June 13, 2005Jeffery S. Snavely
Dear Mr. Snavely,
Thank you for meeting with representatives from the Pennsylvania Association for Medical Transcription and the American Association for Medical Transcription’s executive director. We greatly appreciated the explanations and review of the Pennsylvania sales and use tax, specifically section 201(y) of the Tax Reform Code of 1971, 72 P.S. § 720 (y) pertaining to secretarial or editing services.
As requested, along with the materials presented at the June 9, 2005 meeting, we were to outline reasons for medical transcription services to be exempt from Pennsylvania sales and use tax. We believe medical transcription falls outside the current definitions for secretarial or editing services. For background purposes, the American Association for Medical Transcription (AAMT) was incorporated as a 501(c)(6) non-profit organization in 1978. AAMT sets standards of practice and education for the medical transcription profession, administers a voluntary certification program for its practitioners, provides continuing education programs, and advocates on behalf of the profession to ensure that quality medical documentation and patient safety remains a high priority for the healthcare system.
Nature of the Work
Medical transcriptionists, as an integral part of the healthcare team, ensure that healthcare documentation is accurate and complete. Sometimes referred to as interpretive medical language specialists, transcriptionists are critical to risk management by correcting and flagging errors in dictation to ensure that consistency exists in the healthcare record. Medical transcriptionists produce a variety of medical reports for inclusion in a patient's permanent medical record, including such report types as emergency room visits, operative notes, diagnostic imaging studies, history and physical examinations, consultations, and discharge summaries. The national accrediting body for healthcare organizations (JCAHO), as well as the health insurance industry mandate the format and content of each specific report type, as these reports in effect become legal documents that can be called into evidence in the event of litigation of any kind, including medical malpractice actions. Additionally, these reports are used for statistical research by the insurance industry, medical equipment and device manufacturers, drug companies, and government health organizations. For the most part, work is done electronically and can be performed anywhere in the U.S. and overseas. Increasingly, the work of transcription will be transmitted digitally as the healthcare system moves toward an electronic and paperless environment.
The Medical Record Begins with Transcription
Accurate and complete transcription is the basis for hospital, clinic, and medical practice reimbursement, crucial to continuity of care, and relied on by health insurers when determining their enrollees’ level of healthcare coverage. Ultimately, clinicians are held accountable for the contents in their health encounter reports, yet in reality reports go unsigned, thereby relying solely on the transcriptionist’s interpretation. Therefore, due to the inherent risks involved if even one document goes unsigned, many medical transcriptionists carry their own errors and omissions professional liability insurance.
Medical Transcriptionists Get Own Classification
Medical transcriptionists achieved a separate job classification based on the Occupational Information Network study conducted in early 1998 by the U.S. Department of Labor. The revised Standard Occupational Classification (SOC), published by the Office of Management and Budget, includes a separate line item 31-9094 for medical transcriptionists in the general arena of health care. In the previous 1980 SOC document, medical transcriptionists were grouped under "Clerical and Other Administrative Support Occupations." This designation for medical transcriptionists did not exist in 1991 when Pennsylvania was determining its exemptions for the sales and use tax code.
Budget Neutrality for Pennsylvania
Most transcription services in Pennsylvania occur in tax-exempt hospitals and not-for-profit medical practices, effectively eliminating half of all transcriptionists from sales and use tax. According to the U.S. Department of Labor, 4 out of 10 MTs work in a hospital setting, while 3 out of 10 are employed in physician offices or work for transcription services. Since transcription is not subject to tax when transcribed by an employee or when a Pennsylvania transcriptionist works for out-of-state entities, that leaves only 3 out of 10 MTs who are independent contractors in the state. If independent contractors only average 1-3 clients each, this is an extremely small percentage of all the dictation done in Pennsylvania. Furthermore, most independent contractors are unaware of the tax law change that occurred in 1991, since prior to that year medical transcription services were tax-exempt in the state. Therefore, it is not customary for independent contractors to charge clients the sales and use tax. Implementing an exemption for medical transcription services would most likely go unnoticed with no appreciable difference to the state’s revenue stream. However, beginning to collect taxes on transcription services could have negative ramifications for the transcription workforce in Pennsylvania by further encouraging purchasers of transcription services to seek services from lower cost non-US. based transcriptionists.
Future Roles for Medical Transcriptionists
Since the Pennsylvania tax code change in 1991, the roles of medical transcriptionists have changed dramatically and are expected to continually evolve over the next decade with implementation of a national health information infrastructure. Increased regulatory requirements, the need for real time healthcare data, and proficient speech recognition and data capture technologies will transform the way medical transcriptionists work. The aging U.S. population, people living longer with chronic diseases, and greater potential for bioterrorist attacks and communicable disease outbreaks will necessitate a well-integrated team of allied health personnel committed to patient safety.
AAMT looks to work with government and private sector policymakers, technology vendors, and the business community to develop workforce retraining and development programs to address the above-mentioned issues. Please feel free to contact us if you need clarification or require additional information concerning the medical transcription profession.
Sincerely,Carol Croft, CMT, FAAMT