Medical device manufacturers are shifting the cost of the
2.3 percent device tax, which went into effect on Jan. 1 as part of the
Affordable Care Act, to hospitals and other healthcare providers, the
Healthcare Supply Chain Association alleged on Friday.
According to HSCA, some medical device companies are adding
a line to their invoices that passes on the cost of the tax to its customers.
“Medical device
manufacturers should be on notice that passing the device tax on is not
acceptable,” said Curtis Rooney, president of HSCA, a trade organization that
represents 15 group purchasing organizations.
“GPOs are effective at limiting these attempts but it
appears medical device manufacturers are trying to work around the GPOs by
creating a new line on their billing statements to hospitals,” said Rooney. “We
think this practice should stop immediately.”
“We think now that the tax is being implemented, it should
be the responsibility of the medical device companies to pay it and not pass it
on to others,” he added.
[See also: Medical device excise tax remains in place after
SCOTUS ruling]
The medical device tax is not what is driving up product
prices, said Kem Hawkins, president of Bloomington, Ind.-based device company
Cook Medical.
“Like every other company doing business in America today,
we have seen significant increases in utilities, rising gasoline prices and
higher healthcare costs,” said Hawkins.
“We have seen higher costs for raw materials and from
regulations. We’ve seen unemployment insurance taxes increasing, along with
other state and local taxes including property taxes. Our employees need
raises. We will have price increases but those increases will not include the
2.3 percent tax,” added Hawkins.
Bruce Carlson, publisher of New York City-based healthcare
research and publishing firm Kalorama Information believes the HSCA’s
accusations are designed to discourage device companies from attempting to use
the tax as leverage in negotiations with GPOs.
“It’s an unsurprising part of negotiations that will occur
between GPOs and med device companies for a long time, with the tax adding just
a bit more friction,” said Carlson. “Right now, I’d say this is a warning shot
across the bow to device companies saying, ‘don’t come to us – GPOs
representing hospitals – and ask us to consider the excise tax you are facing
in price negotiations.”
While it is illegal for medical device companies to charge
their customers for the tax, it is legal in some states for them to include a
line item showing the tax on their invoices, said Carlson.
“It is illegal to put the healthcare reform medical device
excise directly onto an invoice and collect it as tax,” he said. “However, some
states such as Texas – where there was opposition to healthcare reform in the
state legislature – have allowed companies to print the 2.3 percent tax on
invoices to demonstrate to consumers what costs the company is facing, as long
as the tax doesn’t add to the total.”
Source: healthcarefinancenews
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