PRIOR PRINTER'S NO. 3962 PRINTER'S NO. 4483
No. 2501 Session of 2004
INTRODUCED BY REICHLEY, NICKOL, BAKER, THOMAS, ARMSTRONG,
BALDWIN, BARRAR, CAPPELLI, CRAHALLA, DALLY, DeWEESE, FRANKEL,
GOODMAN, GRUCELA, JAMES, KILLION, LEH, LYNCH, MACKERETH,
MARKOSEK, McCALL, MILLARD, S. MILLER, MUSTIO, SAINATO,
SEMMEL, STERN, E. Z. TAYLOR, J. TAYLOR, TIGUE, TURZAI,
WATSON, YUDICHAK, FREEMAN, YOUNGBLOOD, BROWNE, PICKETT,
DENLINGER, ROSS AND MELIO, JUNE 7, 2004
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,
AS AMENDED, OCTOBER 5, 2004
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 and making a repeal.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15 the Tax Reform Code of 1971, is amended by adding an article to
16 read:
17 ARTICLE XVII-C
18 DISEASE MANAGEMENT TAX CREDIT
19 Section 1701-C. Short title.
1 This article shall be known and may be cited as the Disease
2 Management Insurance Policy Tax Credit Act.
3 Section 1702-C. Definitions.
4 The following words and phrases when used in this article
5 shall have the meanings given to them in this section unless the
6 context clearly indicates otherwise:
7 "Department." The Department of Revenue of the Commonwealth.
8 "Disease management insurance policy." A group or individual
9 health insurance policy that includes a disease management
10 program.
11 "Disease management program." A set of interventions
12 designed to improve the health of individuals, especially those
13 with certain ailments or diseases. A disease management program
14 may include:
15 (1) Identifying patients and matching the intervention
16 with need.
17 (2) Support for adherence to evidence-based medical
18 practice guidelines, including providing medical treatment
19 guidelines to physicians and other providers, and providing
20 support services to assist the physician in monitoring the
21 patient.
22 (3) Services designed to enhance patient management and
23 adherence to an individualized treatment plan, including
24 patient education, monitoring and reminders, and behavior
25 modification programs aimed at encouraging lifestyle changes.
26 (4) Routine reporting and feedback loops, including
27 communication with patient, physician, health plan and
28 ancillary providers, and practice profiling.
29 (5) Collection and analysis of process and outcome
30 measures.
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1 "Master Settlement Agreement." As defined in section 102 of
2 the act of June 26, 2001 (P.L.755, No.77), known as the Tobacco
3 Settlement Act.
4 "Pass-through entity." Any of the following:
5 (1) A partnership, limited partnership, limited
6 liability company, business trust or other unincorporated
7 entity that for Federal income tax purposes is taxable as a
8 partnership.
9 (2) A Pennsylvania S corporation.
10 "Primary contractor." A person licensed to conduct business
11 in this Commonwealth that develops, implements or monitors
12 disease management programs.
13 "Qualified tax liability." The liability for taxes imposed
14 under Article III, IV or VI. The term includes the liability for
15 taxes imposed under Article III on a sole proprietor, partner,
16 shareholder, owner or member of a pass-through entity.
17 "Secretary." The Secretary of Revenue of the Commonwealth.
18 "Service provider." A person licensed to conduct business in
19 this Commonwealth that is selected by the primary contractor to
20 provide disease management programs.
21 "Small business." A taxpayer with fewer than 50 employees.
22 "Tax credit." The disease management insurance policy tax
23 credit authorized under this article.
24 "Taxpayer." An entity subject to tax under Article III, IV
25 or VI. The term includes:
26 (1) the partner, shareholder, owner or member of a pass-
27 through entity that receives a tax credit; or
28 (2) a sole proprietor.
29 "Tobacco Settlement Act." The act of June 26, 2001 (P.L.755,
30 No.77), known as the Tobacco Settlement Act.
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1 "Tobacco Settlement Fund." The Tobacco Settlement Fund
2 established section 303(a) of the act of June 26, 2001 (P.L.755,
3 No.77), known as the Tobacco Settlement Act.
4 Section 1703-C. Credit for disease management insurance
5 policies.
6 (a) Application.--A taxpayer who purchases and provides a
7 disease management insurance policy to employees in a taxable
8 year may apply for a tax credit as provided in this article. By
9 September 15, a taxpayer must submit an application to the
10 department for premiums paid in the taxable year that ended in
11 the prior calendar year.
12 (b) Tax credit.--A taxpayer qualified under subsection (a)
13 shall receive a tax credit for the taxable year in the amount of
14 $100 for each employee of the taxpayer covered by a disease
15 management insurance policy.
16 (c) Notification of credit.--By December 15 of the calendar
17 year following the close of the taxable year, the department
18 shall notify the taxpayer of the amount of the taxpayer's tax
19 credit approved by the department.
20 Section 1704-C. Certification requirement.
21 (a) Application.--In order to qualify for the tax credit, a
22 taxpayer, in conjunction with the Department of Labor and
23 Industry and the Insurance Department, shall make application
24 for the certification of the disease management program
25 purchased as part of the disease management insurance policy.
26 The Insurance Department shall develop the certification
27 criteria.
28 (b) Reapplying.--In the subsequent tax year, a taxpayer
29 reapplying for the tax credit must provide verification to the
30 Department of Labor and Industry and the Insurance Department
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1 that the disease management program meets the certification
2 requirements and continues to be purchased by the taxpayer.
3 Section 1705-C. Carryover, carryback, refund and assignment of
4 credit.
5 (a) General rule.--If the taxpayer cannot use the entire
6 amount of the tax credit for the taxable year in which the tax
7 credit is first approved because the amount of the tax credit
8 exceeds the tax liability of the taxpayer for the year in which
9 the tax credit under section 1703-C is to be applied, the excess
10 may be carried over to succeeding taxable years and used as a
11 credit against the qualified tax liability of the taxpayer for
12 those taxable years. Each time the tax credit is carried over to
13 a succeeding taxable year, it shall be reduced by the amount
14 that was used as a credit during the immediately preceding
15 taxable year. The tax credit may be carried over and applied to
16 succeeding taxable years for no more than 15 taxable years
17 following the first taxable year for which the taxpayer was
18 entitled to claim the credit.
19 (b) Application of tax credit.--A tax credit approved by the
20 department for premiums incurred in a taxable year shall first
21 be applied against the taxpayer's qualified tax liability for
22 the current taxable year as of the date on which the credit was
23 approved before the tax credit may be applied against any tax
24 liability under subsection (a).
25 (c) Unused tax credit.--A taxpayer is not entitled to
26 assign, carry back or obtain a refund of an unused tax credit.
27 Section 1706-C. Time limitations.
28 A taxpayer is not entitled to a tax credit for health
29 insurance premiums providing for disease management programs
30 incurred in taxable years ending after December 31, 2006.
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1 Section 1707-C. Limitation on credits.
2 (a) Allocation for small businesses.--The total amount of
3 tax credits approved by the department shall not exceed
4 $19,000,000 in any fiscal year. Of that amount, 40% of available
5 funds shall be allocated exclusively for small businesses.
6 However, if the total amounts allocated to either the group of
7 applicants exclusive of small businesses or the group of small
8 business applicants is not approved in any fiscal year, the
9 unused portion will become available for use by other qualifying
10 taxpayers.
11 (b) Proration of tax credits.--
12 (1) If the total amount of tax credits applied for by
13 all taxpayers, exclusive of small businesses, exceeds the
14 amount allocated for those credits, the tax credit to be
15 received by each applicant shall be prorated by the
16 department among all applicants, exclusive of small
17 businesses, who have qualified for the credit.
18 (2) If the total amount of tax credits applied for by
19 all small businesses exceeds the amount allocated for those
20 credits, the tax credit to be received by each small business
21 applicant shall be prorated by the department among all small
22 business applicants who have qualified for the credit.
23 Section 1708-C. Shareholder, owner or member pass-through.
24 (a) Pennsylvania S corporations.--If a Pennsylvania S
25 corporation does not have an eligible tax liability against
26 which the tax credit may be applied, a shareholder of the
27 Pennsylvania S corporation is entitled to a tax credit equal to
28 the tax credit determined for the Pennsylvania S corporation for
29 the taxable year multiplied by the percentage of the
30 Pennsylvania S corporation's distributive income to which the
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1 shareholder is entitled.
2 (b) Pass-through entities.--If a pass-through entity other
3 than a Pennsylvania S corporation does not have an eligible tax
4 liability against which the tax credit may be applied, an owner
5 or member of the pass-through entity is entitled to a tax credit
6 equal to the tax credit determined for the pass-through entity
7 for the taxable year multiplied by the percentage of the pass-
8 through entity's distributive income to which the owner or
9 member is entitled.
10 (c) Entitlement.--The credit provided under subsection (a)
11 or (b) is in addition to any tax credit to which a shareholder,
12 owner or member of a pass-through entity is otherwise entitled
13 under this article. However, a pass-through entity and a
14 shareholder, owner or member of a pass-through entity may not
15 claim a credit under this article for the same premium or
16 employee.
17 Section 1709-C. Accountability.
18 (a) Review procedures.--Any taxpayer that receives a tax
19 credit under this act shall be subject to a performance review
20 by the Department of Labor and Industry, in conjunction with the
21 Insurance Department. As appropriate, the performance review
22 shall be based upon information submitted to the department that
23 includes the following:
24 (1) The contractor's or service provider's strategic
25 goals and objectives for disease management programs.
26 (2) The contractor's or service provider's annual
27 performance plan setting forth how these strategic goals and
28 objectives are to be achieved and the specific methodology
29 for evaluating results, along with any proposed methods for
30 improvement.
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1 (3) The contractor's or service provider's annual
2 performance report setting forth the specific results in
3 achieving its strategic goals and objectives for disease
4 management, including any changes in the health of
5 participants in the disease management program.
6 (4) The progress made in achieving expected program
7 priorities and goals.
8 (5) Any other information deemed necessary by the
9 department.
10 (b) Penalty.--If a performance review indicates that a
11 primary contractor or a service provider failed to comply with
12 contract requirements or meet performance goals, taxpayers may
13 be subject to a reduction in or ineligibility for future tax
14 credit funding under this act.
15 Section 1710-C. Report to General Assembly.
16 (a) Submission of report.--The secretary shall submit an
17 annual report indicating the effectiveness of the credit
18 provided by this article no later than March 15 following the
19 year in which the credits were approved to the Governor, the
20 Chairmen and the Minority Chairmen of the Public Health and
21 Welfare Committee and the Appropriations Committee of the Senate
22 and the Chairmen and Minority Chairmen of the Health and Human
23 Services Committee and the Appropriations Committee of the House
24 of Representatives.
25 (b) Contents.--The report shall include the names of all
26 taxpayers utilizing the credit as of the date of the report and
27 the amount of credits approved and utilized by each taxpayer.
28 (c) Public information.--Notwithstanding any law providing
29 for the confidentiality of tax records, the information
30 contained in the report shall be public information.
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1 (d) Recommendations.--The report may also include any
2 recommendations for changes in the calculation or administration
3 of the credit.
4 Section 1711-C. Termination.
5 The department shall not approve a tax credit under this
6 article for taxable years ending after December 31, 2006.
7 Section 1712-C. Regulations.
8 The secretary shall promulgate regulations necessary for the
9 implementation and administration of this article.
10 Section 1713-C. Appropriation from the Tobacco Settlement Fund. <--
11 The General Assembly hereby appropriates funds in the Tobacco
12 Settlement Fund received by the Commonwealth pursuant to the
13 Master Settlement Agreement in accordance with the following
14 percentages based on actual funds received in each year or upon
15 receipt of the final annual payment:
16 (1) Seven percent for tobacco use prevention and
17 cessation programs pursuant to Chapter 7 of the Tobacco
18 Settlement Act.
19 (2) Five percent for deposit into the General Fund to
20 pay for the pilot program authorized under this article.
21 Section 2. Section 306(b)(1)(iii) of the act of June 26,
22 2001 (P.L.755, No.77), known as the Tobacco Settlement Act, is
23 repealed.
24 Section 3 2. This act shall take effect in 60 days. <--
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