Industry optimistic on sales tax repeal

Thursday, February 3, 2011

WASHINGTON - Industry stakeholders are wasting no time trying to ensure that a sales tax on medical devices that goes into effect in 2013 doesn't apply to HME.

"One way or the other, we are working to make sure the tax doesn't go into effect in our little sphere of the world," said Cara Bachenheimer, senior vice president of government relations for Invacare.

The Patient Protection and Affordable Care Act contained a provision that imposes a 2.3% excise tax on class II and class III medical device sales to help pay for healthcare reform. The tax is expected to raise $20 billion over 10 years.

One of the industry's strategies for dealing with the tax: Supporting bills introduced Jan. 25 by Rep. Erik Paulsen, R-Minn., and Sen. Orrin Hatch, R-Utah, that would repeal it completely.

"We are very pleased," said Seth Johnson, vice president of government affairs for Pride Mobility. "There's a lot of bi-partisan support for eliminating that tax."

Another strategy: The healthcare reform act contains language that exempts "any other medical device determined to be the type that is generally purchased by the general public at retail for individual use" and stakeholders believe HME fits the bill.

"Clearly, all HME providers are required to have retail locations, so I would think that would exempt--and should exempt--all HME items," pointed out Johnson. "That's an effort we plan to continue working on with the folks at the Department of Treasury and the Internal Revenue Service as we move through this year."

If the sales tax does go through, providers can be sure they'll feel the squeeze.

"Any kind of costs right now get passed onto the providers," said Duwayne Kramer, president of Leisure-Lift. "Everything's been cut to the bone for the past three or four years. I have to."