SENATE BILL REPORT

SSB 6273

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Majority Report: That Substitute Senate Bill No. 6273 be substituted therefor, and the substitute bill do pass.

Signed by Senators Keiser, Chair; Franklin, Vice Chair; Pflug, Ranking Minority Member; Becker, Murray and Parlette.

Background: Prescribed durable medical equipment includes a variety of devices, such as blood glucose monitors, canes, home oxygen equipment, hospital beds, walkers, and wheelchairs. Medical insurance often includes coverage for these types of prescribed devices, and a common benefit design may cover 80 percent of the cost of the device, with the remaining 20 percent to be paid by the patient. Some insurance carriers include the cost of the state sales tax with their plan payment to the vendor, but many others do not. The additional charge then falls on the patient or on the vendor providing the device. Some devices are quite expensive and the patient charge for their portion of the payment plus an additional charge for sales tax on the total item price can be prohibitive. For example a specialized power wheelchair for a complex patient can be $30,000, which could result in thousands of dollars in out-of-pocket charges for the patient.

Summary of Substitute Bill: Medical insurance plans issued on or after January 1, 2011, that include coverage for prescribed durable medical equipment and mobility enhancing equipment, must include the sales tax or use tax calculation in their plan payment. The payment must reflect the negotiated provider agreement for the prescribed equipment, and separately identify the sales tax or use tax if the provider submitting a claim or invoice indicates the geographically adjusted sales tax. The tax calculation must be consistent with the sales tax requirements established in RCW 82.08 and the use tax requirements in RCW 82.12.

The definitions for durable medical equipment and mobility enhancing equipment are consistent with the definitions provided in RCW 82.08 and 82.12. Durable medical equipment includes equipment that can withstand repeated use, is primarily and customarily used to serve a medical purpose, generally is not useful to a person in the absence of illness or injury, and is not worn in or on the body. Mobility enhancing equipment includes equipment that is primarily and customarily used to provide or increase the ability to move from one place to another and is appropriate for use in a home or a motor vehicle, is not generally used by persons with normal mobility, and does not include any motor vehicle or equipment on a motor vehicle normally provided by a motor vehicle manufacturer.

Staff Summary of Public Testimony on Original Bill: PRO: We have worked on this issue for a number of years, trying to find a way to protect consumers from the additional costs of these devices. We've tried several approaches and this approach creates a fair method that is simple and creates a benefit for the people who need these devices while also creating a level playing field for insurance carriers. The burden of these expenses disproportionately hits the disabled and elderly population. This bill provides some protection and ensures the sales tax is included in their coverage. A possible amendment that may help further clarify the sales tax should be added separately to the negotiated payment for the device. Extending the sales tax exemption to all of these devices has not been possible, but this approach would hold insurance plans accountable for payment of the tax. The public Medicaid and Labor and Industries payments add on sales tax and we would like the insurance carriers to do the same. Even a small additional charge is having an impact on some persons with disabilities accessing the devices - they cannot afford additional charges and go without.