Category — Medical Devices

In late January, Representative Erik Paulsen (R-MN), along with 41 bipartisan cosponsors, introduced the Protect Medical Innovation Act of 2011 (H.R. 436) in the House of Representatives.  Senator Orrin Hatch (R-UT) introduced companion legislation, Medical Device Access and Innovation Protection Act (S. 17).  If enacted, the bill provides for the immediate repeal of the excise tax on medical device sales that was passed last year as a part of the Patient Protection and Affordable Care Act (PPACA).  The tax was included in PPACA as a revenue-raising provision, however, opponents of the tax claim that it will hamper innovation and send manufacturing jobs abroad.  Other similar pieces of legislation to repeal the medical device tax have been introduced by Senator Scott Brown (R-MA) (S. 262) and Representative Jim Gerlach (R-PA) (H.R. 488).

The Centers for Medicare & Medicaid Services (CMS) will delay its requirement that Medicare contractors automatically reject claims for health services, durable medical equipment, prosthetics, orthotics, and supplies, and certain other items and services based on orders or certifications from physicians and other eligible professionals who are not enrolled in the Medicare Provider Enrollment, Chain and Ownership System (PECOS).  The Patient Protection and Affordable Care Act  permits only Medicare-enrolled providers to certify or order such items and services under Medicare Part B.  CMS issued an Interim Final Rule in May 2010 that would have allowed Medicare contractors to automatically reject, starting on July 6, 2010, claims based on orders from providers not enrolled in PECOS.  Due to providers’ reports of problems with enrollment, however, CMS will delay the automatic rejection procedures.  Other provisions of the regulations will go into effect on July 6, 2010.  Providers should not see any change in the processing of submitted claims until the automatic rejection procedures are operational.

Click here for the CMS Press Release.

On May 21, 2010, the Internal Revenue Service (IRS) released Notice 2010-45, providing detailed guidance regarding the therapeutic discovery tax credit program established by the Patient Protection and Affordable Care Act.  The program is aimed at producing new therapies, creating jobs and advancing U.S. competitiveness.  The Notice describes the procedures that companies must follow in order to apply for a credit or a grant under the program and sets forth important filing dates for the 2009-2010 allocation round. 

Under Section 9023 of the Act, Congress created a new section 48D of the Internal Revenue Code to provide a tax credit or grant to each eligible company that makes a “qualified investment” in a “qualifying therapeutic discovery project” in the amount of 50 percent of the investment, up to a cap of $10 million.  To be eligible to participate in the program, a company with no more than 250 employees must make, or have made, such an investment in a qualifying project during 2009 or 2010. 

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On May 5, 2010, CMS published an Interim Final Rule (IFR) with comment period that implements section 6402(a) of the Patient Protection and Affordable Care Act, which requires all providers of services and suppliers under Medicare or Medicaid that qualify for a National Provider Identifier (NPI) to include their NPI on all enrollment applications and all claims for payment. The IFR also allows for rejection of Medicare claims that do not include the required NPI or that do not contain the legal name and NPI of the ordering or referring physician or eligible professional. 

Further, the IFR creates a requirement that physician enrollment in Medicare is a condition for Medicare coverage of services they order.  This enrollment requirement could impact teaching hospitals that rely on residents to order diagnostic tests and/or refer Medicare beneficiaries to other services.  Teaching hospitals should ensure that all residents enroll in Medicare and make sure they stay enrolled, as after 12 months if a physician does not submit any bills to Medicare the physician will be disenrolled.

The effective date of the IFR and the deadline for comments is July 4, 2010. Please click here to view the IFR.