Medical Device Makers Shut Out Of Value-Based Care Without Kickback Rule Change

Oct 26, 2018 / Bruce Japsen Senior Contributor

The medical device industry is pushing for a change in the federal anti-kickback law to allow companies to fully participate in the shift away from fee-for-service medicine to value-based care.

The device industry wants changes known as “safe harbors” designed to prevent medical device makers from running afoul of healthcare fraud laws that impose penalties if individuals knowingly pay for or induce a sale or referral. Such rules are applied to medical care providers, insurers and other companies that have their services, products and devices covered by government health insurance.

The value-based care form of payment rewards medical care providers by compensating doctors and hospitals that achieve the best health outcomes. That is in contrast to the traditional fee-for-service form of payment that is based on volume of medical care delivered and is known to increase healthcare costs in the form of unnecessary tests and procedures.

But device makers are limited despite the role of medical technology and devices in healthcare advancements. Thus, the industry Friday submitted suggestions to the U.S. Department of Health and Human Services’ Office of Inspector General, which is seeking input on rule changes related to value-based care payments.

“Device makers cannot currently enter into certain value-based partnerships because federal rules prevent them from providing any incentives unless they fall within safe harbor or a waiver,” said Scott Whitaker, chief executive officer of The Advanced Medical Technology Association (AdvaMed). The trade group represents some of the world’s biggest medical device makers including Johnson & Johnson, Abbott Laboratories, Medtronic, Stryker and Baxter International.

“ The device industry wants clarity on how they can at least participate in a Medicare reimbursement structure that allows the company and the provider to share in savings should they create a system that led to a better outcome at a lower price,” Whitaker said. “The best way to accomplish this is through new value-based safe harbors for pricing arrangements, warranties, and risk-sharing arrangements.”