Hospitals worry about footing the bill for medical devices

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Hospital executives are worried that the healthcare reform tax on medical devices that kicks in starting 2013 will hurt their bottom lines more than the device makers, reports the Hill's Healthwatch blog. The fear is that medical device manufacturers will be able to hand over the 2.3 percent excise tax to hospitals.

Therefore, hospital groups--including the American Hospital Association, the Federation of American Hospitals, the Catholic Health Association of the United States and the Health Industry Group Purchasing Association--are asking the IRS to prohibit device manufacturers from passing the cost of the tax onto their purchasers.

They suggest requiring device makers to verify on federal excise tax returns that they did not transer the costs, notes Healthwatch. "We believe this is appropriate public policy, and reflects the true intent of Congress in establishing the 'shared responsibility' network of stakeholders that made passage of [Affordable Care Act] possible," they wrote in a letter to the IRS.

The hospital groups also fear that the medical device industry will reap a "double benefit" if the IRS allows the device makers to deduct the tax as well.

The government defends the medical device tax, saying it will help pay for healthcare reforms, especially those related to the implementation of health information technology, notes EBN.

However, the medical device industry is pushing for the tax to be repealed, in part because it will burden small device makers.

For more:
- read the Hill's Healthwatch blog post
- read the EBN article

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