Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
300.0000 HOSPITALS, INSTITUTIONS AND HOMES FOR THE CARE OF PERSONS—Regulation 1503
300.0130 Sale of Supply Items to the U.S. Government (Medicare). Hospitals furnish tangible personal property to their patients in connection with medical care. There are several factors relevant to determining whether the hospital is the consumer of the property so furnished or the retailer. (See Annotation 300.0134 for a discussion of these factors.) One of the relevant factors is whether the hospital separately itemizes its charges for the tangible personal property on its bill for hospital care. It is the bill the hospital sends to the patient that is determinative, regardless of whether the patient pays the bill directly or the patient's insurer pays the bill: statements that the hospital may issue to the insurer are not relevant.
When a hospital issues an itemized billing to the patient, the hospital may be regarded as the retailer of certain tangible personal property as discussed in Annotation 300.0134. However, if the hospital does not provide the patient (whether a direct pay patient or one whose insurer will pay the hospital's bill) with billing showing itemized charges for nonadministered tangible personal property, the hospital is the consumer of such property.
Medicare now requires hospitals to use a specific format when submitting bills to be paid by Medicare, and that format does not involve sending an itemized billing to either Medicare or the patient. However, the Medicare regulations do not forbid the hospital from sending the patient a completely itemized statement, and thus do not prevent the hospital from being regarded as the retailer of nonadministered tangible personal property if that is what it wishes. If so, the hospital must send to the patient an itemized billing with separate charges for such property. 11/25/91.