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

SPONSOR Campos

ORIGINAL DATE

LAST UPDATED

01/18/08

01/19/08 HB 134

SHORT TITLE Birthing Workforce Retention Fund

SB

ANALYST Hanika Ortiz

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$250.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

$250.0

Recurring Birthing Workforce Retention

Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates HB 167

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Health Policy Commission (HPC)

New Mexico Medical Board (MB)

SUMMARY

Synopsis of Bill

House Bill 134 appropriates $250 thousand from the General Fund to the newly proposed

Birthing Workforce Retention Fund for FY09 and subsequent fiscal years. Any unexpended or

unencumbered balance remaining at the end of any fiscal year shall not revert to the General

Fund.

House Bill 134 – Page

2

The bill states the purpose of the fund is to provide malpractice insurance premium assistance for

certified nurse-midwives (CNM’s) or physicians whose insurance premium costs jeopardize their

ability to continue their obstetrics practices in New Mexico. The fund shall be administratively

attached to the DOH.

FISCAL IMPLICATIONS

The appropriation of $250 thousand contained in this bill is a recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY09 shall not revert to

the General Fund. The use of legislative appropriations to fund malpractice premiums may raise

potential constitutional law questions under the Anti-Donation Clause of Article IX, Section 14.

The HPC reports that given the significant rural population in New Mexico and the high rates of

both rural and urban poverty, reinsurance efforts designed to increase, improve and ensure access

to pre- and post- pregnancy-related healthcare for those populations is a goal that may fit within

the Anti-Donation Clause’s exception of the State providing for the care and maintenance of the

sick and indigent.

The applicant must have a malpractice liability insurance policy currently in force. Any award

from the fund shall not be less than $10 thousand; and, priority for awards will be given to

certified nurse-midwives, family practice physicians and obstetricians having a low number of

patients. There appears to be no maximum cap for any amount awarded an applicant.

This bill creates a new fund and provides for continuing appropriations. The LFC has concerns

with including continuing appropriation language in the statutory provisions for newly created

funds, as earmarking reduces the ability of the legislature to establish spending priorities.

SIGNIFICANT ISSUES

The rules will require that the applicant demonstrate need by showing that Medicaid patients or

indigent patients constitute at least one-half of the obstetric practice of the applicant; and, that

malpractice insurance premium costs have threatened the health of the practice.

PERFORMANCE IMPLICATIONS

The NM Medical Board notes a shortage of physicians in rural areas providing specialized

practice such as obstetrics. One fact reportedly, they believe, is the pressure of malpractice

coverage.

The bill establishes the "birthing workforce retention fund" for physicians and certified nurse

midwives but does not include licensed midwives. A licensed midwife is not a nurse but has met

licensure requirements to perform a specified array of services. Licensed Midwives, not Certified

Nurse Midwives, provide most out-of-hospital births and also are the practitioners for whom

obtaining professional malpractice insurance is the greatest problem.

ADMINISTRATIVE IMPLICATIONS

The Department of Health will need to develop rules, process applications and award funds and

the Department believes they will need at least six to eight months to able to do so within

existing resources.

House Bill 134 – Page

3

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Duplicates HB 167

Relates to SM 1, a memorial requesting the HPC to continue the task force on obstetric health

care practitioner liability insurance.

TECHNICAL

Clarification may be needed to define the terms “indigent" and “financial stability" as used

within the bill.

OTHER SUBSTANTIVE ISSUES

Proponents of the bill believe the cost of insurance is prohibitive for obstetrical providers.

According to previous agency analyses from 2006, between Aug 2001 and July 2005 obstetrician

premiums rose from $40,801 to $89,710.This was even with the cap in New Mexico on damages

other than medical bills and punitive damages, as well as the mandatory review of claims before

a medical/legal panel provisions.

DOH notes that family Practice physicians face significant increases in liability insurance rates if

they provide childbirth services. Most family practice physicians devote little or none of their

practice to childbirth, and are less able to cover such increases with payments for childbirth

services. Many have chosen not to provide these services in order to avoid high liability

insurance premiums.

DOH reports there are currently 137 CNMs licensed and actively practicing in New Mexico.

Since 2005, 82% of CNMs have estimated that half or more of their patients were on public

assistance. DOH further reports that CNMs are affected more than physician providers by

medical malpractice claims because they are not included in the Med-Mal Act and because their

incomes are smaller. A 2007 study by the HPC’s Task Force on Alternative Compensation

found that liability insurance premiums for various CNMs in urban and rural private practices

increased 432% in five years, from an average of about $6,000 per year in 2001 to $31,900 in

2007. The reason for the rapid rise in liability premiums for CNMs is related to the rise in the

awards for each claim, not to an increase in claims made against CNMs.

ALTERNATIVES

In 2006 HSD implemented a Birthing Options Program that allows Licensed Midwives and

Certified Nurse Midwives who certify they cannot obtain malpractice insurance at reasonable

costs for out-of-hospital births to participate in the Medicaid Program. The mother

acknowledges that she is aware the practitioner does not carry malpractice insurance. The

governing statute of the Medical Board has no requirement that these providers carry medical

malpractice insurance.

HPC further provides that their “Task Force on Alternative Compensation" worked during 2007

to develop long-term solutions to the rising costs of professional liability insurance for childbirth

health care providers and is in the process of developing proposals to further address this issue.

AHO/mt