MASSDEVICE ON CALL — A group of hospital Assn.s is putting forward a novel argument against the excise tax on medical devices in the health care reform law: Device makers stand to benefit from the the 2.3 percent levy.
The American Hospital Assn., the Federation of American Hospitals, the Catholic Health Assn. of the U.S. and the Health Industry Group Purchasing Assn. are worried that the way the tax is structured would allow med-tech manufacturers to pass it along to their customers — namely, hospitals, according to a letter they sent to the IRS.
Learn more about how the medical device tax could apply to contract manufacturers
“This ‘double-dip’ could place device companies in a better financial position than they were prior to health reform, while transferring their financial commitment onto other health care stakeholders,” according to the letter.
The associations want the IRS to ban device makers from passing the tax on to purchasers, suggesting that they be made to certify that they haven’t done so on their excise tax returns.
“I can tell you with 100 percent certainty that nobody in the medical device industry thinks they’re benefiting from the tax,” David Fisher, executive director of the Medical Imaging Technology Alliance, told MassDevice. “We were not on Capitol Hill lobbying for it.”*
The concern at MITA, Fisher added, is similar to that of other stakeholders in the med-tech arena: That the tax will be applied to components or service contracts for medical devices at each stop along the manufacturing supply chain.
“When you think about a medical device, you think about a pacemaker. You don’t necessarily think about a CT machine,” Fisher told us. “But you don’t lease an ICD, whereas a hospital might very well lease a CT machine or an MR machine. The market for imaging equipment is different, and that leads t certain issues [the IRS] needs to address.”
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*Correction, April 6, 2011: This article original mis-spelled David Fisher’s name. Return to the corrected sentence.