patient/physician notifications; because the reports are publicly
available, MDRs could become the basis for private lawsuits,
including class actions; and if we fail to submit a required MDR to
the FDA, the FDA could take enforcement action against us.
If any of these events occur, then we could incur significant
expenses and it could become more difficult for us to market and
sell our products and to generate revenues from sales. Other
countries may impose analogous reporting requirements that could
cause us to incur expenses and may also limit our ability to
generate revenues from sales of our products.
We face significant uncertainty in the industry due to
government healthcare reform.
The Patient Protection and Affordable Care Act, as amended, (the
“Affordable Care Act”) as well as other healthcare reform may have
a significant impact on our business. The Affordable Care Act is
extremely complex, and, as a result, additional legislation is
likely to be considered and enacted over time. The impact of the
Affordable Care Act on the health care industry is extensive and
includes, among other things, the federal government assuming a
larger role in the health care system, expanding healthcare
coverage of United States citizens and mandating basic healthcare
benefits. The uncertainties regarding the implementation of the
Affordable Care Act, including possible repeal of the Affordable
Care Act, ongoing legal challenges, and further judicial
interpretations, create unpredictability for the health care
industry, which itself constitutes a risk.
The Affordable Care Act contains many provisions designed to
generate the revenues necessary to fund the coverage expansions and
to reduce costs of Medicare and Medicaid, including imposing a 2.3%
excise tax on domestic sales of many medical devices by
manufacturers that began in 2013. The medical device excise tax has
been suspended in 2018 and 2019. If the excise tax is not repealed,
we will be subject to this or any future excise tax on our sales of
certain medical devices in the U.S. beginning January 1, 2020.
The Affordable Care Act includes a Hospital Readmission Reduction
program and is designed to reduce payments to hospitals with excess
heart failure readmissions, among other conditions. The penalty to
hospitals can be significant, as much as 3% of total Medicare
reimbursement. We believe the Aquadex FlexFlow system may offer
hospitals an economic benefit for using the device on a regular
basis for in-patient or out-patient usage to avoid readmissions for
heart failure; however, if the Hospital Readmission Reduction
program is repealed, hospitals may not be as inclined to take
measures to reduce readmissions.
In addition, any healthcare reforms enacted in the future may, like
the Affordable Care Act, be phased in over a number of years, but
if enacted, could reduce our revenue, increase our costs, or
require us to revise the ways in which we conduct business or put
us at risk for loss of business. In addition, our results of
operations, financial position and cash flows could be materially
adversely affected by changes under the Affordable Care Act and
changes under any federal or state legislation adopted in the
future.
Moreover, the Physician Payment Sunshine Act (the Sunshine Act),
which was enacted as part of the Affordable Care Act, requires
applicable medical device companies to track and publicly report,
with limited exceptions, all payments and other transfers of value
to physicians and teaching hospitals in the U.S. Implementing
regulations for these tracking and reporting obligations were
finalized in 2013, and companies have been required to track
payments made since August 1, 2013. Effective in 2019, payments to
certain nurses, who prescribe treatments, has been added to the
list of recipients that companies need to track. If we fail to
comply with the data collection and reporting obligations imposed
by the Sunshine Act, we may be subject to substantial civil
monetary penalties.
We are subject, directly or indirectly, to United States
federal and state healthcare fraud and abuse and false claims
laws and regulations. Prosecutions under such laws
have increased in recent years and we may become subject to
such litigation. If we are unable to, or have not
fully complied with such laws, we could face substantial
penalties.
Our operations are directly, or indirectly through customers,
subject to various state and federal fraud and abuse laws,
including, without limitation, the federal Anti-Kickback Statute,
the stark law and federal False Claims Act. These laws may impact,
among other things, our sales, marketing and education
programs.
The federal Anti-Kickback Statute prohibits persons from knowingly
and willfully soliciting, offering, receiving or providing
remuneration, directly or indirectly, in exchange for or to induce
either the referral of an individual, or the furnishing or
arranging for a good or service, for which payment may be made
under a federal healthcare program such as the Medicare and
Medicaid programs. Several courts have interpreted the statute’s
intent requirement to mean that if any one purpose of an
arrangement involving remuneration is to induce referrals of
federal healthcare covered