Medical Device Daily Washington Editor
The U.S. House of Representatives passed the landmark Patient Protection and Affordable Care Act of 2010 (H.R. 3590) late Sunday night by a vote of 219-212, earning just three votes more than the bare minimum needed for passage, and the majority party enjoyed a similar margin in passing the technical amendments in the form of H.R. 4872, dubbed the Health Care and Education Affordability Reconciliation Acts.
Introduced by Rep. John Spratt, Jr. (D-South Carolina), this latter piece of legislation contains many of the articles of greatest immediate concern to device makers, imposing a tax of 2.9% on medical device makers starting in 2013. H.R. 4872 will also set the assumed utilization rate for imaging equipment at 75% of the typical workweek in imaging labs.
Republicans voted unanimously against both bills while more than 30 Democrats defected from the party line to vote against them.
The section of H.R. 3590 dealing with comparative effectiveness research lists numerous requirements for the staffing of an advisory body and for participating researcher, but the bill would forbid the use of the resulting data to “mandate coverage, reimbursement, or other policies for any public or private payer,“ and cannot be used to deny coverage “in the case where such individual is participating in a clinical trial and such costs would otherwise be covered.“
H.R. 3590 stipulates that insurers impose no lifetime or annual benefits limits and retains the controversial language regarding abortion coverage as the Senate bill. Democrats who had previously opposed the bill due to questions regarding taxpayer funded abortions came on board when President Obama announced Sunday that he would issue an executive order to forbid the use of public funds to provide abortions in taxpayer-subsidized plans. However, conservatives charged that such an executive order can be readily withdrawn or never enforced.
H.R. 3590 expands Medicaid coverage to those at 133% of the federal poverty level, up from 100% today, and includes language setting up a value-based purchasing program for hospitals mandating quality reports for healthcare-associated infections, infarcts, pneumonia, heart failure, and several surgical procedures. Hospitals that report and meet the quality standards will be eligible for incentive payments of 1% in 2013, a multiplier that rises by a quarter percentage point every year until 2017, when it flattens at 2%.
In an unattributed March 21 statement, the Medical Device Manufacturers Association (MDMA; Washington) said it is “very concerned about the impact a $20 billion device tax will have on patient care, innovation and small businesses,“ making the case that under the tax, “many companies will owe more in taxes than they generate in profits.“ MDMA says that such a scenario will force firms to lay off employees and cut budgets for research and development. The statement also notes that absent an elimination of the tax, “structuring it to provide relief for smaller companies is critical,“ urging that Congress address the issue “before the tax takes effect in 2013.“
Steve Ubl, President/CEO of the Advanced Medical Technology Association (AdvaMed; Washington), said in a March 21 statement that while industry “remain[s] concerned about the effects of the medical technology tax, we applaud expanded insurance coverage for millions of American families and the significant progress in a number of important areas, including an enhanced program of clinical comparative effectiveness research that will improve medical decision-making and enhanced transparency in the financial relationships between providers and the health care industry.“
However, Ubl also urged Congress and the White House to be mindful going forward of “the potential impact of policy changes on future innovation and medical progress.“
In a March 21 statement, the American College of Radiology (Reston, Virginia), said that the reset of utilization rates to 75% (currently at 50%) “will shift necessary imaging care to large hospitals, increase the cost to Medicare of appropriate imaging,“ and force patients into “longer commutes and wait times.“ The shift would also “cause potentially life threatening delays in diagnosis and treatment of cancer and other serious illnesses,“ ACR says.
The ACR statement also makes note “of an average 23% reduction from the Deficit Reduction Act of 2005,“ which when added to the cuts implicit in the expanded utilization rate will add up to $13.8 billion. ACR states that the net effect will be to “restrict and possibly end the ability of many non-hospital providers to offer imaging services, particularly in rural areas where equipment is needed, but utilized less frequently.“
The bills will shortly proceed to the Senate, where budget reconciliation is likely to be used to require only a simple 51-vote majority for passage.
Mark McCarty, 703-268-5690