SB0295

SENATE BILL 295

57th legislature - STATE OF NEW MEXICO - first session, 2025

INTRODUCED BY

Jeff Steinborn and Carrie Hamblen and William E. Sharer

and Craig W. Brandt and Martin Hickey

AN ACT

RELATING TO TAXATION; PROVIDING A GROSS RECEIPTS TAX DEDUCTION FOR THE SALE OF MEDICAL EQUIPMENT, SUPPLIES AND DRUGS; PROVIDING A GROSS RECEIPTS TAX DEDUCTION TO RECEIPTS FOR CERTAIN HEALTH CARE SERVICES, EXCEPT FOR THOSE FOR MEDICAID PATIENTS; REMOVING THE SUNSET DATE OF A GROSS RECEIPTS TAX DEDUCTION FOR RECEIPTS FROM COPAYMENTS OR DEDUCTIBLES PAID BY AN INSURED OR ENROLLEE TO A HEALTH CARE PRACTITIONER OR AN ASSOCIATION OF HEALTH CARE PRACTITIONERS; EXTENDING A GROSS RECEIPTS TAX DEDUCTION TO RECEIPTS FROM A PATIENT PAID TO A HEALTH CARE PRACTITIONER OR AN ASSOCIATION OF HEALTH CARE PRACTITIONERS FOR HEALTH CARE SERVICES THAT ARE NOT PERFORMED PURSUANT TO A CONTRACT WITH A MANAGED CARE ORGANIZATION OR HEALTH CARE INSURER; PROVIDING THAT A HEALTH CARE PROVIDER RECEIVING MEDICAID REIMBURSEMENT SHALL BE REIMBURSED FOR ALL APPLICABLE GROSS RECEIPTS TAXES THAT THE PROVIDER IS REQUIRED TO PAY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 7-9-93 NMSA 1978 (being Laws 2004, Chapter 116, Section 6, as amended) is amended to read:

"7-9-93. DEDUCTION--GROSS RECEIPTS--CERTAIN RECEIPTS FOR SERVICES PROVIDED BY HEALTH CARE PRACTITIONER OR ASSOCIATION OF HEALTH CARE PRACTITIONERS.--

A. Receipts of a health care practitioner or an association of health care practitioners for commercial contract services or medicare part C services paid by a managed care organization or health care insurer may be deducted from gross receipts if the services are within the scope of practice of the health care practitioner providing the service. [Receipts from fee-for-service payments by a health care insurer may not be deducted from gross receipts.]

B. [Prior to July 1, 2028] Receipts from a copayment or deductible paid by an insured or enrollee to a health care practitioner or an association of health care practitioners for commercial contract services pursuant to the terms of the insured's health insurance plan or enrollee's managed care health plan may be deducted from gross receipts if the services are within the scope of practice of the health care practitioner providing the service.

C. Receipts from a patient to a health care practitioner or an association of health care practitioners for health care services that are not performed pursuant to a contract with a managed care organization or health care insurer may be deducted from gross receipts if the services are within the scope of practice of the health care practitioner providing the service.

[C.] D. The deductions provided by this section shall be applied only to gross receipts remaining after all other allowable deductions available under the Gross Receipts and Compensating Tax Act have been taken, except for deductions pursuant to Section 7-9-93.1 NMSA 1978.

[D.] E. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department.

[E. The department shall compile an annual report on the deductions provided by this section that shall include the number of taxpayers that claimed the deductions, the aggregate amount of deductions claimed and any other information necessary to evaluate the effectiveness of the deductions. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the deductions.]

F. The deductions provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the number of taxpayers that claimed each deduction, the aggregate amount of deductions claimed and any other information necessary to evaluate the cost and effectiveness of the deductions.

[F.] G. As used in this section:

(1) "association of health care practitioners" means a corporation, an unincorporated business entity or other legal entity organized by, owned by or employing one or more health care practitioners; provided that the entity is not:

(a) an organization granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(3) of the United States Internal Revenue Code of 1986, as that section may be amended or renumbered; or

(b) a health maintenance organization or a hospital, hospice, nursing home or an entity that is solely an outpatient facility or intermediate care facility licensed [pursuant to the Public Health Act] by the health care authority;

(2) "commercial contract services" means health care services performed by a health care practitioner pursuant to a contract with a managed care organization or health care insurer other than those health care services provided for medicare patients pursuant to Title 18 of the federal Social Security Act or for medicaid patients pursuant to Title 19 or Title 21 of the federal Social Security Act;

(3) "copayment" means a fixed dollar amount that a health care insurer or managed care health plan requires an insured or enrollee to pay upon incurring an expense for receiving medical services;

(4) "deductible" means the amount of covered charges an insured or enrollee is required to pay in a plan year for commercial contract services before the insured's health insurance plan or enrollee's managed care health plan begins to pay for applicable covered charges;

[(5) "fee-for-service" means payment for health care services by a health care insurer for covered charges under an indemnity insurance plan;

(6)] (5) "health care insurer" means a person that:

(a) has a valid certificate of authority in good standing pursuant to the New Mexico Insurance Code to act as an insurer, health maintenance organization or nonprofit health care plan or prepaid dental plan; and

(b) contracts to reimburse licensed health care practitioners for providing basic health services to enrollees at negotiated fee rates;

[(7)] (6) "health care practitioner" means:

(a) a chiropractic physician licensed pursuant to the provisions of the Chiropractic Physician Practice Act;

(b) a dentist or dental hygienist licensed pursuant to the Dental Health Care Act;

(c) a doctor of oriental medicine licensed pursuant to the provisions of the Acupuncture and Oriental Medicine Practice Act;

(d) an optometrist licensed pursuant to the provisions of the Optometry Act;

(e) an osteopathic physician licensed pursuant to the provisions of the Medical Practice Act;

(f) a physical therapist licensed pursuant to the provisions of the Physical Therapy Act;

(g) a physician or physician assistant licensed pursuant to the provisions of the Medical Practice Act;

(h) a podiatric physician licensed pursuant to the provisions of the Podiatry Act;

(i) a psychologist licensed pursuant to the provisions of the Professional Psychologist Act;

(j) a registered lay midwife registered by the department of health;

(k) a registered nurse or licensed practical nurse licensed pursuant to the provisions of the Nursing Practice Act;

(l) a registered occupational therapist licensed pursuant to the provisions of the Occupational Therapy Act;

(m) a respiratory care practitioner licensed pursuant to the provisions of the Respiratory Care Act;

(n) a speech-language pathologist or audiologist licensed pursuant to the Speech-Language Pathology, Audiology and Hearing Aid Dispensing Practices Act;

(o) a professional clinical mental health counselor, marriage and family therapist or professional art therapist licensed pursuant to the provisions of the Counseling and Therapy Practice Act who has obtained a master's degree or a doctorate;

(p) an independent social worker licensed pursuant to the provisions of the Social Work Practice Act; and

(q) a clinical laboratory that is accredited pursuant to 42 U.S.C. Section 263a but that is not a laboratory in a physician's office or in a hospital defined pursuant to 42 U.S.C. Section 1395x;

[(8)] (7) "managed care health plan" means a health care plan offered by a managed care organization that provides for the delivery of comprehensive basic health care services and medically necessary services to individuals enrolled in the plan other than those services provided to medicare patients pursuant to Title 18 of the federal Social Security Act [or to medicaid patients pursuant to Title 19 or Title 21 of the federal Social Security Act];

[(9)] (8) "managed care organization" means a person that provides for the delivery of comprehensive basic health care services and medically necessary services to individuals enrolled in a plan through its own employed health care providers or by contracting with selected or participating health care providers. "Managed care organization" includes only those persons that provide comprehensive basic health care services to enrollees on a contract basis, including the following:

(a) health maintenance organizations;

(b) preferred provider organizations;

(d) competitive medical plans;

(e) exclusive provider organizations;

(f) integrated delivery systems;

(g) independent physician-provider organizations;

(h) physician hospital-provider organizations; and

(i) managed care services organizations; and

[(10)] (9) "medicare part C services" means services performed pursuant to a contract with a managed health care provider for medicare patients pursuant to Title 18 of the federal Social Security Act."

SECTION 2. A new section of the Gross Receipts and Compensating Tax Act, Section 7-9-93.1 NMSA 1978, is enacted to read:

"7-9-93.1. [NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--CERTAIN RECEIPTS FOR SERVICES PROVIDED BY HEALTH CARE PRACTITIONER OR ASSOCIATION OF HEALTH CARE PRACTITIONERS EXCEPT FOR MEDICAID PATIENTS--MEDICAL EQUIPMENT, SUPPLIES AND DRUGS.--

A. Except for those receipts that may be deducted from gross receipts pursuant to Section 7-9-93 NMSA 1978, receipts of a health care practitioner or an association of health care practitioners for health care services, other than services provided for medicaid patients pursuant to Title 19 or Title 21 of the federal Social Security Act, performed by a health care practitioner may be deducted from gross receipts if the services are within the scope of practice of the health care practitioner providing the service.

B. Receipts from the sale of medical equipment and medical supplies to a health care practitioner or an association of health care practitioners may be deducted from gross receipts if the medical equipment and medical supplies are regularly used within the practice of the health care practitioner or association of health care practitioners.

C. Receipts from the sale of medical drugs to a health care practitioner or an association of health care practitioners may be deducted from gross receipts if the medical drugs are regularly used for the treatment of patients within the practice of the health care practitioner or association of health care practitioners.

D. The deductions provided by this section shall be applied only to gross receipts remaining after all other allowable deductions available under the Gross Receipts and Compensating Tax Act have been taken.

E. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department.

F. The deduction provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the number of taxpayers that claimed each deduction, the aggregate amount of deductions claimed and any other information necessary to evaluate the cost and effectiveness of the deductions.

G. As used in this section:

(1) "association of health care practitioners" means a corporation, unincorporated business entity or other legal entity organized by, owned by or employing one or more health care practitioners; provided that the entity is not:

(b) a health maintenance organization or a hospital, hospice, nursing home or an entity that is solely an outpatient facility or intermediate care facility licensed by the health care authority;

(2) "copayment" means a fixed dollar amount that a health care insurer or managed care health plan requires an insured or enrollee to pay upon incurring an expense for receiving medical services;

(3) "deductible" means the amount of covered charges an insured or enrollee is required to pay in a plan year for commercial contract services before the insured's health insurance plan or enrollee's managed care health plan begins to pay for applicable covered charges;

(4) "health care insurer" means a person that:

(b) contracts to reimburse licensed health care practitioners for providing basic health services to enrollees at negotiated fee rates;

(5) "health care practitioner" means: