Minnesota 2025-2026 Regular Session

Minnesota Senate Bill SF102 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; repealing the gross revenues tax on hospitals and health care
3	3	1.3 providers; making related technical changes; amending Minnesota Statutes 2024,
4	4	1.4 sections 62J.041, subdivision 1; 214.16, subdivision 3; 256B.04, subdivision 25;
5	5	1.5 256B.0625, subdivision 13e; 270B.14, subdivision 1; 289A.38, subdivision 6;
6	6	1.6 repealing Minnesota Statutes 2024, sections 13.4967, subdivision 3; 295.50,
7	7	1.7 subdivisions 1, 1a, 2, 2a, 2b, 3, 4, 6, 6a, 7, 7a, 9b, 9c, 10a, 10c, 12b, 13, 13a, 14,
8	8	1.8 15, 16; 295.51, subdivisions 1, 1a; 295.52, subdivisions 1, 1a, 2, 3, 4, 4a, 5, 6, 8;
9	9	1.9 295.53, subdivisions 1, 2, 3, 4a; 295.54; 295.55; 295.56; 295.57; 295.58; 295.581;
10	10	1.10 295.582; 295.59; Minnesota Rules, parts 4650.0102, subpart 24e; 4652.0100,
11	11	1.11 subpart 20.
12	12	1.12BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
13	13	1.13 Section 1. Minnesota Statutes 2024, section 62J.041, subdivision 1, is amended to read:
14	14	1.14 Subdivision 1.Definitions.(a) For purposes of this section, the following definitions
15	15	1.15apply.
16	16	1.16 (b) "Health plan company" has the definition provided in section 62Q.01.
17	17	1.17 (c) "Total expenditures" means incurred claims or expenditures on health care services,
18	18	1.18administrative expenses, charitable contributions, and all other payments made by health
19	19	1.19plan companies out of premium revenues.
20	20	1.20 (d) "Net expenditures" means total expenditures minus exempted taxes and assessments
21	21	1.21and payments or allocations made to establish or maintain reserves.
22	22	1.22 (e) "Exempted taxes and assessments" means direct payments for taxes to government
23	23	1.23agencies, contributions to the Minnesota Comprehensive Health Association, the medical
24	24	1.24assistance provider's surcharge under section 256.9657, the MinnesotaCare provider tax
25	25	1.25under section 295.52, assessments by the Health Coverage Reinsurance Association,
26	26	1Section 1.
27	27	25-00559 as introduced12/04/24 REVISOR EAP/NS
28	28	SENATE
29	29	STATE OF MINNESOTA
30	30	S.F. No. 102NINETY-FOURTH SESSION
31	31	(SENATE AUTHORS: DRAZKOWSKI)
32	32	OFFICIAL STATUSD-PGDATE
33	33	Introduction and first reading01/16/2025
34	34	Referred to Taxes 2.1assessments by the Minnesota Life and Health Insurance Guaranty Association, assessments
35	35	2.2by the Minnesota Risk Adjustment Association, and any new assessments imposed by
36	36	2.3federal or state law.
37	37	2.4 (f) "Consumer cost-sharing or subscriber liability" means enrollee coinsurance,
38	38	2.5co-payment, deductible payments, and amounts in excess of benefit plan maximums.
39	39	2.6 EFFECTIVE DATE.This section is effective for gross revenues received after
40	40	2.7December 31, 2025.
41	41	2.8 Sec. 2. Minnesota Statutes 2024, section 214.16, subdivision 3, is amended to read:
42	42	2.9 Subd. 3.Grounds for disciplinary action.The board shall take disciplinary action,
43	43	2.10which may include license revocation, against a regulated person for:
44	44	2.11 (1) intentional failure to provide the commissioner of health with the data required under
45	45	2.12chapter 62J; and
46	46	2.13 (2) intentional failure to provide the commissioner of revenue with data on gross revenue
47	47	2.14and other information required for the commissioner to implement sections 295.50 to 295.58;
48	48	2.15 (3) intentional failure to pay the health care provider tax required under section 295.52;
49	49	2.16and
50	50	2.17 (4) (2) entering into a contract or arrangement that is prohibited under sections 62J.70
51	51	2.18to 62J.73.
52	52	2.19 EFFECTIVE DATE.This section is effective for gross revenues received after
53	53	2.20December 31, 2025.
54	54	2.21 Sec. 3. Minnesota Statutes 2024, section 256B.04, subdivision 25, is amended to read:
55	55	2.22 Subd. 25.Medical assistance and MinnesotaCare payment increase.(a) The
56	56	2.23commissioner shall increase medical assistance and MinnesotaCare fee-for-service payments
57	57	2.24by an amount equal to the tax rate defined for hospitals, surgical centers, or health care
58	58	2.25providers under sections 295.50 to 295.57 for all services subject to those taxes.
59	59	2.26 (b) The commissioner shall reflect in the total payments made to managed care
60	60	2.27organizations, county-based purchasing plans, and other participating entities contracted
61	61	2.28with the commissioner under section 256B.69, the cost of: (1) payments made to providers
62	62	2.29for the tax on the services outlined in paragraph (a); and (2) the taxes imposed under sections
63	63	2.30297I.05, subdivision 5, and 256.9657, subdivision 3, on premium revenue paid by the state
64	64	2.31for medical assistance and the MinnesotaCare program. Any increase based on clause (2)
65	65	2Sec. 3.
66	66	25-00559 as introduced12/04/24 REVISOR EAP/NS 3.1must be reflected in provider rates paid by the managed care organization, county-based
67	67	3.2purchasing plan, or other participating entity, unless the managed care organization,
68	68	3.3county-based purchasing plan, or other participating entity is a staff model health plan
69	69	3.4company.
70	70	3.5 EFFECTIVE DATE.This section is effective for gross revenues received after
71	71	3.6December 31, 2025.
72	72	3.7 Sec. 4. Minnesota Statutes 2024, section 256B.0625, subdivision 13e, is amended to read:
73	73	3.8 Subd. 13e.Payment rates.(a) The basis for determining the amount of payment shall
74	74	3.9be the lower of the ingredient costs of the drugs plus the professional dispensing fee; or the
75	75	3.10usual and customary price charged to the public. The usual and customary price means the
76	76	3.11lowest price charged by the provider to a patient who pays for the prescription by cash,
77	77	3.12check, or charge account and includes prices the pharmacy charges to a patient enrolled in
78	78	3.13a prescription savings club or prescription discount club administered by the pharmacy or
79	79	3.14pharmacy chain, unless the prescription savings club or prescription discount club is one
80	80	3.15in which an individual pays a recurring monthly access fee for unlimited access to a defined
81	81	3.16list of drugs for which the pharmacy does not bill the member or a payer on a
82	82	3.17per-standard-transaction basis. The amount of payment basis must be reduced to reflect all
83	83	3.18discount amounts applied to the charge by any third-party provider/insurer agreement or
84	84	3.19contract for submitted charges to medical assistance programs. The net submitted charge
85	85	3.20may not be greater than the patient liability for the service. The professional dispensing fee
86	86	3.21shall be $11.55 for prescriptions filled with legend drugs meeting the definition of "covered
87	87	3.22outpatient drugs" according to United States Code, title 42, section 1396r-8(k)(2). The
88	88	3.23dispensing fee for intravenous solutions that must be compounded by the pharmacist shall
89	89	3.24be $11.55 per claim. The professional dispensing fee for prescriptions filled with
90	90	3.25over-the-counter drugs meeting the definition of covered outpatient drugs shall be $11.55
91	91	3.26for dispensed quantities equal to or greater than the number of units contained in the
92	92	3.27manufacturer's original package. The professional dispensing fee shall be prorated based
93	93	3.28on the percentage of the package dispensed when the pharmacy dispenses a quantity less
94	94	3.29than the number of units contained in the manufacturer's original package. The pharmacy
95	95	3.30dispensing fee for prescribed over-the-counter drugs not meeting the definition of covered
96	96	3.31outpatient drugs shall be $3.65 for quantities equal to or greater than the number of units
97	97	3.32contained in the manufacturer's original package and shall be prorated based on the
98	98	3.33percentage of the package dispensed when the pharmacy dispenses a quantity less than the
99	99	3.34number of units contained in the manufacturer's original package. The National Average
100	100	3.35Drug Acquisition Cost (NADAC) shall be used to determine the ingredient cost of a drug.
101	101	3Sec. 4.
102	102	25-00559 as introduced12/04/24 REVISOR EAP/NS 4.1For drugs for which a NADAC is not reported, the commissioner shall estimate the ingredient
103	103	4.2cost at the wholesale acquisition cost minus two percent. The ingredient cost of a drug for
104	104	4.3a provider participating in the federal 340B Drug Pricing Program shall be either the 340B
105	105	4.4Drug Pricing Program ceiling price established by the Health Resources and Services
106	106	4.5Administration or NADAC, whichever is lower. Wholesale acquisition cost is defined as
107	107	4.6the manufacturer's list price for a drug or biological to wholesalers or direct purchasers in
108	108	4.7the United States, not including prompt pay or other discounts, rebates, or reductions in
109	109	4.8price, for the most recent month for which information is available, as reported in wholesale
110	110	4.9price guides or other publications of drug or biological pricing data. The maximum allowable
111	111	4.10cost of a multisource drug may be set by the commissioner and it shall be comparable to
112	112	4.11the actual acquisition cost of the drug product and no higher than the NADAC of the generic
113	113	4.12product. Establishment of the amount of payment for drugs shall not be subject to the
114	114	4.13requirements of the Administrative Procedure Act.
115	115	4.14 (b) Pharmacies dispensing prescriptions to residents of long-term care facilities using
116	116	4.15an automated drug distribution system meeting the requirements of section 151.58, or a
117	117	4.16packaging system meeting the packaging standards set forth in Minnesota Rules, part
118	118	4.176800.2700, that govern the return of unused drugs to the pharmacy for reuse, may employ
119	119	4.18retrospective billing for prescription drugs dispensed to long-term care facility residents. A
120	120	4.19retrospectively billing pharmacy must submit a claim only for the quantity of medication
121	121	4.20used by the enrolled recipient during the defined billing period. A retrospectively billing
122	122	4.21pharmacy must use a billing period not less than one calendar month or 30 days.
123	123	4.22 (c) A pharmacy provider using packaging that meets the standards set forth in Minnesota
124	124	4.23Rules, part 6800.2700, is required to credit the department for the actual acquisition cost
125	125	4.24of all unused drugs that are eligible for reuse, unless the pharmacy is using retrospective
126	126	4.25billing. The commissioner may permit the drug clozapine to be dispensed in a quantity that
127	127	4.26is less than a 30-day supply.
128	128	4.27 (d) If a pharmacy dispenses a multisource drug, the ingredient cost shall be the NADAC
129	129	4.28of the generic product or the maximum allowable cost established by the commissioner
130	130	4.29unless prior authorization for the brand name product has been granted according to the
131	131	4.30criteria established by the Drug Formulary Committee as required by subdivision 13f,
132	132	4.31paragraph (a), and the prescriber has indicated "dispense as written" on the prescription in
133	133	4.32a manner consistent with section 151.21, subdivision 2.
134	134	4.33 (e) The basis for determining the amount of payment for drugs administered in an
135	135	4.34outpatient setting shall be the lower of the usual and customary cost submitted by the
136	136	4.35provider, 106 percent of the average sales price as determined by the United States
137	137	4Sec. 4.
138	138	25-00559 as introduced12/04/24 REVISOR EAP/NS 5.1Department of Health and Human Services pursuant to title XVIII, section 1847a of the
139	139	5.2federal Social Security Act, the specialty pharmacy rate, or the maximum allowable cost
140	140	5.3set by the commissioner. If average sales price is unavailable, the amount of payment must
141	141	5.4be lower of the usual and customary cost submitted by the provider, the wholesale acquisition
142	142	5.5cost, the specialty pharmacy rate, or the maximum allowable cost set by the commissioner.
143	143	5.6The commissioner shall discount the payment rate for drugs obtained through the federal
144	144	5.7340B Drug Pricing Program by 28.6 percent. The payment for drugs administered in an
145	145	5.8outpatient setting shall be made to the administering facility or practitioner. A retail or
146	146	5.9specialty pharmacy dispensing a drug for administration in an outpatient setting is not
147	147	5.10eligible for direct reimbursement.
148	148	5.11 (f) The commissioner may establish maximum allowable cost rates for specialty pharmacy
149	149	5.12products that are lower than the ingredient cost formulas specified in paragraph (a). The
150	150	5.13commissioner may require individuals enrolled in the health care programs administered
151	151	5.14by the department to obtain specialty pharmacy products from providers with whom the
152	152	5.15commissioner has negotiated lower reimbursement rates. Specialty pharmacy products are
153	153	5.16defined as those used by a small number of recipients or recipients with complex and chronic
154	154	5.17diseases that require expensive and challenging drug regimens. Examples of these conditions
155	155	5.18include, but are not limited to: multiple sclerosis, HIV/AIDS, transplantation, hepatitis C,
156	156	5.19growth hormone deficiency, Crohn's Disease, rheumatoid arthritis, and certain forms of
157	157	5.20cancer. Specialty pharmaceutical products include injectable and infusion therapies,
158	158	5.21biotechnology drugs, antihemophilic factor products, high-cost therapies, and therapies that
159	159	5.22require complex care. The commissioner shall consult with the Formulary Committee to
160	160	5.23develop a list of specialty pharmacy products subject to maximum allowable cost
161	161	5.24reimbursement. In consulting with the Formulary Committee in developing this list, the
162	162	5.25commissioner shall take into consideration the population served by specialty pharmacy
163	163	5.26products, the current delivery system and standard of care in the state, and access to care
164	164	5.27issues. The commissioner shall have the discretion to adjust the maximum allowable cost
165	165	5.28to prevent access to care issues.
166	166	5.29 (g) Home infusion therapy services provided by home infusion therapy pharmacies must
167	167	5.30be paid at rates according to subdivision 8d.
168	168	5.31 (h) The commissioner shall contract with a vendor to conduct a cost of dispensing survey
169	169	5.32for all pharmacies that are physically located in the state of Minnesota that dispense outpatient
170	170	5.33drugs under medical assistance. The commissioner shall ensure that the vendor has prior
171	171	5.34experience in conducting cost of dispensing surveys. Each pharmacy enrolled with the
172	172	5.35department to dispense outpatient prescription drugs to fee-for-service members must
173	173	5Sec. 4.
174	174	25-00559 as introduced12/04/24 REVISOR EAP/NS 6.1respond to the cost of dispensing survey. The commissioner may sanction a pharmacy under
175	175	6.2section 256B.064 for failure to respond. The commissioner shall require the vendor to
176	176	6.3measure a single statewide cost of dispensing for specialty prescription drugs and a single
177	177	6.4statewide cost of dispensing for nonspecialty prescription drugs for all responding pharmacies
178	178	6.5to measure the mean, mean weighted by total prescription volume, mean weighted by
179	179	6.6medical assistance prescription volume, median, median weighted by total prescription
180	180	6.7volume, and median weighted by total medical assistance prescription volume. The
181	181	6.8commissioner shall post a copy of the final cost of dispensing survey report on the
182	182	6.9department's website. The initial survey must be completed no later than January 1, 2021,
183	183	6.10and repeated every three years. The commissioner shall provide a summary of the results
184	184	6.11of each cost of dispensing survey and provide recommendations for any changes to the
185	185	6.12dispensing fee to the chairs and ranking minority members of the legislative committees
186	186	6.13with jurisdiction over medical assistance pharmacy reimbursement. Notwithstanding section
187	187	6.14256.01, subdivision 42, this paragraph does not expire.
188	188	6.15 (i) The commissioner shall increase the ingredient cost reimbursement calculated in
189	189	6.16paragraphs (a) and (f) by 1.8 percent for prescription and nonprescription drugs subject to
190	190	6.17the wholesale drug distributor tax under section 295.52.
191	191	6.18 EFFECTIVE DATE.This section is effective for gross revenues received after
192	192	6.19December 31, 2025.
193	193	6.20 Sec. 5. Minnesota Statutes 2024, section 270B.14, subdivision 1, is amended to read:
194	194	6.21 Subdivision 1.Disclosure to commissioner of human services.(a) On the request of
195	195	6.22the commissioner of human services, the commissioner shall disclose return information
196	196	6.23regarding taxes imposed by chapter 290, and claims for refunds under chapter 290A, to the
197	197	6.24extent provided in paragraph (b) and for the purposes set forth in paragraph (c).
198	198	6.25 (b) Data that may be disclosed are limited to data relating to the identity, whereabouts,
199	199	6.26employment, income, and property of a person owing or alleged to be owing an obligation
200	200	6.27of child support.
201	201	6.28 (c) The commissioner of human services may request data only for the purposes of
202	202	6.29carrying out the child support enforcement program and to assist in the location of parents
203	203	6.30who have, or appear to have, deserted their children. Data received may be used only as set
204	204	6.31forth in section 518A.83.
205	205	6.32 (d) The commissioner shall provide the records and information necessary to administer
206	206	6.33the supplemental housing allowance to the commissioner of human services.
207	207	6Sec. 5.
208	208	25-00559 as introduced12/04/24 REVISOR EAP/NS 7.1 (e) At the request of the commissioner of human services, the commissioner of revenue
209	209	7.2shall electronically match the Social Security or individual taxpayer identification numbers
210	210	7.3and names of participants in the telephone assistance plan operated under sections 237.69
211	211	7.4to 237.71, with those of property tax refund filers under chapter 290A or renter's credit filers
212	212	7.5under section 290.0693, and determine whether each participant's household income is
213	213	7.6within the eligibility standards for the telephone assistance plan.
214	214	7.7 (f) The commissioner may provide records and information collected under sections
215	215	7.8295.50 to 295.59 to the commissioner of human services for purposes of the Medicaid
216	216	7.9Voluntary Contribution and Provider-Specific Tax Amendments of 1991, Public Law
217	217	7.10102-234. Upon the written agreement by the United States Department of Health and Human
218	218	7.11Services to maintain the confidentiality of the data, the commissioner may provide records
219	219	7.12and information collected under sections 295.50 to 295.59 to the Centers for Medicare and
220	220	7.13Medicaid Services section of the United States Department of Health and Human Services
221	221	7.14for purposes of meeting federal reporting requirements.
222	222	7.15 (g) (f) The commissioner may provide records and information to the commissioner of
223	223	7.16human services as necessary to administer the early refund of refundable tax credits.
224	224	7.17 (h) (g) The commissioner may disclose information to the commissioner of human
225	225	7.18services as necessary for income verification for eligibility and premium payment under
226	226	7.19the MinnesotaCare program, under section 256L.05, subdivision 2, as well as the medical
227	227	7.20assistance program under chapter 256B.
228	228	7.21 (i) (h) The commissioner may disclose information to the commissioner of human
229	229	7.22services necessary to verify whether applicants or recipients for the Minnesota family
230	230	7.23investment program, general assistance, the Supplemental Nutrition Assistance Program
231	231	7.24(SNAP), Minnesota supplemental aid program, and child care assistance have claimed
232	232	7.25refundable tax credits under chapter 290 and the property tax refund under chapter 290A,
233	233	7.26and the amounts of the credits.
234	234	7.27 (j) (i) At the request of the commissioner of human services and when authorized in
235	235	7.28writing by the taxpayer, the commissioner of revenue may match the business legal name
236	236	7.29or individual legal name, and the Minnesota tax identification number, federal Employer
237	237	7.30Identification Number, or Social Security number of the applicant under section 142C.03;
238	238	7.31245A.04, subdivision 1; or 245I.20; or license or certification holder. The commissioner of
239	239	7.32revenue may share the matching with the commissioner of human services. The matching
240	240	7.33may only be used by the commissioner of human services to determine eligibility for provider
241	241	7.34grant programs and to facilitate the regulatory oversight of license and certification holders
242	242	7Sec. 5.
243	243	25-00559 as introduced12/04/24 REVISOR EAP/NS 8.1as it relates to ownership and public funds program integrity. This paragraph applies only
244	244	8.2if the commissioner of human services and the commissioner of revenue enter into an
245	245	8.3interagency agreement for the purposes of this paragraph.
246	246	8.4 EFFECTIVE DATE.This section is effective for gross revenues received after
247	247	8.5December 31, 2025.
248	248	8.6 Sec. 6. Minnesota Statutes 2024, section 289A.38, subdivision 6, is amended to read:
249	249	8.7 Subd. 6.Omission in excess of 25 percent.Additional taxes may be assessed within
250	250	8.86-1/2 years after the due date of the return or the date the return was filed, whichever is
251	251	8.9later, if:
252	252	8.10 (1) the taxpayer omits from gross income an amount properly includable in it that is in
253	253	8.11excess of 25 percent of the amount of gross income stated in the return;
254	254	8.12 (2) the taxpayer omits from a sales, use, or withholding tax return, or a return for a tax
255	255	8.13imposed under section 295.52, an amount of taxes in excess of 25 percent of the taxes
256	256	8.14reported in the return; or
257	257	8.15 (3) the taxpayer omits from the gross estate assets in excess of 25 percent of the gross
258	258	8.16estate reported in the return.
259	259	8.17 EFFECTIVE DATE.This section is effective for gross revenues received after
260	260	8.18December 31, 2025.
261	261	8.19 Sec. 7. REPEALER.
262	262	8.20 Minnesota Statutes 2024, sections 13.4967, subdivision 3; 295.50, subdivisions 1, 1a,
263	263	8.212, 2a, 2b, 3, 4, 6, 6a, 7, 7a, 9b, 9c, 10a, 10c, 12b, 13, 13a, 14, 15, and 16; 295.51, subdivisions
264	264	8.221 and 1a; 295.52, subdivisions 1, 1a, 2, 3, 4, 4a, 5, 6, and 8; 295.53, subdivisions 1, 2, 3,
265	265	8.23and 4a; 295.54; 295.55; 295.56; 295.57; 295.58; 295.581; 295.582; and 295.59, and
266	266	8.24Minnesota Rules, parts 4650.0102, subpart 24e; and 4652.0100, subpart 20, are repealed.
267	267	8.25 EFFECTIVE DATE.This section is effective for gross revenues received after
268	268	8.26December 31, 2025.
269	269	8Sec. 7.
270	270	25-00559 as introduced12/04/24 REVISOR EAP/NS 13.4967 OTHER TAX DATA CODED ELSEWHERE.
271	271	Subd. 3.Hospital and health care provider tax.Certain patient data provided to the Department
272	272	of Revenue under sections 295.50 to 295.59 are classified under section 295.57, subdivision 2.
273	273	295.50 DEFINITIONS.
274	274	Subdivision 1.Definitions.For purposes of sections 295.50 to 295.59, the following terms have
275	275	the meanings given.
276	276	Subd. 1a.Blood components."Blood components" means the parts of the blood that are
277	277	separated from blood by physical or mechanical means and are intended for transfusion. Blood
278	278	components do not include blood derivatives.
279	279	Subd. 2.Commissioner."Commissioner" is the commissioner of revenue.
280	280	Subd. 2a.Delivered outside of Minnesota."Delivered outside of Minnesota" means property
281	281	which the seller delivers to a common carrier for delivery outside Minnesota, places in the United
282	282	States mail or parcel post directed to the purchaser outside Minnesota, or delivers to the purchaser
283	283	outside Minnesota by means of the seller's own delivery vehicles, and which is not later returned
284	284	to a point within Minnesota, except in the course of interstate commerce.
285	285	Subd. 2b.Emergency medical reasons."Emergency medical reasons" means a public health
286	286	emergency declaration pursuant to United States Code, title 42, section 247d; a national security
287	287	or peacetime emergency declared by the governor pursuant to section 12.31; or a situation involving
288	288	an action by the commissioner of health pursuant to section 144.4197, 144.4198, or 151.37,
289	289	subdivisions 2, paragraph (b), and 10, except that, for purposes of this subdivision, a drug shortage
290	290	not caused by a public health emergency shall not constitute an emergency medical reason.
291	291	Subd. 3.Gross revenues."Gross revenues" are total amounts received in money or otherwise
292	292	by:
293	293	(1) a hospital for patient services;
294	294	(2) a surgical center for patient services;
295	295	(3) a health care provider, other than a staff model health plan company, for patient services;
296	296	(4) a wholesale drug distributor for sale or distribution of legend drugs that are delivered in
297	297	Minnesota by the wholesale drug distributor, by common carrier, or by mail, unless the legend
298	298	drugs are delivered to another wholesale drug distributor who sells legend drugs exclusively at
299	299	wholesale; and
300	300	(5) a staff model health plan company as gross premiums for enrollees, co-payments, deductibles,
301	301	coinsurance, and fees for patient services.
302	302	Subd. 4.Health care provider.(a) "Health care provider" means:
303	303	(1) a person whose health care occupation is regulated or required to be regulated by the state
304	304	of Minnesota furnishing any or all of the following goods or services directly to a patient or
305	305	consumer: medical, surgical, optical, visual, dental, hearing, nursing services, drugs, laboratory,
306	306	diagnostic or therapeutic services;
307	307	(2) a person who provides goods and services not listed in clause (1) that qualify for
308	308	reimbursement under the medical assistance program provided under chapter 256B;
309	309	(3) a staff model health plan company;
310	310	(4) an ambulance service required to be licensed;
311	311	(5) a person who sells or repairs hearing aids and related equipment or prescription eyewear;
312	312	or
313	313	(6) a person providing patient services, who does not otherwise meet the definition of health
314	314	care provider and is not specifically excluded in clause (b), who employs or contracts with a health
315	315	care provider as defined in clauses (1) to (5) to perform, supervise, otherwise oversee, or consult
316	316	with regarding patient services.
317	317	(b) Health care provider does not include:
318	318	(1) hospitals; medical supplies distributors, except as specified under paragraph (a), clause (5);
319	319	nursing homes licensed under chapter 144A or licensed in any other jurisdiction; wholesale drug
320	320	1R
321	321	APPENDIX
322	322	Repealed Minnesota Statutes: 25-00559 distributors; pharmacies; surgical centers; bus and taxicab transportation, or any other providers of
323	323	transportation services other than ambulance services required to be licensed; supervised living
324	324	facilities for persons with developmental disabilities, licensed under Minnesota Rules, parts
325	325	4665.0100 to 4665.9900; housing with services establishments required to be registered under
326	326	chapter 144D; board and lodging establishments providing only custodial services that are licensed
327	327	under chapter 157 and registered under section 157.17 to provide supportive services or health
328	328	supervision services; adult foster homes as defined in Minnesota Rules, part 9555.5105; day training
329	329	and habilitation services for adults with developmental disabilities as defined in section 252.41,
330	330	subdivision 3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day
331	331	care centers as defined in Minnesota Rules, part 9555.9600;
332	332	(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15; a person
333	333	providing personal care services and supervision of personal care services as defined in Minnesota
334	334	Rules, part 9505.0335; a person providing home care nursing services as defined in Minnesota
335	335	Rules, part 9505.0360; and home care providers required to be licensed under chapter 144A for
336	336	home care services provided under chapter 144A;
337	337	(3) a person who employs health care providers solely for the purpose of providing patient
338	338	services to its employees;
339	339	(4) an educational institution that employs health care providers solely for the purpose of
340	340	providing patient services to its students if the institution does not receive fee for service payments
341	341	or payments for extended coverage; and
342	342	(5) a person who receives all payments for patient services from health care providers, surgical
343	343	centers, or hospitals for goods and services that are taxable to the paying health care providers,
344	344	surgical centers, or hospitals, as provided under section 295.53, subdivision 1, paragraph (b), clause
345	345	(3) or (4), or from a source of funds that is excluded or exempt from tax under sections 295.50 to
346	346	295.59.
347	347	Subd. 6.Home health care services."Home health care services" are services:
348	348	(1) defined under the state medical assistance program as home health agency services provided
349	349	by a home health agency, personal care services and supervision of personal care services, home
350	350	care nursing services, and waivered services or services by home care providers required to be
351	351	licensed under chapter 144A; and
352	352	(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing facility,
353	353	as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with
354	354	developmental disabilities as defined in section 256B.055, subdivision 12, paragraph (d).
355	355	Subd. 6a.Hospice care services."Hospice care services" are services:
356	356	(1) as defined in Minnesota Rules, part 9505.0297; and
357	357	(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing facility
358	358	as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with
359	359	developmental disabilities as defined in section 256B.055, subdivision 12, paragraph (d).
360	360	Subd. 7.Hospital."Hospital" means a hospital licensed under chapter 144, or a hospital licensed
361	361	by any other jurisdiction.
362	362	Subd. 7a.Manufacturer."Manufacturer" has the meaning provided in section 151.01,
363	363	subdivision 14a.
364	364	Subd. 9b.Patient services.(a) "Patient services" means inpatient and outpatient services and
365	365	other goods and services provided by hospitals, surgical centers, or health care providers. They
366	366	include the following health care goods and services provided to a patient or consumer:
367	367	(1) bed and board;
368	368	(2) nursing services and other related services;
369	369	(3) use of hospitals, surgical centers, or health care provider facilities;
370	370	(4) medical social services;
371	371	(5) drugs, biologicals, supplies, appliances, and equipment;
372	372	(6) other diagnostic or therapeutic items or services;
373	373	2R
374	374	APPENDIX
375	375	Repealed Minnesota Statutes: 25-00559 (7) medical or surgical services;
376	376	(8) items and services furnished to ambulatory patients not requiring emergency care; and
377	377	(9) emergency services.
378	378	(b) "Patient services" does not include:
379	379	(1) services provided to nursing homes licensed under chapter 144A;
380	380	(2) examinations for purposes of utilization reviews, insurance claims or eligibility, litigation,
381	381	and employment, including reviews of medical records for those purposes;
382	382	(3) services provided to and by community residential mental health facilities licensed under
383	383	section 245I.23 or Minnesota Rules, parts 9520.0500 to 9520.0670, and to and by residential
384	384	treatment programs for children with severe emotional disturbance licensed or certified under
385	385	chapter 245A;
386	386	(4) services provided under the following programs: day treatment services as defined in section
387	387	245.462, subdivision 8; assertive community treatment as described in section 256B.0622; adult
388	388	rehabilitative mental health services as described in section 256B.0623; crisis response services as
389	389	described in section 256B.0624; and children's therapeutic services and supports as described in
390	390	section 256B.0943;
391	391	(5) services provided to and by community mental health centers as defined in section 245.62,
392	392	subdivision 2;
393	393	(6) services provided to and by assisted living programs and congregate housing programs;
394	394	(7) hospice care services;
395	395	(8) home and community-based waivered services under chapter 256S and sections 256B.49
396	396	and 256B.501;
397	397	(9) targeted case management services under sections 256B.0621; 256B.0625, subdivisions 20,
398	398	20a, 33, and 44; and 256B.094; and
399	399	(10) services provided to the following: supervised living facilities for persons with
400	400	developmental disabilities licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; housing
401	401	with services establishments required to be registered under chapter 144D; board and lodging
402	402	establishments providing only custodial services that are licensed under chapter 157 and registered
403	403	under section 157.17 to provide supportive services or health supervision services; adult foster
404	404	homes as defined in Minnesota Rules, part 9555.5105; day training and habilitation services for
405	405	adults with developmental disabilities as defined in section 252.41, subdivision 3; boarding care
406	406	homes as defined in Minnesota Rules, part 4655.0100; adult day care services as defined in section
407	407	245A.02, subdivision 2a; and home health agencies as defined in Minnesota Rules, part 9505.0175,
408	408	subpart 15, or licensed under chapter 144A.
409	409	Subd. 9c.Person."Person" means an individual, partnership, limited liability company,
410	410	corporation, association, governmental unit or agency, or public or private organization of any kind.
411	411	Subd. 10a.Pharmacy."Pharmacy" means a pharmacy required to be licensed under chapter
412	412	151, or a pharmacy required to be licensed by any other jurisdiction.
413	413	Subd. 10c.Pharmacy benefits manager."Pharmacy benefits manager" means an entity that
414	414	performs pharmacy benefits management.
415	415	Subd. 12b.Staff model health plan company."Staff model health plan company" means a
416	416	health plan company as defined in section 62Q.01, subdivision 4, which employs one or more types
417	417	of health care provider to deliver health care services to the health plan company's enrollees.
418	418	Subd. 13.Surgical center."Surgical center" is an outpatient surgical center as defined in
419	419	Minnesota Rules, chapter 4675, or a similar facility located in any other jurisdiction.
420	420	Subd. 13a.Third-party purchaser of health care services."Third-party purchaser of health
421	421	care services" includes but is not limited to a health carrier or community integrated service network
422	422	that pays for health care services on behalf of patients or that reimburses, indemnifies, compensates,
423	423	or otherwise insures patients for health care services.
424	424	Subd. 14.Wholesale drug distributor."Wholesale drug distributor" means any person engaged
425	425	in wholesale drug distribution including but not limited to manufacturers; repackagers; own-label
426	426	3R
427	427	APPENDIX
428	428	Repealed Minnesota Statutes: 25-00559 distributors; jobbers; brokers; warehouses, including manufacturers' and distributors' warehouses,
429	429	chain drug warehouses, and wholesale drug warehouses; independent wholesale drug traders; and
430	430	pharmacies that conduct wholesale drug distribution. A wholesale drug distributor does not include
431	431	a common carrier or individual hired primarily to transport legend drugs.
432	432	Subd. 15.Legend drug."Legend drug" means a drug that is required by federal law to bear
433	433	one of the following statements: "Caution: Federal law prohibits dispensing without prescription"
434	434	or "Rx only." Legend drugs do not include nutritional products as defined in Minnesota Rules, part
435	435	9505.0325, subpart 1, and blood and blood components.
436	436	Subd. 16.Wholesale drug distribution."Wholesale drug distribution" means the sale or
437	437	distribution of legend drugs to a person other than a consumer or patient, but does not include:
438	438	(1) a sale between a division, subsidiary, parent, affiliated, or related company under the common
439	439	ownership and control of a corporate entity;
440	440	(2) the purchase or other acquisition, by a hospital or other health care entity that is a member
441	441	of a group purchasing organization, of a legend drug for its own use from the organization or from
442	442	other hospitals or health care entities that are members of such organizations;
443	443	(3) the sale, purchase, or trade of a legend drug by a charitable organization described in section
444	444	501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1988, to a
445	445	nonprofit affiliate of the organization to the extent otherwise permitted by law;
446	446	(4) the sale, purchase, or trade of a legend drug among hospitals or other health care entities
447	447	that are under common control;
448	448	(5) the sale, purchase, or trade of a legend drug for emergency medical reasons;
449	449	(6) the transfer of legend drugs by a retail pharmacy to another retail pharmacy to alleviate a
450	450	temporary shortage; or
451	451	(7) the distribution of legend drug samples by manufacturer representatives.
452	452	295.51 MINIMUM CONTACTS REQUIRED FOR JURISDICTION TO TAX GROSS
453	453	REVENUE.
454	454	Subdivision 1.Business transactions in Minnesota.A hospital, surgical center, or health care
455	455	provider is subject to tax under sections 295.50 to 295.59 if it is "transacting business in Minnesota."
456	456	A hospital, surgical center, or health care provider is transacting business in Minnesota if it maintains
457	457	contacts with or presence in the state of Minnesota sufficient to permit taxation of gross revenues
458	458	received for patient services under the United States Constitution.
459	459	Subd. 1a.Nexus in Minnesota.(a) To the extent allowed by the United States Constitution and
460	460	the laws of the United States, a person who is a wholesale drug distributor, a person subject to tax
461	461	under section 295.52, subdivision 4, or a person who sells or repairs hearing aids and related
462	462	equipment or prescription eyewear is subject to the taxes imposed by this chapter if the person:
463	463	(1) has or maintains within this state, directly or by a subsidiary or an affiliate, an office, place
464	464	of distribution, sales, storage, or sample room or place, warehouse, or other place of business,
465	465	including the employment of a resident of this state who works from a home office in this state;
466	466	(2) has a representative, including but not limited to an employee, affiliate, agent, salesperson,
467	467	canvasser, solicitor, independent contractor, or other third party operating in this state under the
468	468	person's authority or the authority of the person's subsidiary, for any purpose, including the repairing,
469	469	selling, delivering, installing, facilitating sales, processing sales, or soliciting of orders for the
470	470	person's goods or services, or the leasing of tangible personal property located in this state, whether
471	471	the place of business or the agent, representative, affiliate, salesperson, canvasser, or solicitor is
472	472	located in the state permanently or temporarily, or whether or not the person, subsidiary, or affiliate
473	473	is authorized to do business in this state;
474	474	(3) owns or leases real property that is located in this state; or
475	475	(4) owns or leases tangible personal property that is present in this state, including but not
476	476	limited to mobile property.
477	477	(b) To the extent allowed by the United States Constitution and the laws of the United States,
478	478	a person who is a wholesale drug distributor, or a person who is subject to tax under section 295.52,
479	479	subdivision 4, is subject to the taxes imposed by this chapter if the person:
480	480	4R
481	481	APPENDIX
482	482	Repealed Minnesota Statutes: 25-00559 (1) conducts a trade or business not described in paragraph (a) and sells, delivers, or distributes
483	483	legend drugs from outside this state to a destination within this state by common carrier or otherwise;
484	484	and
485	485	(2) meets one of the following thresholds:
486	486	(i) makes 200 or more sales, deliveries, or distributions described in clause (1) during any taxable
487	487	year;
488	488	(ii) the gross revenues of a wholesale drug distributor that sells, delivers, or distributes legend
489	489	drugs as described in clause (1) totals more than $100,000 during any taxable year; or
490	490	(iii) the price paid by a person who is subject to tax under section 295.52, subdivision 4, totals
491	491	more than $100,000 for legend drugs that the person sells, delivers, or distributes as described in
492	492	clause (1) during any taxable year.
493	493	(c) To the extent allowed by the United States Constitution and the laws of the United States,
494	494	a person who sells or repairs hearing aids and related equipment or prescription eyewear is subject
495	495	to the taxes imposed by this chapter if the person:
496	496	(1) conducts a trade or business not described in paragraph (a) and:
497	497	(i) sells, delivers, or distributes hearing aids and related equipment or prescription eyewear from
498	498	outside of this state to a destination within this state by common carrier or otherwise; or
499	499	(ii) repairs hearing aids and related equipment or prescription eyewear outside of this state and
500	500	delivers or distributes the hearing aids and related equipment or prescription eyewear to a destination
501	501	within this state by common carrier or otherwise; and
502	502	(2) meets one of the following thresholds:
503	503	(i) makes 200 or more sales, deliveries, distributions, or repairs described in clause (1) during
504	504	any taxable year; or
505	505	(ii) the gross revenues of the person who sells, delivers, distributes, or repairs hearing aids and
506	506	related equipment or prescription eyewear described in clause (1) totals more than $100,000 during
507	507	any taxable year.
508	508	(d) Once a taxpayer has established nexus with Minnesota under paragraph (b) or (c), the
509	509	taxpayer must continue to file an annual return and remit taxes for subsequent years. A taxpayer
510	510	who has established nexus under paragraph (b) or (c) is no longer required to file an annual return
511	511	and remit taxes if the taxpayer:
512	512	(1) ceases to engage in the activities or no longer meets any of the applicable thresholds in
513	513	paragraph (b) or (c) for an entire taxable year; and
514	514	(2) notifies the commissioner by March 15 of the following calendar year, in a manner prescribed
515	515	by the commissioner, that the taxpayer no longer engages in any of the activities or no longer meets
516	516	any of the applicable thresholds in paragraph (b) or (c).
517	517	(e) If, after notifying the commissioner pursuant to paragraph (d), the taxpayer subsequently
518	518	engages in any of the activities and meets any of the applicable thresholds in paragraph (b) or (c),
519	519	the taxpayer shall again comply with the applicable requirements of paragraphs (b) to (d).
520	520	295.52 TAXES IMPOSED.
521	521	Subdivision 1.Hospital tax.A tax is imposed on each hospital equal to 1.8 percent of its gross
522	522	revenues.
523	523	Subd. 1a.Surgical center tax.A tax is imposed on each surgical center equal to 1.8 percent of
524	524	its gross revenues.
525	525	Subd. 2.Provider tax.A tax is imposed on each health care provider equal to 1.8 percent of
526	526	its gross revenues.
527	527	Subd. 3.Wholesale drug distributor tax.A tax is imposed on each wholesale drug distributor
528	528	equal to 1.8 percent of its gross revenues.
529	529	Subd. 4.Use tax; legend drugs.(a) A person that receives legend drugs for resale or use in
530	530	Minnesota, other than from a wholesale drug distributor that is subject to tax under subdivision 3,
531	531	is subject to a tax equal to the price paid for the legend drugs multiplied by 1.8 percent. Liability
532	532	for the tax is incurred when legend drugs are received or delivered in Minnesota by the person.
533	533	5R
534	534	APPENDIX
535	535	Repealed Minnesota Statutes: 25-00559 (b) A tax imposed under this subdivision does not apply to purchases by an individual for
536	536	personal consumption.
537	537	Subd. 4a.Tax collection.A wholesale drug distributor with nexus in Minnesota, who is not
538	538	subject to tax under subdivision 3, on all or a particular transaction is required to collect the tax
539	539	imposed under subdivision 4, from the purchaser of the drugs and give the purchaser a receipt for
540	540	the tax paid. The tax collected shall be remitted to the commissioner in the manner prescribed by
541	541	section 295.55, subdivision 3.
542	542	Subd. 5.Volunteer ambulance services.Volunteer ambulance services are not subject to the
543	543	tax under this section. For purposes of this requirement, "volunteer ambulance service" means an
544	544	ambulance service in which all of the individuals whose primary responsibility is direct patient care
545	545	meet the definition of volunteer under section 144E.001, subdivision 15. The ambulance service
546	546	may employ administrative and support staff, and remain eligible for this exemption, if the primary
547	547	responsibility of these staff is not direct patient care.
548	548	Subd. 6.Hearing aids and prescription eyewear.The tax liability of a person who meets the
549	549	definition of a health care provider solely because the person sells or repairs hearing aids and related
550	550	equipment or prescription eyewear is limited to the gross revenues received from the sale or repair
551	551	of these items.
552	552	Subd. 8.Contingent reduction in tax rate.(a) By December 1 of each year, beginning in 2011,
553	553	the commissioner of management and budget shall determine the projected balance in the health
554	554	care access fund for the biennium.
555	555	(b) If the commissioner of management and budget determines that the projected balance in the
556	556	health care access fund for the biennium reflects a ratio of revenues to expenditures and transfers
557	557	greater than 125 percent, and if the actual cash balance in the fund is adequate, as determined by
558	558	the commissioner of management and budget, the commissioner, in consultation with the
559	559	commissioner of revenue, shall reduce the tax rates levied under subdivisions 1, 1a, 2, 3, and 4, for
560	560	the subsequent calendar year sufficient to reduce the structural balance in the fund. The rate may
561	561	be reduced to the extent that the projected revenues for the biennium do not exceed 125 percent of
562	562	expenditures and transfers. The new rate shall be rounded to the nearest one-tenth of one percent.
563	563	The rate reduction under this paragraph expires at the end of each calendar year and is subject to
564	564	an annual redetermination by the commissioner of management and budget.
565	565	(c) For purposes of the analysis defined in paragraph (b), the commissioner of management and
566	566	budget shall include projected revenues.
567	567	295.53 EXCLUSIONS AND EXEMPTIONS; SPECIAL RULES.
568	568	Subdivision 1.Exclusions and exemptions.(a) The following payments are excluded from the
569	569	gross revenues subject to the hospital, surgical center, or health care provider taxes under sections
570	570	295.50 to 295.59:
571	571	(1) payments received by a health care provider or the wholly owned subsidiary of a health care
572	572	provider for care provided outside Minnesota;
573	573	(2) government payments received by the Direct Care and Treatment executive board for
574	574	state-operated services;
575	575	(3) payments received by a health care provider for hearing aids and related equipment or
576	576	prescription eyewear delivered outside of Minnesota; and
577	577	(4) payments received by an educational institution from student tuition, student activity fees,
578	578	health care service fees, government appropriations, donations, or grants, and for services identified
579	579	in and provided under an individualized education program as defined in section 256B.0625 or
580	580	Code of Federal Regulations, chapter 34, section 300.340(a). Fee for service payments and payments
581	581	for extended coverage are taxable.
582	582	(b) The following payments are exempted from the gross revenues subject to hospital, surgical
583	583	center, or health care provider taxes under sections 295.50 to 295.59:
584	584	(1) payments received for services provided under the Medicare program, including payments
585	585	received from the government and organizations governed by sections 1833, 1853, and 1876 of
586	586	title XVIII of the federal Social Security Act, United States Code, title 42, section 1395; and enrollee
587	587	deductibles, co-insurance, and co-payments, whether paid by the Medicare enrollee, by Medicare
588	588	supplemental coverage as described in section 62A.011, subdivision 3, clause (10), or by Medicaid
589	589	6R
590	590	APPENDIX
591	591	Repealed Minnesota Statutes: 25-00559 payments under title XIX of the federal Social Security Act. Payments for services not covered by
592	592	Medicare are taxable;
593	593	(2) payments received for home health care services;
594	594	(3) payments received from hospitals or surgical centers for goods and services on which liability
595	595	for tax is imposed under section 295.52 or the source of funds for the payment is exempt under
596	596	clause (1), (6), (9), (10), or (11);
597	597	(4) payments received from the health care providers for goods and services on which liability
598	598	for tax is imposed under this chapter or the source of funds for the payment is exempt under clause
599	599	(1), (6), (9), (10), or (11);
600	600	(5) amounts paid for legend drugs to a wholesale drug distributor who is subject to tax under
601	601	section 295.52, subdivision 3, reduced by reimbursement received for legend drugs otherwise
602	602	exempt under this chapter;
603	603	(6) payments received from the behavioral health fund under chapter 254B;
604	604	(7) payments received in the nature of charitable donations that are not designated for providing
605	605	patient services to a specific individual or group;
606	606	(8) payments received for providing patient services incurred through a formal program of
607	607	health care research conducted in conformity with federal regulations governing research on human
608	608	subjects. Payments received from patients or from other persons paying on behalf of the patients
609	609	are subject to tax;
610	610	(9) payments received from any governmental agency for services benefiting the public, not
611	611	including payments made by the government in its capacity as an employer or insurer or payments
612	612	made by the government for services provided under the MinnesotaCare program or the medical
613	613	assistance program governed by title XIX of the federal Social Security Act, United States Code,
614	614	title 42, sections 1396 to 1396v;
615	615	(10) payments received under the federal Employees Health Benefits Act, United States Code,
616	616	title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of 1990. Enrollee deductibles,
617	617	co-insurance, and co-payments are subject to tax;
618	618	(11) payments received under the federal Tricare program, Code of Federal Regulations, title
619	619	32, section 199.17(a)(7). Enrollee deductibles, co-insurance, and co-payments are subject to tax;
620	620	and
621	621	(12) supplemental, enhanced, or uniform adjustment factor payments authorized under section
622	622	256B.196, 256B.197, or 256B.1973.
623	623	(c) Payments received by wholesale drug distributors for legend drugs sold directly to
624	624	veterinarians or veterinary bulk purchasing organizations are excluded from the gross revenues
625	625	subject to the wholesale drug distributor tax under sections 295.50 to 295.59.
626	626	Subd. 2.Deductions for staff model health plan company.In addition to the exemptions
627	627	allowed under subdivision 1, a staff model health plan company may deduct from its gross revenues
628	628	for the year:
629	629	(1) amounts paid to hospitals, surgical centers, and health care providers that are not employees
630	630	of the staff model health plan company for services on which liability for the tax is imposed under
631	631	section 295.52;
632	632	(2) net amounts added to reserves, to the extent that the amounts added do not cause total reserves
633	633	to exceed 200 percent of the statutory net worth requirement, the calculation of which may be
634	634	determined on a consolidated basis, taking into account the amounts held in reserve by affiliated
635	635	staff model health plan companies;
636	636	(3) assessments for the comprehensive health insurance plan under section 62E.11; and
637	637	(4) amounts spent for administration as reported as total administration to the Department of
638	638	Health in the statement of revenues, expenses, and net worth pursuant to section 62D.08, subdivision
639	639	3, clause (a).
640	640	Subd. 3.Separate statement of tax.A hospital, surgical center, health care provider, or
641	641	wholesale drug distributor must not state the tax obligation under section 295.52 in a deceptive or
642	642	misleading manner. It must not separately state tax obligations on bills provided to patients,
643	643	7R
644	644	APPENDIX
645	645	Repealed Minnesota Statutes: 25-00559 consumers, or other payers when the amount received for the services or goods is not subject to
646	646	tax.
647	647	Pharmacies that separately state the tax obligations on bills provided to consumers or to other
648	648	payers who purchase legend drugs may state the tax obligation as the wholesale price of the legend
649	649	drugs multiplied by the tax percentage specified in section 295.52. Pharmacies must not state the
650	650	tax obligation based on the retail price.
651	651	Whenever the commissioner determines that a person has engaged in any act or practice
652	652	constituting a violation of this subdivision, the commissioner may bring an action in the name of
653	653	the state in the district court of the appropriate county to enjoin the act or practice and to enforce
654	654	compliance with this subdivision, or the commissioner may refer the matter to the attorney general
655	655	or the county attorney of the appropriate county. Upon a proper showing, a permanent or temporary
656	656	injunction, restraining order, or other appropriate relief must be granted.
657	657	Subd. 4a.Credit for research.(a) In addition to the exemptions allowed under subdivision 1,
658	658	a hospital or health care provider may claim an annual credit against the total amount of tax, if any,
659	659	the hospital or health care provider owes for that calendar year under sections 295.50 to 295.57.
660	660	The credit shall equal 2.5 percent of revenues for patient services used to fund expenditures for
661	661	qualifying research conducted by an allowable research program. The amount of the credit shall
662	662	not exceed the tax liability of the hospital or health care provider under sections 295.50 to 295.57.
663	663	(b) For purposes of this subdivision, the following requirements apply:
664	664	(1) expenditures must be for program costs of qualifying research conducted by an allowable
665	665	research program;
666	666	(2) an allowable research program must be a formal program of medical and health care research
667	667	conducted by an entity which is exempt under section 501(c)(3) of the Internal Revenue Code as
668	668	defined in section 289A.02, subdivision 7, or is owned and operated under authority of a
669	669	governmental unit;
670	670	(3) qualifying research must:
671	671	(A) be approved in writing by the governing body of the hospital or health care provider which
672	672	is taking the deduction under this subdivision;
673	673	(B) have as its purpose the development of new knowledge in basic or applied science relating
674	674	to the diagnosis and treatment of conditions affecting the human body;
675	675	(C) be subject to review by individuals with expertise in the subject matter of the proposed
676	676	study but who have no financial interest in the proposed study and are not involved in the conduct
677	677	of the proposed study; and
678	678	(D) be subject to review and supervision by an institutional review board operating in conformity
679	679	with federal regulations if the research involves human subjects or an institutional animal care and
680	680	use committee operating in conformity with federal regulations if the research involves animal
681	681	subjects. Research expenses are not exempt if the study is a routine evaluation of health care methods
682	682	or products used in a particular setting conducted for the purpose of making a management decision.
683	683	Costs of clinical research activities paid directly for the benefit of an individual patient are excluded
684	684	from this exemption. Basic research in fields including biochemistry, molecular biology, and
685	685	physiology are also included if such programs are subject to a peer review process.
686	686	(c) No credit shall be allowed under this subdivision for any revenue received by the hospital
687	687	or health care provider in the form of a grant, gift, or otherwise, whether from a government or
688	688	nongovernment source, on which the tax liability under section 295.52 is not imposed.
689	689	(d) The taxpayer shall apply for the credit under this section on the annual return under section
690	690	295.55, subdivision 5.
691	691	(e) Beginning September 1, 2001, if the actual or estimated amount paid under this section for
692	692	the calendar year exceeds $2,500,000, the commissioner of management and budget shall determine
693	693	the rate of the research credit for the following calendar year to the nearest one-half percent so that
694	694	refunds paid under this section will most closely equal $2,500,000. The commissioner of management
695	695	and budget shall publish in the State Register by October 1 of each year the rate of the credit for
696	696	the following calendar year. A determination under this section is not subject to the rulemaking
697	697	provisions of chapter 14.
698	698	8R
699	699	APPENDIX
700	700	Repealed Minnesota Statutes: 25-00559 295.54 CREDIT FOR TAXES PAID.
701	701	Subdivision 1.Taxes paid to another state.A hospital, surgical center, or health care provider
702	702	that has paid taxes to another jurisdiction measured by gross revenues and is subject to tax under
703	703	sections 295.52 to 295.59 on the same gross revenues is entitled to a credit for the tax legally due
704	704	and paid to another jurisdiction to the extent of the lesser of (1) the tax actually paid to the other
705	705	jurisdiction, or (2) the amount of tax imposed by Minnesota on the gross revenues subject to tax in
706	706	the other taxing jurisdictions.
707	707	Subd. 2.Pharmacy refund.A pharmacy may claim an annual refund against the total amount
708	708	of tax, if any, the pharmacy owes during that calendar year under section 295.52, subdivision 4.
709	709	The refund shall equal the amount paid by the pharmacy to a wholesale drug distributor subject to
710	710	tax under section 295.52, subdivision 3, for legend drugs delivered by the pharmacy outside of
711	711	Minnesota, multiplied by the tax percentage specified in section 295.52, subdivision 3. If the amount
712	712	of the refund exceeds the tax liability of the pharmacy under section 295.52, subdivision 4, the
713	713	commissioner shall provide the pharmacy with a refund equal to the excess amount. Each qualifying
714	714	pharmacy must apply for the refund on the annual return as prescribed by the commissioner, on or
715	715	before March 15 of the year following the calendar year the legend drugs were delivered outside
716	716	Minnesota. The refund shall not be allowed if the initial claim for refund is filed more than one
717	717	year after the original due date of the return. Interest on refunds paid under this subdivision will
718	718	begin to accrue 60 days after the date a claim for refund is filed. For purposes of this subdivision,
719	719	the date a claim is filed is the due date of the return if a return is due or the date of the actual claim
720	720	for refund, whichever is later.
721	721	Subd. 3.Wholesale drug distributor credit.A wholesale drug distributor who has paid taxes
722	722	to another state or province or territory of Canada measured by gross revenues or sales and is subject
723	723	to tax under sections 295.52 to 295.59 on the same gross revenues or sales is entitled to a credit for
724	724	the tax legally due and paid to another state or province or territory of Canada to the extent of the
725	725	lesser of (1) the tax actually paid to the other state or province or territory of Canada or (2) the
726	726	amount of tax imposed by Minnesota on the gross revenues or sales subject to tax in the other taxing
727	727	jurisdictions.
728	728	295.55 PAYMENT OF TAX.
729	729	Subdivision 1.Scope.The provisions of this section apply to the taxes imposed under sections
730	730	295.50 to 295.58.
731	731	Subd. 2.Estimated tax; hospitals; surgical centers.(a) Each hospital or surgical center must
732	732	make estimated payments of the taxes for the calendar year in monthly installments to the
733	733	commissioner within 15 days after the end of the month.
734	734	(b) Estimated tax payments are not required of hospitals or surgical centers if: (1) the tax for
735	735	the current calendar year is $500 or less; or (2) the tax for the previous calendar year is $500 or
736	736	less.
737	737	(c) Underpayment of estimated installments bear interest at the rate specified in section 270C.40,
738	738	from the due date of the payment until paid or until the due date of the annual return whichever
739	739	comes first. An underpayment of an estimated installment is the difference between the amount
740	740	paid and the lesser of (1) 90 percent of one-twelfth of the tax for the calendar year or (2) one-twelfth
741	741	of the total tax for the previous calendar year.
742	742	Subd. 3.Estimated tax; other taxpayers.(a) Each taxpayer, other than a hospital or surgical
743	743	center, must make estimated payments of the taxes for the calendar year in quarterly installments
744	744	to the commissioner by April 15, July 15, October 15, and January 15 of the following calendar
745	745	year.
746	746	(b) Estimated tax payments are not required if: (1) the tax for the current calendar year is $500
747	747	or less; or (2) the tax for the previous calendar year is $500 or less.
748	748	(c) Underpayment of estimated installments bear interest at the rate specified in section 270C.40,
749	749	from the due date of the payment until paid or until the due date of the annual return whichever
750	750	comes first. An underpayment of an estimated installment is the difference between the amount
751	751	paid and the lesser of (1) 90 percent of one-quarter of the tax for the calendar year or (2) one-quarter
752	752	of the total tax for the previous calendar year.
753	753	Subd. 4.Electronic payments.A taxpayer with an aggregate tax liability of $10,000 or more
754	754	in a fiscal year ending June 30 must remit all liabilities by electronic means in all subsequent
755	755	calendar years.
756	756	9R
757	757	APPENDIX
758	758	Repealed Minnesota Statutes: 25-00559 Subd. 5.Annual return.The taxpayer must file an annual return reconciling the estimated
759	759	payments by March 15 of the following calendar year.
760	760	Subd. 6.Form of returns.The commissioner shall prescribe the content, format, and manner
761	761	of the estimated payment forms and annual return pursuant to section 270C.30.
762	762	Subd. 7.Extensions for filing returns.If good cause exists, the commissioner may extend the
763	763	time for filing MinnesotaCare tax returns for not more than 60 days.
764	764	295.56 TRANSFER OF ACCOUNTS RECEIVABLE.
765	765	When a hospital, surgical center, health care provider, or wholesale drug distributor transfers,
766	766	assigns, or sells accounts receivable to another person who is subject to tax under this chapter,
767	767	liability for the tax on the accounts receivable is imposed on the transferee, assignee, or buyer of
768	768	the accounts receivable. No liability for these accounts receivable is imposed on the transferor,
769	769	assignor, or seller of the accounts receivable.
770	770	295.57 COLLECTION AND ENFORCEMENT; REFUNDS; APPLICATION OF OTHER
771	771	CHAPTERS; ACCESS TO RECORDS; INTEREST ON OVERPAYMENTS.
772	772	Subdivision 1.Application of other chapters.Unless specifically provided otherwise by
773	773	sections 295.50 to 295.59, the interest, criminal penalties, and refunds provisions in chapter 289A,
774	774	the civil penalty provisions applicable to withholding and sales taxes under section 289A.60, and
775	775	the audit, assessment, appeal, collection, enforcement, and administrative provisions of chapters
776	776	270C and 289A, apply to taxes imposed under sections 295.50 to 295.59.
777	777	Subd. 2.Access to records.For purposes of administering the taxes imposed by sections 295.50
778	778	to 295.59, the commissioner may access patients' records that contain billing or other financial
779	779	information without prior consent from the patients. The data collected is classified as private or
780	780	nonpublic data.
781	781	Subd. 3.Interest on overpayments.Interest must be paid on an overpayment refunded or
782	782	credited to the taxpayer in the manner provided in section 289A.56, subdivision 2.
783	783	Subd. 4.Sampling techniques.The commissioner may use statistical or other sampling
784	784	techniques consistent with generally accepted auditing standards in examining returns or records
785	785	and making assessments.
786	786	Subd. 5.Exemption for amounts paid for legend drugs.If a hospital, surgical center, or health
787	787	care provider cannot determine the actual cost or reimbursement of legend drugs under the exemption
788	788	provided in section 295.53, subdivision 1, paragraph (b), clause (5), the following method must be
789	789	used:
790	790	A hospital, surgical center, or health care provider must determine the amount paid for legend
791	791	drugs used during the month or quarter and multiply that amount by a ratio, the numerator of which
792	792	is the total amount received for taxable patient services, and the denominator of which is the total
793	793	amount received for all patient services, including amounts exempt under section 295.53, subdivision
794	794	1, paragraph (b). The result represents the allowable exemption for the monthly or quarterly cost
795	795	of drugs.
796	796	295.58 DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.
797	797	The commissioner shall deposit all revenues, including penalties and interest, derived from the
798	798	taxes imposed by sections 295.50 to 295.57 and from the insurance premiums tax imposed by
799	799	section 297I.05, subdivision 5, on health maintenance organizations, community integrated service
800	800	networks, and nonprofit health service plan corporations in the health care access fund. There is
801	801	annually appropriated from the health care access fund to the commissioner of revenue the amount
802	802	necessary to make refunds under this chapter.
803	803	295.581 PROHIBITION ON NON-MINNESOTACARE TRANSFERS FROM FUND.
804	804	Notwithstanding any law to the contrary, and notwithstanding section 645.33, money in the
805	805	health care access fund shall be appropriated only for purposes that are consistent with past and
806	806	current MinnesotaCare appropriations in Laws 1992, chapter 549; Laws 1993, chapter 345; Laws
807	807	1994, chapter 625; and Laws 1995, chapter 234, or for initiatives that are part of the section 1115
808	808	of the Social Security Act health care reform waiver submitted to the federal Centers for Medicare
809	809	and Medicaid Services by the commissioner of human services as appropriated in Laws 1995,
810	810	chapter 234.
811	811	10R
812	812	APPENDIX
813	813	Repealed Minnesota Statutes: 25-00559 295.582 AUTHORITY.
814	814	Subdivision 1.Tax expense transfer.(a) The tax expense generated by section 295.52 may be
815	815	transferred as follows:
816	816	(1) a hospital, surgical center, or health care provider subject to the tax under section 295.52
817	817	may transfer the tax expense to all third-party contracts for the purchase of health care services on
818	818	behalf of a patient or consumer;
819	819	(2) a wholesale drug distributor subject to the tax under section 295.52 may transfer the tax
820	820	expense to entities that purchase legend drugs from the wholesale drug distributor; and
821	821	(3) a pharmacy that has paid the tax expense transferred by a wholesale drug distributor may
822	822	transfer the tax expense to all third-party contracts for the purchase of health care services on behalf
823	823	of a patient or consumer. Nothing shall prohibit a pharmacy from transferring the tax expense
824	824	generated under section 295.52 to a pharmacy benefits manager.
825	825	(b) The transfer of the tax expense under paragraph (a) must comply with the following:
826	826	(1) the tax expense transferred to the third-party purchaser or a pharmacy benefits manager
827	827	must not exceed the tax percentage specified in section 295.52 multiplied against:
828	828	(i) gross revenues received under the third-party contract; and
829	829	(ii) co-payments and deductibles paid by the individual patient or consumer; and
830	830	(2) the tax expense must not be generated on revenues derived from payments that are excluded
831	831	or exempted from the tax under section 295.53.
832	832	(c) Payment of the transferred tax expense is required as follows:
833	833	(1) all third-party purchasers of health care services, including but not limited to third-party
834	834	purchasers regulated under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A,
835	835	or under section 471.61 or 471.617, and pharmacy benefits managers must pay the transferred
836	836	expense. This is in addition to any payments due under existing contracts with the hospital, surgical
837	837	center, pharmacy, or health care provider, to the extent allowed under federal law; and
838	838	(2) all entities that purchase legend drugs from a wholesale drug distributor must pay the
839	839	transferred expense.
840	840	(d) A third-party purchaser or pharmacy benefits manager must comply with this section
841	841	regardless of whether the third-party purchaser or pharmacy benefits manager is a for-profit,
842	842	not-for-profit, or nonprofit entity.
843	843	(e) Nothing in this section limits the ability of a hospital, surgical center, health care provider,
844	844	pharmacy, or wholesale drug distributor to recover all or part of the section 295.52 obligation by
845	845	other methods, including increasing fees or charges.
846	846	(f) Any hospital, surgical center, or health care provider subject to a tax under section 295.52
847	847	or a pharmacy that has paid the additional expense transferred under this section by a wholesale
848	848	drug distributor may file a complaint with the commissioner responsible for regulating the third-party
849	849	purchaser if at any time the third-party purchaser fails to comply with this section.
850	850	(g) If the commissioner responsible for regulating the third-party purchaser finds at any time
851	851	that the third-party purchaser has not complied with this section, the commissioner may take
852	852	enforcement action against a third-party purchaser which is subject to the commissioner's regulatory
853	853	jurisdiction and which does not allow a hospital, surgical center, pharmacy, or provider to
854	854	pass-through the tax expense. The commissioner may by order fine or censure the third-party
855	855	purchaser or revoke or suspend the certificate of authority or license of the third-party purchaser
856	856	to do business in this state if the commissioner finds that the third-party purchaser has not complied
857	857	with this section. The third-party purchaser may appeal the commissioner's order through a contested
858	858	case hearing in accordance with chapter 14.
859	859	Subd. 2.Agreement.A contracting agreement between a third-party purchaser or a pharmacy
860	860	benefits manager and a resident or nonresident pharmacy registered under chapter 151, may not
861	861	prohibit:
862	862	(1) a pharmacy that has paid additional expense transferred under this section by a wholesale
863	863	drug distributor from exercising its option under this section to transfer such additional expenses
864	864	generated by the section 295.52 obligations on to the third-party purchaser or pharmacy benefits
865	865	manager; or
866	866	11R
867	867	APPENDIX
868	868	Repealed Minnesota Statutes: 25-00559 (2) a pharmacy that is subject to tax under section 295.52, subdivision 4, from exercising its
869	869	option under this section to recover all or part of the section 295.52 obligations from the third-party
870	870	purchaser or a pharmacy benefits manager.
871	871	295.59 SEVERABILITY.
872	872	If any section, subdivision, clause, or phrase of sections 295.50 to 295.582 is for any reason
873	873	held to be unconstitutional or in violation of federal law, the decision shall not affect the validity
874	874	of the remaining portions of sections 295.50 to 295.582. The legislature declares that it would have
875	875	passed sections 295.50 to 295.582 and each section, subdivision, sentence, clause, and phrase
876	876	thereof, irrespective of the fact that any one or more sections, subdivisions, sentences, clauses, or
877	877	phrases is declared unconstitutional.
878	878	12R
879	879	APPENDIX
880	880	Repealed Minnesota Statutes: 25-00559 4650.0102DEFINITIONS.
881	881	Subp. 24e.MinnesotaCare tax."MinnesotaCare tax" means expenses for the
882	882	MinnesotaCare tax under Minnesota Statutes, sections 295.52 and 295.582. For purposes
883	883	of reporting under part 4650.0112, the MinnesotaCare tax is an operating expense.
884	884	4652.0100DEFINITIONS.
885	885	Subp. 20.MinnesotaCare tax expenses."MinnesotaCare tax expenses" means all
886	886	payments made for the MinnesotaCare tax under Minnesota Statutes, sections 295.52 and
887	887	295.582.
888	888	13R
889	889	APPENDIX
890	890	Repealed Minnesota Rules: 25-00559