In response to the Senate Finance Committee's report and concerns over physician-owned distributorships, the Office of Inspector General is initiating a review of PODs to examine how they may contribute to cost increases, according to a Lexology 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.
The OIG did not provide a timeline for its final report. In its review, it will conduct a national analysis of hospitals that bill Medicare for spinal surgery to determine how many spinal implants are provided to the hospitals by PODs. It will also focus on how widespread POD use has become and whether PODs save hospitals money.
The OIG also noted that there is existing guidance for physician-vendor relationships under the Anti-kickback Statute. It has traditionally upheld the view that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he/she generates business, could constitute an illegal inducement under the Federal Anti-kickback Statute. It also considers the following elements when reviewing questionable relationships:
• The terms under which a physician may invest in the entity;
• The terms under which a physician owner may be required to divest his or her ownership;
• The actual return or projected return on the physician's investment;
• The amount of revenues generated for the entity by the physician-investors.
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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.
The OIG did not provide a timeline for its final report. In its review, it will conduct a national analysis of hospitals that bill Medicare for spinal surgery to determine how many spinal implants are provided to the hospitals by PODs. It will also focus on how widespread POD use has become and whether PODs save hospitals money.
The OIG also noted that there is existing guidance for physician-vendor relationships under the Anti-kickback Statute. It has traditionally upheld the view that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he/she generates business, could constitute an illegal inducement under the Federal Anti-kickback Statute. It also considers the following elements when reviewing questionable relationships:
• The terms under which a physician may invest in the entity;
• The terms under which a physician owner may be required to divest his or her ownership;
• The actual return or projected return on the physician's investment;
• The amount of revenues generated for the entity by the physician-investors.
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