PRINTER'S NO. 1315
No. 251 Session of 2005
INTRODUCED BY REICHLEY, BAKER, DeWEESE, JAMES, BALDWIN, BOYD,
CALTAGIRONE, CAPPELLI, DALLY, GOOD, GOODMAN, GRUCELA, HERMAN,
HESS, HUTCHINSON, W. KELLER, MACKERETH, MARKOSEK, McCALL,
McILHATTAN, NICKOL, PICKETT, READSHAW, RUBLEY, SHANER,
E. Z. TAYLOR, THOMAS, TIGUE, TURZAI, WATSON AND FRANKEL,
MARCH 29, 2005
REFERRED TO COMMITTEE ON FINANCE, MARCH 29, 2005
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," providing for a disease management tax credit.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
14 the Tax Reform Code of 1971, is amended by adding an article to
15 read:
16 ARTICLE XVII-D
17 DISEASE MANAGEMENT TAX CREDIT
18 Section 1701-D. Scope.
19 This article relates to disease management insurance policy
20 tax credits.
1 Section 1702-D. Definitions.
2 The following words and phrases when used in this article
3 shall have the meanings given to them in this section unless the
4 context clearly indicates otherwise:
5 "Department." The Department of Revenue of the Commonwealth.
6 "Disease management insurance policy." A group or individual
7 health insurance policy that includes a disease management
8 program.
9 "Disease management program." A set of interventions
10 designed to improve the health of individuals, especially those
11 with certain ailments or diseases. A disease management program
12 may include:
13 (1) Identifying patients and matching the intervention
14 with need.
15 (2) Support for adherence to evidence-based medical
16 practice guidelines, including providing medical treatment
17 guidelines to physicians and other providers, and providing
18 support services to assist the physician in monitoring the
19 patient.
20 (3) Services designed to enhance patient management and
21 adherence to an individualized treatment plan, including
22 patient education, monitoring and reminders, and behavior
23 modification programs aimed at encouraging lifestyle changes.
24 (4) Routine reporting and feedback loops, including
25 communication with patient, physician, health plan and
26 ancillary providers, and practice profiling.
27 (5) Collection and analysis of process and outcome
28 measures.
29 "Pass-through entity." Any of the following:
30 (1) A partnership, limited partnership, limited
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1 liability company, business trust or other unincorporated
2 entity that for Federal income tax purposes is taxable as a
3 partnership.
4 (2) A Pennsylvania S corporation.
5 "Primary contractor." A person licensed to conduct business
6 in this Commonwealth that develops, implements or monitors
7 disease management programs.
8 "Qualified tax liability." The liability for taxes imposed
9 under Article III (relating to personal income tax), IV
10 (relating to corporate net income tax) or VI (relating to
11 capital stock franchise tax). The term includes the liability
12 for taxes imposed under Article III on a sole proprietor,
13 partner, shareholder, owner or member of a pass-through entity.
14 "Secretary." The Secretary of Revenue of the Commonwealth.
15 "Service provider." A person licensed to conduct business in
16 this Commonwealth that is selected by the primary contractor to
17 provide disease management programs.
18 "Small business." A taxpayer with fewer than 50 employees.
19 "Tax credit." The disease management insurance policy tax
20 credit authorized under this article.
21 "Taxpayer." An entity subject to tax under Article III
22 (relating to personal income tax), IV (relating to corporate net
23 income tax) or VI (relating to capital stock franchise tax). The
24 term includes:
25 (1) the partner, shareholder, owner or member of a pass-
26 through entity that receives a tax credit; or
27 (2) a sole proprietor.
28 Section 1703-D. Credit for disease management insurance
29 policies.
30 (a) Application.--A taxpayer who purchases and provides a
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1 disease management insurance policy to employees in a taxable
2 year may apply for a tax credit as provided in this article. By
3 September 15, a taxpayer must submit an application to the
4 department for premiums paid in the taxable year that ended in
5 the prior calendar year.
6 (b) Tax credit.--A taxpayer qualified under subsection (a)
7 shall receive a tax credit for the taxable year in the amount of
8 $200 for each employee of the taxpayer covered by a disease
9 management insurance policy.
10 (c) Notification of credit.--By December 15 of the calendar
11 year following the close of the taxable year, the department
12 shall notify the taxpayer of the amount of the taxpayer's tax
13 credit approved by the department.
14 Section 1704-D. Certification requirement.
15 (a) Application.--In order to qualify for the tax credit, a
16 taxpayer, in conjunction with the Department of Labor and
17 Industry and the Insurance Department, shall make application
18 for the certification of the disease management program
19 purchased as part of the disease management insurance policy.
20 The Insurance Department shall develop the certification
21 criteria.
22 (b) Reapplying.--In the subsequent tax year, a taxpayer
23 reapplying for the tax credit must provide verification to the
24 Department of Labor and Industry and the Insurance Department
25 that the disease management program meets the certification
26 requirements and continues to be purchased by the taxpayer.
27 Section 1705-D. Carryover, carryback, refund and assignment of
28 credit.
29 (a) General rule.--If the taxpayer cannot use the entire
30 amount of the tax credit for the taxable year in which the tax
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1 credit is first approved because the amount of the tax credit
2 exceeds the tax liability of the taxpayer for the year in which
3 the tax credit under section 1703-D (relating to credit for
4 disease management insurance policies) is to be applied, the
5 excess may be carried over to succeeding taxable years and used
6 as a credit against the qualified tax liability of the taxpayer
7 for those taxable years. Each time the tax credit is carried
8 over to a succeeding taxable year, it shall be reduced by the
9 amount that was used as a credit during the immediately
10 preceding taxable year. The tax credit may be carried over and
11 applied to succeeding taxable years for no more than 15 taxable
12 years following the first taxable year for which the taxpayer
13 was entitled to claim the credit.
14 (b) Application of tax credit.--A tax credit approved by the
15 department for premiums incurred in a taxable year shall first
16 be applied against the taxpayer's qualified tax liability for
17 the current taxable year as of the date on which the credit was
18 approved before the tax credit may be applied against any tax
19 liability under subsection (a).
20 (c) Unused tax credit.--A taxpayer is not entitled to
21 assign, carry back or obtain a refund of an unused tax credit.
22 Section 1706-D. Time limitations.
23 A taxpayer is not entitled to a tax credit for health
24 insurance premiums providing for disease management programs
25 incurred in taxable years ending after December 31, 2007.
26 Section 1707-D. Limitation on credits.
27 (a) Allocation for small businesses.--Forty percent of
28 available funds shall be allocated exclusively for small
29 businesses. However, if the total amounts allocated to either
30 the group of applicants exclusive of small businesses or the
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1 group of small business applicants is not approved in any fiscal
2 year, the unused portion will become available for use by other
3 qualifying taxpayers.
4 (b) Proration of tax credits.--
5 (1) If the total amount of tax credits applied for by
6 all taxpayers, exclusive of small businesses, exceeds the
7 amount allocated for those credits, the tax credit to be
8 received by each applicant shall be prorated by the
9 department among all applicants, exclusive of small
10 businesses, who have qualified for the credit.
11 (2) If the total amount of tax credits applied for by
12 all small businesses exceeds the amount allocated for those
13 credits, the tax credit to be received by each small business
14 applicant shall be prorated by the department among all small
15 business applicants who have qualified for the credit.
16 Section 1708-D. Shareholder, owner or member pass-through.
17 (a) Pennsylvania S corporations.--If a Pennsylvania S
18 corporation does not have an eligible tax liability against
19 which the tax credit may be applied, a shareholder of the
20 Pennsylvania S corporation is entitled to a tax credit equal to
21 the tax credit determined for the Pennsylvania S corporation for
22 the taxable year multiplied by the percentage of the
23 Pennsylvania S corporation's distributive income to which the
24 shareholder is entitled.
25 (b) Pass-through entities.--If a pass-through entity other
26 than a Pennsylvania S corporation does not have an eligible tax
27 liability against which the tax credit may be applied, an owner
28 or member of the pass-through entity is entitled to a tax credit
29 equal to the tax credit determined for the pass-through entity
30 for the taxable year multiplied by the percentage of the pass-
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1 through entity's distributive income to which the owner or
2 member is entitled.
3 (c) Entitlement.--The credit provided under subsection (a)
4 or (b) is in addition to any tax credit to which a shareholder,
5 owner or member of a pass-through entity is otherwise entitled
6 under this article. However, a pass-through entity and a
7 shareholder, owner or member of a pass-through entity may not
8 claim a credit under this article for the same premium or
9 employee.
10 Section 1709-D. Accountability.
11 (a) Review procedures.--Any taxpayer that receives a tax
12 credit under this article shall be subject to a performance
13 review by the Department of Labor and Industry, in conjunction
14 with the Insurance Department. As appropriate, the performance
15 review shall be based upon information submitted to the
16 department that includes the following:
17 (1) The contractor's or service provider's strategic
18 goals and objectives for disease management programs.
19 (2) The contractor's or service provider's annual
20 performance plan setting forth how these strategic goals and
21 objectives are to be achieved and the specific methodology
22 for evaluating results, along with any proposed methods for
23 improvement.
24 (3) The contractor's or service provider's annual
25 performance report setting forth the specific results in
26 achieving its strategic goals and objectives for disease
27 management, including any changes in the health of
28 participants in the disease management program.
29 (4) The progress made in achieving expected program
30 priorities and goals.
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1 (5) Any other information deemed necessary by the
2 department.
3 (b) Penalty.--If a performance review indicates that a
4 primary contractor or a service provider failed to comply with
5 contract requirements or meet performance goals, taxpayers may
6 be subject to a reduction in or ineligibility for future tax
7 credit funding under this article.
8 Section 1710-D. Report to General Assembly.
9 (a) Submission of report.--The secretary shall submit an
10 annual report indicating the effectiveness of the credit
11 provided by this article no later than March 15 following the
12 year in which the credits were approved to the Governor, the
13 chairmen and the minority chairmen of the Public Health and
14 Welfare Committee and the Appropriations Committee of the Senate
15 and the chairmen and minority chairmen of the Health and Human
16 Services Committee and the Appropriations Committee of the House
17 of Representatives.
18 (b) Contents.--The report shall include the names of all
19 taxpayers utilizing the credit as of the date of the report and
20 the amount of credits approved and utilized by each taxpayer.
21 (c) Public information.--Notwithstanding any law providing
22 for the confidentiality of tax records, the information
23 contained in the report shall be public information.
24 (d) Recommendations.--The report may also include any
25 recommendations for changes in the calculation or administration
26 of the credit.
27 Section 1711-D. Termination.
28 The department shall not approve a tax credit under this
29 article for taxable years ending after December 31, 2007.
30 Section 1712-D. Regulations.
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1 The secretary shall promulgate regulations necessary for the
2 implementation and administration of this article.
3 Section 2. This act shall take effect in 60 days.
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