Article 5. Inclusion Of Medi-cal Managed Care Plans In Sales Tax of California Revenue And Taxation Code >> Division 2. >> Part 1. >> Chapter 2. >> Article 5.

For purposes of this article, notwithstanding any provision of Chapter 1 (commencing with Section 6001), the following words have the following meanings in extending the sales tax to sellers of Medi-Cal health care services:
  (a) "Gross receipts" means the total amount received by a seller of a Medi-Cal managed care plan in premium or capitation payments for the coverage or provision of all health care services, including, but not limited to, Medi-Cal services. "Gross receipts" shall not include amounts received by a Medi-Cal managed care plan pursuant to a subcontract with a Medi-Cal managed care plan to provide health care services to Medi-Cal beneficiaries.
  (b) "Seller" means any person, other than an insurer as described in Section 12003 or a dental managed care plan as described in Section 14087.46 of the Welfare and Institutions Code, or any entity that enters into a contract with the State Department of Health Care Services pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.9 (commencing with Section 14088), or Article 2.91 (commencing with Section 14089) of Chapter 7 of, or pursuant to Article 1 (commencing with Section 14200) or Article 7 (commencing with Section 14490) of Chapter 8 of, Part 3 of Division 9 of the Welfare and Institutions Code.
  (c) "At retail" means a sale for any purpose other than resale.
  (d) "Sale" means the provision of a Medi-Cal managed care plan.

Notwithstanding any other provisions in this part, for the privilege of selling Medi-Cal health care services at retail, a tax is hereby extended to all sellers of Medi-Cal managed care plans at the rate of 3.9375 percent of the gross receipts of any seller from the sale of all Medi-Cal managed care plans sold at retail in this state.

For the efficient administration of this article and the collection of tax from sellers, a seller shall register with the State Board of Equalization and report and pay the tax to the State Board of Equalization, which shall collect the tax.

For the efficient administration of this article and the collection of tax from sellers, Article 1.1 (commencing with Section 6470) of Chapter 5, pertaining to prepayment of taxes, shall not apply to sellers until no later than three months after the date that federal financial participation is available and any necessary federal approvals have been obtained.

A seller shall file with the board an application pursuant to Section 6066, which shall state that the applicant will actively engage in the retail sale of Medi-Cal health care services.

After compliance by the seller with Section 6178 and by the seller and the board with Section 6067, the board shall grant and issue a permit or permits to each applicant pursuant to Section 6067.

A permit issued pursuant to this article shall be held only by a seller that is actively engaged in the retail sale of Medi-Cal health care services. Any seller not so engaged shall forthwith surrender its permit to the board for cancellation. The board may revoke the permit of a seller found to be not actively engaged in the retail sale of Medi-Cal health care services.

For purposes of Section 6486, a seller is a retailer.

Every seller shall keep any records, receipts, contracts, and other pertinent papers in such form as the board may require.

The board, or any person authorized in writing by the board, may examine the books, papers, records, and equipment of any seller, and may investigate the character of the business of the seller, pursuant to Section 7054.

Notwithstanding Section 7101, all revenues, less refunds, derived from the taxes extended by this article shall be deposited in the State Treasury to the credit of the Children's Health and Human Services Special Fund. Funds deposited in the Children's Health and Human Services Special Fund pursuant to this section are hereby continuously appropriated to the State Department of Health Care Services solely for purposes of funding managed care rates for health care services for children, seniors, persons with disabilities, and dual eligibles in the Medi-Cal program that reflect the cost of services and acuity of the population served. The State Department of Health Care Services shall provide a quarterly reconciliation of tax revenue utilization to Medi-Cal managed care plans including an itemized accounting of the dollars as a part of the ratesetting process.

Notwithstanding the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)), the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), and Part 1.7 (commencing with Section 7285), no county, city, or district shall impose a sales or use tax on the gross receipts defined in Section 6174.

Notwithstanding any other law, the Controller may use the funds in the Children's Health and Human Services Special Fund for cashflow loans to the General Fund as provided in Sections 16310 and 16381 of the Government Code.

A seller subject to the tax imposed pursuant to this article shall be assessed the amount the seller will be required to pay, but the seller shall not be required to pay the tax if the State Department of Health Care Services has not fulfilled its obligations to provide actuarially sound, monthly capitation payments to the seller, which are certified as actuarially sound by State Department of Health Care Services' actuaries or contracted actuaries.

This article shall be implemented only if and to the extent that federal financial participation under Title XIX of the federal Social Security Act (42 U.S.C. 1395 et seq.) is available and any necessary federal approvals have been obtained. This article is automatically repealed if it is delayed based upon a challenge under federal law.

This article shall have no force or effect if there is a final judicial determination made by any state or federal court that is not appealed, in any action by any party, or a final determination by the administrator of the federal Centers for Medicare and Medicaid Services, that disallows, defers, or alters the implementation of this article.

This article shall be operative on July 1, 2013, and shall become inoperative on July 1, 2016. As of January 1, 2017, this article is repealed. A tax imposed by this article shall continue to be due and payable until the tax is paid.