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

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DATE TYPED 2/19/05

HB 637/aHEC

SHORT TITLE Expand Primary Care Capital Funding Act

SB

ANALYST Kehoe

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

(See Fiscal Im-

pact Narrative)

Primary Care

Capital Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates Senate Bill 456

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

(See Fiscal Im-

pact Narrative)

Primary Care Capi-

tal Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

Department of Health (DOH)

Public Education Department (PED)

New Mexico Finance Authority (NMFA)

House Bill 637/aHEC -- Page 2

SUMMARY

Synopsis of HEC Amendment

House Education Committee amendments provide for the following:

Items 1 and 2, make technical changes for clarity to the definition of “primary care”.

Items 3 and 4, clarifies NMFA may make a loan to a school-based health center that operates in a

public school district.

Synopsis of Original Bill

House Bill 637 amends the Primary Care Capital Funding Act to create a separate fund for long-

term financing of capital projects for school-based health centers or telehealth sites, expand eli-

gibility, and provide loan eligibility requirements.

Significant Issues

The 1994 Legislature enacted the Primary Care Act which created a revolving fund known as the

primary care capital fund for the purpose of providing loans and other financial assistance to ru-

ral primary health care clinics for infrastructure, construction, and equipment projects. The De-

partment of Health (DOH) and the New Mexico Finance Authority (NMFA), under a joint pow-

ers agreement, carry out the purposes of the Act and jointly adopted the rules governing the fi-

nancing of the primary health care projects in under-serviced areas of New Mexico. The current

rules and regulations allow for up to 20% of loan repayments to be made in the form of contract-

for-services. As of June 30, 2004, 14 loans totaling $6.8 million have been made from the pri-

mary care capital fund and the fund has a cash balance of approximately $1.8 million.

House Bill 637 proposes to amend the Primary Care Act to allow for long-term financing of land

acquisition, infrastructure and equipment for the delivery of primary care services at telehealth

sites or school-based health centers. The amendment expands eligible entities for the loan pro-

gram to include a school-based health center that operates in a public school district and that

meets DOH requirements or that is funded by the federal Department of Health and Human Ser-

vices; or a telehealth site operated by a community-based nonprofit primary care clinic or hos-

pice that operates in a rural or other health care underserved area of the state and that has assets

totaling less than $10 million and is a non-profit corporation for federal tax purposes.

House Bill 637 requires a separate account be maintained for appropriations made to the primary

care capital fund for the purposes of financing projects for school-based health centers and tele-

health sites. The bill further authorizes NMFA to make a loan to a public school district operat-

ing a school-based health center or to an eligible telehealth site for capital projects provided the

loan does not exceed the amount reserved for school-based health centers or telehealth sites.

FISCAL IMPLICATIONS

House Bill 637 does not contain an appropriation. However, the governor’s capital outlay fund-

ing recommendations include $1,006 million for telehealth capital projects and $3 million for

school-based health centers from the general fund. It is not clear if additional general fund rec-

House Bill 637/aHEC -- Page 3

ommendations of $300 thousand for DOH health facilities and $800 thousand for the primary

health care equipment fund would also be used for school-based health centers and telehealth

sites. DOH indicates its base budget request for FY06 includes $500 thousand for operating

costs for the proposed centers and sites.

ADMINISTRATIVE IMPLICATIONS

The powers and duties of both NMFA and DOH in relationship to administering the Primary

care Capital Funding Act would remain the same as provided by current law. NMFA is responsi-

ble for all financial duties of the program including administering the fund, accounting for all

money in the fund, evaluating and approving loans, enforcing provisions of loans and contracts,

and all other financial aspects of the fund. DOH will administer the loan program and contracts

for services provided under the Act including defining sick and medically indigent persons, es-

tablishing priorities for loans and contracts for services, determining appropriateness of the capi-

tal project, evaluating the capability of an applicant to provide and maintain services, selecting

recipients of loans and persons with whom to contract for services, and determine compliance of

capital projects with all state and federal licensing and procurement requirements. Either may,

instead of a loan, contract for services with an eligible entity to provide free or reduced fee pri-

mary care services for sick and medically indigent persons as reasonably adequate legal consid-

eration for money from the fund to the entity so it may acquire or construct a capital project to

provide the services.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

House Bill 637 duplicates Senate Bill 456 in its entirety.

TECHNICAL ISSUES

NMFA questions the clarity of two issues within the bill: 1) May the operation of a school-based

health center be contracted by the public school district to another public or private entity.; and

2) a school-based health center must operate within the school district, but must it operate on

school property, or may it operate on property not owned by the district.

OTHER SUBSTANTIVE ISSUES

The Medical Assistance Division of HSD describes school-based health centers as partnerships

created by schools and community health organizations to provide onsite primary, preventive

and mental health services to students while reducing lost school time, removing barriers to care,

promoting family involvement and advancing the health and educational success of school-aged

children and youth. The centers play an important role in increasing access to primary and men-

tal health services, particularly among vulnerable, hard-to-reach or at-risk children and adoles-

cents who may not have access to services outside of the school setting, particularly in rural and

other medically underserved areas of the state.

According to DOH, the provisions of this bill support the aims of the DOH Strategic Plan to im-

prove access to health services, improve the health of New Mexicans, prevent teen pregnancy,

and prevent teen suicide.

House Bill 637/aHEC -- Page 4

PED indicates telehealth sites have the potential to close the gaps in healthcare access that many

New Mexicans face due to the lack of medical and behavioral health specialists in their area, and

the sites could bridge clinical and behavioral health specialists to the primary care provider in a

virtual environment. According to PED, this bill supports the governor’s initiative to double the

number of school-based health centers from 34 to 68 in the next 12 months.

LMK/yr:sb