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F I S C A L I M P A C T R E P O R T

SPONSOR Feldman

ORIGINAL DATE

LAST UPDATED

011/30/08

HB

SHORT TITLE Health Provider General Liability Insurance

SM 11

ANALYST Hanika-Ortiz

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY08

FY09

FY10 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$0.1/minimal

Non-

Recurring GF

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Medical Board (NMMB)

Health Policy Commission (HPC)

Department of Health (DOH)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of Bill

Senate Memorial 11 requests that the DOH convene a task force on health care provider general

liability insurance to study and make recommendations to the Legislative Health and Human

Services Committee on the best means of offering financial support to health care providers to

offset general liability insurance premiums.

This memorial requires the task force to report its findings to the Legislative Health and Human

Services Committee by September 1, 2008.

FISCAL IMPLICATIONS

Agencies will need to provide staff time to participate on the task force.

SIGNIFICANT ISSUES

HPC reports that to be qualified under the New Mexico Medical Malpractice Act, health care

providers must either obtain coverage from an insurer on an “occurrence" policy form or else

maintain a substantial cash deposit with the Superintendent of Insurance. In addition to coverage

Senate Memorial 11 – Page

2

premium payments, qualifying health care providers must also pay an annual surcharge to the

Patient Compensation Fund.

HPC further reports that the New Mexico Medical Malpractice Act also requires participating

insurance companies to issue occurrence type policies with limits of $200,000 per claim. In

addition to the policy premium, the insurers collect a surcharge (determined by the State) from

each policyholder. The surcharge amount is placed in the Patient Compensation Fund. The funds

are used to pay judgments or settlements in excess of the $200,000 per claim limit. Payments

from the Patient Compensation Fund are subject to the specific terms of the Act, which includes

damage up to $600,000, plus past and future medical expenses.

DOH reports that successful health care provision depends on the availability of qualified

healthcare professionals. Assuming that more coverage is obtained for the uninsured, coverage

does not equate to access if there are not enough health care providers available to actually

provide the care.

DOH further reports that currently thirty-two of the thirty-three counties in the state are

designated as Health Professional Shortage Areas (HPSAs), for primary care physicians and

psychiatrists. Recruitment to these areas is difficult for a variety of reasons, including the

inability to secure affordable provider insurance. As health professional insurance coverage for

certain disciplines (e.g. obstetricians and surgeons) becomes exceedingly expensive, alternatives

such as subsidies, tax credits or other mechanisms may become important for the state.

PERFORMANCE IMPLICATIONS

The NMMB notes that it has been several years since health care provider general liability

insurance has been studied; and, the Board would support revisiting this issue.

New Mexico needs to be aware of changes in the medical malpractice market and identifying

appropriate incentives to assist with health care practitioner retention and recruitment. The

NMMB further notes it would be beneficial to study what other states are doing to increase

affordable, accessible health care, particularly within high-risk medical specialties and in

medically underserved communities.

ADMINISTRATIVE IMPLICATIONS

The Memorial requests the DOH convene the task force in conjunction with the NM Medical

Society, the Insurance Division of the Public Regulation Commission, the Attorney General, the

NM Health Policy Commission and the NM Nurses Association.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SM1, requests that the HPC continue the work of its task force on obstetric health care

practitioner liability insurance.

TECHNICAL ISSUES

See suggested amendments.

Senate Memorial 11 – Page

3

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

The issue of high general liability insurance premiums will not be studied in depth.

AMENDMENTS

The HPC suggests the following:

Page 2, line 7, replace “New Mexico Health Policy Commission" with “United States

Department of Health and Human Services" because this department determines Health

Professional Shortage Areas.

Page 3, line 7, correct a drafting error by replacing the word “damages" with the proper term

“premiums."

Replace the term “general liability" (as used in the title and body of the bill) with “professional

liability" on page 1, lines 12, 15, 18, 21-22; page 2 line 2; page 3, lines 16-17, and line 21.

AHO/jp