Notes from Congressional Hearing on Health Information Technology

The U.S. House of Representatives Energy & Commerce Committee’s Subcommittee on Communications and Technology held a hearing March 19 titled “Health Information Technologies: Harnessing Wireless Innovation.”

Stakeholders from the population health management industry testified in this important issue for our industry and wellness in general. Here is a brief summary of the testimony:

U.S. House of Representatives Hearing Summary

Energy & Commerce Subcommittee on Communications and Technology

 “HIT: Harnessing Wireless Innovation”

Representative Greg Walden (R-OR) – Chair

Representative Bob Latta (R-OH) – Vice Chair

Key Comments from Health Care Industry Stakeholders:

Overly broad application of FDA regulations and the medical device tax continue to be top concerns and potential hurdles to investment and growth for mobile health industry stakeholders. Stakeholders generally described uncertainty in the health care industry on how to best navigate the mobile medical regulatory environment and anticipate future regulatory actions. They emphasized the need for final FDA guidance on mobile medical devices and applications to bring clarity and assurance to the marketplace. The final guidance should delineate what would be considered low-risk devices and hence outside of the regulations. It should also assess manufacturing exemptions, classify devices by individual levels of risk, coordinate through a single office in the FDA and work in collaboration with app developers. Further, higher risk medical apps that purport to make clinical decisions should be required go through the FDA approval process. Stakeholders noted that the final guidance does not have to be all-encompassing. Rather, updates should be anticipated as technology advances the concept of a medical device and health care stakeholders continue to innovate.

Regarding the medical device tax, significant anxiety persists among health industry stakeholders over the tax’s potential to stifle innovation and marketplace investment. In response to the “retail exemption” to the medical device tax, stakeholders seemed aligned that most medical apps would qualify for the exemption and that smartphones and tablets are excluded from the tax.  Though, some stakeholder comments indicated that the tax could be a slippery slope to overregulation and wary of whether this retail exemption will alleviate burdens associated with the tax if a mobile medical device or application is deemed to be FDA regulated.

Finally, the Federal Communications Commission Incentive Auctions must be open and inclusive. There is significant underutilization of the wireless spectrum that needs to be resolved in order to pave the way for continued growth and innovation in the health industry.

Key Comments from Subcommittee Members:

Members of the Subcommittee broadly agreed and recognized that cloud, mobile and app technology is transforming health IT. Patient safety continues to be a paramount consideration for both Congress and industry stakeholders as innovation and corresponding regulatory actions progress. The Subcommittee’s objective was to understand stakeholder concerns and risks related to the medical device tax and pending FDA final guidance. They also expressly sought information from industry stakeholders on recommended next steps.

Additional Background Information:

Medical Device Tax

The Affordable Care Act amended Section 4191 of the Internal Revenue Code to create the medical device tax. The tax is 2.3% of the sale price of the taxable medical device and generally applies to manufacturers and importers of certain devices created after December 31, 2012. The “retail exemption” to the medical device tax states that the tax does not apply to the sale of any devices that are typically purchased at retail by the general public for individual use. The IRS issued final medical device tax regulations on December 7, 2012 and noted factors to consider in evaluating whether a particular device qualifies for the “retail exemption.” The regulations also identify several categories of exempt devices. For further details, view the final IRS regulations on taxable medical devices here: Federal Register- IRS Medical Device Tax. Also, view the IRS’s Frequently Asked Questions and Answers on this topic here: IRS-FAQ Medical Device Tax.

Federal Communications Commission Incentive Auctions

The Federal Communications Commission Incentive Auctions are a voluntary, market-based method of repurposing the wireless broadband spectrum. The auctions encourage current licensees to voluntarily relinquish spectrum usage rights in exchange for a share of proceeds from an auction of new licenses to use the repurposed spectrum. The first incentive auction is anticipated in 2014.

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