S1137B1621A06120       VDL:JSL 03/11/08    #90             A06120
                       AMENDMENTS TO SENATE BILL NO. 1137
                                    Sponsor:  REPRESENTATIVE REICHLEY
                                           Printer's No. 1621

     1       Amend Title, page 1, line 20, by removing the comma after
     2    "program" and inserting
     3               and
     4       Amend Title, page 1, line 21, by striking out "and" and
     5    inserting
     6               ; providing for a disease management tax credit;
     7               further providing

     8       Amend Bill, page 20, by inserting between lines 26 and 27
     9       Section 5.1.  The act is amended by adding a chapter to read:
    10                               CHAPTER 15
    11                     DISEASE MANAGEMENT TAX CREDIT
    12    Section 1501.  Scope.
    13       This chapter relates to disease management insurance policy
    14    tax credits.
    15    Section 1502.  Definitions.
    16       The following words and phrases when used in this chapter
    17    shall have the meanings given to them in this section unless the
    18    context clearly indicates otherwise:
    19       "Department."  The Department of Revenue of the Commonwealth.
    20       "Disease management insurance policy."  A group or individual
    21    health insurance policy that includes a disease management
    22    program.
    23       "Disease management program."  A set of interventions
    24    designed to improve the health of individuals, especially those
    25    with certain ailments or diseases. A disease management program
    26    may include:
    27           (1)  Identifying patients and matching the intervention
    28       with need.
    29           (2)  Support for adherence to evidence-based medical
    30       practice guidelines, including providing medical treatment
    31       guidelines to physicians and other providers, and providing
    32       support services to assist the physician in monitoring the
    33       patient.
    34           (3)  Services designed to enhance patient management and
    35       adherence to an individualized treatment plan, including
    36       patient education, monitoring and reminders, and behavior
    37       modification programs aimed at encouraging lifestyle changes.


     1           (4)  Routine reporting and feedback loops, including
     2       communication with patient, physician, health plan and
     3       ancillary providers, and practice profiling.
     4           (5)  Collection and analysis of process and outcome
     5       measures.
     6       "Pass-through entity."  Any of the following:
     7           (1)  A partnership, limited partnership, limited
     8       liability company, business trust or other unincorporated
     9       entity that for Federal income tax purposes is taxable as a
    10       partnership.
    11           (2)  A Pennsylvania S corporation.
    12       "Primary contractor."  A person licensed to conduct business
    13    in this Commonwealth that develops, implements or monitors
    14    disease management programs.
    15       "Qualified tax liability."  The liability for taxes imposed
    16    under Article III (relating to personal income tax), IV
    17    (relating to corporate net income tax) or VI (relating to
    18    capital stock franchise tax) of the act of March 4, 1971 (P.L.6,
    19    No.2), known as the Tax Reform Code of 1971. The term includes
    20    the liability for taxes imposed under Article III of the Tax
    21    Reform Code of 1971 on a sole proprietor, partner, shareholder,
    22    owner or member of a pass-through entity.
    23       "Secretary."  The Secretary of Revenue of the Commonwealth.
    24       "Service provider."  A person licensed to conduct business in
    25    this Commonwealth that is selected by the primary contractor to
    26    provide disease management programs.
    27       "Small business."  A taxpayer with fewer than 50 employees.
    28       "Tax credit."  The disease management insurance policy tax
    29    credit authorized under this chapter.
    30       "Taxpayer."  An entity subject to tax under Article III
    31    (relating to personal income tax), IV (relating to corporate net
    32    income tax) or VI (relating to capital stock franchise tax) of
    33    the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
    34    Code of 1971. The term includes:
    35           (1)  the partner, shareholder, owner or member of a pass-
    36       through entity that receives a tax credit; or
    37           (2)  a sole proprietor.
    38    Section 1503.  Credit for disease management insurance policies.
    39       (a)  Application.--
    40           (1)  A taxpayer who purchases and provides a disease
    41       management insurance policy to employees in a taxable year
    42       may apply for a tax credit as provided in this chapter. By
    43       September 15, a taxpayer must submit an application to the
    44       department for premiums paid in the taxable year that ended
    45       in the prior calendar year.
    46           (2)  A taxpayer with 50 or more employees who purchases
    47       and provides a disease management insurance policy to
    48       employees in a taxable year may apply for a tax credit as
    49       provided in this chapter. By September 15, a taxpayer must
    50       submit an application to the department for premiums paid in
    51       the taxable year that ended in the prior calendar year.
    52       (b)  Tax credit.--A taxpayer qualified under subsection
    53    (a)(1) shall receive a tax credit for the taxable year in the
    54    amount of $500 for each employee of the taxpayer covered by a
    55    disease management insurance policy. A taxpayer qualified under
    56    subsection (a)(2) shall receive a tax credit for the taxable
    57    year in an amount equal to 50% of the cost to the taxpayer for
    58    providing health care coverage for employees, contingent on
    59    proof the purchased coverage utilizes disease management

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     1    protocols.
     2       (c)  Notification of credit.--By December 15 of the calendar
     3    year following the close of the taxable year, the department
     4    shall notify the taxpayer of the amount of the taxpayer's tax
     5    credit approved by the department.
     6    Section 1504.  Certification requirement.
     7       (a)  Application.--In order to qualify for the tax credit, a
     8    taxpayer, in conjunction with the Department of Labor and
     9    Industry and the Insurance Department, shall make application
    10    for the certification of the disease management program
    11    purchased as part of the disease management insurance policy.
    12    The Insurance Department shall develop the certification
    13    criteria.
    14       (b)  Reapplying.--In the subsequent tax year, a taxpayer
    15    reapplying for the tax credit must provide verification to the
    16    Department of Labor and Industry and the Insurance Department
    17    that the disease management program meets the certification
    18    requirements and continues to be purchased by the taxpayer.
    19    Section 1505.  Carryover, carryback, refund and assignment of
    20                       credit.
    21       (a)  General rule.--If the taxpayer cannot use the entire
    22    amount of the tax credit for the taxable year in which the tax
    23    credit is first approved because the amount of the tax credit
    24    exceeds the tax liability of the taxpayer for the year in which
    25    the tax credit under section 1503 (relating to credit for
    26    disease management insurance policies) is to be applied, the
    27    excess may be carried over to succeeding taxable years and used
    28    as a credit against the qualified tax liability of the taxpayer
    29    for those taxable years. Each time the tax credit is carried
    30    over to a succeeding taxable year, it shall be reduced by the
    31    amount that was used as a credit during the immediately
    32    preceding taxable year. The tax credit may be carried over and
    33    applied to succeeding taxable years for no more than 15 taxable
    34    years following the first taxable year for which the taxpayer
    35    was entitled to claim the credit.
    36       (b)  Application of tax credit.--A tax credit approved by the
    37    department for premiums incurred in a taxable year shall first
    38    be applied against the taxpayer's qualified tax liability for
    39    the current taxable year as of the date on which the credit was
    40    approved before the tax credit may be applied against any tax
    41    liability under subsection (a).
    42       (c)  Unused tax credit.--A taxpayer is not entitled to
    43    assign, carry back or obtain a refund of an unused tax credit.
    44    Section 1506.  Time limitations.
    45       A taxpayer is not entitled to a tax credit for health
    46    insurance premiums providing for disease management programs
    47    incurred in taxable years ending after December 31, 2010.
    48    Section 1507.  Limitation on credits.
    49       (a)  Allocation for small businesses.--Forty percent of
    50    available funds shall be allocated exclusively for small
    51    businesses. However, if the total amounts allocated to either
    52    the group of applicants exclusive of small businesses or the
    53    group of small business applicants is not approved in any fiscal
    54    year, the unused portion will become available for use by other
    55    qualifying taxpayers.
    56       (b)  Proration of tax credits.--
    57           (1)  If the total amount of tax credits applied for by
    58       all taxpayers, exclusive of small businesses, exceeds the
    59       amount allocated for those credits, the tax credit to be

    SB1137A06120                     - 3 -     

     1       received by each applicant shall be prorated by the
     2       department among all applicants, exclusive of small
     3       businesses, who have qualified for the credit.
     4           (2)  If the total amount of tax credits applied for by
     5       all small businesses exceeds the amount allocated for those
     6       credits, the tax credit to be received by each small business
     7       applicant shall be prorated by the department among all small
     8       business applicants who have qualified for the credit.
     9    Section 1508.  Shareholder, owner or member pass-through.
    10       (a)  Pennsylvania S corporations.--If a Pennsylvania S
    11    corporation does not have an eligible tax liability against
    12    which the tax credit may be applied, a shareholder of the
    13    Pennsylvania S corporation is entitled to a tax credit equal to
    14    the tax credit determined for the Pennsylvania S corporation for
    15    the taxable year multiplied by the percentage of the
    16    Pennsylvania S corporation's distributive income to which the
    17    shareholder is entitled.
    18       (b)  Pass-through entities.--If a pass-through entity other
    19    than a Pennsylvania S corporation does not have an eligible tax
    20    liability against which the tax credit may be applied, an owner
    21    or member of the pass-through entity is entitled to a tax credit
    22    equal to the tax credit determined for the pass-through entity
    23    for the taxable year multiplied by the percentage of the pass-
    24    through entity's distributive income to which the owner or
    25    member is entitled.
    26       (c)  Entitlement.--The credit provided under subsection (a)
    27    or (b) is in addition to any tax credit to which a shareholder,
    28    owner or member of a pass-through entity is otherwise entitled
    29    under this chapter. However, a pass-through entity and a
    30    shareholder, owner or member of a pass-through entity may not
    31    claim a credit under this chapter for the same premium or
    32    employee.
    33    Section 1509.  Accountability.
    34       (a)  Review procedures.--Any taxpayer that receives a tax
    35    credit under this chapter shall be subject to a performance
    36    review by the Department of Labor and Industry, in conjunction
    37    with the Insurance Department. As appropriate, the performance
    38    review shall be based upon information submitted to the
    39    department that includes the following:
    40           (1)  The contractor's or service provider's strategic
    41       goals and objectives for disease management programs.
    42           (2)  The contractor's or service provider's annual
    43       performance plan setting forth how these strategic goals and
    44       objectives are to be achieved and the specific methodology
    45       for evaluating results, along with any proposed methods for
    46       improvement.
    47           (3)  The contractor's or service provider's annual
    48       performance report setting forth the specific results in
    49       achieving its strategic goals and objectives for disease
    50       management, including any changes in the health of
    51       participants in the disease management program.
    52           (4)  The progress made in achieving expected program
    53       priorities and goals.
    54           (5)  Any other information deemed necessary by the
    55       department.
    56       (b)  Penalty.--If a performance review indicates that a
    57    primary contractor or a service provider failed to comply with
    58    contract requirements or meet performance goals, taxpayers may
    59    be subject to a reduction in or ineligibility for future tax

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     1    credit funding under this chapter.
     2    Section 1510.  Report to General Assembly.
     3       (a)  Submission of report.--The secretary shall submit an
     4    annual report indicating the effectiveness of the credit
     5    provided by this chapter no later than March 15 following the
     6    year in which the credits were approved to the Governor, the
     7    chairmen and the minority chairmen of the Public Health and
     8    Welfare Committee and the Appropriations Committee of the Senate
     9    and the chairmen and minority chairmen of the Health and Human
    10    Services Committee and the Appropriations Committee of the House
    11    of Representatives.
    12       (b)  Contents.--The report shall include the names of all
    13    taxpayers utilizing the credit as of the date of the report and
    14    the amount of credits approved and utilized by each taxpayer.
    15       (c)  Public information.--Notwithstanding any law providing
    16    for the confidentiality of tax records, the information
    17    contained in the report shall be public information.
    18       (d)  Recommendations.--The report may also include any
    19    recommendations for changes in the calculation or administration
    20    of the credit.
    21    Section 1511.  Termination.
    22       The department shall not approve a tax credit under this
    23    chapter for taxable years ending after December 31, 2010.
    24    Section 1512.  Regulations.
    25       The secretary shall promulgate regulations necessary for the
    26    implementation and administration of this chapter.












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