SF4194

Purpose

This bill changes who pays the state's gross receipts tax by clarifying and narrowing who counts as a health care provider for tax purposes, and it explicitly excludes licensed chiropractors from being taxed. It amends Minnesota Statutes to define health care providers and to set which entities are subject to the gross receipts tax on hospitals and health care providers.

Main Provisions

• Definition of health care provider
  • A health care provider is a person whose health care occupation is regulated by Minnesota and who furnishes directly to a patient or consumer goods or services such as medical, surgical, optical, dental, hearing, nursing, drugs, laboratory, diagnostic, or therapeutic services.
  • It also includes a person who provides goods or services not listed above if they qualify for reimbursement under the Medical Assistance (MA) program (MinnesotaCare/Medicaid) or related programs.
  • It can include entities like staff model health plan companies, ambulance services, and certain providers of hearing aids, prescription eyewear, or other patient services when they employ or contract with a health care provider to supervise or consult on patient services.
• Exclusions from the health care provider classification
  • The bill narrows who is considered a health care provider by explicitly excluding many entities, including:
  • Hospitals
  • Medical supplies distributors (except as specified)
  • Nursing homes
  • Wholesale drug distributors and pharmacies
  • Surgical centers
  • Transportation providers other than ambulance services (e.g., bus and taxicab services)
  • Various housing/assisted living and service establishments
  • Home health agencies (in some cases) and other home care-related services
  • Educational institutions that hire health care workers only to serve students under certain payment arrangements
  • Entities that receive all patient payments for services from providers or hospitals for items taxable to those providers
  • Certain other listed categories such as adult foster care homes, home care providers licensed under health-related chapters, and similar facilities
• Exclusion of chiropractors
  • Licensed chiropractors are explicitly excluded from the providers subject to the gross receipts tax.

Notable Changes to Existing Law

• Scope of taxed entities
  • The bill preserves a gross receipts tax on hospitals and on those health care providers that meet the (redefined) definition, but it excludes chiropractors and many other types of entities listed in the exclusions.
• Clarified definitions
  • The health care provider definition is detailed and ties to regulated health care occupations and specific patient services, as well as MA program eligibility, to determine who is taxed.
• Structural change to tax base
  • By redefining who is a health care provider and listing exclusions, the bill changes who is inside or outside the tax base for the gross receipts tax.

Potential Impact (summary)

• Tax base changes
  • Some entities that might have been taxed under a broader interpretation will now be excluded (e.g., hospitals remain taxed separately, but many other service and facility types are no longer considered health care providers for the tax).
• Exclusion of chiropractors
  • Chiropractors would no longer be subject to the gross receipts tax under this bill.
• Clarity for taxpayers
  • Health care organizations will have clearer guidelines on whether they fall under the health care provider definition for tax purposes.

Relevant Terms - gross receipts tax - health care provider - hospitals - chiropractors - Minnesota Statutes 2024 section 295.50 subdivision 4 - regulated health care occupation - Medical Assistance program (MA) - ambulance service - hearing aids - prescription eyewear - patient services - exclusion list (nursing homes, pharmacies, wholesale drug distributors, surgical centers, certain transportation services) - staff model health plan - MA reimbursement - section 295.53 subdivision 2.1 (referenced context)