H-1074.1  _______________________________________________

                          HOUSE BILL 1682

          _______________________________________________

State of Washington      54th Legislature     1995 Regular Session

By Representatives Hymes, Morris, Sherstad, Stevens, Kremen, D. Schmidt, Thompson, Blanton, Cooke and Mastin

Read first time 02/03/95.  Referred to Committee on Finance.

Providing a business and occupation tax deduction for managed care entities.

    AN ACT Relating to the tax treatment of managed care entities; adding a new section to chapter 82.04 RCW; creating a new section; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  A new section is added to chapter 82.04 RCW to read as follows:

    MANAGED CARE AND EQUITABLE TAX TREATMENT.  (1) The legislature finds that managed care arrangement presents a reasonable means to control health care costs.  However, managed care arrangements typically involve several different groups coming together to provide health care.  This can result in each of the parties being taxed for all of the care being provided even though the care is provided by others under contract.  It is in the public interest to avoid the discouragement of managed care through tax burdens that do not apply to nonmanaged care arrangements.

    (2) In computing tax under this chapter, there may be deducted from the measure of tax, amounts paid or subject to be paid to health care providers for rendering services to patients pursuant to a contract between a health care provider organization such as an independent practice association, physician-hospital organization, management services organization, or similar entity; and a third party payer or another health care provider organization that has such a contract with a third party payer.  A health care provider organization does not qualify for this deduction unless the payments to the providers are subject to this tax.

NEW SECTION. Sec. 2.  CAPTIONS.  Captions as used in this act constitute no part of the law.

NEW SECTION. Sec. 3.  This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995.

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