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SF 3269

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/17/2023 10:08am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; repealing the gross revenues tax on hospitals and health care
providers; making related technical changes; amending Minnesota Statutes 2022,
sections 16A.724, subdivision 2; 62J.041, subdivision 1; 214.16, subdivision 3;
256B.04, subdivision 25; 256B.0625, subdivision 13e; 270B.14, subdivision 1;
289A.38, subdivision 6; repealing Minnesota Statutes 2022, sections 13.4967,
subdivision 3; 295.50, subdivisions 1, 1a, 2, 2a, 2b, 3, 4, 6, 6a, 7, 7a, 9b, 9c, 10a,
10b, 10c, 12b, 13, 13a, 14, 15, 16; 295.51, subdivisions 1, 1a; 295.52, subdivisions
1, 1a, 2, 3, 4, 4a, 5, 6, 8; 295.53, subdivisions 1, 2, 3, 4a; 295.54; 295.55; 295.56;
295.57; 295.58; 295.581; 295.582; 295.59; Minnesota Rules, parts 4650.0102,
subpart 24e; 4652.0100, subpart 20.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 16A.724, subdivision 2, is amended to read:


Subd. 2.

Transfers.

(a) deleted text beginNotwithstanding section 295.581,deleted text end To the extent available
resources in the health care access fund exceed expenditures in that fund, effective for the
biennium beginning July 1, 2007, the commissioner of management and budget shall transfer
the excess funds from the health care access fund to the general fund on June 30 of each
year, provided that the amount transferred in fiscal year 2016 shall not exceed $48,000,000,
the amount in fiscal year 2017 shall not exceed $122,000,000, the amount in fiscal year
2024 shall not exceed $70,215,000, and the amount in any fiscal biennium thereafter shall
not exceed $244,000,000. The purpose of this transfer is to meet the rate increase required
under section 256B.04, subdivision 25.

(b) For fiscal years 2006 to 2011, MinnesotaCare shall be a forecasted program, and, if
necessary, the commissioner shall reduce these transfers from the health care access fund
to the general fund to meet annual MinnesotaCare expenditures or, if necessary, transfer
sufficient funds from the general fund to the health care access fund to meet annual
MinnesotaCare expenditures.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2023.
new text end

Sec. 2.

Minnesota Statutes 2022, section 62J.041, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) For purposes of this section, the following definitions
apply.

(b) "Health plan company" has the definition provided in section 62Q.01.

(c) "Total expenditures" means incurred claims or expenditures on health care services,
administrative expenses, charitable contributions, and all other payments made by health
plan companies out of premium revenues.

(d) "Net expenditures" means total expenditures minus exempted taxes and assessments
and payments or allocations made to establish or maintain reserves.

(e) "Exempted taxes and assessments" means direct payments for taxes to government
agencies, contributions to the Minnesota Comprehensive Health Association, the medical
assistance provider's surcharge under section 256.9657, deleted text beginthe MinnesotaCare provider tax
under section 295.52,
deleted text end assessments by the Health Coverage Reinsurance Association,
assessments by the Minnesota Life and Health Insurance Guaranty Association, assessments
by the Minnesota Risk Adjustment Association, and any new assessments imposed by
federal or state law.

(f) "Consumer cost-sharing or subscriber liability" means enrollee coinsurance,
co-payment, deductible payments, and amounts in excess of benefit plan maximums.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2023.
new text end

Sec. 3.

Minnesota Statutes 2022, section 214.16, subdivision 3, is amended to read:


Subd. 3.

Grounds for disciplinary action.

The board shall take disciplinary action,
which may include license revocation, against a regulated person for:

(1) intentional failure to provide the commissioner of health with the data required under
chapter 62J;new text begin and
new text end

deleted text begin (2) intentional failure to provide the commissioner of revenue with data on gross revenue
and other information required for the commissioner to implement sections 295.50 to 295.58;
deleted text end

deleted text begin (3) intentional failure to pay the health care provider tax required under section 295.52;
and
deleted text end

deleted text begin (4)deleted text endnew text begin (2)new text end entering into a contract or arrangement that is prohibited under sections 62J.70
to 62J.73.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2023.
new text end

Sec. 4.

Minnesota Statutes 2022, section 256B.04, subdivision 25, is amended to read:


Subd. 25.

Medical assistance and MinnesotaCare payment increase.

deleted text begin (a) The
commissioner shall increase medical assistance and MinnesotaCare fee-for-service payments
by an amount equal to the tax rate defined for hospitals, surgical centers, or health care
providers under sections 295.50 to 295.57 for all services subject to those taxes.
deleted text end

deleted text begin (b)deleted text end The commissioner shall reflect in the total payments made to managed care
organizations, county-based purchasing plans, and other participating entities contracted
with the commissioner under section 256B.69, the cost ofdeleted text begin: (1) payments made to providers
for the tax on the services outlined in paragraph (a); and (2)
deleted text end the taxes imposed under sections
297I.05, subdivision 5, and 256.9657, subdivision 3, on premium revenue paid by the state
for medical assistance and the MinnesotaCare program. Any increase deleted text beginbased on clause (2)deleted text end
must be reflected in provider rates paid by the managed care organization, county-based
purchasing plan, or other participating entity, unless the managed care organization,
county-based purchasing plan, or other participating entity is a staff model health plan
company.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2023.
new text end

Sec. 5.

Minnesota Statutes 2022, section 256B.0625, subdivision 13e, is amended to read:


Subd. 13e.

Payment rates.

(a) The basis for determining the amount of payment shall
be the lower of the ingredient costs of the drugs plus the professional dispensing fee; or the
usual and customary price charged to the public. The usual and customary price means the
lowest price charged by the provider to a patient who pays for the prescription by cash,
check, or charge account and includes prices the pharmacy charges to a patient enrolled in
a prescription savings club or prescription discount club administered by the pharmacy or
pharmacy chain. The amount of payment basis must be reduced to reflect all discount
amounts applied to the charge by any third-party provider/insurer agreement or contract for
submitted charges to medical assistance programs. The net submitted charge may not be
greater than the patient liability for the service. The professional dispensing fee shall be
$10.77 for prescriptions filled with legend drugs meeting the definition of "covered outpatient
drugs" according to United States Code, title 42, section 1396r-8(k)(2). The dispensing fee
for intravenous solutions that must be compounded by the pharmacist shall be $10.77 per
claim. The professional dispensing fee for prescriptions filled with over-the-counter drugs
meeting the definition of covered outpatient drugs shall be $10.77 for dispensed quantities
equal to or greater than the number of units contained in the manufacturer's original package.
The professional dispensing fee shall be prorated based on the percentage of the package
dispensed when the pharmacy dispenses a quantity less than the number of units contained
in the manufacturer's original package. The pharmacy dispensing fee for prescribed
over-the-counter drugs not meeting the definition of covered outpatient drugs shall be $3.65
for quantities equal to or greater than the number of units contained in the manufacturer's
original package and shall be prorated based on the percentage of the package dispensed
when the pharmacy dispenses a quantity less than the number of units contained in the
manufacturer's original package. The National Average Drug Acquisition Cost (NADAC)
shall be used to determine the ingredient cost of a drug. For drugs for which a NADAC is
not reported, the commissioner shall estimate the ingredient cost at the wholesale acquisition
cost minus two percent. The ingredient cost of a drug for a provider participating in the
federal 340B Drug Pricing Program shall be either the 340B Drug Pricing Program ceiling
price established by the Health Resources and Services Administration or NADAC,
whichever is lower. Wholesale acquisition cost is defined as the manufacturer's list price
for a drug or biological to wholesalers or direct purchasers in the United States, not including
prompt pay or other discounts, rebates, or reductions in price, for the most recent month for
which information is available, as reported in wholesale price guides or other publications
of drug or biological pricing data. The maximum allowable cost of a multisource drug may
be set by the commissioner and it shall be comparable to the actual acquisition cost of the
drug product and no higher than the NADAC of the generic product. Establishment of the
amount of payment for drugs shall not be subject to the requirements of the Administrative
Procedure Act.

(b) Pharmacies dispensing prescriptions to residents of long-term care facilities using
an automated drug distribution system meeting the requirements of section 151.58, or a
packaging system meeting the packaging standards set forth in Minnesota Rules, part
6800.2700, that govern the return of unused drugs to the pharmacy for reuse, may employ
retrospective billing for prescription drugs dispensed to long-term care facility residents. A
retrospectively billing pharmacy must submit a claim only for the quantity of medication
used by the enrolled recipient during the defined billing period. A retrospectively billing
pharmacy must use a billing period not less than one calendar month or 30 days.

(c) A pharmacy provider using packaging that meets the standards set forth in Minnesota
Rules, part 6800.2700, is required to credit the department for the actual acquisition cost
of all unused drugs that are eligible for reuse, unless the pharmacy is using retrospective
billing. The commissioner may permit the drug clozapine to be dispensed in a quantity that
is less than a 30-day supply.

(d) If a pharmacy dispenses a multisource drug, the ingredient cost shall be the NADAC
of the generic product or the maximum allowable cost established by the commissioner
unless prior authorization for the brand name product has been granted according to the
criteria established by the Drug Formulary Committee as required by subdivision 13f,
paragraph (a), and the prescriber has indicated "dispense as written" on the prescription in
a manner consistent with section 151.21, subdivision 2.

(e) The basis for determining the amount of payment for drugs administered in an
outpatient setting shall be the lower of the usual and customary cost submitted by the
provider, 106 percent of the average sales price as determined by the United States
Department of Health and Human Services pursuant to title XVIII, section 1847a of the
federal Social Security Act, the specialty pharmacy rate, or the maximum allowable cost
set by the commissioner. If average sales price is unavailable, the amount of payment must
be lower of the usual and customary cost submitted by the provider, the wholesale acquisition
cost, the specialty pharmacy rate, or the maximum allowable cost set by the commissioner.
The commissioner shall discount the payment rate for drugs obtained through the federal
340B Drug Pricing Program by 28.6 percent. The payment for drugs administered in an
outpatient setting shall be made to the administering facility or practitioner. A retail or
specialty pharmacy dispensing a drug for administration in an outpatient setting is not
eligible for direct reimbursement.

(f) The commissioner may establish maximum allowable cost rates for specialty pharmacy
products that are lower than the ingredient cost formulas specified in paragraph (a). The
commissioner may require individuals enrolled in the health care programs administered
by the department to obtain specialty pharmacy products from providers with whom the
commissioner has negotiated lower reimbursement rates. Specialty pharmacy products are
defined as those used by a small number of recipients or recipients with complex and chronic
diseases that require expensive and challenging drug regimens. Examples of these conditions
include, but are not limited to: multiple sclerosis, HIV/AIDS, transplantation, hepatitis C,
growth hormone deficiency, Crohn's Disease, rheumatoid arthritis, and certain forms of
cancer. Specialty pharmaceutical products include injectable and infusion therapies,
biotechnology drugs, antihemophilic factor products, high-cost therapies, and therapies that
require complex care. The commissioner shall consult with the Formulary Committee to
develop a list of specialty pharmacy products subject to maximum allowable cost
reimbursement. In consulting with the Formulary Committee in developing this list, the
commissioner shall take into consideration the population served by specialty pharmacy
products, the current delivery system and standard of care in the state, and access to care
issues. The commissioner shall have the discretion to adjust the maximum allowable cost
to prevent access to care issues.

(g) Home infusion therapy services provided by home infusion therapy pharmacies must
be paid at rates according to subdivision 8d.

(h) The commissioner shall contract with a vendor to conduct a cost of dispensing survey
for all pharmacies that are physically located in the state of Minnesota that dispense outpatient
drugs under medical assistance. The commissioner shall ensure that the vendor has prior
experience in conducting cost of dispensing surveys. Each pharmacy enrolled with the
department to dispense outpatient prescription drugs to fee-for-service members must
respond to the cost of dispensing survey. The commissioner may sanction a pharmacy under
section 256B.064 for failure to respond. The commissioner shall require the vendor to
measure a single statewide cost of dispensing for specialty prescription drugs and a single
statewide cost of dispensing for nonspecialty prescription drugs for all responding pharmacies
to measure the mean, mean weighted by total prescription volume, mean weighted by
medical assistance prescription volume, median, median weighted by total prescription
volume, and median weighted by total medical assistance prescription volume. The
commissioner shall post a copy of the final cost of dispensing survey report on the
department's website. The initial survey must be completed no later than January 1, 2021,
and repeated every three years. The commissioner shall provide a summary of the results
of each cost of dispensing survey and provide recommendations for any changes to the
dispensing fee to the chairs and ranking members of the legislative committees with
jurisdiction over medical assistance pharmacy reimbursement.

deleted text begin (i) The commissioner shall increase the ingredient cost reimbursement calculated in
paragraphs (a) and (f) by 1.8 percent for prescription and nonprescription drugs subject to
the wholesale drug distributor tax under section 295.52.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2023.
new text end

Sec. 6.

Minnesota Statutes 2022, section 270B.14, subdivision 1, is amended to read:


Subdivision 1.

Disclosure to commissioner of human services.

(a) On the request of
the commissioner of human services, the commissioner shall disclose return information
regarding taxes imposed by chapter 290, and claims for refunds under chapter 290A, to the
extent provided in paragraph (b) and for the purposes set forth in paragraph (c).

(b) Data that may be disclosed are limited to data relating to the identity, whereabouts,
employment, income, and property of a person owing or alleged to be owing an obligation
of child support.

(c) The commissioner of human services may request data only for the purposes of
carrying out the child support enforcement program and to assist in the location of parents
who have, or appear to have, deserted their children. Data received may be used only as set
forth in section 256.978.

(d) The commissioner shall provide the records and information necessary to administer
the supplemental housing allowance to the commissioner of human services.

(e) At the request of the commissioner of human services, the commissioner of revenue
shall electronically match the Social Security numbers and names of participants in the
telephone assistance plan operated under sections 237.69 to 237.71, with those of property
tax refund filers, and determine whether each participant's household income is within the
eligibility standards for the telephone assistance plan.

deleted text begin (f) The commissioner may provide records and information collected under sections
295.50 to 295.59 to the commissioner of human services for purposes of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amendments of 1991, Public Law
102-234. Upon the written agreement by the United States Department of Health and Human
Services to maintain the confidentiality of the data, the commissioner may provide records
and information collected under sections 295.50 to 295.59 to the Centers for Medicare and
Medicaid Services section of the United States Department of Health and Human Services
for purposes of meeting federal reporting requirements.
deleted text end

deleted text begin (g)deleted text endnew text begin (f)new text end The commissioner may provide records and information to the commissioner of
human services as necessary to administer the early refund of refundable tax credits.

deleted text begin (h)deleted text endnew text begin (g)new text end The commissioner may disclose information to the commissioner of human
services as necessary for income verification for eligibility and premium payment under
the MinnesotaCare program, under section 256L.05, subdivision 2, as well as the medical
assistance program under chapter 256B.

deleted text begin (i)deleted text endnew text begin (h)new text end The commissioner may disclose information to the commissioner of human
services necessary to verify whether applicants or recipients for the Minnesota family
investment program, general assistance, the Supplemental Nutrition Assistance Program
(SNAP), Minnesota supplemental aid program, and child care assistance have claimed
refundable tax credits under chapter 290 and the property tax refund under chapter 290A,
and the amounts of the credits.

deleted text begin (j)deleted text endnew text begin (i)new text end The commissioner may disclose information to the commissioner of human services
necessary to verify income for purposes of calculating parental contribution amounts under
section 252.27, subdivision 2a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2023.
new text end

Sec. 7.

Minnesota Statutes 2022, section 289A.38, subdivision 6, is amended to read:


Subd. 6.

Omission in excess of 25 percent.

Additional taxes may be assessed within
6-1/2 years after the due date of the return or the date the return was filed, whichever is
later, if:

(1) the taxpayer omits from gross income an amount properly includable in it that is in
excess of 25 percent of the amount of gross income stated in the return;

(2) the taxpayer omits from a sales, use, or withholding tax returndeleted text begin, or a return for a tax
imposed under section 295.52,
deleted text end an amount of taxes in excess of 25 percent of the taxes
reported in the return; or

(3) the taxpayer omits from the gross estate assets in excess of 25 percent of the gross
estate reported in the return.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2023.
new text end

Sec. 8. new text beginREPEALER.
new text end

new text begin Minnesota Statutes 2022, sections 13.4967, subdivision 3; 295.50, subdivisions 1, 1a,
2, 2a, 2b, 3, 4, 6, 6a, 7, 7a, 9b, 9c, 10a, 10b, 10c, 12b, 13, 13a, 14, 15, and 16; 295.51,
subdivisions 1 and 1a; 295.52, subdivisions 1, 1a, 2, 3, 4, 4a, 5, 6, and 8; 295.53, subdivisions
1, 2, 3, and 4a; 295.54; 295.55; 295.56; 295.57; 295.58; 295.581; 295.582; and 295.59,
new text end new text begin and
new text end new text begin Minnesota Rules, parts 4650.0102, subpart 24e; and 4652.0100, subpart 20, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for gross revenues received after
December 31, 2023.
new text end

APPENDIX

Repealed Minnesota Statutes: 23-04857

13.4967 OTHER TAX DATA CODED ELSEWHERE.

Subd. 3.

Hospital and health care provider tax.

Certain patient data provided to the Department of Revenue under sections 295.50 to 295.59 are classified under section 295.57, subdivision 2.

295.50 DEFINITIONS.

Subdivision 1.

Definitions.

For purposes of sections 295.50 to 295.59, the following terms have the meanings given.

Subd. 1a.

Blood components.

"Blood components" means the parts of the blood that are separated from blood by physical or mechanical means and are intended for transfusion. Blood components do not include blood derivatives.

Subd. 2.

Commissioner.

"Commissioner" is the commissioner of revenue.

Subd. 2a.

Delivered outside of Minnesota.

"Delivered outside of Minnesota" means property which the seller delivers to a common carrier for delivery outside Minnesota, places in the United States mail or parcel post directed to the purchaser outside Minnesota, or delivers to the purchaser outside Minnesota by means of the seller's own delivery vehicles, and which is not later returned to a point within Minnesota, except in the course of interstate commerce.

Subd. 2b.

Emergency medical reasons.

"Emergency medical reasons" means a public health emergency declaration pursuant to United States Code, title 42, section 247d; a national security or peacetime emergency declared by the governor pursuant to section 12.31; or a situation involving an action by the commissioner of health pursuant to section 144.4197, 144.4198, or 151.37, subdivisions 2, paragraph (b), and 10, except that, for purposes of this subdivision, a drug shortage not caused by a public health emergency shall not constitute an emergency medical reason.

Subd. 3.

Gross revenues.

"Gross revenues" are total amounts received in money or otherwise by:

(1) a hospital for patient services;

(2) a surgical center for patient services;

(3) a health care provider, other than a staff model health plan company, for patient services;

(4) a wholesale drug distributor for sale or distribution of legend drugs that are delivered in Minnesota by the wholesale drug distributor, by common carrier, or by mail, unless the legend drugs are delivered to another wholesale drug distributor who sells legend drugs exclusively at wholesale; and

(5) a staff model health plan company as gross premiums for enrollees, co-payments, deductibles, coinsurance, and fees for patient services.

Subd. 4.

Health care provider.

(a) "Health care provider" means:

(1) a person whose health care occupation is regulated or required to be regulated by the state of Minnesota furnishing any or all of the following goods or services directly to a patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services, drugs, laboratory, diagnostic or therapeutic services;

(2) a person who provides goods and services not listed in clause (1) that qualify for reimbursement under the medical assistance program provided under chapter 256B;

(3) a staff model health plan company;

(4) an ambulance service required to be licensed;

(5) a person who sells or repairs hearing aids and related equipment or prescription eyewear; or

(6) a person providing patient services, who does not otherwise meet the definition of health care provider and is not specifically excluded in clause (b), who employs or contracts with a health care provider as defined in clauses (1) to (5) to perform, supervise, otherwise oversee, or consult with regarding patient services.

(b) Health care provider does not include:

(1) hospitals; medical supplies distributors, except as specified under paragraph (a), clause (5); nursing homes licensed under chapter 144A or licensed in any other jurisdiction; wholesale drug distributors; pharmacies; surgical centers; bus and taxicab transportation, or any other providers of transportation services other than ambulance services required to be licensed; supervised living facilities for persons with developmental disabilities, licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; housing with services establishments required to be registered under chapter 144D; board and lodging establishments providing only custodial services that are licensed under chapter 157 and registered under section 157.17 to provide supportive services or health supervision services; adult foster homes as defined in Minnesota Rules, part 9555.5105; day training and habilitation services for adults with developmental disabilities as defined in section 252.41, subdivision 3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day care centers as defined in Minnesota Rules, part 9555.9600;

(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15; a person providing personal care services and supervision of personal care services as defined in Minnesota Rules, part 9505.0335; a person providing home care nursing services as defined in Minnesota Rules, part 9505.0360; and home care providers required to be licensed under chapter 144A for home care services provided under chapter 144A;

(3) a person who employs health care providers solely for the purpose of providing patient services to its employees;

(4) an educational institution that employs health care providers solely for the purpose of providing patient services to its students if the institution does not receive fee for service payments or payments for extended coverage; and

(5) a person who receives all payments for patient services from health care providers, surgical centers, or hospitals for goods and services that are taxable to the paying health care providers, surgical centers, or hospitals, as provided under section 295.53, subdivision 1, paragraph (b), clause (3) or (4), or from a source of funds that is exempt from tax under this chapter.

Subd. 6.

Home health care services.

"Home health care services" are services:

(1) defined under the state medical assistance program as home health agency services provided by a home health agency, personal care services and supervision of personal care services, home care nursing services, and waivered services or services by home care providers required to be licensed under chapter 144A; and

(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing facility, as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with developmental disabilities as defined in section 256B.055, subdivision 12, paragraph (d).

Subd. 6a.

Hospice care services.

"Hospice care services" are services:

(1) as defined in Minnesota Rules, part 9505.0297; and

(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing facility as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with developmental disabilities as defined in section 256B.055, subdivision 12, paragraph (d).

Subd. 7.

Hospital.

"Hospital" means a hospital licensed under chapter 144, or a hospital licensed by any other jurisdiction.

Subd. 7a.

Manufacturer.

"Manufacturer" has the meaning provided in section 151.01, subdivision 14a.

Subd. 9b.

Patient services.

(a) "Patient services" means inpatient and outpatient services and other goods and services provided by hospitals, surgical centers, or health care providers. They include the following health care goods and services provided to a patient or consumer:

(1) bed and board;

(2) nursing services and other related services;

(3) use of hospitals, surgical centers, or health care provider facilities;

(4) medical social services;

(5) drugs, biologicals, supplies, appliances, and equipment;

(6) other diagnostic or therapeutic items or services;

(7) medical or surgical services;

(8) items and services furnished to ambulatory patients not requiring emergency care; and

(9) emergency services.

(b) "Patient services" does not include:

(1) services provided to nursing homes licensed under chapter 144A;

(2) examinations for purposes of utilization reviews, insurance claims or eligibility, litigation, and employment, including reviews of medical records for those purposes;

(3) services provided to and by community residential mental health facilities licensed under section 245I.23 or Minnesota Rules, parts 9520.0500 to 9520.0670, and to and by residential treatment programs for children with severe emotional disturbance licensed or certified under chapter 245A;

(4) services provided under the following programs: day treatment services as defined in section 245.462, subdivision 8; assertive community treatment as described in section 256B.0622; adult rehabilitative mental health services as described in section 256B.0623; crisis response services as described in section 256B.0624; and children's therapeutic services and supports as described in section 256B.0943;

(5) services provided to and by community mental health centers as defined in section 245.62, subdivision 2;

(6) services provided to and by assisted living programs and congregate housing programs;

(7) hospice care services;

(8) home and community-based waivered services under chapter 256S and sections 256B.49 and 256B.501;

(9) targeted case management services under sections 256B.0621; 256B.0625, subdivisions 20, 20a, 33, and 44; and 256B.094; and

(10) services provided to the following: supervised living facilities for persons with developmental disabilities licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; housing with services establishments required to be registered under chapter 144D; board and lodging establishments providing only custodial services that are licensed under chapter 157 and registered under section 157.17 to provide supportive services or health supervision services; adult foster homes as defined in Minnesota Rules, part 9555.5105; day training and habilitation services for adults with developmental disabilities as defined in section 252.41, subdivision 3; boarding care homes as defined in Minnesota Rules, part 4655.0100; adult day care services as defined in section 245A.02, subdivision 2a; and home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15, or licensed under chapter 144A.

Subd. 9c.

Person.

"Person" means an individual, partnership, limited liability company, corporation, association, governmental unit or agency, or public or private organization of any kind.

Subd. 10a.

Pharmacy.

"Pharmacy" means a pharmacy required to be licensed under chapter 151, or a pharmacy required to be licensed by any other jurisdiction.

Subd. 10b.

Regional treatment center.

"Regional treatment center" means a regional center as defined in section 253B.02, subdivision 18d.

Subd. 10c.

Pharmacy benefits manager.

"Pharmacy benefits manager" means an entity that performs pharmacy benefits management.

Subd. 12b.

Staff model health plan company.

"Staff model health plan company" means a health plan company as defined in section 62Q.01, subdivision 4, which employs one or more types of health care provider to deliver health care services to the health plan company's enrollees.

Subd. 13.

Surgical center.

"Surgical center" is an outpatient surgical center as defined in Minnesota Rules, chapter 4675, or a similar facility located in any other jurisdiction.

Subd. 13a.

Third-party purchaser of health care services.

"Third-party purchaser of health care services" includes but is not limited to a health carrier or community integrated service network that pays for health care services on behalf of patients or that reimburses, indemnifies, compensates, or otherwise insures patients for health care services.

Subd. 14.

Wholesale drug distributor.

"Wholesale drug distributor" means any person engaged in wholesale drug distribution including but not limited to manufacturers; repackagers; own-label distributors; jobbers; brokers; warehouses, including manufacturers' and distributors' warehouses, chain drug warehouses, and wholesale drug warehouses; independent wholesale drug traders; and pharmacies that conduct wholesale drug distribution. A wholesale drug distributor does not include a common carrier or individual hired primarily to transport legend drugs.

Subd. 15.

Legend drug.

"Legend drug" means a drug that is required by federal law to bear one of the following statements: "Caution: Federal law prohibits dispensing without prescription" or "Rx only." Legend drugs do not include nutritional products as defined in Minnesota Rules, part 9505.0325, subpart 1, and blood and blood components.

Subd. 16.

Wholesale drug distribution.

"Wholesale drug distribution" means the sale or distribution of legend drugs to a person other than a consumer or patient, but does not include:

(1) a sale between a division, subsidiary, parent, affiliated, or related company under the common ownership and control of a corporate entity;

(2) the purchase or other acquisition, by a hospital or other health care entity that is a member of a group purchasing organization, of a legend drug for its own use from the organization or from other hospitals or health care entities that are members of such organizations;

(3) the sale, purchase, or trade of a legend drug by a charitable organization described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1988, to a nonprofit affiliate of the organization to the extent otherwise permitted by law;

(4) the sale, purchase, or trade of a legend drug among hospitals or other health care entities that are under common control;

(5) the sale, purchase, or trade of a legend drug for emergency medical reasons;

(6) the transfer of legend drugs by a retail pharmacy to another retail pharmacy to alleviate a temporary shortage; or

(7) the distribution of legend drug samples by manufacturer representatives.

295.51 MINIMUM CONTACTS REQUIRED FOR JURISDICTION TO TAX GROSS REVENUE.

Subdivision 1.

Business transactions in Minnesota.

A hospital, surgical center, or health care provider is subject to tax under sections 295.50 to 295.59 if it is "transacting business in Minnesota." A hospital, surgical center, or health care provider is transacting business in Minnesota if it maintains contacts with or presence in the state of Minnesota sufficient to permit taxation of gross revenues received for patient services under the United States Constitution.

Subd. 1a.

Nexus in Minnesota.

(a) To the extent allowed by the United States Constitution and the laws of the United States, a person who is a wholesale drug distributor, a person subject to tax under section 295.52, subdivision 4, or a person who sells or repairs hearing aids and related equipment or prescription eyewear is subject to the taxes imposed by this chapter if the person:

(1) has or maintains within this state, directly or by a subsidiary or an affiliate, an office, place of distribution, sales, storage, or sample room or place, warehouse, or other place of business, including the employment of a resident of this state who works from a home office in this state;

(2) has a representative, including but not limited to an employee, affiliate, agent, salesperson, canvasser, solicitor, independent contractor, or other third party operating in this state under the person's authority or the authority of the person's subsidiary, for any purpose, including the repairing, selling, delivering, installing, facilitating sales, processing sales, or soliciting of orders for the person's goods or services, or the leasing of tangible personal property located in this state, whether the place of business or the agent, representative, affiliate, salesperson, canvasser, or solicitor is located in the state permanently or temporarily, or whether or not the person, subsidiary, or affiliate is authorized to do business in this state;

(3) owns or leases real property that is located in this state; or

(4) owns or leases tangible personal property that is present in this state, including but not limited to mobile property.

(b) To the extent allowed by the United States Constitution and the laws of the United States, a person who is a wholesale drug distributor, or a person who is subject to tax under section 295.52, subdivision 4, is subject to the taxes imposed by this chapter if the person:

(1) conducts a trade or business not described in paragraph (a) and sells, delivers, or distributes legend drugs from outside this state to a destination within this state by common carrier or otherwise; and

(2) meets one of the following thresholds:

(i) makes 200 or more sales, deliveries, or distributions described in clause (1) during any taxable year;

(ii) the gross revenues of a wholesale drug distributor that sells, delivers, or distributes legend drugs as described in clause (1) totals more than $100,000 during any taxable year; or

(iii) the price paid by a person who is subject to tax under section 295.52, subdivision 4, totals more than $100,000 for legend drugs that the person sells, delivers, or distributes as described in clause (1) during any taxable year.

(c) To the extent allowed by the United States Constitution and the laws of the United States, a person who sells or repairs hearing aids and related equipment or prescription eyewear is subject to the taxes imposed by this chapter if the person:

(1) conducts a trade or business not described in paragraph (a) and:

(i) sells, delivers, or distributes hearing aids and related equipment or prescription eyewear from outside of this state to a destination within this state by common carrier or otherwise; or

(ii) repairs hearing aids and related equipment or prescription eyewear outside of this state and delivers or distributes the hearing aids and related equipment or prescription eyewear to a destination within this state by common carrier or otherwise; and

(2) meets one of the following thresholds:

(i) makes 200 or more sales, deliveries, distributions, or repairs described in clause (1) during any taxable year; or

(ii) the gross revenues of the person who sells, delivers, distributes, or repairs hearing aids and related equipment or prescription eyewear described in clause (1) totals more than $100,000 during any taxable year.

(d) Once a taxpayer has established nexus with Minnesota under paragraph (b) or (c), the taxpayer must continue to file an annual return and remit taxes for subsequent years. A taxpayer who has established nexus under paragraph (b) or (c) is no longer required to file an annual return and remit taxes if the taxpayer:

(1) ceases to engage in the activities or no longer meets any of the applicable thresholds in paragraph (b) or (c) for an entire taxable year; and

(2) notifies the commissioner by March 15 of the following calendar year, in a manner prescribed by the commissioner, that the taxpayer no longer engages in any of the activities or no longer meets any of the applicable thresholds in paragraph (b) or (c).

(e) If, after notifying the commissioner pursuant to paragraph (d), the taxpayer subsequently engages in any of the activities and meets any of the applicable thresholds in paragraph (b) or (c), the taxpayer shall again comply with the applicable requirements of paragraphs (b) to (d).

295.52 TAXES IMPOSED.

Subdivision 1.

Hospital tax.

A tax is imposed on each hospital equal to 1.8 percent of its gross revenues.

Subd. 1a.

Surgical center tax.

A tax is imposed on each surgical center equal to 1.8 percent of its gross revenues.

Subd. 2.

Provider tax.

A tax is imposed on each health care provider equal to 1.8 percent of its gross revenues.

Subd. 3.

Wholesale drug distributor tax.

A tax is imposed on each wholesale drug distributor equal to 1.8 percent of its gross revenues.

Subd. 4.

Use tax; legend drugs.

(a) A person that receives legend drugs for resale or use in Minnesota, other than from a wholesale drug distributor that is subject to tax under subdivision 3, is subject to a tax equal to the price paid for the legend drugs multiplied by 1.8 percent. Liability for the tax is incurred when legend drugs are received or delivered in Minnesota by the person.

(b) A tax imposed under this subdivision does not apply to purchases by an individual for personal consumption.

Subd. 4a.

Tax collection.

A wholesale drug distributor with nexus in Minnesota, who is not subject to tax under subdivision 3, on all or a particular transaction is required to collect the tax imposed under subdivision 4, from the purchaser of the drugs and give the purchaser a receipt for the tax paid. The tax collected shall be remitted to the commissioner in the manner prescribed by section 295.55, subdivision 3.

Subd. 5.

Volunteer ambulance services.

Volunteer ambulance services are not subject to the tax under this section. For purposes of this requirement, "volunteer ambulance service" means an ambulance service in which all of the individuals whose primary responsibility is direct patient care meet the definition of volunteer under section 144E.001, subdivision 15. The ambulance service may employ administrative and support staff, and remain eligible for this exemption, if the primary responsibility of these staff is not direct patient care.

Subd. 6.

Hearing aids and prescription eyewear.

The tax liability of a person who meets the definition of a health care provider solely because the person sells or repairs hearing aids and related equipment or prescription eyewear is limited to the gross revenues received from the sale or repair of these items.

Subd. 8.

Contingent reduction in tax rate.

(a) By December 1 of each year, beginning in 2011, the commissioner of management and budget shall determine the projected balance in the health care access fund for the biennium.

(b) If the commissioner of management and budget determines that the projected balance in the health care access fund for the biennium reflects a ratio of revenues to expenditures and transfers greater than 125 percent, and if the actual cash balance in the fund is adequate, as determined by the commissioner of management and budget, the commissioner, in consultation with the commissioner of revenue, shall reduce the tax rates levied under subdivisions 1, 1a, 2, 3, and 4, for the subsequent calendar year sufficient to reduce the structural balance in the fund. The rate may be reduced to the extent that the projected revenues for the biennium do not exceed 125 percent of expenditures and transfers. The new rate shall be rounded to the nearest one-tenth of one percent. The rate reduction under this paragraph expires at the end of each calendar year and is subject to an annual redetermination by the commissioner of management and budget.

(c) For purposes of the analysis defined in paragraph (b), the commissioner of management and budget shall include projected revenues.

295.53 EXCLUSIONS AND EXEMPTIONS; SPECIAL RULES.

Subdivision 1.

Exclusions and exemptions.

(a) The following payments are excluded from the gross revenues subject to the hospital, surgical center, or health care provider taxes under sections 295.50 to 295.59:

(1) payments received by a health care provider or the wholly owned subsidiary of a health care provider for care provided outside Minnesota;

(2) government payments received by the commissioner of human services for state-operated services;

(3) payments received by a health care provider for hearing aids and related equipment or prescription eyewear delivered outside of Minnesota; and

(4) payments received by an educational institution from student tuition, student activity fees, health care service fees, government appropriations, donations, or grants, and for services identified in and provided under an individualized education program as defined in section 256B.0625 or Code of Federal Regulations, chapter 34, section 300.340(a). Fee for service payments and payments for extended coverage are taxable.

(b) The following payments are exempted from the gross revenues subject to hospital, surgical center, or health care provider taxes under sections 295.50 to 295.59:

(1) payments received for services provided under the Medicare program, including payments received from the government and organizations governed by sections 1833, 1853, and 1876 of title XVIII of the federal Social Security Act, United States Code, title 42, section 1395; and enrollee deductibles, co-insurance, and co-payments, whether paid by the Medicare enrollee, by Medicare supplemental coverage as described in section 62A.011, subdivision 3, clause (10), or by Medicaid payments under title XIX of the federal Social Security Act. Payments for services not covered by Medicare are taxable;

(2) payments received for home health care services;

(3) payments received from hospitals or surgical centers for goods and services on which liability for tax is imposed under section 295.52 or the source of funds for the payment is exempt under clause (1), (6), (9), (10), or (11);

(4) payments received from the health care providers for goods and services on which liability for tax is imposed under this chapter or the source of funds for the payment is exempt under clause (1), (6), (9), (10), or (11);

(5) amounts paid for legend drugs to a wholesale drug distributor who is subject to tax under section 295.52, subdivision 3, reduced by reimbursement received for legend drugs otherwise exempt under this chapter;

(6) payments received from the behavioral health fund under chapter 254B;

(7) payments received in the nature of charitable donations that are not designated for providing patient services to a specific individual or group;

(8) payments received for providing patient services incurred through a formal program of health care research conducted in conformity with federal regulations governing research on human subjects. Payments received from patients or from other persons paying on behalf of the patients are subject to tax;

(9) payments received from any governmental agency for services benefiting the public, not including payments made by the government in its capacity as an employer or insurer or payments made by the government for services provided under the MinnesotaCare program or the medical assistance program governed by title XIX of the federal Social Security Act, United States Code, title 42, sections 1396 to 1396v;

(10) payments received under the federal Employees Health Benefits Act, United States Code, title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of 1990. Enrollee deductibles, co-insurance, and co-payments are subject to tax;

(11) payments received under the federal Tricare program, Code of Federal Regulations, title 32, section 199.17(a)(7). Enrollee deductibles, co-insurance, and co-payments are subject to tax; and

(12) supplemental, enhanced, or uniform adjustment factor payments authorized under section 256B.196, 256B.197, or 256B.1973.

(c) Payments received by wholesale drug distributors for legend drugs sold directly to veterinarians or veterinary bulk purchasing organizations are excluded from the gross revenues subject to the wholesale drug distributor tax under sections 295.50 to 295.59.

Subd. 2.

Deductions for staff model health plan company.

In addition to the exemptions allowed under subdivision 1, a staff model health plan company may deduct from its gross revenues for the year:

(1) amounts paid to hospitals, surgical centers, and health care providers that are not employees of the staff model health plan company for services on which liability for the tax is imposed under section 295.52;

(2) net amounts added to reserves, to the extent that the amounts added do not cause total reserves to exceed 200 percent of the statutory net worth requirement, the calculation of which may be determined on a consolidated basis, taking into account the amounts held in reserve by affiliated staff model health plan companies;

(3) assessments for the comprehensive health insurance plan under section 62E.11; and

(4) amounts spent for administration as reported as total administration to the Department of Health in the statement of revenues, expenses, and net worth pursuant to section 62D.08, subdivision 3, clause (a).

Subd. 3.

Separate statement of tax.

A hospital, surgical center, health care provider, or wholesale drug distributor must not state the tax obligation under section 295.52 in a deceptive or misleading manner. It must not separately state tax obligations on bills provided to patients, consumers, or other payers when the amount received for the services or goods is not subject to tax.

Pharmacies that separately state the tax obligations on bills provided to consumers or to other payers who purchase legend drugs may state the tax obligation as the wholesale price of the legend drugs multiplied by the tax percentage specified in section 295.52. Pharmacies must not state the tax obligation based on the retail price.

Whenever the commissioner determines that a person has engaged in any act or practice constituting a violation of this subdivision, the commissioner may bring an action in the name of the state in the district court of the appropriate county to enjoin the act or practice and to enforce compliance with this subdivision, or the commissioner may refer the matter to the attorney general or the county attorney of the appropriate county. Upon a proper showing, a permanent or temporary injunction, restraining order, or other appropriate relief must be granted.

Subd. 4a.

Credit for research.

(a) In addition to the exemptions allowed under subdivision 1, a hospital or health care provider may claim an annual credit against the total amount of tax, if any, the hospital or health care provider owes for that calendar year under sections 295.50 to 295.57. The credit shall equal 2.5 percent of revenues for patient services used to fund expenditures for qualifying research conducted by an allowable research program. The amount of the credit shall not exceed the tax liability of the hospital or health care provider under sections 295.50 to 295.57.

(b) For purposes of this subdivision, the following requirements apply:

(1) expenditures must be for program costs of qualifying research conducted by an allowable research program;

(2) an allowable research program must be a formal program of medical and health care research conducted by an entity which is exempt under section 501(c)(3) of the Internal Revenue Code as defined in section 289A.02, subdivision 7, or is owned and operated under authority of a governmental unit;

(3) qualifying research must:

(A) be approved in writing by the governing body of the hospital or health care provider which is taking the deduction under this subdivision;

(B) have as its purpose the development of new knowledge in basic or applied science relating to the diagnosis and treatment of conditions affecting the human body;

(C) be subject to review by individuals with expertise in the subject matter of the proposed study but who have no financial interest in the proposed study and are not involved in the conduct of the proposed study; and

(D) be subject to review and supervision by an institutional review board operating in conformity with federal regulations if the research involves human subjects or an institutional animal care and use committee operating in conformity with federal regulations if the research involves animal subjects. Research expenses are not exempt if the study is a routine evaluation of health care methods or products used in a particular setting conducted for the purpose of making a management decision. Costs of clinical research activities paid directly for the benefit of an individual patient are excluded from this exemption. Basic research in fields including biochemistry, molecular biology, and physiology are also included if such programs are subject to a peer review process.

(c) No credit shall be allowed under this subdivision for any revenue received by the hospital or health care provider in the form of a grant, gift, or otherwise, whether from a government or nongovernment source, on which the tax liability under section 295.52 is not imposed.

(d) The taxpayer shall apply for the credit under this section on the annual return under section 295.55, subdivision 5.

(e) Beginning September 1, 2001, if the actual or estimated amount paid under this section for the calendar year exceeds $2,500,000, the commissioner of management and budget shall determine the rate of the research credit for the following calendar year to the nearest one-half percent so that refunds paid under this section will most closely equal $2,500,000. The commissioner of management and budget shall publish in the State Register by October 1 of each year the rate of the credit for the following calendar year. A determination under this section is not subject to the rulemaking provisions of chapter 14.

295.54 CREDIT FOR TAXES PAID.

Subdivision 1.

Taxes paid to another state.

A hospital, surgical center, or health care provider that has paid taxes to another jurisdiction measured by gross revenues and is subject to tax under sections 295.52 to 295.59 on the same gross revenues is entitled to a credit for the tax legally due and paid to another jurisdiction to the extent of the lesser of (1) the tax actually paid to the other jurisdiction, or (2) the amount of tax imposed by Minnesota on the gross revenues subject to tax in the other taxing jurisdictions.

Subd. 2.

Pharmacy refund.

A pharmacy may claim an annual refund against the total amount of tax, if any, the pharmacy owes during that calendar year under section 295.52, subdivision 4. The refund shall equal the amount paid by the pharmacy to a wholesale drug distributor subject to tax under section 295.52, subdivision 3, for legend drugs delivered by the pharmacy outside of Minnesota, multiplied by the tax percentage specified in section 295.52, subdivision 3. If the amount of the refund exceeds the tax liability of the pharmacy under section 295.52, subdivision 4, the commissioner shall provide the pharmacy with a refund equal to the excess amount. Each qualifying pharmacy must apply for the refund on the annual return as prescribed by the commissioner, on or before March 15 of the year following the calendar year the legend drugs were delivered outside Minnesota. The refund shall not be allowed if the initial claim for refund is filed more than one year after the original due date of the return. Interest on refunds paid under this subdivision will begin to accrue 60 days after the date a claim for refund is filed. For purposes of this subdivision, the date a claim is filed is the due date of the return if a return is due or the date of the actual claim for refund, whichever is later.

Subd. 3.

Wholesale drug distributor credit.

A wholesale drug distributor who has paid taxes to another state or province or territory of Canada measured by gross revenues or sales and is subject to tax under sections 295.52 to 295.59 on the same gross revenues or sales is entitled to a credit for the tax legally due and paid to another state or province or territory of Canada to the extent of the lesser of (1) the tax actually paid to the other state or province or territory of Canada or (2) the amount of tax imposed by Minnesota on the gross revenues or sales subject to tax in the other taxing jurisdictions.

295.55 PAYMENT OF TAX.

Subdivision 1.

Scope.

The provisions of this section apply to the taxes imposed under sections 295.50 to 295.58.

Subd. 2.

Estimated tax; hospitals; surgical centers.

(a) Each hospital or surgical center must make estimated payments of the taxes for the calendar year in monthly installments to the commissioner within 15 days after the end of the month.

(b) Estimated tax payments are not required of hospitals or surgical centers if: (1) the tax for the current calendar year is $500 or less; or (2) the tax for the previous calendar year is $500 or less.

(c) Underpayment of estimated installments bear interest at the rate specified in section 270C.40, from the due date of the payment until paid or until the due date of the annual return whichever comes first. An underpayment of an estimated installment is the difference between the amount paid and the lesser of (1) 90 percent of one-twelfth of the tax for the calendar year or (2) one-twelfth of the total tax for the previous calendar year.

Subd. 3.

Estimated tax; other taxpayers.

(a) Each taxpayer, other than a hospital or surgical center, must make estimated payments of the taxes for the calendar year in quarterly installments to the commissioner by April 15, July 15, October 15, and January 15 of the following calendar year.

(b) Estimated tax payments are not required if: (1) the tax for the current calendar year is $500 or less; or (2) the tax for the previous calendar year is $500 or less.

(c) Underpayment of estimated installments bear interest at the rate specified in section 270C.40, from the due date of the payment until paid or until the due date of the annual return whichever comes first. An underpayment of an estimated installment is the difference between the amount paid and the lesser of (1) 90 percent of one-quarter of the tax for the calendar year or (2) one-quarter of the total tax for the previous calendar year.

Subd. 4.

Electronic payments.

A taxpayer with an aggregate tax liability of $10,000 or more in a fiscal year ending June 30 must remit all liabilities by electronic means in all subsequent calendar years.

Subd. 5.

Annual return.

The taxpayer must file an annual return reconciling the estimated payments by March 15 of the following calendar year.

Subd. 6.

Form of returns.

The commissioner shall prescribe the content, format, and manner of the estimated payment forms and annual return pursuant to section 270C.30.

Subd. 7.

Extensions for filing returns.

If good cause exists, the commissioner may extend the time for filing MinnesotaCare tax returns for not more than 60 days.

295.56 TRANSFER OF ACCOUNTS RECEIVABLE.

When a hospital, surgical center, health care provider, or wholesale drug distributor transfers, assigns, or sells accounts receivable to another person who is subject to tax under this chapter, liability for the tax on the accounts receivable is imposed on the transferee, assignee, or buyer of the accounts receivable. No liability for these accounts receivable is imposed on the transferor, assignor, or seller of the accounts receivable.

295.57 COLLECTION AND ENFORCEMENT; REFUNDS; APPLICATION OF OTHER CHAPTERS; ACCESS TO RECORDS; INTEREST ON OVERPAYMENTS.

Subdivision 1.

Application of other chapters.

Unless specifically provided otherwise by sections 295.50 to 295.59, the interest, criminal penalties, and refunds provisions in chapter 289A, the civil penalty provisions applicable to withholding and sales taxes under section 289A.60, and the audit, assessment, appeal, collection, enforcement, and administrative provisions of chapters 270C and 289A, apply to taxes imposed under sections 295.50 to 295.59.

Subd. 2.

Access to records.

For purposes of administering the taxes imposed by sections 295.50 to 295.59, the commissioner may access patients' records that contain billing or other financial information without prior consent from the patients. The data collected is classified as private or nonpublic data.

Subd. 3.

Interest on overpayments.

Interest must be paid on an overpayment refunded or credited to the taxpayer in the manner provided in section 289A.56, subdivision 2.

Subd. 4.

Sampling techniques.

The commissioner may use statistical or other sampling techniques consistent with generally accepted auditing standards in examining returns or records and making assessments.

Subd. 5.

Exemption for amounts paid for legend drugs.

If a hospital, surgical center, or health care provider cannot determine the actual cost or reimbursement of legend drugs under the exemption provided in section 295.53, subdivision 1, paragraph (b), clause (5), the following method must be used:

A hospital, surgical center, or health care provider must determine the amount paid for legend drugs used during the month or quarter and multiply that amount by a ratio, the numerator of which is the total amount received for taxable patient services, and the denominator of which is the total amount received for all patient services, including amounts exempt under section 295.53, subdivision 1, paragraph (b). The result represents the allowable exemption for the monthly or quarterly cost of drugs.

295.58 DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.

The commissioner shall deposit all revenues, including penalties and interest, derived from the taxes imposed by sections 295.50 to 295.57 and from the insurance premiums tax imposed by section 297I.05, subdivision 5, on health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations in the health care access fund. There is annually appropriated from the health care access fund to the commissioner of revenue the amount necessary to make refunds under this chapter.

295.581 PROHIBITION ON NON-MINNESOTACARE TRANSFERS FROM FUND.

Notwithstanding any law to the contrary, and notwithstanding section 645.33, money in the health care access fund shall be appropriated only for purposes that are consistent with past and current MinnesotaCare appropriations in Laws 1992, chapter 549; Laws 1993, chapter 345; Laws 1994, chapter 625; and Laws 1995, chapter 234, or for initiatives that are part of the section 1115 of the Social Security Act health care reform waiver submitted to the federal Centers for Medicare and Medicaid Services by the commissioner of human services as appropriated in Laws 1995, chapter 234.

295.582 AUTHORITY.

Subdivision 1.

Tax expense transfer.

(a) The tax expense generated by section 295.52 may be transferred as follows:

(1) a hospital, surgical center, or health care provider subject to the tax under section 295.52 may transfer the tax expense to all third-party contracts for the purchase of health care services on behalf of a patient or consumer;

(2) a wholesale drug distributor subject to the tax under section 295.52 may transfer the tax expense to entities that purchase legend drugs from the wholesale drug distributor; and

(3) a pharmacy that has paid the tax expense transferred by a wholesale drug distributor may transfer the tax expense to all third-party contracts for the purchase of health care services on behalf of a patient or consumer. Nothing shall prohibit a pharmacy from transferring the tax expense generated under section 295.52 to a pharmacy benefits manager.

(b) The transfer of the tax expense under paragraph (a) must comply with the following:

(1) the tax expense transferred to the third-party purchaser or a pharmacy benefits manager must not exceed the tax percentage specified in section 295.52 multiplied against:

(i) gross revenues received under the third-party contract; and

(ii) co-payments and deductibles paid by the individual patient or consumer; and

(2) the tax expense must not be generated on revenues derived from payments that are excluded or exempted from the tax under section 295.53.

(c) Payment of the transferred tax expense is required as follows:

(1) all third-party purchasers of health care services, including but not limited to third-party purchasers regulated under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A, or under section 471.61 or 471.617, and pharmacy benefits managers must pay the transferred expense. This is in addition to any payments due under existing contracts with the hospital, surgical center, pharmacy, or health care provider, to the extent allowed under federal law; and

(2) all entities that purchase legend drugs from a wholesale drug distributor must pay the transferred expense.

(d) A third-party purchaser or pharmacy benefits manager must comply with this section regardless of whether the third-party purchaser or pharmacy benefits manager is a for-profit, not-for-profit, or nonprofit entity.

(e) Nothing in this section limits the ability of a hospital, surgical center, health care provider, pharmacy, or wholesale drug distributor to recover all or part of the section 295.52 obligation by other methods, including increasing fees or charges.

(f) Any hospital, surgical center, or health care provider subject to a tax under section 295.52 or a pharmacy that has paid the additional expense transferred under this section by a wholesale drug distributor may file a complaint with the commissioner responsible for regulating the third-party purchaser if at any time the third-party purchaser fails to comply with this section.

(g) If the commissioner responsible for regulating the third-party purchaser finds at any time that the third-party purchaser has not complied with this section, the commissioner may take enforcement action against a third-party purchaser which is subject to the commissioner's regulatory jurisdiction and which does not allow a hospital, surgical center, pharmacy, or provider to pass-through the tax expense. The commissioner may by order fine or censure the third-party purchaser or revoke or suspend the certificate of authority or license of the third-party purchaser to do business in this state if the commissioner finds that the third-party purchaser has not complied with this section. The third-party purchaser may appeal the commissioner's order through a contested case hearing in accordance with chapter 14.

Subd. 2.

Agreement.

A contracting agreement between a third-party purchaser or a pharmacy benefits manager and a resident or nonresident pharmacy registered under chapter 151, may not prohibit:

(1) a pharmacy that has paid additional expense transferred under this section by a wholesale drug distributor from exercising its option under this section to transfer such additional expenses generated by the section 295.52 obligations on to the third-party purchaser or pharmacy benefits manager; or

(2) a pharmacy that is subject to tax under section 295.52, subdivision 4, from exercising its option under this section to recover all or part of the section 295.52 obligations from the third-party purchaser or a pharmacy benefits manager.

295.59 SEVERABILITY.

If any section, subdivision, clause, or phrase of sections 295.50 to 295.582 is for any reason held to be unconstitutional or in violation of federal law, the decision shall not affect the validity of the remaining portions of sections 295.50 to 295.582. The legislature declares that it would have passed sections 295.50 to 295.582 and each section, subdivision, sentence, clause, and phrase thereof, irrespective of the fact that any one or more sections, subdivisions, sentences, clauses, or phrases is declared unconstitutional.

Repealed Minnesota Rule: 23-04857

4650.0102 DEFINITIONS.

Subp. 24e.

MinnesotaCare tax.

"MinnesotaCare tax" means expenses for the MinnesotaCare tax under Minnesota Statutes, sections 295.52 and 295.582. For purposes of reporting under part 4650.0112, the MinnesotaCare tax is an operating expense.

4652.0100 DEFINITIONS.

Subp. 20.

MinnesotaCare tax expenses.

"MinnesotaCare tax expenses" means all payments made for the MinnesotaCare tax under Minnesota Statutes, sections 295.52 and 295.582.