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Hospitals are joining the clamor against the controversial medical device tax that went into effect on Jan. 1, 2013 and its group purchasing organizations (GPO) members are rallying right behind them.

Certain hospitals have found that some medical device manufacturers are billing them directly to cover the costs associated with the medical device tax, according the Healthcare Supply Chain Association (HSCA), an industry trade lobby.



"We have examples of some medical device manufacturers attempting to include the medical device excise tax as a line item on their bills, HSCA president Curtis Rooney, told DOTmed News. "We regard this as a serious attempt to go against what congress intended when it passed the landmark health care reform legislation. Health care reform was premised on the shared responsibilities of those in the health care sector and included an explicit division of the costs of health care reform."

The medical device tax was included in President Obama's 2010 health care reform law to help raise roughly $30 billion over 10 years to offset the cost of reform. Despite aggressive lobbying by medical device makers, industry partners and even some politicians in recent months, beginning this year, the 2.3 percent excise tax will apply to the sale of medical devices by manufacturers and importers. The medical device industry has been fiercely opposed to the 2.3 percent tax from the get-go, which they said will force companies to lay off workers and dry up R&D funding.

Hospitals have also been aware for some time of the burden this tax presents on their bottom lines. In a March 2011 letter to the U.S. Internal Revenue Service (IRS), the American Hospital Association (AHA), the Federation of American Hospitals (FAH), the Catholic Health Association (CHA) and HSCA urged the IRS not to allow medical device manufacturers to pass on the cost of the device tax to hospitals.

That letter stated: "Medical device companies are part of the supply chain for health care providers. Thus, these companies do not receive federal health insurance program payments directly, so the option of reducing direct payment was not available to Congress to fulfill the device industry's financial commitment. Instead, a medical device tax was enacted as the proper way for medical device companies to contribute financially to the better health care system envisioned in the ACA."

Rooney advised members of GPOs to monitor the device marketplace for evidence of cost-shifting onto hospitals, and not to enter into contracts with device makers that bill them for the medical device tax.

Rooney also told DOTmed News that hospitals should put manufacturers on notice that passing on the tax is unacceptable.