On December 22, 2014, the Department assessed the Taxpayer for tax, penalty and interest for the CRS reporting periods from January 31, 2008 through December 31, 2013. On January 29, 2015, the Taxpayer protested the assessment. The Taxpayer was a non-filer of CRS returns during the periods at issue. During the relevant period, the Taxpayer provided hospice nursing care services in nursing homes in New Mexico, under contract with the nursing home facilities. The Taxpayer is a license hospice nursing service provider that is only authorized to provide clinical services in a residential setting related to the hospice diagnosis. The Taxpayer is not a licensed nursing home provider and does not provide room and board services or curative services. At issue in this case are the Taxpayer’s receipts received from Medicaid for the patients’ room and board at the nursing home facilities. This is the only amount in dispute in the protest. The nature of the transactions was that the nursing home facility would bill the Taxpayer for the room and board that the facility provided to the Taxpayer’s hospice patients. The Taxpayer billed Medicaid for the nursing home room and board at the permissible Medicaid room and board rate, and Medicaid would pay the Taxpayer 95% of the permissible room and board rate. Upon receipt of payment, the Taxpayer would place the money in a specific reimbursement account and then reimburse the nursing facility at 100% of the Medicaid room and board rate. The Taxpayer would not retain any portion of the money. The Taxpayer’s contracts with the nursing homes specified that the Taxpayer was an independent contractor. The question in the protest is two-fold. First, does the Taxpayer receive payment from Medicaid for room and board for reimbursement to the nursing home in a disclosed agency capacity? Second, if the Taxpayer was not acting as a disclosed agent, does the fact that the Medicaid regulations require the Taxpayer to bill for room and board services provided by nursing homes establish an agency relationship? Regulation 22.214.171.124 NMAC provides that an agency relationship only exists if a person has the power to bind a principal in contract with a third party. The contracts between the Taxpayer and the nursing homes make it clear that this was not the case. The Taxpayer argued that the Medicaid regulations forced it to be the nursing home’s agent for purposes of billing, but the Taxpayer entered into contracts that disavowed any agency relationship with the nursing homes. The Taxpayers’ protest was denied.
Star Hospice, Inc.