45th legislature - STATE OF NEW MEXICO - first session, 2001

RELATING TO TAXATION; PROVIDING A CREDIT AGAINST THE GROSS RECEIPTS TAX FOR HOSPITALS LICENSED BY THE DEPARTMENT OF HEALTH; IMPOSING CONDITIONS FOR CLAIMING THE CREDIT.

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

Section 1. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

"[NEW MATERIAL] CREDIT--GROSS RECEIPTS TAX--RECEIPTS OF CERTAIN HOSPITALS.--

A. A hospital licensed by the department of health may claim a credit against the gross receipts tax for each reporting period of an eligible twelve-month period in an amount equal to three and two hundred seventy-five thousandths percent of the hospital's taxable gross receipts for that reporting period after all appropriate exemptions and deductions have been taken. The credit provided for in this section shall be considered a payment of the state portion of gross receipts tax.

B. As used in this section:

(1) "charity care" means the provision of medically necessary care to an individual who has a household income less than two hundred percent of the federal poverty level, is without any reasonably identifiable alternative third party or other payment sources and has been deemed pursuant to the hospital's credit and collection policies and procedures, financially unable to pay for all or part of the services rendered;

(2) "cost-to-charge ratio" means the relationship that a hospital's total operating expenses bear to the hospital's reported charges for the same period as determined by the federal health care financing administration medicare cost report filed by the hospital and audited and finalized by the federal health care financing administration;

(3) "eligible twelve-month period" means the twelve-month period beginning on July 1 of any year that a hospital reported uncompensated care in an amount equal to at least three percent of net patient revenues for the year ending on June 30 of the year prior to that July 1;

(4) "net patient revenue" means for any year the total amount realized from patients, third-party payers and others for services rendered to an individual patient, including estimated retroactive adjustments under reimbursement agreements with third-party payers, provided that retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined; and

(5) "uncompensated care" means for any period the sum of the following multiplied by the cost-to-charge ratio for that same period:

(a) an account receivable based on services furnished to a patient that is: 1) regarded as uncollectible following reasonable collection efforts pursuant to the facility's credit and collection policies and procedures; 2) charged as a credit loss pursuant to the facility's credit and collection policies and procedures; and 3) not otherwise classified as charity care; and

(b) the unpaid amount of the total hospital, including emergency room, charges for charity care, provided that for those hospitals with a discounted or sliding fee scale established by the governing board, total charges shall be determined based on the discounted or sliding fee scale. "Charges for charity care" do not include the difference between total charges and the allowable amount paid by a third party, including medicaid, medicare and the county indigent fund, regardless of a patient's income level."

Section 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2001.