The U.S. Senate’s Finance Committee today issued a report slamming physician-owned distributorships that sell the spinal implants their doctor-owners prescribe.
It’s not the 1st time that so-called PODs have drawn scrutiny from federal officials. Back in 2011, a Senate Finance panel report prompted a group of senators to petition the U.S. Health & Human Services Dept.’s inspector general to investigate the businesses and warn that they may create incentives for doctors to give preference to devices that provide them a financial return. The finance committee’s 2011 report found that PODS existed in 20 states, with more than 40 in California alone.
In 2012 the HHS OIG issued a “Special Fraud Alert” labeling PODs as “inherently suspect” under Medicare’s anti-kickback rules. A 2013 OIG report found that the cost of spinal fusion surgeries rises when hospitals purchase medical devices from PODs, finding that 20% of the procedures used devices purchased from the doctor-owned distributors. The Justice Dept. joined the chorus that year, warning that the influence that doctors have over hospitals purchasing practices leaves room for serious conflicts of interest.
The Senate Finance report released today found that PODs had spread to 43 states and the District of Columbia as of November 2015. What’s more, the report found, surgeons at PODs saw 24% more patients than non-POD physicians and performed nearly twice the number of fusion procedures.
“Unchecked, this position of power can give POD spinal surgeons the opportunity to grant themselves a steady stream of income by increasing the use of the products supplied by their POD. PODs present an inherent conflict of interest that can put the physician’s medical judgment at odds with the patient’s best interests,” according to the report.
“The relationship between doctors their patients should be one characterized by trust and a level of professionalism that is held to the highest standards,” Finance chairman Sen. Orrin Hatch (R-Utah) said in prepared remarks. “Unfortunately, when surgeons have a financial interest in medical device companies, the data calls into question whether the best interest of the patient is considered when invasive surgeries are recommended. Patients are strongly inclined to follow their physician’s advice, and when doctors are able to recommend surgeries from which they financially benefit from the devices used, a clear conflict of interest is presented and the patients’ health can be put at risk. Moreover, by recommending surgeries that may not be necessary, such arrangements can also inflate federal healthcare costs at the expense of taxpayers. It is my hope that, with this report, we can continue to work towards expanding transparency and identifying how to better protect and inform patients about what could possibly be harmful POD arrangements.”
The Senate Finance report recommended tighter transparency laws requiring doctors to disclose their stakes in device companies to hospitals and patients. Hospitals should draft and enforce policies addressing PODs, with the Centers for Medicare & Medicaid Services setting a deadline for implementing POD policies and denying reimbursement for POD-supplied devices to hospitals without them.
“The business structure and payments associated with certain PODs have been found to be illegal. Furthermore, overt or implied threats made by physicians to move their practice unless a hospital accepts their POD would likely violate fraud and abuse laws,” according to the report. “Law enforcement should continue and expand their efforts to charge and prosecute those doctors, PODs, and hospitals that violate the law.”
Matthew Wetzel, assistant general counsel for AdvaMed, said the group was encouraged that the report distinguished between PODs and medical device companies that might have some physician ownership.
“AdvaMed has long raised concerns regarding PODs and has advocated for transparent, ethical business arrangements and ownership models for medical technology manufacturers and distributors under federal laws, consistent with the association’s code of ethics. We are committed to working with our members to continue to raise awareness and develop proactive advocacy solutions to address PODs-related concerns,” Wetzel said in an emailed statement.
