The Intrusion FACTOR

GPO legislation could reach far into the healthcare supply chain.

Legislation targeted at group purchasing organizations (GPOs) could affect purchasers throughout the healthcare supply chain, including those in hospitals and integrated delivery networks, distributors and manufacturers, warned Robert Betz, president and CEO of the Health Industry Group Purchasing Association (HIGPA).

Speaking at HIGPA’s recent annual conference and expo, Betz warned that some of the provisions of the recently introduced “Medical Device Competition Act of 2004” are so broad that they could create “significant regulatory burdens, legal issues and expense for the supply chain.”

Betz promised the industry wouldn’t accept the legislation without a fight. “We can beat this, but we need the resources to do so,” he said, requesting active support from HIGPA members and others in the supply chain.

Betz said provisions in the proposed legislation are cause for alarm. Particularly troubling is a provision that calls for all “purchasing agents” to be certified annually in compliance with the regulations. The problem, Betz said, is that “purchasing agent” is defined broadly, as any individual or entity “that negotiates and implements contracts to purchase hospital supplies or medical equipment, devices, products or goods or services of any kind for any group of individuals or entities who are furnishing services reimbur-sable under a Federal healthcare program.”

If interpreted literally, that definition would encompass not only GPOs, but also distributors, manufacturers, wholesalers and pharmacy benefit managers, not to mention hospital and integrated delivery network (IDN) purchasing professionals. “This could be a major regulatory intrusion.”

Betz described the legislation as being “light on specifics” when it comes to the certification process. “Great latitude has been given to the Department of Health and Human Services,” he said.

A fight ahead
At press time, the legislation had been referred to the Senate Finance Committee, which, in Betz’s words, is “very serious about Medicare and Medicaid fraud and abuse statutes.” Because it was introduced so late (Oct. 1) in the 108th Congress, the legislation expects to be reintroduced in early-2005.

But HIGPA wasn’t waiting until then to voice its discontent. “Today we start the program to put together a coalition to help defeat this legislation,” said Betz at the Orlando meeting.

Betz hopes that coalition will include such organizations as AdvaMED, an association for medical products manufacturers; the Health Industry Distributors Association; the American Hospital Association; the Healthcare DistributionManagement Association; the Pharmaceutical Research and Manufacturers of America and others.

HIGPA was planning on launching a letter writing campaign to its members, urging them to encourage their Senators to stop the legislation. “We’ll also ask manufacturers and distributors to read the legislation and analyze it,” Betz said.

In the meantime, the association was assembling a working group to fortify its own code of conduct and to explore whether the voluntary code could be applied to other players in the supply chain. In addition, HIGPA announced plans to commission the healthcare research firm Muse & Associates to study the financial burden the legislation would have on the industry. Washington, D.C.-based Muse authored a September 2002 study for HIGPA entitled “The Role of Group Purchasing in the Health Care System and the Impact on Public Care Expenditures if Additional Restrictions are Imposed on GPO Contracting Processes.”

“We’re going to fight this legislation and will marshal all our resources to do that,” said Betz.

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