Revision: June 15, 2014, midnight
SB -369-FN-A - VERSION ADOPTED BY BOTH BODIES
03/13/14 0862s
03/13/14 0960s
03/27/14 1075s
14May2014… 1803h
06/04/14…2004CofC
2014 SESSION
10/01
SENATE BILL 369-FN-A
AN ACT relative to the Medicaid enhancement tax.
SPONSORS: Sen. Odell, Dist 8; Rep. Major, Rock 14
This bill revises services taxable under the Medicaid enhancement tax and clarifies that the Medicaid enhancement tax is a health care-related tax. The bill removes the application of the Medicaid enhancement tax to special hospitals for rehabilitation. The bill also changes the payment schedule for the tax and the method for collecting overdue tax payments.
This bill prescribes expenditures from the uncompensated care and Medicaid fund.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/13/14 0862s
03/13/14 0960s
03/27/14 1075s
14May2014… 1803h
06/04/14…2004CofC
14-2699
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Fourteen
AN ACT relative to the Medicaid enhancement tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Medicaid Enhancement Tax; Definition; Hospital. Amend RSA 84-A:1, III to read as follows:
III. “Hospital” means general hospitals [and special hospitals for rehabilitation] required to be licensed under RSA 151 that provide inpatient and outpatient hospital services, but not including government facilities.
2 New Paragraph: Medicaid Enhancement Tax; Definition; Inpatient Hospital Services. Amend RSA 84-A:1 by inserting after paragraph III the following new paragraph:
III-a. “Inpatient hospital services” means those services that are classified as inpatient hospital services for purposes of section 1903(w) of the Social Security Act, and are defined in 42 C.F.R section 440.10, regardless of the patient receiving the service or the payor for that service.
3 New Paragraph; Medicaid Enhancement Tax; Definition; Outpatient Hospital Services. Amend RSA 84-A:1 by inserting after paragraph IV-a the following new paragraph:
IV-b. “Outpatient hospital services” means those services that are classified as outpatient hospital services for purposes of section 1903(w) of the Social Security Act, and are defined in 42 C.F.R. section 440.20, regardless of the patient receiving the service or the payor for that service.
4 Medicaid Enhancement Tax; Definition; Net Patient Services Revenue. Amend RSA 84-A:1, IV-a to read as follows:
IV-a. “Net patient services revenue” means the gross charges of the hospital for inpatient and outpatient hospital services less any deducted amounts for bad debts, charity care, and payor discounts. “Net patient services revenue” shall include revenues received from the state’s uncompensated care account and revenues received from all payers of inpatient and outpatient [patient care] hospital services.
5 Imposition of Tax. RSA 84-A:2 is repealed and reenacted to read as follows:
84-A:2 Imposition of Tax.
I. For the taxable period ending June 30, 2014, a tax is imposed at a rate of 5.5 percent upon the net patient services revenue of every hospital for the hospital's fiscal year ending during the first full calendar year preceding the taxable period.
II. For the taxable period ending June 30, 2015, a tax is imposed at a rate of 5.5 percent upon the net patient services revenue of every hospital for the hospital’s fiscal year ending during the calendar year in which the taxable period begins.
III. For the taxable period ending June 30, 2016, a tax is imposed at a rate of 5.45 percent upon the net patient services revenue of every hospital for the hospital’s fiscal year ending during the calendar year in which the taxable period begins.
IV. For the taxable period ending June 30, 2017, a tax is imposed at a rate of 5.4 percent upon the net patient services revenue of every hospital for the hospital’s fiscal year ending during the calendar year in which the taxable period begins.
V. For the taxable period ending June 30, 2018, and for every taxable period thereafter, a tax is imposed at a rate of 5.4 percent upon the net patient services revenue of every hospital for the hospital’s fiscal year ending during the calendar year in which the taxable period begins unless the total aggregate uncompensated care for hospitals with both a critical and a noncritical access hospital designation falls below $375 million, at which point the tax rate shall be 5.25 percent.
6 Tax Due; Offset For Past Due Payments. RSA 84-A:3 is repealed and reenacted to read as follows:
84-A:3 Tax Due; Offset for Past Due Payments.
I. For the taxable period beginning July 1, 2014, and for every taxable period thereafter, each hospital shall pay 100 percent of its Medicaid enhancement tax due and payable for the taxable period no later than the fifteenth day of April.
II. Payments due under this section which are past due from any hospital by more than 60 days may be collected from such hospital by means of offset against any amounts due and payable to such hospital by any program operated by the department of health and human services including, but not limited to, programs of medical assistance authorized under the Title XIX or XXI of the Social Security Act and operated by the department of health and human services, or any other state program under which the state purchases services from such a hospital. The department of revenue administration shall establish a plan for reporting the necessary information to the department of health and human services or other appropriate state department to collect offsets under this section.
7 Returns. Amend RSA 84-A:4 to read as follows:
84-A:4 Returns. Every hospital shall on or before the [tenth] fifteenth day of [the month following the expiration of] April in the taxable period make a return to the commissioner. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the form of such return and the data which it must contain for the correct computation of net patient services revenue and the tax assessed upon such amount. All returns shall be signed by the taxpayer or by its authorized representative, subject to the pains and penalties of perjury. If such return shows an overpayment of the tax due, the commissioner shall refund or credit the overpayment to the hospital in accordance with RSA 21-J:28-a. Every hospital shall on or before January 15 in the taxable period make a nonbinding estimate of its projected tax payment.
8 Method of Payment; Reference Corrected. Amend RSA 84-A:5, I to read as follows:
I. The payments required by RSA 84-A:3[, II-a] shall be made by electronic transfer of moneys to the state treasurer and deposited to the uncompensated care and Medicaid fund established by RSA?167:64.
9 New Sections; Medicaid Enhancement Taxes; Declaration of Intent; Severability. Amend RSA?84-A by inserting after section 13 the following new sections:
84-A:14 Declaration of Intent. It is the declared intent of this chapter to provide for the consistent, equitable, and rational taxation of revenue received from inpatient hospital services and outpatient hospital services, which are 2 separate and distinct classes of property and are permissible classes of health care-related services which may be taxed in accordance with federal law to ensure access to Federal Financial Participation. In addition, it is the declared intent of this chapter to enact a health care-related tax, as permitted under section 1903(w) of the Social Security Act, upon the revenue derived from inpatient and outpatient hospital services, which are distinct from other classes of health care services, are subject to a different reimbursement methodology for public payors, are subject to different licensing and certification requirements, are potentially eligible for uncompensated care payments under the disproportionate share hospital program, and which provide a necessary, rational, and demonstrated public health benefit.
84-A:15 Severability. If any provision of this chapter or the application thereof to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of the chapter which can be given effect without the invalid provisions or applications, and to this end the provisions of this chapter are severable. This severability clause shall apply to the application of this chapter to revenue from inpatient hospital services and outpatient hospital services, such that the invalidity of either shall not affect the application of the statute to the other.
10 Substantial Understatement Penalty. Amend RSA 21-J:33-a, I to read as follows:
I. If there is a substantial understatement of tax imposed under RSA 77, RSA 77-A, RSA 77-E, RSA 78-A, RSA 78-C, RSA 82-A [or] RSA 83-C, [or] RSA 83-E, or RSA 84-A for any taxable period, there shall be added to the tax an amount equal to 25 percent of the amount of any underpayment attributable to such understatement.
11 Medicaid Enhancement Tax; Definition; Uncompensated Care and Medicaid Fund. Amend RSA 84-A:1, VI to read as follows:
VI. “Uncompensated care and Medicaid fund” means the fund established in RSA 167:64 to reimburse hospitals for costs associated with uncompensated care and shortfalls in publicly funded programs.
12 Subdivision Heading. Amend the subdivision heading preceding RSA 167:63 to read as follows:
Uncompensated Care and Medicaid Fund
13 Uncompensated Care and Medicaid Fund. RSA 167:64 is repealed and reenacted to read as follows:
167:64 Uncompensated Care and Medicaid Fund.
I. There is hereby established in the state treasury an uncompensated care and Medicaid fund which shall consist of the moneys collected pursuant to RSA 84-A. Investment earnings of the fund shall be credited to the fund. Moneys paid into the fund shall be exempt from any state budget reductions, and the commissioner is authorized to expend these funds, together with matching federal funds, as follows:
(a)(1) The commissioner shall provide reimbursement for uncompensated care costs in accordance with the approved schedule of payments through either Medicaid rate adjustments or disproportionate share hospital payment adjustments, or a combination thereof, provided however that no hospital shall receive any such reimbursement for uncompensated care costs unless it is a qualified hospital as defined in subparagraph (b)(1). Funds available under this section shall also be used to make provider payments and to support Medicaid services and programs administered by the department in amounts directed by the budget in each year of the biennium.
(2) Expenditure of revenues deposited to the uncompensated care and Medicaid fund shall be made for the following purposes in the following order of priority in fiscal year 2015:
(A) To support medical provider payments as budgeted in each year of the biennium;
(B) To make disproportionate share hospital payments to support up to 75 percent of the uncompensated care costs of New Hampshire’s hospitals with critical access designation consistent with the requirements of 42 U.S.C. section 1396r-4(g) and any relevant federal regulations promulgated thereunder as budgeted in each year of the biennium based on available funding, to be shared among such hospitals in proportion to the amount of uncompensated care provided;
(C) To make disproportionate share hospital payments to support the uncompensated care costs of New Hampshire’s general hospitals without critical access designation shared among such hospitals consistent with the requirements of 42 U.S.C. section 1396r-4(g) and any relevant federal regulations promulgated thereunder in proportion to the amount of uncompensated care provided with funds available from net Medicaid enhancement tax revenue received by the state in fiscal year 2015 in excess of $190,300,000; and
(D) To make a disproportionate share hospital payment to each hospital that meets the criteria set forth for “deemed disproportionate share hospitals” as that term is defined under 42 U.S.C. section 1396r-4 up to an amount as budgeted in each year of the biennium based on available funding.
(3) Subject to subparagraph (a)(3)(D), expenditure of revenues deposited to the uncompensated care and Medicaid fund shall be made for the following purposes in the following order of priority in fiscal years 2016, 2017, 2018, and 2019, and in addition in fiscal years 2016, 2017, 2018, and 2019, if New Hampshire hospitals’ total aggregate uncompensated care costs as reported to the department in any such fiscal year is less than $350,000,000, the state shall pay New Hampshire’s hospitals not less than $175,000,000 in disproportionate share hospital payments, shared among such hospitals in proportion to the amount of uncompensated care provided; provided that New Hampshire hospitals with a critical access hospital designation shall continue to receive reimbursements of no less than 75 percent of each hospital’s uncompensated care costs and no hospital shall be paid disproportionate share hospital payments of more than 100 percent of uncompensated care costs:
(A) To make disproportionate share hospital payments to New Hampshire hospitals with and without critical access designation in the following order of priority, provided that, in fiscal years 2016 and 2017, the New Hampshire hospitals shall not be paid more than a cap of $224,000,000 in disproportionate share hospital payments and in fiscal years 2018 and 2019 the New Hampshire hospitals shall not be paid more than a cap of $241,900,000 in disproportionate share hospital payments:
(i) To support 75 percent of the uncompensated care costs of New Hampshire’s hospitals with critical access designation consistent with the requirements of 42 U.S.C. section 1396r-4(g) and any relevant federal regulations promulgated thereunder to be shared among such hospitals in proportion to the amount of uncompensated care provided;
(ii) To make disproportionate share hospital payments to support 50 percent of the uncompensated care costs of New Hampshire’s hospitals without critical access hospital designation in fiscal year 2016 and 2017 and 55 percent of uncompensated care costs of New Hampshire’s hospitals without critical access hospital designation in fiscal year 2018 and fiscal year 2019 and in fiscal years thereafter consistent with the requirements of 42 U.S.C. section 1396r-4(g) and any relevant federal regulations promulgated thereunder in proportion to the amount of uncompensated care provided and up to the remaining amount of the applicable cap set forth in subparagraph (a)(3)(A), but not less than the amount guaranteed in disproportionate share hospital payments as set forth in subparagraph (a)(3); and
(B) To make a disproportionate share hospital payment to each hospital that meets the criteria set forth for “deemed disproportionate share hospitals” as that term is defined under 42 U.S.C. section 1396r-4 up to an amount as budgeted in each year of the biennium.
(C) Any remaining funds produced from the Medicaid enhancement tax shall be used to support provider payments and to support Medicaid services and programs administered by the department.
(D) Notwithstanding any provision to the contrary, in each of fiscal years 2016, 2017, 2018, and 2019, the amount of uncompensated care reimbursed to non-critical access hospitals shall be reduced in both state contribution and federal match by any shortfall in net Medicaid enhancement tax revenues received below the following thresholds: fiscal year 2016 - $220.5 million; fiscal year 2017 - $228.1 million; fiscal year 2018 - $235.9 million; and fiscal year 2019 - $243.4 million. However, to the extent the aggregate uncompensated care for all hospitals falls below $375 million and the Medicaid enhancement tax rate is further reduced as set forth in RSA 84-A:2, V, then the threshold for fiscal year 2018 shall be $229.4 million and for fiscal year 2019 shall be $235.7 million. Further, the caps in subparagraph (a)(3)(A) and the reimbursements and caps in subparagraph (a)(3)(A)(ii) shall be reduced by 85 percent of the difference between total Medicaid enhancement tax revenue calculated at 5.5 percent of net patient services revenue and Medicaid enhancement tax revenue at the current tax rate for the applicable fiscal year.
(b)(1) The commissioner is hereby authorized and directed to develop and implement a schedule of payments for reimbursement of the uncompensated care costs consistent with the level of funding made available for such payments in each year of any biennium, incurred by those hospitals that are qualified as follows:?
(A) The hospital is a “deemed disproportionate share hospital” as defined by criteria set forth under 42 U.S.C. section 1396r-4 and is not otherwise receiving a disproportionate share hospital payment, or
(B) The hospital:
(i) Meets the minimum criteria for disproportionate share eligibility under relevant federal statutory changes at 42 U.S.C. 1396r-4(d);
(ii) Is not a special hospital for rehabilitation; and
(iii) Participates in the provider network of the state Medicaid care management program.?
(2) The reimbursement of uncompensated care costs paid in state fiscal year 2015 and thereafter shall be in accordance with the schedule of payments to hospitals consistent with this section and shall be structured in a manner that is consistent with all federal laws and regulations governing (i) Title XIX disproportionate share hospital payment adjustments and other rate payments, (ii) conditions for receiving federal financial participation, and (iii) permissible sources of state financial participation as provided for under 42 C.F.R. part 433 and all other applicable federal regulations. Disproportionate share hospital payments shall be made under this paragraph by May 31 in any fiscal year.
(c) For purposes of this section, uncompensated care costs shall include: any charity care cost, and any portion of Medicaid-covered patient care costs unreimbursed by Medicaid payments, that the commissioner determines would meet the criteria under 42 U.S.C. section 1396r-4(g) governing hospital-specific limits on disproportionate share hospital payments under Title XIX of the Social Security Act and the provisions of all federal regulations promulgated thereunder.
(d) One percent of the funds made available for uncompensated care payments shall be placed in a separate class line reserved for the expenses of the department in administering this subdivision.
II. Moneys in the uncompensated care and Medicaid fund shall be continually appropriated to the department for the purposes of this subdivision.
III. The department shall secure all necessary waivers pursuant to 42 C.F.R. section 433.68 and approvals of state plan amendments from the Centers for Medicare and Medicaid Services (CMS).
IV. Payment of disproportionate share hospital payments under this section is contingent upon New Hampshire receiving a sufficient federal Medicaid disproportionate share hospital allotment from CMS.
14 Uncompensated Care Fund; Definition; Hospital. Amend RSA 167:63, IV to read as follows:
IV. “Hospital” means general hospitals [and special hospitals for rehabilitation] required to be licensed under RSA 151, but not including government facilities.
15 Operating Budget; Department of Health and Human Services; Provider Payments. Amend 2013, 143.1, 05, 95, 47, 470010, 7940, estimated source of funds for provider payments, to read as follows:
ESTIMATED SOURCE OF FUNDS FOR
PROVIDER PAYMENTS
007 Agency Income 18,601,359 19,078,123
009 Agency Income [81,691,149] 153,891,149 [90,291,149] 163,991,149
FEDERAL FUNDS 229,814,212 219,781,567
GENERAL FUNDS [115,098,935] 42,898,935 [95,750,212] 22,050,212
TOTAL SOURCE OF FUNDS 445,205,655 424,901,051
16 Estimates Revenues. Amend 2013, 143:17 to read as follows:
143:17 Estimates of Unrestricted Revenue.
GENERAL FUND FY 2014 FY 2015
BUSINESS PROFITS TAX $276,010,000 $281,700,000
BUSINESS ENTERPRISE TAX 73,600,000 75,100,000
SUBTOTAL BUSINESS TAXES 349,610,000 356,800,000
MEALS AND ROOMS TAX 242,400,000 247,360,000
TOBACCO TAX 127,000,000 121,900,000
TRANSFER FROM LIQUOR 133,400,000 136,800,000
INTEREST AND DIVIDENDS TAX 96,100,000 98,000,000
INSURANCE 86,900,000 109,500,000
COMMUNICATIONS TAX 62,500,000 62,500,000
REAL ESTATE TRANSFER TAX 63,575,000 64,835,000
COURT FINES & FEES 13,000,000 13,000,000
SECURITIES REVENUE 37,600,000 37,600,000
UTILITY CONSUMPTION TAX 6,000,000 6,000,000
BOARD AND CARE 27,500,000 28,200,000
BEER TAX 13,200,000 13,200,000
OTHER REVENUES 77,200,000 77,500,000
TOBACCO SETTLEMENT 2,400,000 1,900,000
SUBTOTAL 1,338,385,000 1,375,095,000
[MEDICAID ENHANCEMENT TAX 72,200,000 73,700,000]
MEDICAID RECOVERIES 5,400,000 5,400,000
TOTAL GENERAL FUND [1,415,985,000] 1,343,785,000 [1,454,195,000] 1,380,495,000
EDUCATION FUND FY 2014 FY 2015
BUSINESS PROFITS TAX 58,550,000 59,800,000
BUSINESS ENTERPRISE TAX 149,440,000 152,600,000
SUBTOTAL BUSINESS TAXES 207,990,000 212,400,000
MEALS AND ROOMS TAX 7,800,000 7,840,000
TOBACCO TAX 74,600,000 71,600,000
REAL ESTATE TRANSFER TAX 31,325,000 31,925,000
TRANSFER FROM LOTTERY 73,100,000 75,000,000
TRANSFER FROM RACING
& CHARITABLE GAMING 3,400,000 3,400,000
TOBACCO SETTLEMENT 40,000,000 40,000,000
UTILITY PROPERTY TAX 34,500,000 35,400,000
STATEWIDE PROPERTY TAX 363,600,000 363,600,000
TOTAL EDUCATION FUND 836,315,000 841,165,000
HIGHWAY FUND FY 2014 FY 2015
GASOLINE ROAD TOLL 122,750,000 122,050,000
MOTOR VEHICLE FEES 109,473,000 109,873,000
MISCELLANEOUS 15,800,000 15,000,000
TOTAL HIGHWAY FUND 248,023,000 246,923,000
FISH AND GAME FUND FY 2014 FY 2015
FISH AND GAME LICENSES 8,500,000 8,500,000
FINES AND MISCELLANEOUS 1,644,000 1,644,000
TOTAL FISH AND GAME FUND 10,144,000 10,144,000
17 Applicability. Sections 2-4, and 9-12 of this act shall take effect upon its passage and shall apply to taxable periods beginning on or after July 1, 2013.
18 Applicability; Medicaid Enhancement Tax; Uncompensated Care Fund; Definition of Hospital. Sections 1 and 14 of this act, deleting special hospitals for rehabilitation from the definition of “hospital” under the Medicaid enhancement tax and the uncompensated care and Medicaid fund, shall take effect on July 1, 2014, and shall apply to the taxable period ending June 30, 2014 and to every taxable period thereafter.
19 Reports.
I. The department of revenue administration shall submit a report to the fiscal committee of the general court on the details of the reporting plan required by RSA 84-A:3, II, as inserted by section 6 of this act, on or before September 30, 2014.
II. The department of revenue administration and the department of health and human services shall submit a report to the fiscal committee of the general court recommending adjustments to the uncompensated care program that reflect funding levels at no less than those provided by this act for fiscal year 2019. Such report shall be submitted no later than October 1, 2018.
20 Effective Date.
I. Sections 6-8 of this act shall take effect July 1, 2014.
II. The remainder of this act shall take effect upon its passage.
LBAO
14-2699
Amended 04/01/14
SB 369-FN-A FISCAL NOTE
AN ACT relative to the Medicaid enhancement tax.
FISCAL IMPACT:
The Departments of Revenue Administration and Health and Human Services state this bill, as amended by the Senate (Amendment #2014-1075s), will reduce state revenue and expenditures by an indeterminable amount in FY 2014 and each year thereafter. This bill will have no fiscal impact on county or local revenue and expenditures.
METHODOLOGY:
The Department of Revenue Administration (DRA) states section 1 of this bill would remove application of the Medicaid Enhancement Tax (MET) to special hospitals for rehabilitation contingent upon federal approval of the waiver in sections 3 and 4 of the bill. These hospitals currently pay the Medicaid Enhancement Tax (MET) and exempting them from the MET would result in a decrease in state tax revenue. The Department states the specific fiscal impact cannot be disclosed because the information relates to fewer than five taxpayers and disclosure would identify, or permit identification of particular tax returns, reports, or related documents of the taxpayers and violate of RSA 21-J:14. Since the section applies to the current taxable period ending June 30, 2014, the Department assumes it may be necessary to issue refunds for MET paid by the rehabilitation hospitals for the current period. Since the section is contingent upon federal waiver approval, the Department cannot determine when the reduction in revenue would occur. The Department states it could administer this section without additional costs.
The Department of Revenue Administration states section 2 of the bill removes the term “special hospitals for rehabilitation” from the Uncompensated Care Fund law, RSA 167:63, IV. Section 3 of the bill inserts a new paragraph after RSA 167:65, IV that requires a federal waiver request for certain special hospitals for rehabilitation for the purpose of waiving RSA 84-A MET liability. Section 4 of the bill provides for the applicability of the aforementioned sections 1 and 2. DRA defers to the Department of Health and Human Services (DHHS) relative to statements on the fiscal impact on sections 2 through 4.
The Department of Revenue Administration states section 5 seeks to change payment of the MET from a single annual payment to quarterly payments payable no later than the 15th day of October, January, March and June of the taxable period. Section 6 of the bill would require an MET return on or before the 15th day of June of the taxable period. Said return is currently due on the 10th day of July of the taxable period. Section 7 changes the reference to payments required by RSA 84-A:3, II-a as there would no longer be a section II-a. DRA states sections 5 through 7 would have no impact on state revenue and it could administer these provisions at no additional cost.
The Department of Health and Human Services states there are three rehabilitation hospitals in New Hampshire: Hampstead Hospital, Northeast Rehabilitation Hospital, and HealthSouth Rehabilitation Hospital. The Department states Hampstead Hospital has previously received an exemption from the MET tax and the impact of this bill would be to the taxes paid by Northeast and HealthSouth rehabilitation hospitals. The Department indicates removing these hospitals from the definition of hospital in the Uncompensated Care Fund and MET statutes would reduce the tax collected and the federal matching funds used to make uncompensated care payments to hospitals. In addition, the rehabilitation hospitals would no longer participate in the uncompensated care program and would not receive uncompensated care payments. Due to the confidentiality requirements in RSA 21-J:14, the Department is not able to disclose the specific amounts. The Department states changing payment of the MET tax from annual to quarterly would also impact the timing of uncompensated care payments to hospitals which are funded in part by the MET tax revenue. The Department assumes there may be refunds for the current tax period ending June 30, 2014 for MET payments made by the exempted hospitals.