Smaller New Mexico hospitals will soon start missing out on government funding due to their fewer number of beds and smaller financial performance.

Senate Bill 17 signed into law earlier this year is set to go into effect this summer, redefining how the state calculates its portion of the Medicaid match for hospitals. The Healthcare Quality Delivery and Access Act establishes that 60% of the state’s match is based on “Medicaid service volume” or beds while 40% is based on performance, which is determined by the Health Care Authority based on reports from the hospitals.

“Ultimately, the bill aims to improve and increase access to healthcare services within the state. However, hospitals that do not have significant Medicaid service volume will not see much benefit,” reads a Legislative Finance Committee report.

According to the report, smaller hospitals with fewer beds care for fewer Medicaid patients, compared to bigger hospitals with a larger capacity to treat Medicaid patients.

“Given the structure of the act, hospitals most at risk of down-sizing may not see much benefit. Generally speaking, hospitals that are not fiscally-challenged will receive the bulk of the financial aid based on bed count,” the report reads. “Ultimately, the act does not target hospitals that are financially struggling, and instead helps larger hospitals which are generally already profitable.”

The LFC report uses Rehoboth McKinley Christian Hospital in Gallup as an example. The smaller hospital lost around $20 million in 2022 and will receive about $6.5 million from the new law.

Rehoboth has made headlines recently by being ordered to pay over $100 million in medical malpractice damages. The civil case was filed in 2019 following a patient’s botched hernia surgery left them with life-long complications.

Gallup hospital says it is ‘indigent’ ahead of court order to find more than $100M 

“This will not cover the full extent of the losses that Rehoboth faces and they will still have a negative net margin of more than $13 million,” the LFC report reads.

On the other hand, the larger Eastern New Mexico Medical Center reported a profit of about $80 million in 2022 and will receive over $37 million from the law. The report said if the Roswell hospital’s earnings remain on track, it could see over $117 million in combined profits and matched funding from the state.

Twelve New Mexico hospitals which qualify for funding under the new law reported net losses in 2022. Four of them will not receive enough state match funding to turn a profit. These include Rehoboth, Presbyterian Hospital in Albuquerque, Santa Fe Medical Center, and Encompass Health Rehabilitation Hospital of Albuquerque.

In Southern New Mexico, Artesia General Hospital reported a nearly $3 million loss in 2022 and is only projected to receive $5.6 million in match funding. The hospital will be profitable at $2.7 million, which is low compared to other larger hospitals in the region.

The report also noted that public funds made up about 70% of total hospital revenue in 2022 and this number is projected to reach 74% by 2025. These include funding from Medicaid, Medicare, Medicare Advantage and state subsidies.

“As the state continues to increase hospital subsidies, New Mexico is in a unique position to ensure hospitals use their revenue to improve patients’ outcomes and access to healthcare,” the report reads.

During a Legislative Health & Human Services Committee meeting this week, Rep. Tara Lujan (D-Santa Fe) said the report raised several “red flags” for the lawmakers.

“We don’t always have all the answers when we come up with legislation. But I knew that we worked together with institutions, with legislators, with the executive office particularly on this bill,” Lujan said. “It looks like we need to make some adjustments.”

When asked by Rep. Pamelya Herndon (D-Albuquerque) about solutions the legislature should consider, LFC Analyst Allegra Hernandez said lawmakers need to make sure there are measures in place to hold hospitals accountable, and to improve care.

She added that the goal should be to make sure New Mexico hospitals are in a financially “healthier place” in five years, and that she does not believe Senate Bill 17, as it is currently written, will do that.

Hernandez offered one solution – the rural emergency hospital designation through Medicare. This designation was established through the Consolidated Appropriations Act of 2021 by Congress. The idea is that smaller, often rural hospitals would transition to become a rural emergency hospital and only offer emergency care to patients. This would limit access to broader services for patients seeking care.

“The rural emergency designation possible by (Medicare) is one potential answer, although it’s not necessarily the most popular answer as it would close hospital beds and only allow for emergency services,” Hernandez said.

Hospitals that choose to transition to this designation would receive another 5% in Medicare funds and a monthly facility payment of about $272,000. According to the LFC report, Guadalupe County Hospital is the only hospital in the state that has chosen to make this transition.

“The state and hospitals will likely need to continue to make difficult decisions about when it is necessary to close hospitals or sections of hospitals,” Hernandez said. “(The rural emergency designation) is an option, although, as I said, it is controversial,” Hernandez said.

New Mexico officials contend that at least 60% of the Permian Basin oil and gas operations they inspected  were in violation of EPA air quality standards.

The New Mexico Environment Department announced the results of a six-month inspection initiative done in partnership with the U.S. Environmental Protection Agency. It found 75 of the 124 facilities investigated had emissions of volatile organic compounds (VOCs) and could be subject to monetary penalties and other actions necessary to comply with requirements pursuant to federal Clean Air Act and state Air Quality Control Act.

Suspected criminal violations will be referred to New Mexico’s Environmental Crimes Task Force for further investigation and potential criminal prosecution of companies or individuals.

During this time, EPA and NMED analyzed data from satellites, regulatory reports and other sources to identify specific sites in the Permian Basin prior to conducting on-site inspections. In April 2024, 14 EPA inspectors and five NMED inspectors took part in joint investigations.

“The results of our federal and state oil and gas investigations are cause for alarm, with a meager 40% compliance rate,” Environment Department Cabinet Secretary James Kenney said. “With the impacts of climate change ravaging our state and air quality degrading, we have no choice but to increase sanctions on polluters until we see a commitment to change behavior.”

The on-site investigations took place at multiple companies’ operations in the Permian Basin. These companies include Chevron U.S.A. Inc, Earthstone Energy, Inc, Franklin Mountain Energy, Inc, Kaiser Francis Oil Company, Marathon, Permian Resources, Tap Rock and XTO Energy, Inc. Approximately 112 facilities are located in communities with environmental justice concerns due to exposure to higher levels of ozone pollution.

VOCs contribute to the formation of ozone, which causes health problems for New Mexicans, including asthma, lung infections, bronchitis and cancer. Air quality has degraded to unsafe levels in several New Mexican counties, including Lea and Eddy Counties in the Permian Basin. This could result in federal sanctions by the EPA on these counties that will require NMED to institute more restrictive regulations on New Mexico’s industry.

NMED currently regulates over 55,000 facilities with 30 permitting staff and six enforcement staff which results in an untenable workload. In fact, it would take NMED 9.6 years to inspect all permitted sources in New Mexico which is why the Department is currently seeking to raise permit fees and hire additional staff.

Given NMED’s lack of adequate permit fees to expand air quality staff, the U.S. Department of Justice (DOJ) and the EPA will lead in resolving these enforcement matters. For such cases, at least half of the civil penalties collected in these matters by the DOJ and EPA are paid to the U.S. Treasury as opposed to the New Mexico general fund. In short, if NMED had appropriate resources to take on more cases itself, more money would be going back to the New Mexico legislature for the benefit of New Mexicans.

“Currently, six people are now managing over 114 active enforcement matters which take thousands of hours, so I welcome the resources provided to us by the EPA and DOJ to hold these polluters accountable,” Compliance and Enforcement Section Chief Cindy Hollenberg said.

 “As of today, 15% of New Mexico’s Permian Basin oil and gas production is under a federal settlement.”

“NMED has not raised its air quality permit fees in two decades, yet our permitting workload has increased a staggering 2,234 percent,” Director of the Environmental Protection Division Michelle Miano said.

“Our proposal to increase fees paid by the industry is our best chance to help the one in seven New Mexicans who suffer from respiratory ailments to breathe clean air.”

As part of NMED’s efforts to avoid federal sanctions resulting from degrading air quality, the Department has increased its oversight of the oil and gas industry. As a result, NMED has observed compliance rates of around 50%, meaning roughly one out of every two facilities inspected is in violation of federal and state rules. Settlements with the oil and gas industry include the following:

• April 2024 – Ameredev II LLC agreed to pay $24.5 million to settle alleged violations of state air regulations. This is the largest civil penalty collected by the Department with an oil and gas company and the total civil penalty was deposited in the state’s general fund as the DOJ and EPA did not assist in this matter.
• February 2024 – Apache Corporation agreed to pay $4 million in civil penalties and undertake projects expected to cost at least $5.5 million to ensure 422 of its oil and gas well pads in New Mexico and Texas comply with state and federal clean air regulations and offset past illegal emissions. Under the federal/state settlement, the U.S. Treasury received $2 million of the civil penalty and state’s general fund received $2 million.
• December 2023 – Oxy USA, Inc. agreed to pay $1.2 million in civil penalties for operating its facility at major source levels without applying for and obtaining a Title V permit and for exceeding federal standards for oil and gas facilities.
• August 2023 – Mewbourne Oil Company agreed to pay a $5.5 million penalty and to spend at least $4.6 million for projects to ensure 422 of its oil and gas battery pads in New Mexico and Texas comply with state and federal clean air regulations. Under the federal/state settlement, the U.S. Treasury received $2.75 million of the civil penalty and state’s general fund received $2.75 million.
• March 2023 – Matador Production Company agreed to pay $1.15 million in civil penalties and undertake projects expected to cost at least $5.05 million to ensure compliance with both state and federal clean air regulations at all 239 of its New Mexico oil and gas well pads to resolve liability alleged in a civil complaint filed today under the Clean Air Act and state regulation Under the federal/state settlement, the U.S. Treasury received $650,000 of the civil penalty and state’s general fund received $500,000.

The EPA’s inspection reports are available online here: https://www.epa.gov/nm/enforcement-and-compliance-assurance-documents-new-mexico.

Source: press release

Lightning is blamed for causing one of the two devastating wildfires that tore through parts of southeastern New Mexico last month.

Federal, state and tribal officials said they identified where the South Fork Fire started, and “human activity and factors did not contribute to the cause.”

The South Fork Fire and the Salt Fire broke out on June 17 in the same general area, near the village of Ruidoso. Thousands were forced to flee their homes as the fire closed in on the village.

Two people died and more than 1,400 structures were damaged in the fires, which are both now about 90% contained.

President Joe Biden approved a major disaster declaration for New Mexico, freeing up federal funds that will assist affected individuals, households and businesses in the area.

“This federal assistance will help affected residents receive the necessary aid to begin to recover and rebuild their lives,” New Mexico Gov. Michelle Lujan Grisham said.

Related story: Yes, wildfires are actually becoming more intense and more common, study says

Firefighting efforts have considerably drawn down since the fires’ peak. There are now only three crews, six engines and one helicopter tending to the fires.

“Fire activity remains limited on the South Fork and Salt fires,” fire officials said on Thursday. “Hot spots remain within dense large, dead/down fuel, dense conifer stands and snags. These heat sources do not threaten containment lines.”

While the cause of the South Fork Fire has been determined, officials are still investigating how the Salt Fire started.

If it’s determined the fire was caused by a person, the FBI is offering a $10,000 reward for information leading to the arrest and conviction of that individual.