House Omnibus Budget Deal Rolls Back a Sequester Cut on Imaging Manufacturers

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The $1.1 trillion omnibus spending package the House approved on Wednesday restores funding to the U.S. Food and Drug Administration for the approval of new medical devices, including advanced medical imaging technologies.

That particular cut had been especially irritating to device developers because the device-approval funding that was lost when the automatic spending cuts known as sequestration went into effect in March of last year was supposed to have come from FDA user fees the device developers had paid to the agency to help facilitate speedier and more predictable reviews of new medical devices. In essence, the developers fees were taken up by sequestration and they did not get the improved device approval process they’d been promised in return for agreeing to pay the new FDA user fees.

The Medical Imaging & Technology Alliance (MITA) “ applauded” Congressional leaders for restoring $85 million in funding lost last year due to the sequestration of FDA user fees. The House voted 359-67 in favor of the spending package.

The Senate is now set to take up the bill, which will fund one third of government spending through September subject to annual decisions by Congress and the White House. The spending package does not address Social Security, Medicare, Medicaid and food stamps. This means that the sequester cuts to most government health spending will continue for the time being and the sustainable growth rate (SGR) formula for determining Medicare physician payments will again come up when the current temporary “doc fix” expires on April 1.

The American Hospital Association (AHA) late last week urged the Medicare Payment Advisory Committee (MedPAC) to begin taking the sequester cuts to Medicare into account when making recommendations for hospital payments and reimbursement for other health care providers. Currently MedPAC proceeds as if the sequester was not in play.

“MedPAC’s position that sequestration is ‘temporary’ is misguided – sequestration is current law and applies to Medicare payments for the next decade,” wrote Linda Fishman, AHA senior vice president for public policy analysis and development, in the letter to MedPAC.

MedPAC is expected to vote on 2015 payment recommendations this month, and the AHA wants it to increase its recommended update factor for inpatient and outpatient hospital payment rates to at least 5%.