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If you haven't had a chance to follow the Medical Device Tax (2.3% tax on revenue) repeal initiative, here is an update on where it stands. When Obama first proposed the Medical Device Tax reform, the US House of Representatives, led by Representative Erik Paulsen (R-Minnestota), was the first to initiate a bill to repeal the device tax.
"The House has taken a stand for American leadership in medical device innovation and the nearly half million U.S. jobs it supports," said Paulsen. "This new ill-conceived tax would force many of our nation's bright medical technology innovators to lay off workers, move jobs overseas, or worse yet, close their doors altogether. With today's vote," he said, "we show the nation what we can accomplish when we put progress before partisanship. I appreciate the support from my colleagues on both sides of the aisle and look forward to action in the Senate on this vital bill for American jobs."
The "Healthcare Costs Reduction Act" was passed on June 8, 2012 by a bipartisan vote of 270 to 146. The bill was then passed to the Senate. But it wasn't until March 21st, 2013, 9 months later, that the U.S. Senate voted 79-20 in favor of a bipartisan amendment that would repeal the Medical Device Tax and establish a reserve fund to help pay for it. It took a while for the bill to pass in the Senate because some members of the Democrat-led Senate voiced concern about how the government would make up for the $30 billion in revenue the tax is slated to generate over 10 years. The Klobuchar-Hatch amendment would establish a deficit-neutral reserve fund to help offset the cost of repealing the tax. In preparation for the Device Tax, many medical device companies have pared down their R&D budgets, shifted R&D oversees, acquired other companies as a method to offer a full product line, laid off workers, and focused on emerging markets for growth. I gave a run down on the layoffs in my October 2012 newsletter. Other companies are also passing some of this tax on to their customers. The device tax went into effect as of January 1st, 2013. It was estimated that the top 19 medical device companies would pay an estimated $411 million in additional taxes this year, as reported by the Boston Business Journal. The tax exempts eyeglasses, contact lenses, hearing aids and devices usually sold over-the-counter to the general public. But Tom Sommer, president of MassMEDIC, the state's industry advocacy group, said those exemptions won't amount to much locally. "Innovation ... is the hallmark of the medical device industry in Massachusetts," he said. The House of Representatives recently passed a new bill that would provide a Medical Device Tax exemption for products used by emergency responders. "The exemption for emergency medical devices would apply to any medical device that is used by ambulance services or first responders providing pre-hospital care, out-of-hospital care and transportation. In addition, any "qualified emergency medical device" would be exempted." Bureaucratic Mismanagement Just when you thought things were looking up with the Device Tax repeal, the Obama Administration, or more specifically the Centers for Medicare and Medicaid Services, has stopped paying the bills from hundreds of health care companies, and it has nothing to do with sequestration. It's bureaucratic mismanagement and it is hurting the diagnostic testing industry. I know I was only speaking to the positive changes, but if you don't already know about this change and in the diagnostic industry, then you need to know. The issue at hand is how Medicare reimburses for diagnostic tests. Diagnostics were reimbursed using a method called "code stacking." Under this current approach, reimbursement was determined by adding up the "cost" of each discrete step needed to perform a particular molecular test. Since there was no standard method of code stacking, reimbursement was dependent on how the laboratory calculated its pricing for reimbursement. This resulted in a lot of variability in what was paid for similar diagnostic tests, depending on which lab ran the test, and how good it was at "stacking" codes. Medicare decided to change the way it reimburses these diagnostic tests, but has been slow to decide on its new policy. So in the absence of a policy, the Medicare program is simply not paying its bills. To read the full story, click here. Top |
