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

SPONSOR Gonzales

ORIGINAL DATE

LAST UPDATED

2-2-06

HJM 47

SHORT TITLE

Workers' Compensation Task Force

SB

ANALYST Lucero

SOURCES OF INFORMATION

LFC Files

Responses Received From

Workers’ Compensation Administration (WCA)

Department of Health (DOH)

Development Disabilities Planning Council (DDPC)

Aging and Long Term Care Department (ALTSD)

SUMMARY

Synopsis of Bill

House Joint Memorial 47 identifies that New Mexico contracts with many private, not-for-profit

agencies to deliver health and human services which have limited funding available for pro-

grammatic and personnel costs. HJM47 also recognizes that workers’ compensation premiums

have increased dramatically which has further limited the available funding.

HJM47 proposes that health and human service agencies may be assigned to the workers’ com-

pensation high-risk pool due to erroneously classified non-classified employees and subcontrac-

tors which has resulted in increased premiums.

House Joint Memorial 47 requests that the workers’ compensation administration be requested to

convene a task force to study workers’ compensation practices and fee structures.

The task force should include:

1.

Representatives of the insurance division of the Public Regulation Commission

2.

The Department of Health

3.

The Children, Youth and Families Department

4.

The Human Services Department,

5.

Not-for-profit community based providers of developmental disability services

6.

Providers of disabled and elderly services

7.

Providers of mental health services and

8.

Other health and human service programs

House Joint Memorial 47 – Page

2

HJM47 requires WCA to report to the interim legislative health and human services committee

by its October 2006.

A copy of this memorial is to be transmitted to the Workers’ Compensation Administration.

FISCAL IMPLICATIONS

The participants of the task force are not compensated for participating on the taskforce. There

is no administrative appropriation to the participating agencies.

The health and human service agencies may experience a reduction in future workers’ compen-

sation rates.

SIGNIFICANT ISSUES

Premiums are entirely under the jurisdiction of the Department of Insurance.

The WCA neither

determines premiums nor determines who goes into the assigned risk pool.

Therefore, it appears sig-

nificantly more effective to assign the responsibility for the task force to the Department of In-

surance where the premiums are set.

Classifications of employers and subcontractors for insurance

purposes are controlled by the Department of Insurance as well.

Department of Health provided the following information:

Workers’ compensation costs have been rising in recent years. Costs may be higher than nec-

essary due to the misclassification of agencies providing services into high-risk pools with

high costs, and the misclassification of non-classified employees and subcontractors. Rec-

ommendations of the task force might be useful in identifying cost saving measures in the

current workers compensation practices. These cost savings can then be applied to program-

matic needs and personnel costs.

California has outlined possible strategies for controlling costs related to Workers’ Compen-

sation (California Commission on Health and Safety and Workers’ Compensation):

o

Fee schedules – Evidence suggests that expanding the scope of Workers’

Compensation fee schedules and linking them to the Medicare payment sys-

tem can lower system costs and the administrative burden.

o

Utilization Review to assess the necessity and reasonableness of medical ser-

vices.

o

Managed Care has been found to lower the cost of medical care; however, pa-

tients in Workers’ Compensation managed care plans generally have reported

lower satisfaction with the care received.

o

Treatment Guidelines to assist in making decisions about appropriate care for

the most common types of work-related injuries.

These strategies may or may not be relevant to New Mexico. However, much information is

readily available from other states that are struggling to control Workers’ Compensation

costs. The proposed task force will be able to benefit from the other states and determine the

most relevant strategies for New Mexico.

House Joint Memorial 47 – Page

3

ADMINISTRATIVE IMPLICATIONS

This bill will require staff time from all agencies and departments included on the task force

without there being an appropriation.

TECHNICAL ISSUES

The bill does not specify how often the task force should meet.

OTHER SUBSTANTIVE ISSUES

ALTSD has employees in our Gold Mentor and Liaison programs classified as “Executive

Other” who have been denied Workers’ Comp. Coverage, ostensibly due to group size, cost, and

risk. The work of this task force could provide guidance for insuring such employees.

Availability of non-profit contractors may be impacted.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Status Quo.

AMENDMENTS

Assign to the Department of Insurance.

DL/yr