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 Sedillo Lopez
LAST UPDATED
ORIGINAL DATE 3/8/2025
SHORT TITLE Corporate Practice of Medicine Act
BILL
NUMBER Senate Bill 450
ANALYST Hernandez
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
See fiscal
implications
See fiscal
implications
See fiscal
implications
See fiscal
implications
Recurring
Federal
Funds
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
NMAG At least $131.8 At least $131.8 At least $263.6 Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Department of Health (DOH)
New Mexico Attorney General (NMAG)
University of New Mexico (UNM)
Agency Analysis was Solicited but Not Received From
Health Care Authority (HCA) Office of the Superintendent of Insurance (OSI)
SUMMARY
Synopsis of Senate Bill 450
Senate Bill 450 (SB450) mandates that a healthcare entity, such as a hospital or healthcare
staffing company, shall not indirectly or directly interfere with, control, or otherwise direct the
professional judgment or clinical decisions of a healthcare provider. Moreover, a healthcare
entity cannot own a patient’s medical records, cannot select, hire, or fire healthcare providers
based on clinical competency, and cannot make decisions regarding coding and billing
procedures for patient care services. Finally, SB450 gives individuals the right to private action Senate Bill 450 – Page 2
for any violations of the bill. Moreover, the New Mexico Attorney General (NMAG) has the
right to bring an action in the name of the state alleging violations.
The effective date of this bill is July 1, 2025.
FISCAL IMPLICATIONS
The University of New Mexico (UNM) states that:
SB450 would undermine the operations of hospitals to such a profound degree that the
fiscal impact is impossible to estimate. Government funds, primarily Medicaid and
Medicare, constitute 74 percent of New Mexico hospital revenues. By compromising the
ability of hospitals to comply with Centers for Medicare and Medicaid Services (CMS)
conditions of participation, SB450 puts all this revenue and thus the financial viability of
all New Mexico hospitals at risk.
NMAG states that:
SB450 tasks the NMAG with enforcing the act and seeking appropriate relief, including
temporary or permanent injunctive relief and restitution from healthcare entities that
interfere with the professional judgment of health care providers. The bill, however, does
not appropriate any money to the NMAG to perform these additional duties. As a result,
the NMAG’s operating budget may need to be increased so it can fulfill its newly created
responsibilities.
This analysis assumes NMAG will need at least 1 additional FTE to enforce the provisions of
SB450 at a recurring cost of $131.8 thousand annually (the average salary in the agency’s Legal
Services Program).
SIGNIFICANT ISSUES
UNM states:
SB450, if enacted, would severely reduce access to healthcare in New Mexico by
profoundly compromising the ability of hospitals and other healthcare providers to
provide patient care. The bill prohibits hospitals from maintaining medical records,
coding and billing for services, and, perhaps most troubling of all, hiring or terminating
people based on clinical competency. SB450, if enacted could render New Mexico
hospital ineligible for Medicaid and Medicare reimbursement, which would force most
hospitals in the state to close.
UNM also notes:
CMS Conditions of Participation (CoPs) are the health and safety standards that
healthcare organizations must meet to participate in federally funded programs including
Medicare and Medicaid. CoPs require hospitals to govern their medical staff, maintain
medical records, and oversee billing/coding to comply with federal regulation. SB450
contains several provisions that may conflict with CoPs for hospitals, particularly
regarding hospital governance, medical staff oversight, and compliance with federal
regulations.
1. Hospital Governing Body Authority (42 CFR §482.12). SB450 states that a hospital Senate Bill 450 – Page 3
(or other healthcare entity) cannot interfere with hiring, firing, or credentialing
decisions of healthcare providers. However, per CMS, the hospital’s governing body
must be responsible for appointing and ensuring the competency of medical staff.
a. Example: B(2)(b) states that a healthcare entity cannot select, hire, or fire
providers based on clinical competency. This contradicts CMS requirements
for hospitals to have a process for medical staff credentialing and privileging.
2. Quality Assessment and Performance Improvement (QAPI) (42 CFR §482.21). CoPs
mandate hospital-wide QAPI programs, but SB450’s restrictions on
"interfering...with professional judgment" hampers implementation of standardized
clinical protocols, quality metrics monitoring, performance improvement initiatives
and patient safety programs. Quality improvement initiatives and standardization of
care protocols would be challenging to implement if they're perceived as "interfering"
with clinical decision-making, worsening patient care.
3. Medical Staff Responsibilities (42 CFR §482.22). SB450 conflicts with the CMS
requirement that medical staff be accountable to the hospital governing body for the
quality of medical care provided to patients. CoPs require adequate staffing plans.
The act’s prohibition on determining patient volumes per "provider" could conflict
with that CMS requirements.
a. Example: SB450 section B(2)(e) limits a hospital’s ability to make decisions
regarding coding and billing, which may interfere with compliance with CMS
documentation and billing regulations.
4. Patient Rights and Medical Records (42 CFR §482.13 & §482.24). SB450 section
B(2)(a) states that a healthcare entity cannot own or determine the content of medical
records. However, CMS requires hospitals to maintain medical records that comply
with federal laws and allow access for regulatory oversight. Hospitals are responsible
for the security, storage, and accuracy of these records.
5. Utilization Review and Financial Relationships (42 CFR §482.30 & Stark Law).
CMS allows hospitals to conduct utilization review to assess the necessity of
diagnostic tests, referrals, and treatment plans to ensure compliance with
Medicare/Medicaid rules.
a. Example: SB450 section B(1)(a-c) restricts hospitals from influencing
diagnostic tests, referrals, or treatment decisions, which could prevent
hospitals from ensuring cost-effective, medically necessary care.
NMAG raised further concerns:
Section 3 appears to prohibit hospitals and staffing health care companies from having
any role in selecting, hiring or firing “health care providers, allied health staff or medical
assistants based, in whole or part, on clinical competency or proficiency.” Such a
restriction may expose such entities to lawsuits for negligent hiring, supervision, and
retention of health care employees. See Spencer v. Health Force, Inc., 2005-NMSC-002,
¶¶ 8, 18-26, 137 N.M. 64 (denying a home health care company summary judgment on a
negligent hiring, supervision, and retention claim because it had a duty to with regard to
the actions of its agents to protect disabled persons under its care); see also Trujillo v.
Presbyterian Health Services, 2025-NMSC-__, ¶¶ 2-26 (Feb. 20, 2025) (reinstating
vicariously liability claims against the defendant hospital, even though medical
negligence claims against its employees or agents, who were radiologists had been
previously dismissed with prejudice).
AEH/sgs/SL2/sgs