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F I S C A L I M P A C T R E P O R T
SPONSOR Sandoval
DATE TYPED 02/15/05 HB 446
SHORT TITLE Physical Therapist Gross Receipts
SB
ANALYST Padilla-Jackson
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
($27.0)
($32.0)
Increasing Recurring
General Fund
($17.0)
($20.0)
Increasing Recurring Local Governments
(Parenthesis ( ) Indicate Revenue Decreases)
Senate Bill 401 is a duplicate.
SOURCES OF INFORMATION
LFC Files
Responses Received From
Taxation and Revenue Department (TRD)
Department of Health (DOH)
For The Legislative Health and Human Services Committee
SUMMARY
Synopsis of Bill
House Bill 446 amends current tax law to expand the list of medical care providers eligible to
receive a gross receipts tax deduction for receipts from the provision of medical health services
to Medicare beneficiaries by physical therapists, clinical laboratories, and home health agencies.
Eligible receipts include those from third-party administrators of Medicare and the Federal Mili-
tary TRICARE program. The bill also reconciles multiple amendments to the same section of
law in laws 2003. The bill states that receipts for health services provided by a clinical lab may
be deducted pursuant to the following schedule:
1.
from July 1, 2003 through June 30, 2004, thirty-three and one-third percent of the re-
ceipts may be deducted;
pg_0002
House Bill 446 -- Page 2
2.
from July 1, 3004 through June 30, 2005, sixty-six and two thirds percent of the receipts
may be deducted; and
3.
after June 30, 2005, one hundred percent of the receipts may be deducted.
The bill also states that receipts for health services provided by a home health agency may be
deducted pursuant to the following schedule:
1.
from July 1, 2003 through June 30, 2004, thirty-three and one-third percent of the re-
ceipts may be deducted;
2.
from July 1, 2004 through June 30, 2005, sixty-six and two thirds percent of the receipts
may be deducted; and
3.
after June 30, 2005, one hundred percent of the receipts may be deducted.
The bill defines “home health agency” to mean a for-profit entity that is licensed by the depart-
ment of health and certified by the federal centers for Medicare and Medicaid services as a home
health agency.
This bill is being introduced on behalf of the Legislative Health and Human Services Depart-
ment. No effective date was provided.
FISCAL IMPLICATIONS
According to the analysis provided by TRD, the total fiscal impact of the bill is -$44 thousand
for FY06, of which -$27 thousand would impact the general fund and -$17 thousand would im-
pact local governments. Implied eligible receipts for this estimate is approximately $675 thou-
sand. TRD’s analysis showed about three percent of the state’s population is covered by
TRICARE and 16 percent of the state’s population is covered by Medicare. A seven percent av-
erage growth rate was used to estimate the forecasted impacts and a 2.3 percent growth rate was
used to forecast the growth in Medicare beneficiaries. Due to similar laws passed in 2003, TRD
notes that the fiscal impact of this bill is limited to the new deduction allowed for physical thera-
pists. See the discussion under ”Other Issues” for more detail.
TRD noted that the gross receipts for physical therapists were taken from the Department’s
“Analysis of Gross Receipts by North American Industry Classification System (NAICS)”. Ad-
ditional information was gathered from the New Mexico Health Policy Commission; the
TRICARE Annual Report; American Physical Therapy Association; and the State of New Mex-
ico Regulation and Licensing Department.
ADMINISTRATIVE IMPLICATIONS
The bill would have a minimal impact to TRD.
OTHER SUBSTANTIVE ISSUES
According to TRD, Laws 2003, Chapter 350, Section 1 amended the deduction under Section 7-
9-77.1 NMSA 1978 to include Medicare receipts of home health agencies and clinical laborato-
ries. However, because Laws 2003, Chapter 351, Section 1, which also amended Section 7-9-
77.1, was signed last by Governor, it was codified, while Laws 2003, Chapter 350, Section 1
pg_0003
House Bill 446 -- Page 3
(deduction for clinical labs and home agencies) appears in the annotations to that section. The
Tax Department interprets the annotations of the statute to be binding as law until and unless
these are omitted in a subsequent amendment of the statute. The Department’s position is based
on the argument that rules of statutory construction are only aids when interpreting true legisla-
tive intent (Quintana v. New Mexico Dep’t of Cors., 100 N.M. 224, P2d 1101 [1983]).
OPJ/njw:lg