Five U.S. senators have asked the Inspector General of the Department of Health and Human Services to launch an investigation into physician-owned distributorships to determine whether they are legal, according to a Wall Street Journal report.
PODs, which exist in at least 20 states, operate as middleman entities that allow surgeons to profit from the devices they use on patients. When surgeons own a distributorship, they get a cut of each sale in exchange for marketing and stocking the device.
In conjunction with the investigation request, the senators also released a report on the increase of PODs in spine and orthopedic surgery. The report says PODs may violate anti-kickback statutes and other federal fraud and abuse laws by creating financial incentives for physician investors to use devices that steer business back to themselves, according to the report.
The Senate report also includes anecdotal evidence linking PODs to unnecessary surgeries, citing an increase of more than 300 percent in spinal re-operation rates at one hospital following the creation of a POD in the area and citing instances of elderly patients in POD areas receiving eight to 10 spinal fusions.
The five senators seeking an investigation are: Sen. Orrin Hatch (R-Utah), Senate Finance Committee Chairman Max Baucus (D-Mont.) and Sens. Herb Kohl (D-Wis.), Charles Grassley (R-Iowa) and Bob Corker (R-Tenn.). The senators have requested the Inspector General submit an initial report on his findings by Aug. 12.
Read the Wall Street Journal report on physician-owned distributorships:
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PODs, which exist in at least 20 states, operate as middleman entities that allow surgeons to profit from the devices they use on patients. When surgeons own a distributorship, they get a cut of each sale in exchange for marketing and stocking the device.
In conjunction with the investigation request, the senators also released a report on the increase of PODs in spine and orthopedic surgery. The report says PODs may violate anti-kickback statutes and other federal fraud and abuse laws by creating financial incentives for physician investors to use devices that steer business back to themselves, according to the report.
The Senate report also includes anecdotal evidence linking PODs to unnecessary surgeries, citing an increase of more than 300 percent in spinal re-operation rates at one hospital following the creation of a POD in the area and citing instances of elderly patients in POD areas receiving eight to 10 spinal fusions.
The five senators seeking an investigation are: Sen. Orrin Hatch (R-Utah), Senate Finance Committee Chairman Max Baucus (D-Mont.) and Sens. Herb Kohl (D-Wis.), Charles Grassley (R-Iowa) and Bob Corker (R-Tenn.). The senators have requested the Inspector General submit an initial report on his findings by Aug. 12.
Read the Wall Street Journal report on physician-owned distributorships:
Related Articles on Physicians and Devices:
Challenges of Marketing Orthopedic Devices to Physicians: Q&A with Spinal Associates President Sid Silverman
Physician-Owned Device Companies: A New Warning Bell is Rung
Las Vegas' University Medical Center CEO Says Hospital Has No Ties to Biotronik Heart Implants