Earlier today, CMS published the final rule on the implementation of the medical device excise tax in the Federal Register. The medical device excise tax, a 2.3% tax levied on Class I, II and III medical devices, has been a controversial part of the Affordable Care Act as several bills have been introduced and supported by members of both parties in congress to repeal the tax provision that is set to activate on January 1st, 2o13. Many in the orthotic and prosthetic industry, especially AOPA’s Tom Fise, submitted comments in favor of including O&P in the “retail exemption” portion of the regulation. Fise also setup direct talks with the Treasury Department on including O&P in the exemption. The rule published today specifically states that orthotics and prosthetics are included in the exemption “for items typically sold at retail.”
From the Federal Register:
The final regulations provide a safe harbor for certain devices that fall under the retail exemption. Prosthetic and orthotic devices, as defined in 42 CFR 414.202, that do not require implantation or insertion by a medical professional, fall under the retail exemption safe harbor described in §48.4191-2(b)(2)(iii)(D)(1). Accordingly, prosthetic and orthotic devices within the meaning of 42 CFR 414.202 that do not require implantation or insertion by a medical professional are considered to be of a type generally purchased by the general public at retail for individual use, without regard to whether they require initial or periodic fitting or adjustment.
A prosthetic or orthotic device that is not in the safe harbor may qualify for the retail exemption based on an application of the facts and circumstances test. The final regulations include an example of a prosthetic device that falls within the retail exemption.