Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Herndon
LAST UPDATED
ORIGINAL DATE 1/27/2025
SHORT TITLE Medicaid Reimbursements for Birth Centers
BILL
NUMBER House Bill 56
ANALYST Esquibel
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected Medical
Assistance
Program 1 FTE
No fiscal
impact
$97.4 $97.4 $194.8 Recurring
General Fund,
Federal Funds
50/50 match
Total
No fiscal
impact
At least $97.4 At least $97.4 $194.8 Recurring
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Health Care Authority (HCA)
SUMMARY
Synopsis of House Bill 56
House Bill 56 (HB56) would increase Medicaid rates such that services provided at a birth center
are reimbursed at the same rate as equivalent services provided at a hospital.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
The bill does not include an appropriation.
The Health Care Authority’s (HCA) reports that hospitals and birth centers currently have
differing Medicaid reimbursement methodologies. Hospitals’ birthing services are reimbursed by
Medicaid using diagnosis-related groups (DRGs), along with respective hospital rates, hospital
capital costs, and taxes. Birth centers’ services are reimbursed by Medicaid for the facility cost
and the professional services, such as the work of the certified nurse midwife. The HCA reports
it is unable to provide an estimated cost because of the differing payment models. However,
since there is currently only one accredited birth center in the state, the programmatic cost is
likely small. House Bill 56 – Page 2
HCA projects that, to implement the provisions of the bill, the Medical Assistance Program
would require an additional FTE with a general fund cost of $48.7 matched at 50 percent with
federal funds for an annual total cost of $97.4 thousand.
SIGNIFICANT ISSUES
The current Medicaid reimbursement methodologies for birthing services at hospitals and birth
centers are written into New Mexico’s Medicaid state plan and any changes would require
approval by CMS. HCA reports it is unlikely the federal Centers for Medicare and Medicaid
Services (CMS) would approve Medicaid DRG payments for birth centers or a split payment
methodology for hospitals. According to HCA, “due to the differences in reimbursement
methodologies between birth centers and hospitals for uncomplicated births, HB56, as it is
currently written, cannot be operationalized.”
ADMINISTRATIVE IMPLICATIONS
The HCA reports that, under the provisions of the bill, an additional new FTE would be required
to implement a Medicaid state plan amendment, claims processing IT system changes, regulatory
revisions, a Medicaid provider supplement, and a Medicaid managed care contract amendment.
ALTERNATIVES
HCA indicates an alternative approach to the Medicaid reimbursement methodology proposed in
the bill is to instead increase birth centers’ facility fee reimbursement rate by a specified
percentage amount.
OTHER SUBSTANT IVE ISSUES
HCA reports increasing the Medicaid facility fee for birth centers has the potential to incentivize
more birth centers to open and more births to occur in birth centers. This could positively impact
maternal health because birth centers may perform fewer low-risk cesarean section procedures
compared to hospitals.
RAE/sgs/rl