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 B. Sanchez
ORIGINAL DATE
LAST UPDATED
02/03/06
HB
SHORT TITLE
MEDICAID SERVICES FOR MENTALLY
RETARDED
SB 734
ANALYST Weber
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
$10,000.0
Recurring
General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates to SB 663, HB 704
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
FY08
$25,000.0
Recurring
Federal
Medicaid
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Human Services Department (HSD)
SUMMARY
Synopsis of Bill
Senate Bill 734 appropriates $10 million from the general fund to the Human Services
Department for the purpose of increasing the Medicaid reimbursement rate for nursing facilities
and intermediate care facilities for the mentally retarded to maintain competitive wages,
adequate staffing and local minimum wage requirements.
pg_0002
Senate Bill 734 Page 2
FISCAL IMPLICATIONS
The appropriation of $10 million contained in this bill is a recurring expense to the general fund.
Any unexpended or unencumbered balance remaining at the end of FY07 shall revert to the
general fund.
SIGNIFICANT ISSUES
HSD notes that currently, Medicaid rates are determined by variety of factors including wages
and staffing levels. This bill would require HSD to determine for each facility local prevailing
wages for similar work and adjust for any local minimum wage requirements. Those
determinations are complex and beyond the resource level of HSD. To meet these requirements,
HSD would have to enter into a contract for those determinations. No funds are provided for that
type of contract, which is likely to be expensive. In addition, the Department of Health currently
establishes requirements for adequate staffing for the enumerated facilities. Those levels are
considered when HSD establishes reimbursement rates. There are currently no requirements
regarding salary levels paid by facilities. Rates paid to the facilities would be adjusted when
Medicaid rates are adjusted if salaries are increased. This bill would require an annual
appropriation increase for the Medicaid Program to account for this increase.
Medicaid regulations allow for rebasing of the rates for nursing facilities and ICF/MRs every
three years with a percentage increase up to the market basket index (MBI) for the two years
prior to the rebasing year if budget is available. An increase in this amount exceeds what the
MBI would allow, as the MBI normally ranges from 2.5% to 3.5%. Also, because the rebasing
takes cost into consideration, any increase in costs in one year from an increase in rates would
drive up the rates for the next rebasing.
POSSIBLE QUESTIONS
Many provider groups are adversely affected financially by the relatively low Medicaid
reimbursement rates yet this bill offers relief to only one. Should other provider groups be
considered.
MW/nt