Doc-owned distributors under the microscope
Physician-owned distributorships (PODs) have been a recent focus of inquiry, litigation and regulation, and now the Senate Finance Committee will take up the issue.
The distributorships have come under scrutiny for potential conflicts of interest among physician-owners who may implant devices they sell or hold a stake in hospitals that buy devices. HHS’ Office of Inspector General warned in an August report that it may be hard to identify which doctors may both own stakes in distributors and in the hospitals to which they sell.
A provision of the Affordable Care Act was meant to make it easier to identify POD owners. It required manufacturers and group purchasing organizations to report ownership interests to the CMS, which published the information on its Open Payments website. But the bad behavior has continued. In May, a Michigan doctor in a distributorship admitted to performing unnecessary surgery and pleaded guilty to fraud.
“While the vast majority of doctors operate with the highest ethical standards, those with a vested stake in medical device distributorships raise a number of concerning questions about the physician’s motivation in prescribing a procedure, as well as the overall cost to the healthcare system,” Sen. Orrin Hatch (R-Utah), chairman of the committee, and Sen. Ron Wyden (D-Ore.), the committee’s ranking member, said in a joint statement.
Witnesses at the scheduled Tuesday hearing include ethics experts, a board adviser to the American Association of Surgical Distributors and the son of a patient whose surgeon was affiliated with a physician-owned distributor.
“When physicians have a financial incentive to recommend and perform a surgery, a potential conflict of interest can occur and jeopardize the health of patients,” the senators said.