Finance, Revenue and Bonding Committee
JOINT FAVORABLE REPORT
Bill No.: SB-1107
AN ACT CONCERNING THE TAXATION OF AMBULATORY SURGICAL
Title: CENTER SERVICES.
Vote Date: 4/22/2021
Vote Action: Joint Favorable
PH Date: 4/20/2021
File No.:
Disclaimer: The following JOINT FAVORABLE Report is prepared for the benefit of the
members of the General Assembly, solely for purposes of information, summarization and
explanation and does not represent the intent of the General Assembly or either chamber
thereof for any purpose.
SPONSORS OF BILL:
Finance, Revenue and Bonding Committee
REASONS FOR BILL:
The purpose of this bill is :
1) to establish a retroactive deduction against the current Ambulatory Surgical Centers (ASC)
tax for COVID-19-related expenses during all of FY 2021
2) sunset the current 6% ASC Tax by June 30, 2021
3) subject ASC services to the States 6.35% Sales Tax beginning July 1, 2021.
RESPONSE FROM ADMINISTRATION/AGENCY:
Melissa Mccaw, Secretary of the Office of Policy and Management State of
Connecticut Opposed
Secretary Mccaw testified in opposition of the bill and is concerned with its federal
compliance and federal reimbursement. With the COVID-19-related expenses deduction
retroactive for FY 2021, the bill would be creating a stratified rate structure. Under federal
law, the tax must be applied uniformly. Exempting certain gross receipts with a 0% tax rate
while other gross receipts are taxed at the 6% rate does not comply with federal regulations
and can jeopardize the states receipt of federal reimbursement both retroactively and going
forward. It is for this reason that the Governor has proposed in H.B. 6433 to remove from
current law the exemption of the first $1 million of gross receipts. As such, since the
provisions of this bill are impermissible under federal law, this bill would further risk federal
reimbursement. The other major component of this bill is converting the ASC Tax to the Sales
Tax which does not alleviate the necessity of complying with federal health provider tax
regulations. Specifically, in order for federal law governing health care provider taxes to
apply, a tax must be of general applicability. Movement of the ASC Tax to the Sales Tax falls
short of this and various provisions contained in this sales tax proposal would move this
component away from general applicability, therefore continuing to make all federal
limitations apply. The tax credit that is offered in the last section of the legislation would be
impermissible as federal Medicaid law prohibits credits on health care related taxes thus
continuing to put at risk federal reimbursement.
NATURE AND SOURCES OF SUPPORT:
Connecticut Hospital Association
The testimony presented by the Connecticut Hospital Association requests the following
changes to the tax on ambulatory surgery centers (ASC) from a provider tax under Section
12-263i of the general statutes to a sales tax under Section 12-407. The current language in
Section 1, subdivision (b)(1)(B), excludes net revenue of a hospital that is subject to the tax
imposed under Section 12-263q from the calculation of the tax. This provision ensures that
ambulatory surgery services provided in a hospital outpatient department are not subject to
multiple taxes. We request that subdivision (45) of subsection (a) of Section 12-407, in
Section 3 of the bill, be amended, to be consistent with the original intent of Section 12-263i,
to exclude net revenue of a hospital that is subject to the tax imposed under Section 12-263q
from the calculation of the sales tax under Section 12-407.
The following testified in support of the bill stating that for many ASCs, the 6% tax on gross
receipts translates to an effective income tax rate of 30 percent because of the way it is
structured. Unlike large hospital systems, ASCs operate like small businesses and pay all the
local, state and federal taxes that small businesses pay. Ambulatory Surgical Centers
provide high quality, cost effective care to patients across Connecticut.
The government and private insurers pay ASCs about 50% less than hospitals, saving
Medicare billions annually and lowering employer health care costs. ASCs also save
Connecticut patients money through lower co-payments and deductibles.
Significant savings are also possible for the Medicaid program and the State Employee
Health Program.
Michael Aronow, MD, President of the Connecticut Orthopaedic Society
Connecticut State Medical Society
Patrick Albergo
Danilo D'Aprile, Orthopaedic Specialty Surgery Center
Digestive Disease Associates LLC
Eastern Connecticut Endoscopy Center
Jenn Gale, Manager of Operations, Surgical Care Affiliates
Christine Jackson, Executive Director, Lighthouse Surgery Center
Guen Kaffenberger, Administrator, Danbury Surgical Center
Ken Larsen, Executive Director, Endoscopy Center of Connecticut, LLC
Marc Lederman, Medical Director, Bloomfield Ambulatory Surgery Center
Page 2 of 3 SB-1107
Maurizio Nichele, Shoreline Colonoscopy Suites
North Haven Surgery Center
David M. Sones, Administrator, Southwest Connecticut Surgery Center, LLC
The physicians and staff of Gastroenterology Associates of Fairfield County
Diane Heelan, CEO, Western Connecticut Orthopedic Surgery Center
Lori Woodworth, Administrator, Guilford Surgery Center
NATURE AND SOURCES OF OPPOSITION:
None expressed
Reported by: Dawn Silveira Date: 5/6/21
Page 3 of 3 SB-1107


Statutes affected:
Raised Bill: 12-263i
FIN Joint Favorable: 12-263i
File No. 678: 12-263i