Creates general excise tax rebate for physicians for qualified medical information technology costs.

A BILL FOR AN ACT

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 medical information technology that would facilitate the rapid and accurate transmission of vital clinical information. One major reason for this delay is the decentralized nature of health care delivery that relies on scores of physicians operating in solo or small group practices. Although decentralization in the delivery of health care has done much to preserve the traditional physician-patient relationship, the cornerstone of our care system, it has hampered the implementation of medical information technology. Such technology would yield great improvements in patient care, and provide social benefits to employers, insurers, and public health agencies and programs, and introduce efficiencies to the health care delivery system as a whole.

Most of the benefits of the technology will accrue to society as a whole in the form of increased efficiency of health care delivery, lowered administration costs, and, therefore, decreased costs to insurers resulting in lower premiums to employers and employees, reduced medical errors, and a higher quality of care to the population of Hawaii. However, the cost of implementing expensive medical information technology falls almost exclusively on physicians, many of whom are small business owners, coping with educational debt, the rising cost of medical malpractice coverage, and shrinking reimbursement.

A limited rebate of the general excise tax imposed on physician services will encourage physicians to invest their time, effort, and money to implement medical information technology in their practices. This modest, self-limiting rebate will yield great dividends to the people of Hawaii, both immediately and over time. It will facilitate the rapid and accurate transmission of information vital to the health of Hawaii's citizens, facilitate the coordination of care, diminish the number of medical errors, lower administrative overhead, reduce the need for duplicative testing, and provide for accurate and timely billing and payments. It will also create highly skilled and well-paying jobs in medical information technology in Hawaii.

The purpose of this Act is to provide a general excise tax rebate to physicians for the costs of qualifying medical information technology.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237-   Rebate for qualifying medical information technology. (a) There shall be allowed to each physician a rebate of the general excise tax imposed on physician services for qualifying medical information technology costs.

(b) To qualify for the rebate, the physician shall:

(c) The amount of the rebate shall be limited to $20,000 of the qualifying medical information technology costs for any individual physician, single resident or domestic corporation, domestic limited liability company, or professional corporation in any tax year, and may not be carried over to subsequent tax years.

(d) Every claim, including amended claims, for a tax rebate 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 rebate may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the tax rebate.

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

(f) As used in this section:

"Physician" means an individual licensed to practice medicine under chapter 453 or chapter 460.

"Qualifying medical information technology costs" means amounts paid for the purchase, lease, or licensing of computer hardware, software, and internet access that are used in connection with the practice of medicine as defined in section 453-1 or section 460-1, and also shall include amounts paid to train physicians and staff to use computer technology acquired in connection with the practice of medicine. The term "qualifying medical information technology costs" does not include amounts paid to third-party claims processing or billing services."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2005.