FDAnews Device Daily Bulletin

DEVICE INDUSTRY LOOKS AT GPO REFORM, CMS GAINSHARING PROGRAM TO CUT DEVICE COSTS

June 20, 2006
A A

Devicemakers are pushing for legislative reforms to rein in the administrative and other fees collected by group purchasing organizations (GPOs) that contribute to Medicare cost pressures, according to an industry expert.

GPOs, which facilitate device sales to hospitals, have reaped administrative profits that are adding to government costs, MDMA Executive Director Mark Leahy told attendees at the Medical Device Manufacturers Association (MDMA) meeting in Washington June 14.

"GPOs don't have to disclose how much money they take in or where it goes," Leahy said, noting that an audit of six GPOs showed they took in $2.3 billion in fees.

Leahy wants the government to look beyond devicemakers when it addresses the issue of cost effectiveness. The MDMA is seeking a repeal of the "safe harbor" that has allowed GPOs to tack on additional layers of administrative fees that can add nearly 10 percent to the cost hospitals pay for devices, Leahy said.

"This gets factored in to the price of products, which in turn affects Medicare reimbursement" for devicemakers, Leahy said, calling the current system a "perverse structure."

"GPOs are not returning all this money to hospitals but are instead redirecting it into their own profits," said Leahy. "Here you have the opportunity to enhance the quality of care and reduce the price." The MDMA wants Congress to look at GPO funding mechanisms. ()a href="http://www.fdanews.com/ddl/33_25/" target=_blank>