Illinois—Sales and Use Tax: Rates of Reimbursement for Physician Services Increased

Illinois—Sales and Use Tax: Rates of Reimbursement for Physician Services Increased; Provisions Relating to Annual Assessments on Hospitals Changed

An amendment to Illinois sales and use tax legislation discusses that (1) the Department of Public Health (department) is increasing rates of reimbursement for physician services to as close to 60% of Medicare rates in effect as of January 1, 2020 utilizing the rates of “Illinois Locality 99 facility rates;” and (2) the amendments made to the annual assessments rules on hospitals. The amendments include:

• Beginning July 1, 2012 and ending on December 31, 2022, a hospital that would have qualified for the rate year beginning October 1, 2011, shall be a “Safety-Net Hospital.”
• For the period of July 1, 2020 through December 31, 2020 and calendar years 2021 and 2022 through 2024, an annual assessment on inpatient services is imposed on each hospital provider in an amount equal to $221.50 multiplied by the difference of the hospital’s occupied bed days less the hospital’s Medicare bed days, provided however: for the period of July 1, 2020 through December 31, 2020, (i) the assessment is equal to 50% of the annual amount; and (ii) the amount of $221.50 is retroactively adjusted by a uniform percentage to generate an amount equal to 50% of the “Assessment Adjustment.”
• For the period of July 1, 2020 through December 31, 2020 and calendar State fiscal years 2021 and 2022 through 2024, an annual assessment on outpatient services is imposed on each hospital provider in an amount equal to .01525 multiplied by the hospital’s outpatient gross revenue, provided however : (i) for the period of July 1, 2020 through December 31, 2020, the assessment is equal to 50% of the annual amount; and (ii) the amount of .01525 is retroactively adjusted by a uniform percentage to generate an amount equal to 50% of the Assessment Adjustment.
• Definition of “Assessment Adjustment.”
• Definition of “Safety-Net Hospital.”
• Extension of the time period that a hospital can qualify as a “Safety-Net Hospital.”

If the change in the assessment methodology for fiscal years 2021 through December 31, 2022 not be approved on or before June 30, 2020, the assessment in effect for fiscal year 2020 will remain in place until the new assessment is approved.

For more information visit Illinois Revenue Sales and Use Tax S.B 2541 

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