Medical device manufacturers are sometimes forced to meet conflicting goals.
You work to meet the needs of patients who depend on your devices, stay aligned with FDA regulations, and maintain the company’s financial health. It’s a difficult juggling act with serious implications.
Using an effective life sciences ERP system dramatically improves your chance of success by eliminating errors common in complicated accounting situations. Additionally, a medical device ERP system automates workflows, optimizes supply chains, and promotes government compliance. It’s an essential tool in today’s rapidly evolving regulatory landscape.
Project Billing and Pass-Through Cost Accounting: An Overview
Transitional pass-through status has been utilized since early 2000, but multiple changes have been implemented in recent years. Social Security Act 1833(t)(6) ordered that transitional pass-through payments would be “provided for certain new drugs, devices, and biological agents.” Those devices and drugs were not paid for as part of a hospital outpatient service, and their cost was a significant part of the payment for associated procedures and services.
The government implemented this act to encourage the healthcare community to use new FDA-approved drugs, biologics, and medical devices and to boost Medicare patients’ access to these treatments.
Pass-Through Status Regulations
This status is designated for a minimum of two years but rarely lasts longer than three years. During this period, the Centers for Medicare & Medicaid Services (CMS) collect data about the products and their performance. CMS then studies this information to determine service payment rate adjustments after the transitional pass-through status ends.
Each pass-through service, medication, or device receives a unique Health Care Common Procedure Coding System code necessary for facilities to be reimbursed. For instance, CMS returns 100% of the cost for pass-through products used for Medicare Part B patients.
Medical Device Manufacturers' Accounting Challenges
Although the medical device industry has a revenue model that resembles other sectors, it has one significant difference—lives are at stake. This reality adds a high degree of complexity to accounting practices:
- Constantly changing regulatory requirements: The FDA frequently updates its requirements, and CMS continues to change pass-through accounting regulations.
- Risk of patient litigation: Device recalls and procedure complications expose device manufacturers financially.
- Sarbanes Oxley Act: This legislation requires all financial reports to include an internal controls report. The act also requires year-end financial disclosure reports.
How Medical Device Manufacturing ERP Software Can Help
A medical device ERP system can help your company stay current with governmental and industry-specific regulations, an almost impossible task without advanced software. The right ERP will create an audit trail that captures the lifecycle of every transaction and helps you maintain proper approval workflows.
An effective ERP efficiently produces required financial reports and minimizes errors and other compliance issues. Software designed for medical device manufacturing and other life science industries protects your company from costly mistakes.
Choosing the Right Medical Device Manufacturing ERP Software
When choosing a medical device ERP system, you should look for the following features:
Quality Management: The FDA requires that you monitor products currently in use. You need a system that can integrate your quality procedures into your operations and alert you when a problem is found.
CRM and Case Management: Your medical device manufacturing ERP software should help you manage your current customer base and acquire new clients. The right system will deal with device rental, leasing procedures, and subscriptions while managing customer concerns.
CAD/CAM-ERP Integration: This capability is necessary to help you stay current with the frequent design and engineering changes. This feature empowers you to manage bills of materials more efficiently.
Workflow Traceability: In the medical device industry, you must be able to control all aspects of the process, from components to assembly to shipping.
NetSuite for Life Sciences provides the features needed to manage workflows, maintain compliance, and bill clients:
- Simple and secure cloud computing
- Unified systems
- Easy and accurate financial reporting
- 360-degree view of customer interactions across all channels
- Role-based employee dashboards
- Real-time views of your company’s financial status
- Optimized supply chains
NetSuite’s ERP handles industry complexities such as project billing and pass-through cost accounting, so you can focus on what matters.
How GBS Can Help
Our GBS team members are NetSuite Life Sciences experts and can help you quickly and efficiently implement and integrate NetSuite into your business. We have the expertise to customize the NetSuite platform to meet your company’s unique needs and help you with any challenges. We offer prompt, personal attention and respond to your requests within two hours because we understand that you need solutions now—not in 24 hours.
Gain Clarity with a Trusted ERP Provider
The medical device manufacturing industry is a rewarding but highly challenging one. You must combine productivity with FDA compliance while meeting the needs of patients. The accounting processes for project billing and pass-through costs are complicated and you have no room for error.
A quality medical device manufacturing ERP software system such as NetSuite Life Sciences is crucial for optimal productivity and compliance. Learn more about GBS by filling out a brief online form or calling one of our knowledgeable representatives.