Industry Unhappy About Congress’ Failure to Delay Device Tax

2013 has started off with a bang, but it wasn’t the sound of the United States falling off the fiscal cliff. The U.S. Congress managed to make a deal regarding the expiration of tax cuts enacted under the last Bush administration, however timid. But medtech isn’t happy. January is now underway, and Congress has failed to repeal or delay the medical device excise tax.

“The effort to repeal the medical device tax will continue,” said Stephen J. Ubl, president and CEO of the Advanced Medical Technology Association (AdvaMed). “The passage of a scaled-back fiscal cliff package that did not address the medical device tax does not diminish the need to repeal the tax. It also does not diminish the bipartisan support for the repeal effort, which is premised on the recognition that the tax is costing jobs and threatening patient care. We urge Congress to repeal the device tax as it returns to address the other pressing tax and budget issues facing the country, so that we can avoid going over the medical technology innovation cliff.”

The “fiscal cliff package” includes items such as the stoppage of a 27 percent reduction in payments to Medicare providers, which is beneficial to Medicare patients who were at risk of being dropped by care providers unable to afford the cuts in compensation. However, the package did cut compensation for some specific services. The package reduces Medicare payments to physicians’ offices for advanced imaging services by $800 million and hospital reimbursements for radiation therapy by $300 million over 10 years. This, on top of the more than $1 billion in cuts for imaging and radiation therapy services put in place earlier in 2012, places what Ubl sees as unacceptable strain on the social insurance program.

“AdvaMed also is disappointed in the cuts to imaging and diabetes-related services that are a part of the package passed by Congress,” Ubl said. “We believe these cuts will hurt access to important technologies that Medicare beneficiaries depend upon.”

The Medical Imaging & Technology Alliance (MITA) added its voice to the chorus, too, especially criticizing the cuts to Medicare imaging compensation.

“The House should reject Medicare cuts since the data clearly show that imaging use per beneficiary is on the decline,” said Gail Rodriguez, MITA’s executive director. “It is arbitrary and capricious for Congress to cut imaging and radiation therapy reimbursements without a full understanding of how those cuts negatively impact their constituents’ ability to receive imaging and radiation therapy that saves lives.”

Rodriguez also drew focus to lawmakers’ failure to delay the device tax: “When you add up all the Medicare cuts and Congress’ reluctance to address the $30 billion medical device tax, this legislation produces a devastating impact that harms patient access to care, moves manufacturing jobs overseas and threatens America’s leadership in medical research and development. We hope the Administration and congressional leaders will take notice of the growing bipartisan opposition to the job-killing device tax and immediately repeal or delay it.”

President of the American Association of Orthopaedic Surgeons (AAOS), John R. Tongue, M.D., said, “The called-for sequestration cuts to critical healthcare programs and physician payments would exacerbate physician efforts to improve quality and reduce costs in our healthcare system by jeopardizing patient access to care, thwarting innovation, and slashing an already strained healthcare workforce. It is true that our nation faces significant fiscal challenges and with healthcare costs currently accounting for over 17 percent of our GDP, we as physicians have a real duty to reduce inefficiencies in our healthcare system.”

Tongue went on to say that the AAOS would continue to work towards “identifying thoughtful fiscal reforms that continue to streamline our healthcare system but also maintain funding for federal payment for medical services, medical innovation, and healthcare quality improvement.”