Report: Medical Device Manufacturers Shifting New Tax onto Providers

One of the most controversial elements of the Patient Protection and Affordable Care Act has been the imposition of a federal excise tax on medical devices, and now one healthcare trade association “expressed alarm over evidence that some medical device manufacturers are shifting the burden of the medical device excise tax directly to American hospitals and other healthcare providers.”

To fund the ACA, Congress imposed a 2.3 percent excise tax on manufacturers and importers of medical devices beginning Jan. 1 of this year. The American Hospital Association, Federation of American Hospitals,  and others, in a March 2011 letter urged the IRS to implement restrictions preventing medical device manufacturers to pass on the tax to providers. On Friday one of the letter co-signers, the Hospital Supply Chain Association, issued a press release stating that some of its member hospitals had reported that they were being assessed the excise tax from their suppliers.

“American hospitals have already lived up to their shared financial responsibility for national health care reform, and now face mounting budgetary strain as they continue to deliver affordable and effective patient care with fewer dollars,” said HSCA President Curtis Rooney in a statement. “It is disheartening to find that some medical device companies have chosen to tack the tax right onto their invoices. We urge all manufacturers to immediately stop passing the medical device tax on to American hospitals, and ultimately to patients and taxpayers.”