FISCAL NOTE
FUND(S):
Medicaid State Share Fund
Sources of Revenue:
Other Fund Medicaid State Share Fund
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is the references to behavioral health from the severance tax section to the section of tax on provider of psychological services.
As written, this bill would essentially remove behavioral health services from taxation under the Severance Tax (West Virginia Code §11-13A, et seq.), and subject the services to the Health Care Provider Tax imposed on providers of psychological services (West Virginia Code §11-27-18 et seq.). Additionally, the conversion to the Health Care Provider Tax would establish a different definition of “gross receipts” for behavioral health services compared to the definition used for the Severance Tax. However, the conversion to the Health Care Provider Tax may be in conflict with Public Law 102-234, the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments of 1991. Federal law precludes the use of the general health care provider tax mechanism for highly Medicaid-funded services, such as behavioral health services. According to our interpretation and due to the potential conflict with federal law, passage of this bill would have unknown but likely significant negative revenues consequences. At a minimum, federal Medicaid matching funds would be expected to decrease by at least $20 million per year.
Additional administrative costs to the State Tax Department associated with this bill would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
As written, this bill would essentially remove behavioral health services from taxation under the Severance Tax (West Virginia Code §11-13A, et seq.), and subject the services to the Health Care Provider Tax imposed on providers of psychological services (West Virginia Code §11-27-18 et seq.). Additionally, the conversion to the Health Care Provider Tax would establish a different definition of “gross receipts” for behavioral health services compared to the definition used for the Severance Tax. However, the conversion to the Health Care Provider Tax may be in conflict with Public Law 102-234, the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments of 1991. Federal law precludes the use of the general health care provider tax mechanism for highly Medicaid-funded services, such as behavioral health services. According to our interpretation and due to the potential conflict with federal law, passage of this bill would have unknown but likely significant negative revenues consequences. At a minimum, federal Medicaid matching funds would be expected to decrease by at least $20 million per year.
Additional administrative costs to the State Tax Department associated with this bill would be minimal.
Memorandum
The stated purpose of this bill is the references to behavioral health from the severance tax section to the section of tax on provider of psychological services.
As written, this bill would essentially remove behavioral health services from taxation under the Severance Tax (West Virginia Code §11-13A, et seq.), and subject the services to the Health Care Provider Tax imposed on providers of psychological services (West Virginia Code §11-27-18 et seq.). However, the conversion to the Health Care Provider Tax may be in conflict with Public Law 102-234, the Medicaid Voluntary Contribution and Provider-Specific Tax Amendments of 1991.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us