HF 2612

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to health; repealing the MinnesotaCare tax on 
  1.3             wholesale drug distributors; amending Minnesota 
  1.4             Statutes 2002, sections 295.50, subdivision 3; 295.53, 
  1.5             subdivision 3; 295.582; Minnesota Statutes 2003 
  1.6             Supplement, section 295.53, subdivision 1; repealing 
  1.7             Minnesota Statutes 2002, sections 295.50, subdivisions 
  1.8             14, 15; 295.51, subdivision 1a; 295.52, subdivisions 
  1.9             3, 4, 4a; 295.54, subdivisions 2, 3; 295.57, 
  1.10            subdivision 5. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 2002, section 295.50, 
  1.13  subdivision 3, is amended to read: 
  1.14     Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
  1.15  amounts received in money or otherwise by: 
  1.16     (1) a hospital for patient services; 
  1.17     (2) a surgical center for patient services; 
  1.18     (3) a health care provider, other than a staff model health 
  1.19  carrier, for patient services; and 
  1.20     (4) a wholesale drug distributor for sale or distribution 
  1.21  of legend drugs that are delivered in Minnesota by the wholesale 
  1.22  drug distributor, by common carrier, or by mail, unless the 
  1.23  legend drugs are delivered to another wholesale drug distributor 
  1.24  who sells legend drugs exclusively at wholesale.  Legend drugs 
  1.25  do not include nutritional products as defined in Minnesota 
  1.26  Rules, part 9505.0325; and 
  1.27     (5) a staff model health plan company as gross premiums for 
  1.28  enrollees, co-payments, deductibles, coinsurance, and fees for 
  2.1   patient services. 
  2.2      [EFFECTIVE DATE.] This section is effective January 1, 
  2.3   2005, and applies to taxes due on or after that date.  
  2.4      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  2.5   295.53, subdivision 1, is amended to read: 
  2.6      Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
  2.7   are excluded from the gross revenues subject to the hospital, 
  2.8   surgical center, or health care provider taxes under sections 
  2.9   295.50 to 295.59: 
  2.10     (1) payments received for services provided under the 
  2.11  Medicare program, including payments received from the 
  2.12  government, and organizations governed by sections 1833 and 1876 
  2.13  of title XVIII of the federal Social Security Act, United States 
  2.14  Code, title 42, section 1395, and enrollee deductibles, 
  2.15  coinsurance, and co-payments, whether paid by the Medicare 
  2.16  enrollee or by a Medicare supplemental coverage as defined in 
  2.17  section 62A.011, subdivision 3, clause (10).  Payments for 
  2.18  services not covered by Medicare are taxable; 
  2.19     (2) payments received for home health care services; 
  2.20     (3) payments received from hospitals or surgical centers 
  2.21  for goods and services on which liability for tax is imposed 
  2.22  under section 295.52 or the source of funds for the payment is 
  2.23  exempt under clause (1), (7), (10), or (14); 
  2.24     (4) payments received from health care providers for goods 
  2.25  and services on which liability for tax is imposed under this 
  2.26  chapter or the source of funds for the payment is exempt under 
  2.27  clause (1), (7), (10), or (14); 
  2.28     (5) amounts paid for legend drugs, other than nutritional 
  2.29  products, to a wholesale drug distributor who is subject to tax 
  2.30  under section 295.52, subdivision 3, reduced by reimbursements 
  2.31  received for legend drugs otherwise exempt under this chapter; 
  2.32     (6) payments received by a health care provider or the 
  2.33  wholly owned subsidiary of a health care provider for care 
  2.34  provided outside Minnesota; 
  2.35     (7) (6) payments received from the chemical dependency fund 
  2.36  under chapter 254B; 
  3.1      (8) (7) payments received in the nature of charitable 
  3.2   donations that are not designated for providing patient services 
  3.3   to a specific individual or group; 
  3.4      (9) (8) payments received for providing patient services 
  3.5   incurred through a formal program of health care research 
  3.6   conducted in conformity with federal regulations governing 
  3.7   research on human subjects.  Payments received from patients or 
  3.8   from other persons paying on behalf of the patients are subject 
  3.9   to tax; 
  3.10     (10) (9) payments received from any governmental agency for 
  3.11  services benefiting the public, not including payments made by 
  3.12  the government in its capacity as an employer or insurer or 
  3.13  payments made by the government for services provided under 
  3.14  medical assistance, general assistance medical care, or the 
  3.15  MinnesotaCare program; 
  3.16     (11) (10) government payments received by a regional 
  3.17  treatment center; 
  3.18     (12) (11) payments received by a health care provider for 
  3.19  hearing aids and related equipment or prescription eyewear 
  3.20  delivered outside of Minnesota; 
  3.21     (13) (12) payments received by an educational institution 
  3.22  from student tuition, student activity fees, health care service 
  3.23  fees, government appropriations, donations, or grants.  Fee for 
  3.24  service payments and payments for extended coverage are taxable; 
  3.25  and 
  3.26     (14) (13) payments received under the federal Employees 
  3.27  Health Benefits Act, United States Code, title 5, section 
  3.28  8909(f), as amended by the Omnibus Reconciliation Act of 1990. 
  3.29     (b) Payments received by wholesale drug distributors for 
  3.30  legend drugs sold directly to veterinarians or veterinary bulk 
  3.31  purchasing organizations are excluded from the gross revenues 
  3.32  subject to the wholesale drug distributor tax under sections 
  3.33  295.50 to 295.59. 
  3.34     [EFFECTIVE DATE.] This section is effective January 1, 
  3.35  2005, and applies to taxes due on or after that date.  
  3.36     Sec. 3.  Minnesota Statutes 2002, section 295.53, 
  4.1   subdivision 3, is amended to read: 
  4.2      Subd. 3.  [SEPARATE STATEMENT OF TAX.] A hospital, surgical 
  4.3   center, or health care provider must not state the tax 
  4.4   obligation under section 295.52 in a deceptive or misleading 
  4.5   manner.  It must not separately state tax obligations on bills 
  4.6   provided to patients, consumers, or other payers when the amount 
  4.7   received for the services or goods is not subject to tax.  
  4.8      Pharmacies that separately state the tax obligations on 
  4.9   bills provided to consumers or to other payers who purchase 
  4.10  legend drugs may state the tax obligation as the wholesale price 
  4.11  of the legend drugs multiplied by the tax percentage specified 
  4.12  in section 295.52.  Pharmacies must not state the tax obligation 
  4.13  based on the retail price.  
  4.14     Whenever the commissioner determines that a person has 
  4.15  engaged in any act or practice constituting a violation of this 
  4.16  subdivision, the commissioner may bring an action in the name of 
  4.17  the state in the district court of the appropriate county to 
  4.18  enjoin the act or practice and to enforce compliance with this 
  4.19  subdivision, or the commissioner may refer the matter to the 
  4.20  attorney general or the county attorney of the appropriate 
  4.21  county.  Upon a proper showing, a permanent or temporary 
  4.22  injunction, restraining order, or other appropriate relief must 
  4.23  be granted.  
  4.24     [EFFECTIVE DATE.] This section is effective January 1, 
  4.25  2005, and applies to taxes due on or after that date.  
  4.26     Sec. 4.  Minnesota Statutes 2002, section 295.582, is 
  4.27  amended to read: 
  4.28     295.582 [AUTHORITY.] 
  4.29     (a) A hospital, surgical center, or health care provider 
  4.30  that is subject to a tax under section 295.52, or a pharmacy 
  4.31  that has paid additional expense transferred under this section 
  4.32  by a wholesale drug distributor, may transfer additional expense 
  4.33  generated by section 295.52 obligations on to all third-party 
  4.34  contracts for the purchase of health care services on behalf of 
  4.35  a patient or consumer.  The additional expense transferred to 
  4.36  the third-party purchaser must not exceed the tax percentage 
  5.1   specified in section 295.52 multiplied against the gross 
  5.2   revenues received under the third-party contract, and the tax 
  5.3   percentage specified in section 295.52 multiplied against 
  5.4   co-payments and deductibles paid by the individual patient or 
  5.5   consumer.  The expense must not be generated on revenues derived 
  5.6   from payments that are excluded from the tax under section 
  5.7   295.53.  All third-party purchasers of health care services 
  5.8   including, but not limited to, third-party purchasers regulated 
  5.9   under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, 
  5.10  or 79A, or under section 471.61 or 471.617, must pay the 
  5.11  transferred expense in addition to any payments due under 
  5.12  existing contracts with the hospital, surgical center, pharmacy, 
  5.13  or health care provider, to the extent allowed under federal 
  5.14  law.  A third-party purchaser of health care services includes, 
  5.15  but is not limited to, a health carrier or community integrated 
  5.16  service network that pays for health care services on behalf of 
  5.17  patients or that reimburses, indemnifies, compensates, or 
  5.18  otherwise insures patients for health care services.  A 
  5.19  third-party purchaser shall comply with this section regardless 
  5.20  of whether the third-party purchaser is a for-profit, 
  5.21  not-for-profit, or nonprofit entity.  A wholesale drug 
  5.22  distributor may transfer additional expense generated by section 
  5.23  295.52 obligations to entities that purchase from the 
  5.24  wholesaler, and the entities must pay the additional expense.  
  5.25  Nothing in this section limits the ability of a hospital, 
  5.26  surgical center, pharmacy, wholesale drug distributor, or health 
  5.27  care provider to recover all or part of the section 295.52 
  5.28  obligation by other methods, including increasing fees or 
  5.29  charges. 
  5.30     (b) Each third-party purchaser regulated under any chapter 
  5.31  cited in paragraph (a) shall include with its annual renewal for 
  5.32  certification of authority or licensure documentation indicating 
  5.33  compliance with paragraph (a).  
  5.34     (c) Any hospital, surgical center, or health care provider 
  5.35  subject to a tax under section 295.52 or a pharmacy that has 
  5.36  paid additional expense transferred under this section by a 
  6.1   wholesale drug distributor may file a complaint with the 
  6.2   commissioner responsible for regulating the third-party 
  6.3   purchaser if at any time the third-party purchaser fails to 
  6.4   comply with paragraph (a).  
  6.5      (d) If the commissioner responsible for regulating the 
  6.6   third-party purchaser finds at any time that the third-party 
  6.7   purchaser has not complied with paragraph (a), the commissioner 
  6.8   may take enforcement action against a third-party purchaser 
  6.9   which is subject to the commissioner's regulatory jurisdiction 
  6.10  and which does not allow a hospital, surgical center, pharmacy, 
  6.11  or provider to pass-through the tax.  The commissioner may by 
  6.12  order fine or censure the third-party purchaser or revoke or 
  6.13  suspend the certificate of authority or license of the 
  6.14  third-party purchaser to do business in this state if the 
  6.15  commissioner finds that the third-party purchaser has not 
  6.16  complied with this section.  The third-party purchaser may 
  6.17  appeal the commissioner's order through a contested case hearing 
  6.18  in accordance with chapter 14. 
  6.19     [EFFECTIVE DATE.] This section is effective January 1, 
  6.20  2005, and applies to taxes due on or after that date. 
  6.21     Sec. 5.  [REPEALER.] 
  6.22     Minnesota Statutes 2002, sections 295.50, subdivisions 14 
  6.23  and 15; 295.51, subdivision 1a; 295.52, subdivisions 3, 4, and 
  6.24  4a; 295.54, subdivisions 2 and 3; and 295.57, subdivision 5, are 
  6.25  repealed. 
  6.26     [EFFECTIVE DATE.] This section is effective January 1, 
  6.27  2005, and applies to taxes due on or after that date.