America’s healthcare system is transitioning, albeit slowly, from a volume based payment system, to a focus on paying for value.  As part of this, last October, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) proposed revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules regarding beneficiary inducements.  HHS OIG aims to “reduce regulatory barriers and accelerate the transformation of the healthcare system into one that better pays for value and promotes care coordination.”

A focus on value has long been the mantra of AMDR’s members.  In 2018 alone, we saved hospitals over $471 million by helping them to see that certain medical devices as assets could be safely reprocessed and used again. Not only are fewer new devices needed, but nearly 15 million pounds of medical waste was also diverted from going to landfills or incinerators.  Over 8,000 hospitals and surgery centers from all 50 states already contract AMDR member reprocessors, including all the US News & World Report “Honor Roll” hospitals.

We’re pleased that OIG is considering inclusion of medical devices into the proposed new rule. If FDA-regulated, professionally reprocessed medical devices are included in the final safe harbor arrangements, healthcare providers will have yet another tool to help lower healthcare costs while achieving the same patient outcomes.  Incentivizing the use of reprocessed devices drives down procedure costs and reduces medical waste and waste disposal costs.  At AMDR, we believe that value, not volume, will be the focus in the years ahead and we are committed to making reprocessed medical devices they key supply chain strategy hospitals employ to maximize the value of their medical device assets, lower costs and reduce waste.

In its comment to the OIG, AMDR states:

AMDR appreciates OIG’s efforts to “accelerate the transformation of the healthcare system into one that betters pays for value and promotes care coordination.” AMDR shares the goal of promoting greater value in healthcare. In fact, AMDR works to better align the medical device industry with the fundamental interests of hospitals and healthcare providers by making SUD reprocessing a key supply chain strategy for all hospitals. Reprocessing is aligned with hospital and healthcare interests in that both hospitals and reprocessors are interested in extending the lifespan of existing medical device assets and thereby lowering costs. Further, AMDR works towards better transparency and accountability in the healthcare supply chain for medical devices so that providers can better control their medical device assets and optimize value by increasing the lifespan of medical technology.

In today’s environment, many incentives exist for medical device companies to provide volume based, rather than value-based sales. The future requires the medical device industry to enter a new paradigm where the focus is on providing value to healthcare rather than volume. The reprocessing subset of the medical device industry is demonstrating the ability of medical device manufacturers to deliver on this goal.

AMDR closes with a request to work with OIG staff and providers to further optimize reprocessing programs at hospitals nationwide.  Our letter to the OIG in support of the proposed rule can be found here: AMDR OIG 0936-AA10-p letter Final pdf.