Report Title:

Tax Credit; Medical Information Technology

Description:

Provides a 200% tax credit for qualified medical information costs.

THE SENATE

S.B. NO.

1692

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE IMPLEMENTATION OF MEDICAL INFORMATION TECHNOLOGY.

 

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

SECTION 1. The delivery of health care is becoming an increasingly complex process. However, unlike other information-based industries such as banking and finance, the health care industry has been slow to adopt information technology that would facilitate the rapid and accurate accumulation and transmission of vital clinical and utilization information. One major reason for this delay in the adoption of medical information technology is the decentralized nature of health care delivery, relying as it does on scores of physicians operating in solo or small group practices. While decentralization in the delivery of health care has done much to preserve the traditional physician/patient relationship, which is the cornerstone of our care system, it has hampered the implementation of medical information technology that would yield great social benefits to employers, insurers, public health agencies, and programs, as well as introduce efficiencies to the health care delivery system as a whole.

Medical information technology is expensive, and while most of the benefits of the technology will accrue to society as a whole in the form of increased efficiency of delivery, lower administration costs (and therefore lower costs to insurers and lower premiums to employers and employees), reduction of medical errors, and higher quality of care to the population of Hawaii as a whole, the cost of implementation falls primarily, almost exclusively, on physicians, many of whom are small businessmen and businesswomen, coping with educational debt, the rising cost of medical malpractice coverage, and shrinking reimbursement.

In order to encourage physicians to invest in medical information technology in their practices, the State of Hawaii should provide a tax credit to those physicians who are willing to invest their time, effort, and money in this technology. This investment credit will yield great dividends to the people of Hawaii both immediately and over time, as it will facilitate the rapid and accurate transmission of information vital to the health of Hawaii's citizens, facilitate coordination of care, reduce the number of medical errors, reduce administrative overhead, reduce the need for duplicative testing, provide for accurate and timely billing and payments, and create highly skilled and well paying jobs in medical information technology here in Hawaii.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Medical information technology; tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed by this chapter, a tax credit deductible from the taxpayer's net income tax liability and general excise tax liability for qualified medical information technology costs.

To qualify for the credit, the taxpayer shall:

(1) Be a resident or domestic corporation or domestic limited liability company or professional corporation;

(2) Have at least $500 in qualified medical information technology costs in the taxable year in which the credit is claimed; and

(3) Certify that the qualified medical information technology will be used in conjunction with the practice of medicine as defined in section 453-1.

(b) The amount of the credit shall be two hundred per cent of the qualified medical information technology costs.

(c) If the tax credit under this section exceeds the aggregate of the taxpayer's income tax liability or general excise tax liability, the excess of the tax credit may be used as a credit against the taxpayer's income tax liability or general excise tax liability under chapter 237, in subsequent taxable years until exhausted.

(d) Every claim, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the tax credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the tax credit.

(e) The director of taxation shall prepare any forms that may be necessary to claim a tax credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claims for the tax credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(f) As used in this section, "qualified medical information technology costs" means amounts paid for the purchase, lease, or licensing of hardware, software, or internet access used in connection with the practice of medicine as defined in section 453-1."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2003; provided that section 1 of this Act shall apply to qualified equipment costs incurred during taxable years commencing after December 31, 2002.

INTRODUCED BY:

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