Saturday, June 1, 2013

Consequences (MDET)

A recent article by Curtis Rooney, president of the Healthcare Supply Chain Association, took to task medical device manufacturers that have chosen to pass along the 2.3% Medical Device Excise Tax to their healthcare customers - Some medical device manufacturers not paying their share of health reform:

"As debate over repeal of the medical device excise tax continues on Capitol Hill, evidence has begun to emerge that some medical device manufacturers have chosen to pass the costs of the tax directly to American hospitals and healthcare providers, and ultimately to patients and taxpayers. For hospitals already delivering effective and affordable care on shrinking budgets, this is tantamount to being double-billed for healthcare reform.... 

... Hospitals are now reporting that, although some suppliers are behaving responsibly, other device manufacturers are billing hospitals directly to cover the costs associated with the medical device excise tax. Although there are more than 40 taxes found in the ACA, hospitals and other healthcare providers report that medical device suppliers are the only parties indicating that they plan to pass the tax on to their customers. That is not right.."

All true... The device manufacturers seem to be falling into three groups, those that do not attempt to pass this expense along (incidentally the plurality of the manufacturers that we deal with); those that seem confused or misinformed; and a smaller group that appear to be actively deceitful about the issue.

An example of a manufacturer from the second group (anonymized to protect the innocent):

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Here's an example from a manufacturer that would appear to fall into the third group (also anonymized). This one is so elaborate that it is difficult to attribute this to confusion or even willful ignorance, but would seem to be an attempt at active dishonesty. The letter references part of the legislation and corresponding IRS regulations, but for things that do not pertain to the hospital doing the purchasing! The hospital is directed to complete a "medical device exemption certificate."  Clearly the first three choices would not apply to a hospital almost 100% of the time (i.e. use for further manufacture, for resale, or for export) leaving "None of the above: Purchased item(s) subject to the 2.3% medical device excise tax" which would imply the purchaser is responsible. The only problem? This logic is applicable to the manufacturer and not to the purchaser!

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The medical device manufacturers are behaving responsibly for the most part. They, and their trade association, are actively trying to get this provision of the Affordable Care Act reversed. Majorities in both the Senate and House have indicated that they are in favor of a repeal, however specific enabling legislation has not been passed so the MDET remains in effect.

OK, so this blogger has no problem with these efforts by the device manufacturers, where he takes exception is with the legislators... Of course, this was not unexpected!

The September 29th, 2008 blog entry 'Quick reminder...' bemoaned Congress' penchant for specializing in ignorance, error, and immediate interest; in evincing a cavalier disregard of the intricacies of the matters they consider; and for 'specializing' in producing unintended consequences!

The follow-up September 29th, 2009 entry 'Unintended consequences' reprised this theme, provided a couple of examples, then said: "... Here's an easy prediction that's guaranteed to come about: one or two years after health care reform (or, rather, health insurance reform) gets passed, our Senators and Representatives will be complaining about some aspect of the delivery system and demanding corrective legislation, and that the issue(s) they are complaining about will be a direct (but unintended) consequence of the earlier reform... Another easy prediction: when this happens they will eschew all ownership and responsibility for the issue, and will seek to lay the blame elsewhere..."


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