Radiologists Should Worry About Medical Device Tax, Too

On January 1, the long-debated and much-opposed medical device tax went into effect. To date, medical device manufacturers have clearly stated their opposition, but industry leaders portend practicing radiologists also have reason to be concerned.

Barely a week old, this measure levies a 2.3 percent tax on all medical devices. The law calls for manufacturers to pay for the tax added to the sale price of the device, but many worry the cost will not only trickle down to providers, but will also, ultimately, stymy the progression of patient care by hindering research and development efforts.

“As radiologists, most of us chose the specialty because it’s a field that incentivizes technological innovation that can make enormous differences in patient care,” said Geraldine McGinty, MD, chair of the American College of Radiology (ACR) Economics Commission. “Payment or health care policies that would, in any way, negatively impact innovation are things that make us feel uncomfortable.”

The device tax will inevitably impact practitioners’ bottom lines, she said. The actual dollar amount is yet unknown, but manufacturers will be forced to pass some of the tax increase on to their customers. The price hike will likely be an unwelcome addition to existing imaging reimbursement cuts and the difficulties radiologists already face with collecting payments from patients. Equipment purchasing decisions could become more complicated or could be postponed, she said.

In addition to individual monetary concerns, radiologists should also worry about what the medical device tax could mean for their ability to provide the most up-to-date patient care. According to the Medical Imaging and Technological Alliance (MITA), this initiative is a job-killer because it makes outsourcing jobs overseas more attractive. But research and development efforts will also be a casualty, said MITA Executive Director Gail Rodriguez.

According to a recent MITA survey, 29 percent of manufacturers anticipate slicing into their research and development budgets as a way to cover the anticipated $287 million associated with the device tax. This change could leave providers without new technological innovations for treating patients, MITA said.

“Radiologists are responsible for caring for patients - diagnosing and staging cancer and tracking the success of therapies,” she said. “So putting taxes on companies responsible for creating better imaging technology can create a burden.”

In fact, a recent Pacific Research Institute report estimates medical device manufacturers will eventually curb research and development investments by $2 billion each year.

Despite the flurry of conversation about the medical device tax among radiology vendors and some leaders, most providers in daily practice have yet to focus on this cost increase, ACR’s McGinty said. They are more likely to still be focused on the drop in imaging utilization and how to combat that downward trend. But, she said, they’ll soon need to take a close look at their balance sheets and determine how the tax will affect their practice.

“The tax has been implemented, and it adds to an already challenging time for radiologists,” she said. “We’re an industry that provides a number of good technology jobs. Carrots, instead of sticks, for us, would be nice.”