PRINTER'S NO.  670

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

670

Session of

2011

  

  

INTRODUCED BY REICHLEY, CLYMER, CUTLER, GEIST, GOODMAN, HARHART, KILLION, MILNE, READSHAW, SWANGER AND WATSON, FEBRUARY 14, 2011

  

  

REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 14, 2011  

  

  

  

AN ACT

  

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Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

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act relating to tax reform and State taxation by codifying

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and enumerating certain subjects of taxation and imposing

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taxes thereon; providing procedures for the payment,

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collection, administration and enforcement thereof; providing

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for tax credits in certain cases; conferring powers and

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imposing duties upon the Department of Revenue, certain

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employers, fiduciaries, individuals, persons, corporations

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and other entities; prescribing crimes, offenses and

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penalties," providing for a disease management tax credit.

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The General Assembly of the Commonwealth of Pennsylvania

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hereby enacts as follows:

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Section 1.  The act of March 4, 1971 (P.L.6, No.2), known as

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the Tax Reform Code of 1971, is amended by adding an article to

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read:

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ARTICLE XVII-G

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DISEASE MANAGEMENT TAX CREDIT

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Section 1701-G.  Scope.

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This article relates to disease management insurance policy

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tax credits.

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Section 1702-G.  Definitions.

 


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The following words and phrases when used in this article

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shall have the meanings given to them in this section unless the

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context clearly indicates otherwise:

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"Department."  The Department of Revenue of the Commonwealth.

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"Disease management insurance policy."  A group or individual

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health insurance policy that includes a disease management

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program.

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"Disease management program."  A set of interventions

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designed to improve the health of individuals, especially those

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with certain ailments or diseases. A disease management program

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may include:

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(1)  Identifying patients and matching the intervention

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with need.

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(2)  Support for adherence to evidence-based medical

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practice guidelines, including providing medical treatment

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guidelines to physicians and other providers, and providing

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support services to assist the physician in monitoring the

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patient.

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(3)  Services designed to enhance patient management and

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adherence to an individualized treatment plan, including

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patient education, monitoring and reminders, and behavior

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modification programs aimed at encouraging lifestyle changes.

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(4)  Routine reporting and feedback loops, including

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communication with patient, physician, health plan and

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ancillary providers, and practice profiling.

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(5)  Collection and analysis of process and outcome

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measures.

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"Pass-through entity."  Any of the following:

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(1)  A partnership, limited partnership, limited

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liability company, business trust or other unincorporated

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entity that for Federal income tax purposes is taxable as a

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partnership.

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(2)  A Pennsylvania S corporation.

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"Primary contractor."  A person licensed to conduct business

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in this Commonwealth that develops, implements or monitors

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disease management programs.

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"Qualified tax liability."  The liability for taxes imposed

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under Article III, IV or VI. The term includes the liability for

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taxes imposed under Article III on a sole proprietor, partner,

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shareholder, owner or member of a pass-through entity.

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"Secretary."  The Secretary of Revenue of the Commonwealth.

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"Service provider."  A person licensed to conduct business in

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this Commonwealth that is selected by the primary contractor to

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provide disease management programs.

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"Small business."  A taxpayer with fewer than 50 employees.

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"Tax credit."  The disease management insurance policy tax

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credit authorized under this article.

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"Taxpayer."  An entity subject to tax under Article III, IV

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or VI. The term includes:

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(1)  the partner, shareholder, owner or member of a pass-

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through entity that receives a tax credit; or

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(2)  a sole proprietor.

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Section 1703-G.  Credit for disease management insurance

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policies.

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(a)  Application.--

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(1)  A taxpayer who purchases and provides a disease

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management insurance policy to employees in a taxable year

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may apply for a tax credit as provided in this article. By

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September 15, a taxpayer must submit an application to the

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department for premiums paid in the taxable year that ended

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in the prior calendar year.

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(2)  A taxpayer with 50 or more employees who purchases

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and provides a disease management insurance policy to

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employees in a taxable year may apply for a tax credit as

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provided in this article. By September 15, a taxpayer must

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submit an application to the department for premiums paid in

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the taxable year that ended in the prior calendar year.

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(b)  Tax credit.--A taxpayer qualified under subsection

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(a)(1) shall receive a tax credit for the taxable year in the

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amount of $500 for each employee of the taxpayer covered by a

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disease management insurance policy. A taxpayer qualified under

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subsection (a)(2) shall receive a tax credit for the taxable

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year in an amount equal to 50% of the cost to the taxpayer for

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providing health care coverage for employees, contingent on

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proof the purchased coverage utilizes disease management

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protocols.

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(c)  Notification of credit.--By December 15 of the calendar

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year following the close of the taxable year, the department

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shall notify the taxpayer of the amount of the taxpayer's tax

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credit approved by the department.

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Section 1704-G.  Certification requirement.

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(a)  Application.--In order to qualify for the tax credit, a

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taxpayer, in conjunction with the Department of Labor and

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Industry and the Insurance Department, shall make application

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for the certification of the disease management program

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purchased as part of the disease management insurance policy.

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The Insurance Department shall develop the certification

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criteria.

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(b)  Reapplying.--In the subsequent tax year, a taxpayer

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reapplying for the tax credit must provide verification to the

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Department of Labor and Industry and the Insurance Department

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that the disease management program meets the certification

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requirements and continues to be purchased by the taxpayer.

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Section 1705-G.  Carryover, carryback, refund and assignment of

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credit.

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(a)  General rule.--If the taxpayer cannot use the entire

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amount of the tax credit for the taxable year in which the tax

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credit is first approved because the amount of the tax credit

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exceeds the tax liability of the taxpayer for the year in which

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the tax credit under section 1703-G is to be applied, the excess

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may be carried over to succeeding taxable years and used as a

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credit against the qualified tax liability of the taxpayer for

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those taxable years. Each time the tax credit is carried over to

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a succeeding taxable year, it shall be reduced by the amount

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that was used as a credit during the immediately preceding

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taxable year. The tax credit may be carried over and applied to

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succeeding taxable years for no more than 15 taxable years

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following the first taxable year for which the taxpayer was

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entitled to claim the credit.

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(b)  Application of tax credit.--A tax credit approved by the

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department for premiums incurred in a taxable year shall first

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be applied against the taxpayer's qualified tax liability for

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the current taxable year as of the date on which the credit was

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approved before the tax credit may be applied against any tax

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liability under subsection (a).

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(c)  Unused tax credit.--A taxpayer is not entitled to

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assign, carry back or obtain a refund of an unused tax credit.

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Section 1706-G.  Time limitations.

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A taxpayer is not entitled to a tax credit for health

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insurance premiums providing for disease management programs

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incurred in taxable years ending after December 31, 2013.

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Section 1707-G.  Limitation on credits.

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(a)  Allocation for small businesses.--Forty percent of

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available funds shall be allocated exclusively for small

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businesses. However, if the total amounts allocated to either

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the group of applicants exclusive of small businesses or the

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group of small business applicants is not approved in any fiscal

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year, the unused portion will become available for use by other

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qualifying taxpayers.

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(b)  Proration of tax credits.--

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(1)  If the total amount of tax credits applied for by

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all taxpayers, exclusive of small businesses, exceeds the

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amount allocated for those credits, the tax credit to be

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received by each applicant shall be prorated by the

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department among all applicants, exclusive of small

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businesses, who have qualified for the credit.

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(2)  If the total amount of tax credits applied for by

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all small businesses exceeds the amount allocated for those

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credits, the tax credit to be received by each small business

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applicant shall be prorated by the department among all small

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business applicants who have qualified for the credit.

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Section 1708-G.  Shareholder, owner or member pass-through.

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(a)  Pennsylvania S corporations.--If a Pennsylvania S

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corporation does not have an eligible tax liability against

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which the tax credit may be applied, a shareholder of the

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Pennsylvania S corporation is entitled to a tax credit equal to

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the tax credit determined for the Pennsylvania S corporation for

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the taxable year multiplied by the percentage of the

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Pennsylvania S corporation's distributive income to which the

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shareholder is entitled.

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(b)  Pass-through entities.--If a pass-through entity other

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than a Pennsylvania S corporation does not have an eligible tax

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liability against which the tax credit may be applied, an owner

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or member of the pass-through entity is entitled to a tax credit

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equal to the tax credit determined for the pass-through entity

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for the taxable year multiplied by the percentage of the pass-

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through entity's distributive income to which the owner or

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member is entitled.

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(c)  Entitlement.--The credit provided under subsection (a)

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or (b) is in addition to any tax credit to which a shareholder,

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owner or member of a pass-through entity is otherwise entitled

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under this article. However, a pass-through entity and a

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shareholder, owner or member of a pass-through entity may not

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claim a credit under this article for the same premium or

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employee.

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Section 1709-G.  Accountability.

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(a)  Review procedures.--Any taxpayer that receives a tax

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credit under this article shall be subject to a performance

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review by the Department of Labor and Industry, in conjunction

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with the Insurance Department. As appropriate, the performance

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review shall be based upon information submitted to the

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department that includes the following:

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(1)  The contractor's or service provider's strategic

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goals and objectives for disease management programs.

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(2)  The contractor's or service provider's annual

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performance plan setting forth how these strategic goals and

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objectives are to be achieved and the specific methodology

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for evaluating results, along with any proposed methods for

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improvement.

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(3)  The contractor's or service provider's annual

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performance report setting forth the specific results in

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achieving its strategic goals and objectives for disease

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management, including any changes in the health of

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participants in the disease management program.

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(4)  The progress made in achieving expected program

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priorities and goals.

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(5)  Any other information deemed necessary by the

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department.

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(b)  Penalty.--If a performance review indicates that a

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primary contractor or a service provider failed to comply with

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contract requirements or meet performance goals, taxpayers may

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be subject to a reduction in or ineligibility for future tax

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credit funding under this article.

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Section 1710-G.  Report to General Assembly.

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(a)  Submission of report.--The secretary shall submit an

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annual report indicating the effectiveness of the credit

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provided by this article no later than March 15 following the

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year in which the credits were approved to the Governor, the

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chairmen and the minority chairmen of the Public Health and

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Welfare Committee and the Appropriations Committee of the Senate

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and the chairmen and minority chairmen of the Health Committee

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and the Appropriations Committee of the House of

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Representatives.

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(b)  Contents.--The report shall include the names of all

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taxpayers utilizing the credit as of the date of the report and

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the amount of credits approved and utilized by each taxpayer.

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(c)  Public information.--Notwithstanding any law providing

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for the confidentiality of tax records, the information

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contained in the report shall be public information.

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(d)  Recommendations.--The report may also include any

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recommendations for changes in the calculation or administration

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of the credit.

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Section 1711-G.  Termination.

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The department shall not approve a tax credit under this

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article for taxable years ending after December 31, 2011.

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Section 1712-G.  Regulations.

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The secretary shall promulgate regulations necessary for the

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implementation and administration of this article.

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Section 2.  This act shall take effect in 60 days.

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