The surge of rhetoric from device buyers warning that a looming 2.3% medical device tax could be a "windfall" for the industry is little more than a "manufactured issue," according to the Medical Imaging & Technology Alliance.
Hospitals and group purchasing organizations say that without proper controls, the industry could hike prices, thereby passing the burden of the tax along to buyers. At the same time, they say, the med-tech industry will reap the benefits of a vastly expanded patient population created by the Affordale Care Act – without paying its fair share for healthcare reform. The groups want the IRS to prevent med-tech from paying for the tax by raising prices.
"It just doesn’t make any sense," MITA policy & strategy chief Chuck Konigsberg told MassDevice.com. "The industry will be paying more than $30 billion over the next 10 years – how could that be viewed as a windfall?"
Furthermore, Konigsberg told us, the IRS has no power to grant the buyer groups what they’re asking.
"[The agency’s] responsibility is to implement the legislation and there’s nothing in the legislation that gives them any authority to set prices," Konigsberg added. "So this is kind of a manufactured issue."
Hospital groups and other health care providers submitted letters to the IRS in response to the federal agency’s draft proposal on implementing the levy. It would take 2.3% of every medical device sale in the U.S., beginning Jan. 1, 2013.
The Federation of American Hospitals, the American Hospital Assn., the Catholic Health Assn. of the U.S., the Healthcare Supply Chain Assn. and the Assn. for Healthcare Resource & Materials all signed on to the letter, which called for controls to prevent the medical device industry from "sidestepping" its responsibilities in paying for the ACA and reaping a "windfall" from the measure.
"The proper policy for the medical device tax would be to prohibit device manufacturers from passing the tax through to their purchasers," according to the letter [emphasis theirs]. "The most effective way to implement this legislative intent is to require device manufacturers to certify on their Form 720 excise tax returns that they have not included the tax as a component of the price of their products, and therefore have not passed the tax through to their customers."
The letter joins one sent to the IRS earlier this week by group purchasing organization Premier, which also pushed the IRS to protect hospitals from price hikes by asking device makers to promise not to bake the tax into the prices of products.
MITA issued a statement yesterday scoffing at the implication that the tax could prove a boon to the industry.
"Only in Washington could paying a $30 billion tax over the next 10 years be viewed as a windfall opportunity, but that’s exactly the false claim being made," MITA executive director Gail Rodriguez said in prepared remarks. "MITA continues to oppose the device tax precisely because we believe it creates strong headwinds against an important sector of the U.S. economy."
MITA doesn’t doesn’t anticipate much of a problem in dealing with the "windfall" rhetoric moving forward, Konigsberg told us.
"Our members certainly support efforts to repeal the tax, but there aren’t any new developments at this point," he said.