South Carolina – Interactive Disease Management Program Not Taxable


SALT Report 2128 – The South Carolina Department of Revenue issued a Private Letter Ruling regarding the taxability of a disease management program sold to healthcare providers. The program is designed to educate patients about their disease while collecting and monitoring the patient’s health information.

Patients who enroll in the program receive daily telephone messages from their healthcare provider. Once the patient listens to the message they answer questions regarding their symptoms using the telephone’s keypad. The patient’s responses are collected and saved in a database so they can be reviewed by authorized healthcare professionals. Generally, the data is viewed in one of the following formats:

  • By program, such as diabetic patients or surgical patients,
  • Alerts based on responses that fall outside determined parameters, for example, weight changes of greater than 2 pounds for congestive heart failure patients,
  • All patients’ responses, and
  • All patient responses on a specific date

The Taxpayer requested guidance regarding whether the disease management program, when sold to healthcare providers, is subject to sales tax.

The Department determined that charges for the disease management program qualified as a sale of data processing services because the program involves interactive patient responses. South Carolina Code Section 12-36-910(C) defines data processing as the “manipulation of information furnished by a customer through all or part of a series of operations involving an interaction of procedures, processes, methods, personnel, and computers.”  Data processing also includes the electronic transfer of, or access to, information.

Based on the facts presented, the Department found that charges for the disease management program constituted a non-taxable data processing service because the data provided by the patients was manipulated through a series of operations involving specific procedures, personnel, and computers. Accordingly, charges by the Taxpayer to healthcare providers are not subject to tax.

For Further Information

South Carolina Department of Revenue – Private Letter Ruling 13-1