WEST virginia Legislature

2018 regular session

Introduced

House Bill 4153

By Delegates Rowe, Ellington, Summers, Maynard, Eldridge, R. Romine, White, Anderson, Miley and Hamilton

[Introduced January 16, 2018; Referred
to the Committee on Health and Human Resources then Finance.]

A BILL to repeal §11-26-1, §11-26-2, §11-26-3, §11-26-4, §11-26-5, §11-26-6, §11-26-7, §11-26-8, §11-26-9, §11-26-10, §11-26-11, §11-26-12, §11-26-13, §11-26-14, §11-26-15, §11-26-16, §11-26-17, §11-26-18, §11-26-19 and §11-26-20 of the Code of West Virginia, 1931, as amended; to amend and reenact §11-27-3 of said code; and to amend said code by adding thereto a new section, designated §11-27-10a, all relating to imposing a health­care related provider tax on certain health care organizations; repealing outdated tax: adding definitions; establishing tax rates; requiring federal approval of tax; and setting effective date.

Be it enacted by the Legislature of West Virginia:

§11-26-1. Legislative findings.

[Repealed]

§11-26-2. Short title; arrangement and classification.

[Repealed]

§11-26-3. Definitions.

[Repealed]

§11-26-4. Imposition of excise tax; rate and application of tax.

[Repealed]

§11-26-5. Administration.

[Repealed]

§11-26-6. Accounting periods and methods of accounting.

[Repealed]

§11-26-7. Tax return and payment.

[Repealed]

§11-26-8. Extension of time for filing returns.

[Repealed]

§11-26-9. Extension of time for paying tax.

[Repealed]

§11-26-10. Place for filing returns or other documents.

[Repealed]

§11-26-11. Signing of returns and other documents.

[Repealed]

§11-26-12. Records.

[Repealed]

§11-26-13. Refunds and credits.

[Repealed]

§11-26-14. Cancellation of Medicaid certification for failure to pay delinquent tax.

[Repealed]

§11-26-15. General procedure and administration.

[Repealed]

§11-26-16. Crimes and penalties.

[Repealed]

§11-26-17. Effective dates.

[Repealed]

§11-26-19. Severability.

[Repealed]

§11-26-20. Transition rules; penalties; effective date.

            [Repealed]

ARTICLE 27. HEALTH CARE PROVIDER TAXES.

§11-27-3. Definitions.

(a) General. -- When used in this article, words defined in subsection (b) of this section have the meaning ascribed to them in this section, except in those instances where a different meaning is distinctly expressed or the context in which the word is used clearly indicates that a different meaning is intended.

(b) Definitions. --

(1) “Business” includes all health care activities engaged in, or caused to be engaged in, with the object of gain or economic benefit, direct or indirect, and whether engaged in for profit, or not for profit, or by a governmental entity: Provided, That “business” does not include services rendered by an employee within the scope of his or her contract of employment. Employee services, services by a partner on behalf of his or her partnership, and services by a member of any other business entity on behalf of that entity, are the business of the employer, or partnership, or other business entity, as the case may be, and reportable as such for purposes of the taxes imposed by this article.

(2) “Broad-based health care related tax” means a broad-based health care related tax as defined in Section 1903 of the Social Security Act, including a health-care related tax for which a waiver from the broad-based or uniformity requirements has been granted and is in effect by the federal Centers for Medicare and Medicaid Services pursuant to the Provisions of section 1903 of the Social Security Act and implementing regulations.

(3) “Department” means the West Virginia Department of Health and Human Resources.

(3) (4) “Corporation” includes associations, joint-stock companies and insurance companies. It also includes governmental entities when and to the extent such governmental entities engaged in activities taxable under this article.

(4) (5) “Includes” and “including” when used in a definition contained in this article shall not be deemed to exclude other things otherwise within the meaning of the term being defined.

(5) (6) “Partner” includes a member in a “partnership”, as defined in this section.

(6) (7) “Partnership” includes a syndicate, group, pool, joint venture or other unincorporated organization through or by means of which any privilege taxable under this article is exercised, and which is not within the meaning of this article a trust or estate or corporation. It includes a limited liability company when such company is treated as a partnership for federal income tax purposes.

(7) (8) “Person” means any individual, partnership, association, company, corporation or other entity engaging in a privilege taxed under this article.

(8) (9) “Social Security Act” means the Social Security Act of the United States, as amended by Public Law 102-234 Public Law 109-171, and codified in Title 42, Section 1396b of the United States Code.

(10) “Secretary” means the West Virginia Department of Health and Human Resources.

(9) (11) “Tax” means any tax imposed by this article and, for purposes of administration and collection of such tax, includes any interest, additions to tax or penalties imposed with respect thereto under article ten of this chapter.

(10) (12) “Taxable year” means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the tax imposed by this article is computed. In the case of a return made under this article, or regulations of the Tax Commissioner, for a fractional part of a year, the term "taxable year" means the period for which such return is made.

(11) (13) “Taxpayer” means any person subject to any tax imposed by this article.

(12) (14) “This code” means the Code of West Virginia, 1931, as amended.

(13) (15) “This state” means the State of West Virginia.

§11-27-10a. Imposition of tax on managed care organizations.

(a) Imposition of tax. — For the Privilege of holding a certificate of authority within this state to establish or operate a “health maintenance organization” pursuant to §33-25A-4 of this code (hereinafter “certified HMO”), there is hereby levied and shall be collected from every such certified HMO an annual broad-based health-care related tax.

(b) Rate and measure of tax. — The tax imposed this section shall be based on the following rates applied to each taxable health plan's total Medicaid member months within tiers I, II and III, and to nonMedicaid member months within tiers IV and V:

(1) Tier I — $59.00 for each Medicaid member month under 250.000.

(2) Tier II — $49.00 for each Medicaid member month between 250.000 and 500.000:

(3) Tier III - $37.00 for each Medicaid member month greater than 500.000.

(4) Tier IV — $0.25 for each nonMedicaid member month under 150.000: and

(5) Tier V — $0.10 for each nonMedicaid member month of 150.000 or more.

(c) Definitions.

(1) “Managed care organization” or “MCO” means a certified HMO that provides health care services to Medicaid members pursuant to an agreement or contract with the department.

(2) “Managed care plan” means an agreement or contract between the secretary and an MCO under which the MCO agrees to provide health care services to Medicaid members.

(3) “Medicaid member” means an individual enrolled in a taxable health plan who  is a Medicaid beneficiary on whose behalf the department directly pays the health plan a capitated payment.

(4) “Medicaid member months” means the number of Medicaid members in a taxable health plan in each month or part of a month over the course of the tax year.

(5) “NonMedicaid enrollee” means an individual who is an “enrollee”, “subscriber”, or “member”, as those terms are defined in §33-25A-2(8) of this code, in a taxable health plan who is not a Medicaid member:  Provided, That this definition does not include Public Employees Retirement Agency members or Medicare Advantage members.

(6) “NonMedicaid member months” means the number of nonMedicaid enrollees in a taxable health plan in each month or part of a month over the course of the tax year, but does not include persons enrolled in either a health plan issued by the West Virginia Public Employees Insurance Agency or a plan issued pursuant to the Federal Employees Health Benefits Act of 1959 (Public Law 86-382) to the extent the imposition of the tax under this section is preempted pursuant to Section 8909(f) of Title 5 of the United States Code.

(7) “Taxable health plan” means: (i) An agreement or contract under which a certified HMO agrees to provide health care services to a nonMedicaid member in accordance with §33-25A-1 et seq. of this code and (ii) a managed care plan.

(d) Effective date. -- (i) Subject to an earlier termination pursuant to the terms of paragraph ii, the tax imposed by this section shall be effective for three years beginning on the first day of the state fiscal year following a thirty day period after the secretary has posted notice on the department Internet website that approval had been received from the federal Centers for Medicare and Medicaid Services that the tax imposed by this section is a permissible health care related tax in accordance with Section 433.68 of Title 42 of the Code of Federal Regulations and is therefore eligible for federal financial  participation.

(ii) The tax imposed by this section shall be administered in accordance with the provisions of this article and the tax administration and procedures act in article ten of this chapter: Provided, That the tax imposed by this section shall be automatically void if the Centers for Medicare and Medicaid Services determines that it is no longer a permissible health care related tax that is eligible for federal financial participation; and further provided that, subject to the terms of this paragraph, the tax imposed by this section shall remain in effect only until June 30, 2021, and as of June 30, 2021, is repealed.

(e) Time for Paying Tax.--  Notwithstanding the provisions of §11-27-25 of this code no taxes may be collected under this article until the department receives written notice that the federal Centers for Medicare and Medicaid Services has approved proposed Medicaid rates as actuarially sound for the taxable year in which the tax will be imposed.

NOTE: The purpose of this bill is to impose a tiered tax on HMOs in a manner that will permit the maximization of federal matching dollars for use in the state Medicaid program.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.