Excluding DMEPOS from Proposed Tariffs

Background

In March 2018, a report of the Trump Administration’s investigation on China concluded that China used several tactics to force technology transfers from US firms and conducted cyberattacks to gain valuable business information and trade secrets.  Section 301 gives the President and the US Trade Representative (USTR) broad authority to act against countries whose actions, policies, or practices unreasonably burden or restrict US commerce.  As result, President Trump proposed a 25% tariff on 1,300 product categories from China, in addition to any existing tariffs that are already in place, that impact 48 DMEPOS manufactured products.  

Request for Exemption

The public had an opportunity to submit comments and/or appear at the May 2018 hearing regarding the USTR proposal.  AAHomecare engaged a firm to assist and worked with manufacturer members to submit comments opposing manufactured home medical equipment (HME) products and components from China being subject to the tariffs. 

Imposing the recommended duties (tariffs) on HME products would…

• Restrict access to these products for a large number of seniors, chronically ill individuals, and persons with disabilities in the US, which is likely to endanger their health and well-being.
• Adversely affect the financial strength of the US HME Industry under the fixed reimbursement structure for Medicare, Medicaid, and private payors, exacerbating financial pressures on HME manufacturers and supplies that led to the access and supply problems arising out of the Competitive Bidding program.
• Create unintended consequences should China close its HME market to US manufacturers and suppliers.

Further, Congress sent a letter to USTR in May 2018 requesting all medical technology products be exempted from the Section 301 tariff list since it “impacts their ability to compete globally, and potentially increase health care costs, which would limit patient access to life-saving technology.” 

There is no deadline for the USTR to announce the final decision on the products ultimately impacted by the tariff.

Resources

• AAH Comments to USTR ’18 
• House Letter to USTR ’18
• USTR Trade Tariff Proposed Policy ’18 

Exempt HME from Medical Device Tax

Background

A provision of the 2010 Affordable Care Act (ACA) subjected home medical device manufacturers to a 2.3% excise tax on their gross revenues, regardless of profits, starting in 2013 to raise $20 billion through 2019.  AAHomecare and Industry stakeholders worked with government agencies and testified on why HME devices and supplies should be subject to the safe harbor exempting them from the tax.  In December 2012, the IRS issued the Final Rule, exempting most HME from the tax before it was scheduled to go into effect in 2013. 

Resources

• AAHomecare Comments on Excise Tax ’11
• Consumer Groups Letter on Excise Tax ’11 
• AAHomecare Analysis of Excise Tax Final Rule ’12 
• Final Rule on Excise Tax ’12 

PDAC & HCPCS Coding Policies

Overview

The PDAC (Pricing, Data Analysis and Coding) contractor is responsible for maintaining the Durable Medical Equipment Coding System, which is the official source for Medicare product verification and assignment. Currently, Noridian has the PDAC contract. 

Manufacturers are not required to have their product code verified except when a LCD or NCD makes code verification a condition of payment. Otherwise, the code does not have to be verified in order for suppliers to be able to bill Medicare for the item.  The PDAC receives, evaluates, and processes coding verification applications for DMEPOS. It establishes, maintains, and evaluates all coding verification decisions on the Product Classification List. A code verification is the PDAC’s decision that a product meets the technical requirements of a code’s descriptor.  

Manufacturers can request a PDAC meeting regarding a HCPCS decision or their pending verification application.  Additionally, AAHomecare meets with the PDAC and its Medical Director, Dr Hughes, regarding issues and initiatives impacting the HME Industry on behalf of its members.  Representatives from the Regulatory Council and Medical Supplies Council attend the meeting, along with AAHomecare staff. 

Resources
•    PDAC Web Site
•    PDAC Overview Guide ‘16