Feature | February 28, 2013

Medical Device Tax Website Created to Monitor Which Vendors are Passing Tax to Hospitals

New site serves as a resource for gathering information on manufacturers not paying their shared responsibility for healthcare reform

February 28, 2013 — The Healthcare Supply Chain Association (HSCA) launched Medical Device Tax Watch, a website dedicated to raising awareness of efforts of some medical device manufacturers to pass the costs of the medical device excise tax (MDET) to American hospitals, healthcare providers and patients. The new site will be a resource for hospitals and a tool for monitoring the device marketplace, and can be found at www.devicetaxwatch.com.

The HSCA says the tax was created for device manufacturers to pay their share of the cost of healthcare reform. The organization said healthcare providers are already paying their share in the form of lower reimbursement rates. HSCA said hospitals committed $155 billion over the next 10 years to help fund the Affordable Care Act (ACA). 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 ACA’s medical device excise tax.

“HSCA has been alarmed to discover mounting evidence that some medical device manufacturers have chosen to tack the costs associated with the medical device excise tax directly onto their invoices, shifting the cost burden of the tax onto American hospitals, healthcare providers, patients and ultimately taxpayers,” said HSCA President Curtis Rooney. “National healthcare reform is a shared financial responsibility, and hospitals have already paid their fair share. HSCA is pleased to launch Medical Device Tax Watch as part of our ongoing effort to raise awareness of manufacturer cost-shifting efforts, and we urge all manufacturers to immediately stop passing on the costs of the medical device tax onto hospitals.”

The website includes a list of vendors who have passed along the device tax to healthcare providers. The organization is advocating that hospitals should include discussion of any passed along tax should be part of any new contract negotiations.

Beginning Jan. 1, 2013, a 2.3 percent excise tax was imposed on sales of “taxable medical devices” by manufacturers and importers. In a March 2011 letter to the U.S. Internal Revenue Service (IRS), HSCA joined the American Hospital Association (AHA), the Federation of American Hospitals (FAH), and the Catholic Health Association (CHA) in urging the IRS not to allow medical device manufacturers to pass on the cost of the device tax to hospitals.

“As hospitals, long-term care facilities and other healthcare providers face increased budgetary pressure, HSCA and its group purchasing organization (GPO) members will continue to be critical cost-savings engines, delivering the best products at the best value to the supply chain,” added Rooney. “HSCA will also continue to serve as a resource and advocate for American hospitals and healthcare providers as we monitor the medical device marketplace for evidence of unfair cost-shifting.”

For more information: www.supplychainassociation.org

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