Cliff Deal Cuts Imaging Reimbursement, Leaves Medical Device Excise Tax Intact

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

Representatives of the medical devices industry expressed disappointment that the White House deal with Congress to avert the so-called fiscal cliff did not address the medical device tax, which took effect Jan. 1.

Medical imaging technology stakeholders also said they were disappointed with Medicare cuts for imaging and radiation therapy services that were included in the bill as a way to provide relief to physicians who were facing a big cut in pay.

The House and Senate Jan. 1 approved legislation (H.R. 8), the American Taxpayer Relief Act of 2012. The measure canceled for a year a 26.5 percent Medicare pay cut for physicians set to be implemented Jan. 1, at a cost of $25.2 billion over 10 years, according to a Congressional Budget Office analysis. The measure cleared the Senate by an 89-8 vote and the House by a 257-167 vote. President Obama signed the legislation Jan. 2.

The legislation also canceled for two months--until March--sequestration cuts mandated under the Budget Control Act of 2011 (Pub. L. No. 112-25). Those cuts included a 2 percent reduction in Medicare spending to providers set to be implemented next month. Medicaid was exempt from sequestration.


FDA gets a two-month reprieve from sequestration cuts that would affect the ability of the agency to approve devices and drugs.  


In a statement, the Alliance for a Stronger FDA said that sequestration would have imposed an 8.2 percent cut on Food and Drug Administration funding in the current fiscal year. “If Congress cannot agree on a replacement for sequestration, then the cut on March 1 would be smaller (both on a percentage basis and in absolute dollars),” the alliance said. If sequestration of FDA funding occurs, “drug and device approvals will be slower, conflicting with promises made to consumers and companies,” the alliance said. The Alliance for a Stronger FDA's membership includes device and drug industry trade groups, as well as nonprofit groups such as the American Heart Association and the National Kidney Foundation.

Industry: Still Need to Repeal Tax.

The device excise tax took effect Jan. 1 and affects manufacturers, importers, and producers of taxable medical devices. Included as part of the Affordable Care Act, the tax is a key funding mechanism to help pay for other parts of the law and is expected to bring in nearly $30 billion over several years.

Stephen J. Ubl, president and chief executive officer of the Advanced Medical Technology Association, said in a Jan. 2 statement that “the passage of a scaled-back fiscal cliff package that did not address the medical device tax does not diminish the need to repeal the tax.”

Ubl said there is bipartisan support for a repeal. “We urge Congress to repeal the device tax as it returns to address the other pressing tax and budget issues facing the country, so that we can avoid going over the medical technology innovation cliff.”

Mark Leahey, president and chief executive officer of the Medical Device Manufacturers Association (MDMA), said in a Jan. 2 statement that while the group was disappointed, MDMA was “heartened by the bipartisan and growing support in both the House and Senate to end this policy.”

Imaging Cuts Harmful.

To pay for the one-year physician fix, the bill included Medicare cuts for advanced imaging services, saving $800 million over 10 years, and cut hospital reimbursement for radiation therapy by $300 million.

The Medical Imaging & Technology Alliance (MITA) said that failure to delay the device tax, along with Medicare cuts, will hinder patients' access to early disease detection and therapy services and threaten American medical technology jobs.

MITA, which represents manufacturers of imaging equipment, said that Congress' refusal to address the 2.3 percent medical device tax as part of the fiscal cliff package will harm America's global leadership in the development of innovative medical imaging technologies and is estimated to cost up to 43,000 U.S. medical technology jobs.

“When you add up all the Medicare cuts and Congress' reluctance to address the $30 billion medical device tax, this legislation produces a devastating impact that harms patient access to care, moves manufacturing jobs overseas and threatens America's leadership in medical research and development,” said Gail Rodriguez, MITA's executive director, in a Jan. 2 statement.

Rodriguez said, “It is arbitrary and capricious for Congress to cut imaging and radiation therapy reimbursements without a full understanding of how those cuts negatively impact their constituents' ability to receive imaging and radiation therapy that saves lives.”

MITA cited a report it released in October 2012 that showed imaging utilization per Medicare beneficiary had declined by 5.12 percent since 2009, and spending on imaging services for each Medicare beneficiary had dropped 16.7 percent since 2006 (6 MELR 602, 10/3/12).

The Access to Medical Imaging Coalition (AMIC), of which MITA is a member, also faulted Congress for reducing imaging reimbursement.

“By putting in place yet another payment cut for imaging, Congress has further reduced patient access to vital early diagnosis that we know saves lives,” Tim Trysla, AMIC's executive director, said in a Jan. 1 statement. “Unfortunately rather than basing payment decisions on up-to-date data, which show imaging use on the decline, Congress is blindly slashing Medicare payments for diagnostics without true knowledge about how their previous cuts affect seniors' access to early diagnosis services.”

According to Trysla, cuts that already have gone into effect have forced physician practices and providers to scale back on clinical staff and forgo technology upgrades. “This additional cut will further exacerbate those problems, closing additional free-standing imaging centers and forcing patients to either forgo lifesaving imaging or receive a scan in hospitals, where they are more expensive,” he said.

By Nathaniel Weixel  

Text of H.R. 8 is at

A Congressional Budget Office analysis of the health care provisions in the bill is at

Request Health Care on Bloomberg Law