Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports
if they are used for other purposes.
Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).
Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and
attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.
F I S C A L I M P A C T R E P O R T
SPONSOR Rehm
ORIGINAL DATE
LAST UPDATED
2/16/2007
2/21/2007 HB 1218
SHORT TITLE
Insurance Adjusters in Medical Practice Act
SB
ANALYST Moser
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
NFI
NFI
Duplicate to: SB 807
SOURCES OF INFORMATION
LFC Files
Responses Received From
NM Board of Medical Examiners
Department of Regulation and Licensing (DRL)
General Services Department (GSD)
SUMMARY
Synopsis of Bill
House Bill 1218 proposes to exempt all insurance adjusters who handle, interpret or adjust an
insurance claim from the Medical Practice Act.
FISCAL IMPLICATIONS
According to the Risk Management Division of GSD “…the fiscal implication is difficult to
predict. This bill could serve to increase the cost of the processing of any medical related claim.
This could be all claims against the state with the exception of property claims. The increase in
cost would be from the necessity of obtaining an expert medical opinion on each claim for each
decision. This would be burdensome, time consuming and costly."
SIGNIFICANT ISSUES
The Medical Practice Act defines the practice of medicine to include, in part, “offering medical
peer review, utilization review or diagnostic service of any kind that directly influences patient
pg_0002
House Bill 1218 – Page
2
care." Any review of an insurance claim that involves on-going patient care falls within this
definition, because approval or denial of a claim may directly influence the care, treatment, or
medication the patient may receive.
Health insurance companies in New Mexico comply with this section of the Medical Practice
Act by having a physician with a current NM medical license on staff who is responsible for the
review of claims and for the determinations made by insurance claims adjusters.
The Medical Board points out that the New Mexico workers compensation system is the only
insurance entity that does not
currently comply with this requirement of the Medical Practice
Act. Determinations made by claims representatives and adjusters for workers compensation are
not
reviewed or approved by a licensed NM physician.
SB 807 proposes to exempt all
insurance claims adjusters from the Medical Practice Act,
meaning that insurance companies that currently have licensed medical doctors providing
oversight for the claims system would no longer need them. This would allow claims adjusters
for insurance companies, as well as for the workers compensation system, to be free to make
medical decisions regarding the care and treatment of patients without the oversight of a
physician.
GSD expresses great concern that if the Medical Practices Act is interpreted to apply to
insurance adjusters of medical claims who are NOT licensed by the Insurance Code, Risk
Management Division (RMD) adjusters who settle medical claims could be accused of practicing
medicine without a license.
The NM Medical Board indicates that it receives frequent complaints from consumers unhappy
with their workers compensation experience –complaining about the limited care provided, and
about their inability to obtain health care they feel may be necessary. The Medical Board cites
that it has also received complaints from physicians treating patients within the workers
compensation context. These physician complaints focus on claims adjusters who will not
authorize the treatments the physician feels their patients need, and that when they attempt to
intercede on behalf of the patient’s they are removed from the case. These physicians argue as
does the medical board that by making these sorts of decisions, the claims adjusters are
practicing medicine without a license.
OTHER SUBSTANTIVE ISSUES
The bill may require Risk Management Division adjusters who settle medical claims, liability
and workers compensation claims to be adjusters licensed under the Insurance Code or risk being
charged with practicing medicine without a license. It would appear that a restriction would be
made for the decision making ability of medical related claims being processed by adjusters.
There is no provision in HB 1218 requiring that insurance adjusters have any sort of medical
training. This concerns the medical board which points out that all of the other current
exemptions to the Medical Practice Act (except for religious and domestic situations) involve
individuals who are medically trained personnel of some sort, working under the supervision of a
licensed physician. The exception proposed by HB1218 would be the first to involve medical
decisions made by individuals without medical training, working without physician supervision.
pg_0003
House Bill 1218 – Page
3
AMENDMENTS
GSD recommends the bill be amended to include, in addition to licensed adjusters, employees
and contractors of the Risk Management Division dealing with medical claims.
GM/csd