Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.
By Nathaniel Weixel
Nov. 17 — A Senate Finance Committee investigation into physician-owned distributors (PODs) of medical devices will result in at least one referral to the HHS Office of Inspector General for potential action, committee leaders said during a Nov. 17 hearing.
Sens. Orrin Hatch (R-Utah), committee chairman, and Ron Wyden (D-Ore.), its ranking member, said a device manufacturer offered to make payments to doctors through a third party to avoid disclosure, a violation of the Physician Payments Sunshine Act. Both Wyden and Hatch said they were skeptical about POD arrangements because of the financial incentives doctors have for performing potentially unnecessary surgeries, and using “preference items” in those surgeries.
PODs are medical device businesses in which a physician is both an investor and a distributor. The arrangement is most common with implantable spinal devices. The arrangements have been investigated by the Department of Health and Human Services OIG because they may represent a conflict of interest that can lead physicians to choose implants or facilities based on profit rather than their patients’ best interests. The Affordable Care Act's Open Payments Program (commonly known as the Physician Payments Sunshine Act) has made it a requirement for PODs to disclose their ownership interests, but POD critics, and the senators, say that hasn't been happening.
Both senators said there's a need for more transparency regarding POD ownership, and the committee will be submitting additional information to both the OIG and to the Centers for Medicare & Medicaid Services about the rate at which PODs report their ownership interests.
“We believe these findings will say quite a bit about the lack of accountability for these types of business arrangements,” Hatch said.
Wyden said there's going to be more bipartisan committee work to shed light on POD arrangements.
“You're going to see Democrats and Republicans working together,” Wyden said. “These are extraordinary circumstances. This is some of the most egregious and offensive behavior I've seen in a long, long time.”
Lawmakers and witnesses, including the lone witness who supported PODs, agreed that disclosure of ownership interests to patients is important. John Steinmann, board adviser for the American Association of Surgeon Distributors (AASD), said the organization requires compliance with both the self-referral and anti-kickback statutes. Steinmann also said distributorships lower the costs of treatment by reducing the price of devices they sell.
“It is an unfortunate fact that throughout the medical profession there will always be a few ‘bad apples’ who can do serious damage to peoples’ lives. We simply must have mechanisms that force physicians to be held to the high standards patients deserve,” Steinmann said. “I believe the absence of clear, affirmative program guidance from the government has kept many honorable surgeons and their hospitals from sitting down to implement this very sensible model.”
But PODs can still find ways around those requirements, Scott Lederhaus, president of the Association for Medical Ethics, said. Even when doctors do disclose POD ownership to patients, the patients usually don't understand what it means.
“Patients are blindly willing to accept whatever implant the surgeon would decide to use regardless of the quality of those implants or where they are made,” Lederhaus said. “A patient has no idea what a POD is or how a POD might affect their treatment or outcome. So a disclosure by the physician of the POD implants to be used is nothing more than the physician telling their patients what they will be inserting into their spines.”
To contact the reporter on this story: Nathaniel Weixel in Washington at email@example.com
To contact the editor responsible for this story: Janey Cohen at firstname.lastname@example.org
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)