Pass­ing it down

GPOS: De­vice­mak­ers billing cost of tax to providers

Modern Healthcare - - LATE NEWS - Beth Kutscher

Group pur­chas­ing or­ga­ni­za­tions say the med­i­cal de­vice in­dus­try is pass­ing along the costs of a con­tro­ver­sial ex­cise tax to health­care providers. The Health­care Sup­ply Chain As­so­ci­a­tion, which rep­re­sents GPOs, says it has ev­i­dence that some med­i­cal de­vice­mak­ers are billing hos­pi­tals di­rectly for the 2.3% tax.

No­va­tion, a GPO that serves com­mu­ni­ty­based, pe­di­atric and aca­demic hos­pi­tals, said in an e-mailed state­ment that at least one un­named med­i­cal de­vice man­u­fac­turer had billed “many” of its mem­bers to cover the costs of the tax. No­va­tion said the hospi­tal in­dus­try has vol­un­tar­ily contributed $155 bil­lion over 10 years to help cover the costs as­so­ci­ated with health­care re­form— while the med­i­cal de­vice tax, which amounts to $20 bil­lion over 10 years, was put in place be­cause man­u­fac­tur­ers “re­fused to vol­un­tar­ily con­trib­ute.”

“While most de­vice man­u­fac­tur­ers are tak­ing re­spon­si­bil­ity for this tax, there are some man­u­fac­tur­ers at­tempt­ing to pass their obli­ga­tion on to hos­pi­tals,” Jody Hatcher, No­va­tion’s pres­i­dent and CEO, said in the state­ment.

A spokes­woman at Ad­vaMed, the trade as­so­ci­a­tion for the med­i­cal de­vice in­dus­try, said in an e-mail that the group has no po­si­tion on how its mem­ber com­pa­nies ap­proach the tax.

“We have con­sis­tently said the de­vice tax is bad pol­icy, and that’s why Ad­vaMed and its mem­ber com­pa­nies con­tinue to fight for its re­peal,” she said. “Mem­bers of Congress from both sides of the aisle re­main strongly sup­port­ive of elim­i­nat­ing the tax be­cause it is al­ready sub­stan­tially in­creas­ing costs to the de­vice in­dus­try and harm­ing its com­pet­i­tive­ness. We have al­ready seen a num­ber of harm­ful ef­fects, in­clud­ing lay­offs, re­duced in­vest­ments in R& D and de­lays in sig­nif­i­cant cap­i­tal im­prove­ments.”

GPO and hospi­tal ad­vo­cates have been urg­ing the In­ter­nal Rev­enue Ser­vice to block the med­i­cal de­vice in­dus­try from shift­ing costs to providers.

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