Frequently Asked Questions
What is prompting this new program?
Beyond the obvious concern for patient safety, managing through any product corrective action, safety notice, withdrawal, or recall (collectively an “Issue Response” notice) is very expensive for a health system. We incur costs in the initial risk triage, researching where products were shipped/used, sorting through and quarantining inventory, assessing and validating alternatives, communicating the plan and returning product for credit. We have had to dedicate full time staff and subscribe to 3rd party systems (i.e. RASMAS, ECRI) just to process and manage issue responses from suppliers. The FDA is expected to continue to raise the bar through more issue response actions on quality for medical supplies, equipment, devices and pharmaceuticals. Health systems cannot afford to bear the cost of managing these issue responses, given the increased pressures to control costs. Ideally, our suppliers would provide us and our patients with high quality products and there would be no need to be reimbursed for downstream costs related to issue response management.
What do you consider a “recall” (Issue Response)?
The FDA defines a recall as “an action taken to address a problem with a medical device that violates FDA law. Recalls occur when a medical device is defective, when it could be a risk to health, or when it is both defective and a risk to health.” This will also apply to all equipment and pharmaceutical recalls and will parallel the three levels of recalls per the FDA:
- Class I Recall: Dangerous or defective products that predictably could cause serious health problems or death.
- Class II Recall: Products that might cause a temporary health problem, or pose only a slight threat of a serious nature.
- Class III Recall: Products that are unlikely to cause any adverse health reaction, but that violate FDA labeling or manufacturing laws.
Our SQN will apply to the total issue response notice need. If there are ten line items of differing sizes, for example, in one notice, we would consider that as one issue response.
The SQN process will also apply to those instances where we investigate internal user product issues that are found to be of supplier origin.
What will be the trigger for the Supplier Quality Notice (SQN)?
The trigger for the SQN will be when we receive the issue response notice from the manufacturer/distributor or when the quality issue is realized.
What is the basis for the 3-tier approximated dollar range amounts?
This is a recovery of costs and does not include any intention or amount of an extraordinary penalty. We conducted a time study analysis for personnel costs associated with our internal response actions finding that the time investment differs by the severity/urgency and the distribution of materials across our delivery system. Many people have to get involved within our health system including teams from clinical areas, Risk, Quality and Safety, Supply Chain, Communications, Legal, Patient Experience, etc. Then we included infrastructure cost for recall database systems like RASMAS. Since this program is meant to recover our administrative costs associated with a documented issue response notice, it is our understanding that the payment would not violate the Anti-Kickback Statute.
The costs included in the 3-tier ranges noted in the SQN program notification do not include the supplier providing replacement product at no cost, paying for shipping of returned products and any sort of liability associated with patient or staff resulting from the recalled product. Those will be addressed per the contract terms.
What circumstances would you envision that could result in additional charges above the specified approximate ranges for each tier amount?
You will receive a notification related to the recall, a copy of the recall notice we received from you or documentation for supplier quality issue(s) impacting use as intended confirmed between Spectrum Health and the Supplier. The notification will provide specific instructions for your finance department on whom the check should be made out to and where it should be sent. This will be sent to the key contract administrator from your company that we have on file that covers Spectrum Health.
What documentation will you be providing to our company related to a “recall” (Issue Response)?
You will receive a notification related to the issue response activity, a copy of the recall notice we received from you or documentation for supplier quality issue(s) impacting use as intended confirmed between Spectrum Health and the Supplier. The notification will provide specific instructions for your finance department on whom the check should be made out to and where it should be sent. This notification packet will be sent to the key contract administrator from your company that we have on file that covers Spectrum Health.
How will the SQN be administered?
The SQN will include an invoice requesting that a check be issued to Spectrum Health for the specified amount. In the event that a credit memo is preferred by your organization, alternate arrangements can be made with instructions in the documentation. If the check/credit has not been received, we reserve the right to deduct the amount from future invoices within 60 days.
Do you expect to eventually make this a part of your contracts?
We have modified our contract language. Most of our contracts, including our Vizient contract, contain a clause noting that the supplier is responsible for costs associated with an issue response event. In some cases, there might be no reference at all about handling such costs. This SQN is addressing the financial recovery of administrative costs associated with the level of internal issue response required by Spectrum Health in both of these cases. If there is special language limiting or restricting such cost recovery by a supplier, those will be handled per the contract language. Our current template has been revised for the SQN program.
Will this process discourage suppliers from voluntarily recalling products?
It should not. When a company learns that it has a product that violates FDA law, it voluntarily recalls the device and notifies the FDA. Legally, the FDA can require a company to recall a device. This could happen if a company refuses to recall a device that is associated with significant health problems or death. However, in practice, the FDA claims that they have rarely needed to require the recall of a medical device or supply. Sometimes, suppliers aren’t sure about the extent of a quality problem and they recall products just to be on the safe side. We support and encourage that, but it still puts a significant burden on the health system due to questions surrounding the safety of a supplier’s product.