1.1 A bill for an act
1.2 relating to taxation; repealing the gross revenues tax on hospitals and health care
1.3 providers; making related technical changes; amending Minnesota Statutes 2024,
1.4 sections 62J.041, subdivision 1; 214.16, subdivision 3; 256B.04, subdivision 25;
1.5 256B.0625, subdivision 13e; 270B.14, subdivision 1; 289A.38, subdivision 6;
1.6 repealing Minnesota Statutes 2024, sections 13.4967, subdivision 3; 295.50,
1.7 subdivisions 1, 1a, 2, 2a, 2b, 3, 4, 6, 6a, 7, 7a, 9b, 9c, 10a, 10c, 12b, 13, 13a, 14,
1.8 15, 16; 295.51, subdivisions 1, 1a; 295.52, subdivisions 1, 1a, 2, 3, 4, 4a, 5, 6, 8;
1.9 295.53, subdivisions 1, 2, 3, 4a; 295.54; 295.55; 295.56; 295.57; 295.58; 295.581;
1.10 295.582; 295.59; Minnesota Rules, parts 4650.0102, subpart 24e; 4652.0100,
1.11 subpart 20.
1.12BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.13 Section 1. Minnesota Statutes 2024, section 62J.041, subdivision 1, is amended to read:
1.14 Subdivision 1.Definitions.(a) For purposes of this section, the following definitions
1.15apply.
1.16 (b) "Health plan company" has the definition provided in section 62Q.01.
1.17 (c) "Total expenditures" means incurred claims or expenditures on health care services,
1.18administrative expenses, charitable contributions, and all other payments made by health
1.19plan companies out of premium revenues.
1.20 (d) "Net expenditures" means total expenditures minus exempted taxes and assessments
1.21and payments or allocations made to establish or maintain reserves.
1.22 (e) "Exempted taxes and assessments" means direct payments for taxes to government
1.23agencies, contributions to the Minnesota Comprehensive Health Association, the medical
1.24assistance provider's surcharge under section 256.9657, the MinnesotaCare provider tax
1.25under section 295.52, assessments by the Health Coverage Reinsurance Association,
1Section 1.
25-00559 as introduced12/04/24 REVISOR EAP/NS
SENATE
STATE OF MINNESOTA
S.F. No. 102NINETY-FOURTH SESSION
(SENATE AUTHORS: DRAZKOWSKI)
OFFICIAL STATUSD-PGDATE
Introduction and first reading01/16/2025
Referred to Taxes 2.1assessments by the Minnesota Life and Health Insurance Guaranty Association, assessments
2.2by the Minnesota Risk Adjustment Association, and any new assessments imposed by
2.3federal or state law.
2.4 (f) "Consumer cost-sharing or subscriber liability" means enrollee coinsurance,
2.5co-payment, deductible payments, and amounts in excess of benefit plan maximums.
2.6 EFFECTIVE DATE.This section is effective for gross revenues received after
2.7December 31, 2025.
2.8 Sec. 2. Minnesota Statutes 2024, section 214.16, subdivision 3, is amended to read:
2.9 Subd. 3.Grounds for disciplinary action.The board shall take disciplinary action,
2.10which may include license revocation, against a regulated person for:
2.11 (1) intentional failure to provide the commissioner of health with the data required under
2.12chapter 62J; and
2.13 (2) intentional failure to provide the commissioner of revenue with data on gross revenue
2.14and other information required for the commissioner to implement sections 295.50 to 295.58;
2.15 (3) intentional failure to pay the health care provider tax required under section 295.52;
2.16and
2.17 (4) (2) entering into a contract or arrangement that is prohibited under sections 62J.70
2.18to 62J.73.
2.19 EFFECTIVE DATE.This section is effective for gross revenues received after
2.20December 31, 2025.
2.21 Sec. 3. Minnesota Statutes 2024, section 256B.04, subdivision 25, is amended to read:
2.22 Subd. 25.Medical assistance and MinnesotaCare payment increase.(a) The
2.23commissioner shall increase medical assistance and MinnesotaCare fee-for-service payments
2.24by an amount equal to the tax rate defined for hospitals, surgical centers, or health care
2.25providers under sections 295.50 to 295.57 for all services subject to those taxes.
2.26 (b) The commissioner shall reflect in the total payments made to managed care
2.27organizations, county-based purchasing plans, and other participating entities contracted
2.28with the commissioner under section 256B.69, the cost of: (1) payments made to providers
2.29for the tax on the services outlined in paragraph (a); and (2) the taxes imposed under sections
2.30297I.05, subdivision 5, and 256.9657, subdivision 3, on premium revenue paid by the state
2.31for medical assistance and the MinnesotaCare program. Any increase based on clause (2)
2Sec. 3.
25-00559 as introduced12/04/24 REVISOR EAP/NS 3.1must be reflected in provider rates paid by the managed care organization, county-based
3.2purchasing plan, or other participating entity, unless the managed care organization,
3.3county-based purchasing plan, or other participating entity is a staff model health plan
3.4company.
3.5 EFFECTIVE DATE.This section is effective for gross revenues received after
3.6December 31, 2025.
3.7 Sec. 4. Minnesota Statutes 2024, section 256B.0625, subdivision 13e, is amended to read:
3.8 Subd. 13e.Payment rates.(a) The basis for determining the amount of payment shall
3.9be the lower of the ingredient costs of the drugs plus the professional dispensing fee; or the
3.10usual and customary price charged to the public. The usual and customary price means the
3.11lowest price charged by the provider to a patient who pays for the prescription by cash,
3.12check, or charge account and includes prices the pharmacy charges to a patient enrolled in
3.13a prescription savings club or prescription discount club administered by the pharmacy or
3.14pharmacy chain, unless the prescription savings club or prescription discount club is one
3.15in which an individual pays a recurring monthly access fee for unlimited access to a defined
3.16list of drugs for which the pharmacy does not bill the member or a payer on a
3.17per-standard-transaction basis. The amount of payment basis must be reduced to reflect all
3.18discount amounts applied to the charge by any third-party provider/insurer agreement or
3.19contract for submitted charges to medical assistance programs. The net submitted charge
3.20may not be greater than the patient liability for the service. The professional dispensing fee
3.21shall be $11.55 for prescriptions filled with legend drugs meeting the definition of "covered
3.22outpatient drugs" according to United States Code, title 42, section 1396r-8(k)(2). The
3.23dispensing fee for intravenous solutions that must be compounded by the pharmacist shall
3.24be $11.55 per claim. The professional dispensing fee for prescriptions filled with
3.25over-the-counter drugs meeting the definition of covered outpatient drugs shall be $11.55
3.26for dispensed quantities equal to or greater than the number of units contained in the
3.27manufacturer's original package. The professional dispensing fee shall be prorated based
3.28on the percentage of the package dispensed when the pharmacy dispenses a quantity less
3.29than the number of units contained in the manufacturer's original package. The pharmacy
3.30dispensing fee for prescribed over-the-counter drugs not meeting the definition of covered
3.31outpatient drugs shall be $3.65 for quantities equal to or greater than the number of units
3.32contained in the manufacturer's original package and shall be prorated based on the
3.33percentage of the package dispensed when the pharmacy dispenses a quantity less than the
3.34number of units contained in the manufacturer's original package. The National Average
3.35Drug Acquisition Cost (NADAC) shall be used to determine the ingredient cost of a drug.
3Sec. 4.
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
4.2cost at the wholesale acquisition cost minus two percent. The ingredient cost of a drug for
4.3a provider participating in the federal 340B Drug Pricing Program shall be either the 340B
4.4Drug Pricing Program ceiling price established by the Health Resources and Services
4.5Administration or NADAC, whichever is lower. Wholesale acquisition cost is defined as
4.6the manufacturer's list price for a drug or biological to wholesalers or direct purchasers in
4.7the United States, not including prompt pay or other discounts, rebates, or reductions in
4.8price, for the most recent month for which information is available, as reported in wholesale
4.9price guides or other publications of drug or biological pricing data. The maximum allowable
4.10cost of a multisource drug may be set by the commissioner and it shall be comparable to
4.11the actual acquisition cost of the drug product and no higher than the NADAC of the generic
4.12product. Establishment of the amount of payment for drugs shall not be subject to the
4.13requirements of the Administrative Procedure Act.
4.14 (b) Pharmacies dispensing prescriptions to residents of long-term care facilities using
4.15an automated drug distribution system meeting the requirements of section 151.58, or a
4.16packaging system meeting the packaging standards set forth in Minnesota Rules, part
4.176800.2700, that govern the return of unused drugs to the pharmacy for reuse, may employ
4.18retrospective billing for prescription drugs dispensed to long-term care facility residents. A
4.19retrospectively billing pharmacy must submit a claim only for the quantity of medication
4.20used by the enrolled recipient during the defined billing period. A retrospectively billing
4.21pharmacy must use a billing period not less than one calendar month or 30 days.
4.22 (c) A pharmacy provider using packaging that meets the standards set forth in Minnesota
4.23Rules, part 6800.2700, is required to credit the department for the actual acquisition cost
4.24of all unused drugs that are eligible for reuse, unless the pharmacy is using retrospective
4.25billing. The commissioner may permit the drug clozapine to be dispensed in a quantity that
4.26is less than a 30-day supply.
4.27 (d) If a pharmacy dispenses a multisource drug, the ingredient cost shall be the NADAC
4.28of the generic product or the maximum allowable cost established by the commissioner
4.29unless prior authorization for the brand name product has been granted according to the
4.30criteria established by the Drug Formulary Committee as required by subdivision 13f,
4.31paragraph (a), and the prescriber has indicated "dispense as written" on the prescription in
4.32a manner consistent with section 151.21, subdivision 2.
4.33 (e) The basis for determining the amount of payment for drugs administered in an
4.34outpatient setting shall be the lower of the usual and customary cost submitted by the
4.35provider, 106 percent of the average sales price as determined by the United States
4Sec. 4.
25-00559 as introduced12/04/24 REVISOR EAP/NS 5.1Department of Health and Human Services pursuant to title XVIII, section 1847a of the
5.2federal Social Security Act, the specialty pharmacy rate, or the maximum allowable cost
5.3set by the commissioner. If average sales price is unavailable, the amount of payment must
5.4be lower of the usual and customary cost submitted by the provider, the wholesale acquisition
5.5cost, the specialty pharmacy rate, or the maximum allowable cost set by the commissioner.
5.6The commissioner shall discount the payment rate for drugs obtained through the federal
5.7340B Drug Pricing Program by 28.6 percent. The payment for drugs administered in an
5.8outpatient setting shall be made to the administering facility or practitioner. A retail or
5.9specialty pharmacy dispensing a drug for administration in an outpatient setting is not
5.10eligible for direct reimbursement.
5.11 (f) The commissioner may establish maximum allowable cost rates for specialty pharmacy
5.12products that are lower than the ingredient cost formulas specified in paragraph (a). The
5.13commissioner may require individuals enrolled in the health care programs administered
5.14by the department to obtain specialty pharmacy products from providers with whom the
5.15commissioner has negotiated lower reimbursement rates. Specialty pharmacy products are
5.16defined as those used by a small number of recipients or recipients with complex and chronic
5.17diseases that require expensive and challenging drug regimens. Examples of these conditions
5.18include, but are not limited to: multiple sclerosis, HIV/AIDS, transplantation, hepatitis C,
5.19growth hormone deficiency, Crohn's Disease, rheumatoid arthritis, and certain forms of
5.20cancer. Specialty pharmaceutical products include injectable and infusion therapies,
5.21biotechnology drugs, antihemophilic factor products, high-cost therapies, and therapies that
5.22require complex care. The commissioner shall consult with the Formulary Committee to
5.23develop a list of specialty pharmacy products subject to maximum allowable cost
5.24reimbursement. In consulting with the Formulary Committee in developing this list, the
5.25commissioner shall take into consideration the population served by specialty pharmacy
5.26products, the current delivery system and standard of care in the state, and access to care
5.27issues. The commissioner shall have the discretion to adjust the maximum allowable cost
5.28to prevent access to care issues.
5.29 (g) Home infusion therapy services provided by home infusion therapy pharmacies must
5.30be paid at rates according to subdivision 8d.
5.31 (h) The commissioner shall contract with a vendor to conduct a cost of dispensing survey
5.32for all pharmacies that are physically located in the state of Minnesota that dispense outpatient
5.33drugs under medical assistance. The commissioner shall ensure that the vendor has prior
5.34experience in conducting cost of dispensing surveys. Each pharmacy enrolled with the
5.35department to dispense outpatient prescription drugs to fee-for-service members must
5Sec. 4.
25-00559 as introduced12/04/24 REVISOR EAP/NS 6.1respond to the cost of dispensing survey. The commissioner may sanction a pharmacy under
6.2section 256B.064 for failure to respond. The commissioner shall require the vendor to
6.3measure a single statewide cost of dispensing for specialty prescription drugs and a single
6.4statewide cost of dispensing for nonspecialty prescription drugs for all responding pharmacies
6.5to measure the mean, mean weighted by total prescription volume, mean weighted by
6.6medical assistance prescription volume, median, median weighted by total prescription
6.7volume, and median weighted by total medical assistance prescription volume. The
6.8commissioner shall post a copy of the final cost of dispensing survey report on the
6.9department's website. The initial survey must be completed no later than January 1, 2021,
6.10and repeated every three years. The commissioner shall provide a summary of the results
6.11of each cost of dispensing survey and provide recommendations for any changes to the
6.12dispensing fee to the chairs and ranking minority members of the legislative committees
6.13with jurisdiction over medical assistance pharmacy reimbursement. Notwithstanding section
6.14256.01, subdivision 42, this paragraph does not expire.
6.15 (i) The commissioner shall increase the ingredient cost reimbursement calculated in
6.16paragraphs (a) and (f) by 1.8 percent for prescription and nonprescription drugs subject to
6.17the wholesale drug distributor tax under section 295.52.
6.18 EFFECTIVE DATE.This section is effective for gross revenues received after
6.19December 31, 2025.
6.20 Sec. 5. Minnesota Statutes 2024, section 270B.14, subdivision 1, is amended to read:
6.21 Subdivision 1.Disclosure to commissioner of human services.(a) On the request of
6.22the commissioner of human services, the commissioner shall disclose return information
6.23regarding taxes imposed by chapter 290, and claims for refunds under chapter 290A, to the
6.24extent provided in paragraph (b) and for the purposes set forth in paragraph (c).
6.25 (b) Data that may be disclosed are limited to data relating to the identity, whereabouts,
6.26employment, income, and property of a person owing or alleged to be owing an obligation
6.27of child support.
6.28 (c) The commissioner of human services may request data only for the purposes of
6.29carrying out the child support enforcement program and to assist in the location of parents
6.30who have, or appear to have, deserted their children. Data received may be used only as set
6.31forth in section 518A.83.
6.32 (d) The commissioner shall provide the records and information necessary to administer
6.33the supplemental housing allowance to the commissioner of human services.
6Sec. 5.
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
7.2shall electronically match the Social Security or individual taxpayer identification numbers
7.3and names of participants in the telephone assistance plan operated under sections 237.69
7.4to 237.71, with those of property tax refund filers under chapter 290A or renter's credit filers
7.5under section 290.0693, and determine whether each participant's household income is
7.6within the eligibility standards for the telephone assistance plan.
7.7 (f) The commissioner may provide records and information collected under sections
7.8295.50 to 295.59 to the commissioner of human services for purposes of the Medicaid
7.9Voluntary Contribution and Provider-Specific Tax Amendments of 1991, Public Law
7.10102-234. Upon the written agreement by the United States Department of Health and Human
7.11Services to maintain the confidentiality of the data, the commissioner may provide records
7.12and information collected under sections 295.50 to 295.59 to the Centers for Medicare and
7.13Medicaid Services section of the United States Department of Health and Human Services
7.14for purposes of meeting federal reporting requirements.
7.15 (g) (f) The commissioner may provide records and information to the commissioner of
7.16human services as necessary to administer the early refund of refundable tax credits.
7.17 (h) (g) The commissioner may disclose information to the commissioner of human
7.18services as necessary for income verification for eligibility and premium payment under
7.19the MinnesotaCare program, under section 256L.05, subdivision 2, as well as the medical
7.20assistance program under chapter 256B.
7.21 (i) (h) The commissioner may disclose information to the commissioner of human
7.22services necessary to verify whether applicants or recipients for the Minnesota family
7.23investment program, general assistance, the Supplemental Nutrition Assistance Program
7.24(SNAP), Minnesota supplemental aid program, and child care assistance have claimed
7.25refundable tax credits under chapter 290 and the property tax refund under chapter 290A,
7.26and the amounts of the credits.
7.27 (j) (i) At the request of the commissioner of human services and when authorized in
7.28writing by the taxpayer, the commissioner of revenue may match the business legal name
7.29or individual legal name, and the Minnesota tax identification number, federal Employer
7.30Identification Number, or Social Security number of the applicant under section 142C.03;
7.31245A.04, subdivision 1; or 245I.20; or license or certification holder. The commissioner of
7.32revenue may share the matching with the commissioner of human services. The matching
7.33may only be used by the commissioner of human services to determine eligibility for provider
7.34grant programs and to facilitate the regulatory oversight of license and certification holders
7Sec. 5.
25-00559 as introduced12/04/24 REVISOR EAP/NS 8.1as it relates to ownership and public funds program integrity. This paragraph applies only
8.2if the commissioner of human services and the commissioner of revenue enter into an
8.3interagency agreement for the purposes of this paragraph.
8.4 EFFECTIVE DATE.This section is effective for gross revenues received after
8.5December 31, 2025.
8.6 Sec. 6. Minnesota Statutes 2024, section 289A.38, subdivision 6, is amended to read:
8.7 Subd. 6.Omission in excess of 25 percent.Additional taxes may be assessed within
8.86-1/2 years after the due date of the return or the date the return was filed, whichever is
8.9later, if:
8.10 (1) the taxpayer omits from gross income an amount properly includable in it that is in
8.11excess of 25 percent of the amount of gross income stated in the return;
8.12 (2) the taxpayer omits from a sales, use, or withholding tax return, or a return for a tax
8.13imposed under section 295.52, an amount of taxes in excess of 25 percent of the taxes
8.14reported in the return; or
8.15 (3) the taxpayer omits from the gross estate assets in excess of 25 percent of the gross
8.16estate reported in the return.
8.17 EFFECTIVE DATE.This section is effective for gross revenues received after
8.18December 31, 2025.
8.19 Sec. 7. REPEALER.
8.20 Minnesota Statutes 2024, sections 13.4967, subdivision 3; 295.50, subdivisions 1, 1a,
8.212, 2a, 2b, 3, 4, 6, 6a, 7, 7a, 9b, 9c, 10a, 10c, 12b, 13, 13a, 14, 15, and 16; 295.51, subdivisions
8.221 and 1a; 295.52, subdivisions 1, 1a, 2, 3, 4, 4a, 5, 6, and 8; 295.53, subdivisions 1, 2, 3,
8.23and 4a; 295.54; 295.55; 295.56; 295.57; 295.58; 295.581; 295.582; and 295.59, and
8.24Minnesota Rules, parts 4650.0102, subpart 24e; and 4652.0100, subpart 20, are repealed.
8.25 EFFECTIVE DATE.This section is effective for gross revenues received after
8.26December 31, 2025.
8Sec. 7.
25-00559 as introduced12/04/24 REVISOR EAP/NS 13.4967 OTHER TAX DATA CODED ELSEWHERE.
Subd. 3.Hospital and health care provider tax.Certain patient data provided to the Department
of Revenue under sections 295.50 to 295.59 are classified under section 295.57, subdivision 2.
295.50 DEFINITIONS.
Subdivision 1.Definitions.For purposes of sections 295.50 to 295.59, the following terms have
the meanings given.
Subd. 1a.Blood components."Blood components" means the parts of the blood that are
separated from blood by physical or mechanical means and are intended for transfusion. Blood
components do not include blood derivatives.
Subd. 2.Commissioner."Commissioner" is the commissioner of revenue.
Subd. 2a.Delivered outside of Minnesota."Delivered outside of Minnesota" means property
which the seller delivers to a common carrier for delivery outside Minnesota, places in the United
States mail or parcel post directed to the purchaser outside Minnesota, or delivers to the purchaser
outside Minnesota by means of the seller's own delivery vehicles, and which is not later returned
to a point within Minnesota, except in the course of interstate commerce.
Subd. 2b.Emergency medical reasons."Emergency medical reasons" means a public health
emergency declaration pursuant to United States Code, title 42, section 247d; a national security
or peacetime emergency declared by the governor pursuant to section 12.31; or a situation involving
an action by the commissioner of health pursuant to section 144.4197, 144.4198, or 151.37,
subdivisions 2, paragraph (b), and 10, except that, for purposes of this subdivision, a drug shortage
not caused by a public health emergency shall not constitute an emergency medical reason.
Subd. 3.Gross revenues."Gross revenues" are total amounts received in money or otherwise
by:
(1) a hospital for patient services;
(2) a surgical center for patient services;
(3) a health care provider, other than a staff model health plan company, for patient services;
(4) a wholesale drug distributor for sale or distribution of legend drugs that are delivered in
Minnesota by the wholesale drug distributor, by common carrier, or by mail, unless the legend
drugs are delivered to another wholesale drug distributor who sells legend drugs exclusively at
wholesale; and
(5) a staff model health plan company as gross premiums for enrollees, co-payments, deductibles,
coinsurance, and fees for patient services.
Subd. 4.Health care provider.(a) "Health care provider" means:
(1) a person whose health care occupation is regulated or required to be regulated by the state
of Minnesota furnishing any or all of the following goods or services directly to a patient or
consumer: medical, surgical, optical, visual, dental, hearing, nursing services, drugs, laboratory,
diagnostic or therapeutic services;
(2) a person who provides goods and services not listed in clause (1) that qualify for
reimbursement under the medical assistance program provided under chapter 256B;
(3) a staff model health plan company;
(4) an ambulance service required to be licensed;
(5) a person who sells or repairs hearing aids and related equipment or prescription eyewear;
or
(6) a person providing patient services, who does not otherwise meet the definition of health
care provider and is not specifically excluded in clause (b), who employs or contracts with a health
care provider as defined in clauses (1) to (5) to perform, supervise, otherwise oversee, or consult
with regarding patient services.
(b) Health care provider does not include:
(1) hospitals; medical supplies distributors, except as specified under paragraph (a), clause (5);
nursing homes licensed under chapter 144A or licensed in any other jurisdiction; wholesale drug
1R
APPENDIX
Repealed Minnesota Statutes: 25-00559 distributors; pharmacies; surgical centers; bus and taxicab transportation, or any other providers of
transportation services other than ambulance services required to be licensed; supervised living
facilities for persons with developmental disabilities, licensed under Minnesota Rules, parts
4665.0100 to 4665.9900; housing with services establishments required to be registered under
chapter 144D; board and lodging establishments providing only custodial services that are licensed
under chapter 157 and registered under section 157.17 to provide supportive services or health
supervision services; adult foster homes as defined in Minnesota Rules, part 9555.5105; day training
and habilitation services for adults with developmental disabilities as defined in section 252.41,
subdivision 3; boarding care homes, as defined in Minnesota Rules, part 4655.0100; and adult day
care centers as defined in Minnesota Rules, part 9555.9600;
(2) home health agencies as defined in Minnesota Rules, part 9505.0175, subpart 15; a person
providing personal care services and supervision of personal care services as defined in Minnesota
Rules, part 9505.0335; a person providing home care nursing services as defined in Minnesota
Rules, part 9505.0360; and home care providers required to be licensed under chapter 144A for
home care services provided under chapter 144A;
(3) a person who employs health care providers solely for the purpose of providing patient
services to its employees;
(4) an educational institution that employs health care providers solely for the purpose of
providing patient services to its students if the institution does not receive fee for service payments
or payments for extended coverage; and
(5) a person who receives all payments for patient services from health care providers, surgical
centers, or hospitals for goods and services that are taxable to the paying health care providers,
surgical centers, or hospitals, as provided under section 295.53, subdivision 1, paragraph (b), clause
(3) or (4), or from a source of funds that is excluded or exempt from tax under sections 295.50 to
295.59.
Subd. 6.Home health care services."Home health care services" are services:
(1) defined under the state medical assistance program as home health agency services provided
by a home health agency, personal care services and supervision of personal care services, home
care nursing services, and waivered services or services by home care providers required to be
licensed under chapter 144A; and
(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing facility,
as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with
developmental disabilities as defined in section 256B.055, subdivision 12, paragraph (d).
Subd. 6a.Hospice care services."Hospice care services" are services:
(1) as defined in Minnesota Rules, part 9505.0297; and
(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing facility
as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with
developmental disabilities as defined in section 256B.055, subdivision 12, paragraph (d).
Subd. 7.Hospital."Hospital" means a hospital licensed under chapter 144, or a hospital licensed
by any other jurisdiction.
Subd. 7a.Manufacturer."Manufacturer" has the meaning provided in section 151.01,
subdivision 14a.
Subd. 9b.Patient services.(a) "Patient services" means inpatient and outpatient services and
other goods and services provided by hospitals, surgical centers, or health care providers. They
include the following health care goods and services provided to a patient or consumer:
(1) bed and board;
(2) nursing services and other related services;
(3) use of hospitals, surgical centers, or health care provider facilities;
(4) medical social services;
(5) drugs, biologicals, supplies, appliances, and equipment;
(6) other diagnostic or therapeutic items or services;
2R
APPENDIX
Repealed Minnesota Statutes: 25-00559 (7) medical or surgical services;
(8) items and services furnished to ambulatory patients not requiring emergency care; and
(9) emergency services.
(b) "Patient services" does not include:
(1) services provided to nursing homes licensed under chapter 144A;
(2) examinations for purposes of utilization reviews, insurance claims or eligibility, litigation,
and employment, including reviews of medical records for those purposes;
(3) services provided to and by community residential mental health facilities licensed under
section 245I.23 or Minnesota Rules, parts 9520.0500 to 9520.0670, and to and by residential
treatment programs for children with severe emotional disturbance licensed or certified under
chapter 245A;
(4) services provided under the following programs: day treatment services as defined in section
245.462, subdivision 8; assertive community treatment as described in section 256B.0622; adult
rehabilitative mental health services as described in section 256B.0623; crisis response services as
described in section 256B.0624; and children's therapeutic services and supports as described in
section 256B.0943;
(5) services provided to and by community mental health centers as defined in section 245.62,
subdivision 2;
(6) services provided to and by assisted living programs and congregate housing programs;
(7) hospice care services;
(8) home and community-based waivered services under chapter 256S and sections 256B.49
and 256B.501;
(9) targeted case management services under sections 256B.0621; 256B.0625, subdivisions 20,
20a, 33, and 44; and 256B.094; and
(10) services provided to the following: supervised living facilities for persons with
developmental disabilities licensed under Minnesota Rules, parts 4665.0100 to 4665.9900; housing
with services establishments required to be registered under chapter 144D; board and lodging
establishments providing only custodial services that are licensed under chapter 157 and registered
under section 157.17 to provide supportive services or health supervision services; adult foster
homes as defined in Minnesota Rules, part 9555.5105; day training and habilitation services for
adults with developmental disabilities as defined in section 252.41, subdivision 3; boarding care
homes as defined in Minnesota Rules, part 4655.0100; adult day care services as defined in section
245A.02, subdivision 2a; and home health agencies as defined in Minnesota Rules, part 9505.0175,
subpart 15, or licensed under chapter 144A.
Subd. 9c.Person."Person" means an individual, partnership, limited liability company,
corporation, association, governmental unit or agency, or public or private organization of any kind.
Subd. 10a.Pharmacy."Pharmacy" means a pharmacy required to be licensed under chapter
151, or a pharmacy required to be licensed by any other jurisdiction.
Subd. 10c.Pharmacy benefits manager."Pharmacy benefits manager" means an entity that
performs pharmacy benefits management.
Subd. 12b.Staff model health plan company."Staff model health plan company" means a
health plan company as defined in section 62Q.01, subdivision 4, which employs one or more types
of health care provider to deliver health care services to the health plan company's enrollees.
Subd. 13.Surgical center."Surgical center" is an outpatient surgical center as defined in
Minnesota Rules, chapter 4675, or a similar facility located in any other jurisdiction.
Subd. 13a.Third-party purchaser of health care services."Third-party purchaser of health
care services" includes but is not limited to a health carrier or community integrated service network
that pays for health care services on behalf of patients or that reimburses, indemnifies, compensates,
or otherwise insures patients for health care services.
Subd. 14.Wholesale drug distributor."Wholesale drug distributor" means any person engaged
in wholesale drug distribution including but not limited to manufacturers; repackagers; own-label
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APPENDIX
Repealed Minnesota Statutes: 25-00559 distributors; jobbers; brokers; warehouses, including manufacturers' and distributors' warehouses,
chain drug warehouses, and wholesale drug warehouses; independent wholesale drug traders; and
pharmacies that conduct wholesale drug distribution. A wholesale drug distributor does not include
a common carrier or individual hired primarily to transport legend drugs.
Subd. 15.Legend drug."Legend drug" means a drug that is required by federal law to bear
one of the following statements: "Caution: Federal law prohibits dispensing without prescription"
or "Rx only." Legend drugs do not include nutritional products as defined in Minnesota Rules, part
9505.0325, subpart 1, and blood and blood components.
Subd. 16.Wholesale drug distribution."Wholesale drug distribution" means the sale or
distribution of legend drugs to a person other than a consumer or patient, but does not include:
(1) a sale between a division, subsidiary, parent, affiliated, or related company under the common
ownership and control of a corporate entity;
(2) the purchase or other acquisition, by a hospital or other health care entity that is a member
of a group purchasing organization, of a legend drug for its own use from the organization or from
other hospitals or health care entities that are members of such organizations;
(3) the sale, purchase, or trade of a legend drug by a charitable organization described in section
501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1988, to a
nonprofit affiliate of the organization to the extent otherwise permitted by law;
(4) the sale, purchase, or trade of a legend drug among hospitals or other health care entities
that are under common control;
(5) the sale, purchase, or trade of a legend drug for emergency medical reasons;
(6) the transfer of legend drugs by a retail pharmacy to another retail pharmacy to alleviate a
temporary shortage; or
(7) the distribution of legend drug samples by manufacturer representatives.
295.51 MINIMUM CONTACTS REQUIRED FOR JURISDICTION TO TAX GROSS
REVENUE.
Subdivision 1.Business transactions in Minnesota.A hospital, surgical center, or health care
provider is subject to tax under sections 295.50 to 295.59 if it is "transacting business in Minnesota."
A hospital, surgical center, or health care provider is transacting business in Minnesota if it maintains
contacts with or presence in the state of Minnesota sufficient to permit taxation of gross revenues
received for patient services under the United States Constitution.
Subd. 1a.Nexus in Minnesota.(a) To the extent allowed by the United States Constitution and
the laws of the United States, a person who is a wholesale drug distributor, a person subject to tax
under section 295.52, subdivision 4, or a person who sells or repairs hearing aids and related
equipment or prescription eyewear is subject to the taxes imposed by this chapter if the person:
(1) has or maintains within this state, directly or by a subsidiary or an affiliate, an office, place
of distribution, sales, storage, or sample room or place, warehouse, or other place of business,
including the employment of a resident of this state who works from a home office in this state;
(2) has a representative, including but not limited to an employee, affiliate, agent, salesperson,
canvasser, solicitor, independent contractor, or other third party operating in this state under the
person's authority or the authority of the person's subsidiary, for any purpose, including the repairing,
selling, delivering, installing, facilitating sales, processing sales, or soliciting of orders for the
person's goods or services, or the leasing of tangible personal property located in this state, whether
the place of business or the agent, representative, affiliate, salesperson, canvasser, or solicitor is
located in the state permanently or temporarily, or whether or not the person, subsidiary, or affiliate
is authorized to do business in this state;
(3) owns or leases real property that is located in this state; or
(4) owns or leases tangible personal property that is present in this state, including but not
limited to mobile property.
(b) To the extent allowed by the United States Constitution and the laws of the United States,
a person who is a wholesale drug distributor, or a person who is subject to tax under section 295.52,
subdivision 4, is subject to the taxes imposed by this chapter if the person:
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APPENDIX
Repealed Minnesota Statutes: 25-00559 (1) conducts a trade or business not described in paragraph (a) and sells, delivers, or distributes
legend drugs from outside this state to a destination within this state by common carrier or otherwise;
and
(2) meets one of the following thresholds:
(i) makes 200 or more sales, deliveries, or distributions described in clause (1) during any taxable
year;
(ii) the gross revenues of a wholesale drug distributor that sells, delivers, or distributes legend
drugs as described in clause (1) totals more than $100,000 during any taxable year; or
(iii) the price paid by a person who is subject to tax under section 295.52, subdivision 4, totals
more than $100,000 for legend drugs that the person sells, delivers, or distributes as described in
clause (1) during any taxable year.
(c) To the extent allowed by the United States Constitution and the laws of the United States,
a person who sells or repairs hearing aids and related equipment or prescription eyewear is subject
to the taxes imposed by this chapter if the person:
(1) conducts a trade or business not described in paragraph (a) and:
(i) sells, delivers, or distributes hearing aids and related equipment or prescription eyewear from
outside of this state to a destination within this state by common carrier or otherwise; or
(ii) repairs hearing aids and related equipment or prescription eyewear outside of this state and
delivers or distributes the hearing aids and related equipment or prescription eyewear to a destination
within this state by common carrier or otherwise; and
(2) meets one of the following thresholds:
(i) makes 200 or more sales, deliveries, distributions, or repairs described in clause (1) during
any taxable year; or
(ii) the gross revenues of the person who sells, delivers, distributes, or repairs hearing aids and
related equipment or prescription eyewear described in clause (1) totals more than $100,000 during
any taxable year.
(d) Once a taxpayer has established nexus with Minnesota under paragraph (b) or (c), the
taxpayer must continue to file an annual return and remit taxes for subsequent years. A taxpayer
who has established nexus under paragraph (b) or (c) is no longer required to file an annual return
and remit taxes if the taxpayer:
(1) ceases to engage in the activities or no longer meets any of the applicable thresholds in
paragraph (b) or (c) for an entire taxable year; and
(2) notifies the commissioner by March 15 of the following calendar year, in a manner prescribed
by the commissioner, that the taxpayer no longer engages in any of the activities or no longer meets
any of the applicable thresholds in paragraph (b) or (c).
(e) If, after notifying the commissioner pursuant to paragraph (d), the taxpayer subsequently
engages in any of the activities and meets any of the applicable thresholds in paragraph (b) or (c),
the taxpayer shall again comply with the applicable requirements of paragraphs (b) to (d).
295.52 TAXES IMPOSED.
Subdivision 1.Hospital tax.A tax is imposed on each hospital equal to 1.8 percent of its gross
revenues.
Subd. 1a.Surgical center tax.A tax is imposed on each surgical center equal to 1.8 percent of
its gross revenues.
Subd. 2.Provider tax.A tax is imposed on each health care provider equal to 1.8 percent of
its gross revenues.
Subd. 3.Wholesale drug distributor tax.A tax is imposed on each wholesale drug distributor
equal to 1.8 percent of its gross revenues.
Subd. 4.Use tax; legend drugs.(a) A person that receives legend drugs for resale or use in
Minnesota, other than from a wholesale drug distributor that is subject to tax under subdivision 3,
is subject to a tax equal to the price paid for the legend drugs multiplied by 1.8 percent. Liability
for the tax is incurred when legend drugs are received or delivered in Minnesota by the person.
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APPENDIX
Repealed Minnesota Statutes: 25-00559 (b) A tax imposed under this subdivision does not apply to purchases by an individual for
personal consumption.
Subd. 4a.Tax collection.A wholesale drug distributor with nexus in Minnesota, who is not
subject to tax under subdivision 3, on all or a particular transaction is required to collect the tax
imposed under subdivision 4, from the purchaser of the drugs and give the purchaser a receipt for
the tax paid. The tax collected shall be remitted to the commissioner in the manner prescribed by
section 295.55, subdivision 3.
Subd. 5.Volunteer ambulance services.Volunteer ambulance services are not subject to the
tax under this section. For purposes of this requirement, "volunteer ambulance service" means an
ambulance service in which all of the individuals whose primary responsibility is direct patient care
meet the definition of volunteer under section 144E.001, subdivision 15. The ambulance service
may employ administrative and support staff, and remain eligible for this exemption, if the primary
responsibility of these staff is not direct patient care.
Subd. 6.Hearing aids and prescription eyewear.The tax liability of a person who meets the
definition of a health care provider solely because the person sells or repairs hearing aids and related
equipment or prescription eyewear is limited to the gross revenues received from the sale or repair
of these items.
Subd. 8.Contingent reduction in tax rate.(a) By December 1 of each year, beginning in 2011,
the commissioner of management and budget shall determine the projected balance in the health
care access fund for the biennium.
(b) If the commissioner of management and budget determines that the projected balance in the
health care access fund for the biennium reflects a ratio of revenues to expenditures and transfers
greater than 125 percent, and if the actual cash balance in the fund is adequate, as determined by
the commissioner of management and budget, the commissioner, in consultation with the
commissioner of revenue, shall reduce the tax rates levied under subdivisions 1, 1a, 2, 3, and 4, for
the subsequent calendar year sufficient to reduce the structural balance in the fund. The rate may
be reduced to the extent that the projected revenues for the biennium do not exceed 125 percent of
expenditures and transfers. The new rate shall be rounded to the nearest one-tenth of one percent.
The rate reduction under this paragraph expires at the end of each calendar year and is subject to
an annual redetermination by the commissioner of management and budget.
(c) For purposes of the analysis defined in paragraph (b), the commissioner of management and
budget shall include projected revenues.
295.53 EXCLUSIONS AND EXEMPTIONS; SPECIAL RULES.
Subdivision 1.Exclusions and exemptions.(a) The following payments are excluded from the
gross revenues subject to the hospital, surgical center, or health care provider taxes under sections
295.50 to 295.59:
(1) payments received by a health care provider or the wholly owned subsidiary of a health care
provider for care provided outside Minnesota;
(2) government payments received by the Direct Care and Treatment executive board for
state-operated services;
(3) payments received by a health care provider for hearing aids and related equipment or
prescription eyewear delivered outside of Minnesota; and
(4) payments received by an educational institution from student tuition, student activity fees,
health care service fees, government appropriations, donations, or grants, and for services identified
in and provided under an individualized education program as defined in section 256B.0625 or
Code of Federal Regulations, chapter 34, section 300.340(a). Fee for service payments and payments
for extended coverage are taxable.
(b) The following payments are exempted from the gross revenues subject to hospital, surgical
center, or health care provider taxes under sections 295.50 to 295.59:
(1) payments received for services provided under the Medicare program, including payments
received from the government and organizations governed by sections 1833, 1853, and 1876 of
title XVIII of the federal Social Security Act, United States Code, title 42, section 1395; and enrollee
deductibles, co-insurance, and co-payments, whether paid by the Medicare enrollee, by Medicare
supplemental coverage as described in section 62A.011, subdivision 3, clause (10), or by Medicaid
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APPENDIX
Repealed Minnesota Statutes: 25-00559 payments under title XIX of the federal Social Security Act. Payments for services not covered by
Medicare are taxable;
(2) payments received for home health care services;
(3) payments received from hospitals or surgical centers for goods and services on which liability
for tax is imposed under section 295.52 or the source of funds for the payment is exempt under
clause (1), (6), (9), (10), or (11);
(4) payments received from the health care providers for goods and services on which liability
for tax is imposed under this chapter or the source of funds for the payment is exempt under clause
(1), (6), (9), (10), or (11);
(5) amounts paid for legend drugs to a wholesale drug distributor who is subject to tax under
section 295.52, subdivision 3, reduced by reimbursement received for legend drugs otherwise
exempt under this chapter;
(6) payments received from the behavioral health fund under chapter 254B;
(7) payments received in the nature of charitable donations that are not designated for providing
patient services to a specific individual or group;
(8) payments received for providing patient services incurred through a formal program of
health care research conducted in conformity with federal regulations governing research on human
subjects. Payments received from patients or from other persons paying on behalf of the patients
are subject to tax;
(9) payments received from any governmental agency for services benefiting the public, not
including payments made by the government in its capacity as an employer or insurer or payments
made by the government for services provided under the MinnesotaCare program or the medical
assistance program governed by title XIX of the federal Social Security Act, United States Code,
title 42, sections 1396 to 1396v;
(10) payments received under the federal Employees Health Benefits Act, United States Code,
title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of 1990. Enrollee deductibles,
co-insurance, and co-payments are subject to tax;
(11) payments received under the federal Tricare program, Code of Federal Regulations, title
32, section 199.17(a)(7). Enrollee deductibles, co-insurance, and co-payments are subject to tax;
and
(12) supplemental, enhanced, or uniform adjustment factor payments authorized under section
256B.196, 256B.197, or 256B.1973.
(c) Payments received by wholesale drug distributors for legend drugs sold directly to
veterinarians or veterinary bulk purchasing organizations are excluded from the gross revenues
subject to the wholesale drug distributor tax under sections 295.50 to 295.59.
Subd. 2.Deductions for staff model health plan company.In addition to the exemptions
allowed under subdivision 1, a staff model health plan company may deduct from its gross revenues
for the year:
(1) amounts paid to hospitals, surgical centers, and health care providers that are not employees
of the staff model health plan company for services on which liability for the tax is imposed under
section 295.52;
(2) net amounts added to reserves, to the extent that the amounts added do not cause total reserves
to exceed 200 percent of the statutory net worth requirement, the calculation of which may be
determined on a consolidated basis, taking into account the amounts held in reserve by affiliated
staff model health plan companies;
(3) assessments for the comprehensive health insurance plan under section 62E.11; and
(4) amounts spent for administration as reported as total administration to the Department of
Health in the statement of revenues, expenses, and net worth pursuant to section 62D.08, subdivision
3, clause (a).
Subd. 3.Separate statement of tax.A hospital, surgical center, health care provider, or
wholesale drug distributor must not state the tax obligation under section 295.52 in a deceptive or
misleading manner. It must not separately state tax obligations on bills provided to patients,
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APPENDIX
Repealed Minnesota Statutes: 25-00559 consumers, or other payers when the amount received for the services or goods is not subject to
tax.
Pharmacies that separately state the tax obligations on bills provided to consumers or to other
payers who purchase legend drugs may state the tax obligation as the wholesale price of the legend
drugs multiplied by the tax percentage specified in section 295.52. Pharmacies must not state the
tax obligation based on the retail price.
Whenever the commissioner determines that a person has engaged in any act or practice
constituting a violation of this subdivision, the commissioner may bring an action in the name of
the state in the district court of the appropriate county to enjoin the act or practice and to enforce
compliance with this subdivision, or the commissioner may refer the matter to the attorney general
or the county attorney of the appropriate county. Upon a proper showing, a permanent or temporary
injunction, restraining order, or other appropriate relief must be granted.
Subd. 4a.Credit for research.(a) In addition to the exemptions allowed under subdivision 1,
a hospital or health care provider may claim an annual credit against the total amount of tax, if any,
the hospital or health care provider owes for that calendar year under sections 295.50 to 295.57.
The credit shall equal 2.5 percent of revenues for patient services used to fund expenditures for
qualifying research conducted by an allowable research program. The amount of the credit shall
not exceed the tax liability of the hospital or health care provider under sections 295.50 to 295.57.
(b) For purposes of this subdivision, the following requirements apply:
(1) expenditures must be for program costs of qualifying research conducted by an allowable
research program;
(2) an allowable research program must be a formal program of medical and health care research
conducted by an entity which is exempt under section 501(c)(3) of the Internal Revenue Code as
defined in section 289A.02, subdivision 7, or is owned and operated under authority of a
governmental unit;
(3) qualifying research must:
(A) be approved in writing by the governing body of the hospital or health care provider which
is taking the deduction under this subdivision;
(B) have as its purpose the development of new knowledge in basic or applied science relating
to the diagnosis and treatment of conditions affecting the human body;
(C) be subject to review by individuals with expertise in the subject matter of the proposed
study but who have no financial interest in the proposed study and are not involved in the conduct
of the proposed study; and
(D) be subject to review and supervision by an institutional review board operating in conformity
with federal regulations if the research involves human subjects or an institutional animal care and
use committee operating in conformity with federal regulations if the research involves animal
subjects. Research expenses are not exempt if the study is a routine evaluation of health care methods
or products used in a particular setting conducted for the purpose of making a management decision.
Costs of clinical research activities paid directly for the benefit of an individual patient are excluded
from this exemption. Basic research in fields including biochemistry, molecular biology, and
physiology are also included if such programs are subject to a peer review process.
(c) No credit shall be allowed under this subdivision for any revenue received by the hospital
or health care provider in the form of a grant, gift, or otherwise, whether from a government or
nongovernment source, on which the tax liability under section 295.52 is not imposed.
(d) The taxpayer shall apply for the credit under this section on the annual return under section
295.55, subdivision 5.
(e) Beginning September 1, 2001, if the actual or estimated amount paid under this section for
the calendar year exceeds $2,500,000, the commissioner of management and budget shall determine
the rate of the research credit for the following calendar year to the nearest one-half percent so that
refunds paid under this section will most closely equal $2,500,000. The commissioner of management
and budget shall publish in the State Register by October 1 of each year the rate of the credit for
the following calendar year. A determination under this section is not subject to the rulemaking
provisions of chapter 14.
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APPENDIX
Repealed Minnesota Statutes: 25-00559 295.54 CREDIT FOR TAXES PAID.
Subdivision 1.Taxes paid to another state.A hospital, surgical center, or health care provider
that has paid taxes to another jurisdiction measured by gross revenues and is subject to tax under
sections 295.52 to 295.59 on the same gross revenues is entitled to a credit for the tax legally due
and paid to another jurisdiction to the extent of the lesser of (1) the tax actually paid to the other
jurisdiction, or (2) the amount of tax imposed by Minnesota on the gross revenues subject to tax in
the other taxing jurisdictions.
Subd. 2.Pharmacy refund.A pharmacy may claim an annual refund against the total amount
of tax, if any, the pharmacy owes during that calendar year under section 295.52, subdivision 4.
The refund shall equal the amount paid by the pharmacy to a wholesale drug distributor subject to
tax under section 295.52, subdivision 3, for legend drugs delivered by the pharmacy outside of
Minnesota, multiplied by the tax percentage specified in section 295.52, subdivision 3. If the amount
of the refund exceeds the tax liability of the pharmacy under section 295.52, subdivision 4, the
commissioner shall provide the pharmacy with a refund equal to the excess amount. Each qualifying
pharmacy must apply for the refund on the annual return as prescribed by the commissioner, on or
before March 15 of the year following the calendar year the legend drugs were delivered outside
Minnesota. The refund shall not be allowed if the initial claim for refund is filed more than one
year after the original due date of the return. Interest on refunds paid under this subdivision will
begin to accrue 60 days after the date a claim for refund is filed. For purposes of this subdivision,
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
for refund, whichever is later.
Subd. 3.Wholesale drug distributor credit.A wholesale drug distributor who has paid taxes
to another state or province or territory of Canada measured by gross revenues or sales and is subject
to tax under sections 295.52 to 295.59 on the same gross revenues or sales is entitled to a credit for
the tax legally due and paid to another state or province or territory of Canada to the extent of the
lesser of (1) the tax actually paid to the other state or province or territory of Canada or (2) the
amount of tax imposed by Minnesota on the gross revenues or sales subject to tax in the other taxing
jurisdictions.
295.55 PAYMENT OF TAX.
Subdivision 1.Scope.The provisions of this section apply to the taxes imposed under sections
295.50 to 295.58.
Subd. 2.Estimated tax; hospitals; surgical centers.(a) Each hospital or surgical center must
make estimated payments of the taxes for the calendar year in monthly installments to the
commissioner within 15 days after the end of the month.
(b) Estimated tax payments are not required of hospitals or surgical centers if: (1) the tax for
the current calendar year is $500 or less; or (2) the tax for the previous calendar year is $500 or
less.
(c) Underpayment of estimated installments bear interest at the rate specified in section 270C.40,
from the due date of the payment until paid or until the due date of the annual return whichever
comes first. An underpayment of an estimated installment is the difference between the amount
paid and the lesser of (1) 90 percent of one-twelfth of the tax for the calendar year or (2) one-twelfth
of the total tax for the previous calendar year.
Subd. 3.Estimated tax; other taxpayers.(a) Each taxpayer, other than a hospital or surgical
center, must make estimated payments of the taxes for the calendar year in quarterly installments
to the commissioner by April 15, July 15, October 15, and January 15 of the following calendar
year.
(b) Estimated tax payments are not required if: (1) the tax for the current calendar year is $500
or less; or (2) the tax for the previous calendar year is $500 or less.
(c) Underpayment of estimated installments bear interest at the rate specified in section 270C.40,
from the due date of the payment until paid or until the due date of the annual return whichever
comes first. An underpayment of an estimated installment is the difference between the amount
paid and the lesser of (1) 90 percent of one-quarter of the tax for the calendar year or (2) one-quarter
of the total tax for the previous calendar year.
Subd. 4.Electronic payments.A taxpayer with an aggregate tax liability of $10,000 or more
in a fiscal year ending June 30 must remit all liabilities by electronic means in all subsequent
calendar years.
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APPENDIX
Repealed Minnesota Statutes: 25-00559 Subd. 5.Annual return.The taxpayer must file an annual return reconciling the estimated
payments by March 15 of the following calendar year.
Subd. 6.Form of returns.The commissioner shall prescribe the content, format, and manner
of the estimated payment forms and annual return pursuant to section 270C.30.
Subd. 7.Extensions for filing returns.If good cause exists, the commissioner may extend the
time for filing MinnesotaCare tax returns for not more than 60 days.
295.56 TRANSFER OF ACCOUNTS RECEIVABLE.
When a hospital, surgical center, health care provider, or wholesale drug distributor transfers,
assigns, or sells accounts receivable to another person who is subject to tax under this chapter,
liability for the tax on the accounts receivable is imposed on the transferee, assignee, or buyer of
the accounts receivable. No liability for these accounts receivable is imposed on the transferor,
assignor, or seller of the accounts receivable.
295.57 COLLECTION AND ENFORCEMENT; REFUNDS; APPLICATION OF OTHER
CHAPTERS; ACCESS TO RECORDS; INTEREST ON OVERPAYMENTS.
Subdivision 1.Application of other chapters.Unless specifically provided otherwise by
sections 295.50 to 295.59, the interest, criminal penalties, and refunds provisions in chapter 289A,
the civil penalty provisions applicable to withholding and sales taxes under section 289A.60, and
the audit, assessment, appeal, collection, enforcement, and administrative provisions of chapters
270C and 289A, apply to taxes imposed under sections 295.50 to 295.59.
Subd. 2.Access to records.For purposes of administering the taxes imposed by sections 295.50
to 295.59, the commissioner may access patients' records that contain billing or other financial
information without prior consent from the patients. The data collected is classified as private or
nonpublic data.
Subd. 3.Interest on overpayments.Interest must be paid on an overpayment refunded or
credited to the taxpayer in the manner provided in section 289A.56, subdivision 2.
Subd. 4.Sampling techniques.The commissioner may use statistical or other sampling
techniques consistent with generally accepted auditing standards in examining returns or records
and making assessments.
Subd. 5.Exemption for amounts paid for legend drugs.If a hospital, surgical center, or health
care provider cannot determine the actual cost or reimbursement of legend drugs under the exemption
provided in section 295.53, subdivision 1, paragraph (b), clause (5), the following method must be
used:
A hospital, surgical center, or health care provider must determine the amount paid for legend
drugs used during the month or quarter and multiply that amount by a ratio, the numerator of which
is the total amount received for taxable patient services, and the denominator of which is the total
amount received for all patient services, including amounts exempt under section 295.53, subdivision
1, paragraph (b). The result represents the allowable exemption for the monthly or quarterly cost
of drugs.
295.58 DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.
The commissioner shall deposit all revenues, including penalties and interest, derived from the
taxes imposed by sections 295.50 to 295.57 and from the insurance premiums tax imposed by
section 297I.05, subdivision 5, on health maintenance organizations, community integrated service
networks, and nonprofit health service plan corporations in the health care access fund. There is
annually appropriated from the health care access fund to the commissioner of revenue the amount
necessary to make refunds under this chapter.
295.581 PROHIBITION ON NON-MINNESOTACARE TRANSFERS FROM FUND.
Notwithstanding any law to the contrary, and notwithstanding section 645.33, money in the
health care access fund shall be appropriated only for purposes that are consistent with past and
current MinnesotaCare appropriations in Laws 1992, chapter 549; Laws 1993, chapter 345; Laws
1994, chapter 625; and Laws 1995, chapter 234, or for initiatives that are part of the section 1115
of the Social Security Act health care reform waiver submitted to the federal Centers for Medicare
and Medicaid Services by the commissioner of human services as appropriated in Laws 1995,
chapter 234.
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APPENDIX
Repealed Minnesota Statutes: 25-00559 295.582 AUTHORITY.
Subdivision 1.Tax expense transfer.(a) The tax expense generated by section 295.52 may be
transferred as follows:
(1) a hospital, surgical center, or health care provider subject to the tax under section 295.52
may transfer the tax expense to all third-party contracts for the purchase of health care services on
behalf of a patient or consumer;
(2) a wholesale drug distributor subject to the tax under section 295.52 may transfer the tax
expense to entities that purchase legend drugs from the wholesale drug distributor; and
(3) a pharmacy that has paid the tax expense transferred by a wholesale drug distributor may
transfer the tax expense to all third-party contracts for the purchase of health care services on behalf
of a patient or consumer. Nothing shall prohibit a pharmacy from transferring the tax expense
generated under section 295.52 to a pharmacy benefits manager.
(b) The transfer of the tax expense under paragraph (a) must comply with the following:
(1) the tax expense transferred to the third-party purchaser or a pharmacy benefits manager
must not exceed the tax percentage specified in section 295.52 multiplied against:
(i) gross revenues received under the third-party contract; and
(ii) co-payments and deductibles paid by the individual patient or consumer; and
(2) the tax expense must not be generated on revenues derived from payments that are excluded
or exempted from the tax under section 295.53.
(c) Payment of the transferred tax expense is required as follows:
(1) all third-party purchasers of health care services, including but not limited to third-party
purchasers regulated under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A,
or under section 471.61 or 471.617, and pharmacy benefits managers must pay the transferred
expense. This is in addition to any payments due under existing contracts with the hospital, surgical
center, pharmacy, or health care provider, to the extent allowed under federal law; and
(2) all entities that purchase legend drugs from a wholesale drug distributor must pay the
transferred expense.
(d) A third-party purchaser or pharmacy benefits manager must comply with this section
regardless of whether the third-party purchaser or pharmacy benefits manager is a for-profit,
not-for-profit, or nonprofit entity.
(e) Nothing in this section limits the ability of a hospital, surgical center, health care provider,
pharmacy, or wholesale drug distributor to recover all or part of the section 295.52 obligation by
other methods, including increasing fees or charges.
(f) Any hospital, surgical center, or health care provider subject to a tax under section 295.52
or a pharmacy that has paid the additional expense transferred under this section by a wholesale
drug distributor may file a complaint with the commissioner responsible for regulating the third-party
purchaser if at any time the third-party purchaser fails to comply with this section.
(g) If the commissioner responsible for regulating the third-party purchaser finds at any time
that the third-party purchaser has not complied with this section, the commissioner may take
enforcement action against a third-party purchaser which is subject to the commissioner's regulatory
jurisdiction and which does not allow a hospital, surgical center, pharmacy, or provider to
pass-through the tax expense. The commissioner may by order fine or censure the third-party
purchaser or revoke or suspend the certificate of authority or license of the third-party purchaser
to do business in this state if the commissioner finds that the third-party purchaser has not complied
with this section. The third-party purchaser may appeal the commissioner's order through a contested
case hearing in accordance with chapter 14.
Subd. 2.Agreement.A contracting agreement between a third-party purchaser or a pharmacy
benefits manager and a resident or nonresident pharmacy registered under chapter 151, may not
prohibit:
(1) a pharmacy that has paid additional expense transferred under this section by a wholesale
drug distributor from exercising its option under this section to transfer such additional expenses
generated by the section 295.52 obligations on to the third-party purchaser or pharmacy benefits
manager; or
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APPENDIX
Repealed Minnesota Statutes: 25-00559 (2) a pharmacy that is subject to tax under section 295.52, subdivision 4, from exercising its
option under this section to recover all or part of the section 295.52 obligations from the third-party
purchaser or a pharmacy benefits manager.
295.59 SEVERABILITY.
If any section, subdivision, clause, or phrase of sections 295.50 to 295.582 is for any reason
held to be unconstitutional or in violation of federal law, the decision shall not affect the validity
of the remaining portions of sections 295.50 to 295.582. The legislature declares that it would have
passed sections 295.50 to 295.582 and each section, subdivision, sentence, clause, and phrase
thereof, irrespective of the fact that any one or more sections, subdivisions, sentences, clauses, or
phrases is declared unconstitutional.
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APPENDIX
Repealed Minnesota Statutes: 25-00559 4650.0102DEFINITIONS.
Subp. 24e.MinnesotaCare tax."MinnesotaCare tax" means expenses for the
MinnesotaCare tax under Minnesota Statutes, sections 295.52 and 295.582. For purposes
of reporting under part 4650.0112, the MinnesotaCare tax is an operating expense.
4652.0100DEFINITIONS.
Subp. 20.MinnesotaCare tax expenses."MinnesotaCare tax expenses" means all
payments made for the MinnesotaCare tax under Minnesota Statutes, sections 295.52 and
295.582.
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APPENDIX
Repealed Minnesota Rules: 25-00559