Second Regular Session Seventieth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 16-0896.02 Kate Meyer x4348 HOUSE BILL 16-1212 HOUSE SPONSORSHIP Roupe, SENATE SPONSORSHIP (None), House Committees Senate Committees State, Veterans, & Military Affairs Finance A BILL FOR AN ACT Concerning a temporary tax incentive for the unreimbursed fees charged by health care providers for providing services to medicaid clients. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) Currently, health care providers that provide services to medicaid clients are often not reimbursed the full amount of the costs of such services. The bill creates an income tax credit to offset the financial impact of these unreimbursed costs. The tax credit is available for services provided in tax years 2016, 2017, and 2018. The amount of the tax credit that can be claimed is 50% of either: The difference in the cost of the services set forth in the medicaid and medicare fee schedules in effect at the time the services were rendered; or For any services without a medicare fee schedule equivalent, the difference between the amounts paid for the services under the medicaid fee schedule in effect at the time the services were rendered and the fee amounts published in the most recent Colorado-specific cost-of-care or compensation survey conducted by an entity identified by rule of the executive director of the department of revenue (department). If the amount of the credit allowed exceeds the amount of the income tax otherwise due, the bill prohibits the balance from either being refunded or carried forward and applied against the income tax due in any succeeding income tax years. The department is required to include information regarding the tax credit in its "State Measurement for Accountable, Responsive, and Transparent (SMART) Government Act" presentation in the legislative interim immediately prior to the repeal of the credit. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, add 39-22-538 as follows: 39-22-538. Tax credit for unreimbursed fees for services provided by health care providers to medicaid clients - eligibility - rules - report - legislative declaration - definitions - repeal. (1) (a) The general assembly finds, determines, and declares that: (I) Medicaid is a valuable program that assists persons who have a low income or limited resources in obtaining health care; (II) Colorado medicaid clients have access to valuable physical and behavioral health benefits delivered in a variety of inpatient and outpatient settings; (III) While the number of enrollees in medicaid has increased markedly in recent years, with the total medicaid expenditures in Colorado expected to exceed six billion dollars for fiscal year 2016-17, the rates of reimbursement to health care providers do not always cover the costs of providing the services; and (IV) Because Medicaid does not reimburse the full amount it costs to deliver these types of care, providers must make up the difference elsewhere or even operate at a loss with respect to services provided to their medicaid clients. (b) The general assembly therefore declares that the purpose of this section is to create and implement an incentive, in the form of a credit against the state income tax, that will encourage health care providers to continue to accept medicaid clients, or increase the number of medicaid clients they accept as patients, incentivize current health care providers to keep practicing in Colorado, and promote Colorado as an attractive state to other providers looking to establish, expand, or relocate their businesses. (2) As used in this section: (a) "Health care provider" means a person, corporation, facility, or institution: (I) That is enrolled under the state medical assistance program, articles 4, 5, and 6 of title 25.5, C.R.S.; and (II) That provides care, services, or goods, including home health care or personal services, to medicaid clients. (b) "Home health care or personal care services" means the medical or nonmedical services provided under a plan of care developed by a licensed home care agency at a private residence. (c) "Taxpayer" means a health care provider that files an income tax return under this article and who provided services to medicaid clients during the tax year for which the tax credit allowed under this section is being claimed. (3) For any income tax year commencing on or after January 1, 2016, but prior to January 1, 2019, an eligible taxpayer is allowed a credit against the income taxes imposed by this article in an amount equal to fifty percent of: (a) The difference between the reimbursed medicaid fees for services provided by the taxpayer to medicaid clients in the tax year for which the tax credit is claimed and the fee for the same service contained in the medicare fee schedule set by the federal centers for medicare and medicaid services in the United States department of health and human services in effect at the time the services were rendered; or (b) For home health care or personal care services for which there are no equivalent medicare service or billing codes, the difference between the amounts paid for the services under the medicaid fee schedule in effect at the time the services were rendered and the fee amounts published in the most recent Colorado-specific cost-of-care or compensation survey conducted by a research institute or consulting organization and approved by the executive director by rule. (4) To qualify for the credit provided by this section, the taxpayer shall submit with his or her income tax return form a copy of the taxpayer's enrollment or revalidation approval letter, issued by the department of health care policy and financing, that contains the taxpayer's Colorado medicaid provider number or national provider identifier or other sufficient verified evidence as set forth by the executive director by rule that the taxpayer was an active medicaid health care provider in Colorado during the tax year, or relevant portion therein, for which the credit is claimed. (5) If the credit allowed under this section exceeds the income taxes otherwise due on the taxpayer's income, the amount of the credit not used as an offset against income taxes in the income tax year for which the credit is being claimed is not allowed as a refund and shall not be carried forward to be applied against income tax due in any subsequent income tax years. (6) The executive director may promulgate rules, in accordance with article 4 of title 24, C.R.S., as may be necessary or convenient to administer and enforce this section. (7) The department shall include, in the presentation it makes pursuant to section 2-7-203, C.R.S., in the interim immediately prior to the commencement of the first regular session of the seventy-second general assembly, information regarding the number of taxpayers who claimed a tax credit under this section, how much money in tax credits were allowed, and, if any, the amount of claims disallowed and number of audits performed to assess compliance with this section. (8) This section is repealed, effective July 1, 2020. SECTION 2. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 10, 2016, if adjournment sine die is on May 11, 2016); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2016 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.