By
Joe
Carlson
Posted:
March 26, 2013 - 12:30 pm ET FiDA highlight
Doctors who hold part ownership in
medical device companies, beware: people in HHS' inspector general's office are
watching you. And they don't like what they see.
The
inspector general's office published a special fraud alert Tuesday (PDF)
on the rapidly growing phenomenon of physician-owned distributorships, or PODs,
saying, “OIG views PODs as inherently
suspect under the anti-kickback statute.”
The
office is already investigating physicians who hold ownership stakes in
spinal-implant businesses, and whether those doctors practice at hospitals
whose Medicare patients receive a higher-than-average proportion of
spinal-fusion procedures. That case may also widen to include doctors with stakes
in cardiac-device makers, the office's 2013 work plan says.
The
alert follows a letter from five bipartisan members of the Senate
Finance Committee in June 2011 (PDF) that said a Senate
investigation had turned up evidence physicians were being pressured into
taking on lucrative
ownerships in device companies because of a dearth of federal rules on the
topic left it open to abuse.
Under
federal law, it may be legal for a surgeon to hold shares in a company that
manufactures devices that the doctor prescribes for his patients, even if it's
a small company that manufactures a product not widely used outside of the
hospital where the doctor practices. But such arrangements are risky and easy to abuse, the
alert says.
Medicare's Anti Kickback law makes such
arrangements illegal if even one of the doctors' motives in prescribing devices
he has ownership in is personal profit. Those
risks are particularly acute, the alert says, for physicians who own stock in
companies that make surgically implanted medical devices, because hospitals
typically listen to doctors' preferences when making
purchasing decisions about those devices.
In
figuring whether a particular arrangement may be illegal, the inspector general
considers, among other factors, whether the profits gained from device-maker
ownership are out of proportion to a small investment by the doctor; whether
the price of the stock varies depending on how much prescribing the doctor is
expected to do; and whether doctors have to sell their ownership if they change
specialties.
Failing
to report an ownership interest is also a red flag, the alert says.
“This
is important guidance for providers who legitimately want to avoid getting into
difficulty with the federal Anti Kickback law,” said Don White, a spokesman for
the inspector general's office.
The
senators' 2011 letter said that such specific guidance was needed by physicians
who were being encouraged to enter physician-owned distributorships of
uncertain legality. The letter cited specific feedback from doctors: “One
surgeon who was pushing back against his colleagues pressuring him to join a
POD wrote that those colleagues were citing the absence of any prevailing
guidance specifically on point on this topic as a reason for joining a POD
venture, and that 'this sort of thought is what prevails unless OIG takes a
stand.'”
The
HHS inspector general's office is slated to release its sweeping investigation
of PODs later in 2013, according to the office's work plan.
“Anytime
a few bad actors determine the treatment and care of patients, as this warning
makes clear, patient safety is put at risk and millions of dollars are lost to
fraud. This is simply unacceptable,” said Sen. Orrin Hatch (R-Utah), the
ranking Republican on the Senate Finance Committee.
Hatch,
who released a critical report on PODs in June 2011, was joined by committee
chairman Max Baucus
(D-Mont.), who said the alert raised serious questions about
the practice.
“Patients have a right to know
they're getting treatment that's tailored to them – not someone else's bottom
line – but physician-owned distributorships may put that guarantee in doubt,”
Baucus said in the emailed statement.
Senator Max S. Baucus
202.224.2651
max@baucus.senate.gov
511 Hart Senate Office Bldg
Washington, DC 20510
