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Finance Committee Report Places Medical Device Plans under Growing Scrutiny

Finance Committee Report Places Medical Device Plans under Growing Scrutiny

Hospitals and providers taking part in physician-owned distributorships, or “PODs” might be at elevated risk for government analysis or enforcement. A Senate Finance Committee (SFC) Report issued this month highlights the SFC’s concerns that particular POD structures may violate fraud and abuse statutes, such as the Anti-Kickback Statute, Stark Law, along with the Sunshine Act.

Based on the SFC Report, PODs are “physician-owned entities that derive revenue from selling, or organizing for that purchase of, implantable devices purchased by their physician-proprietors to be used in procedures the doctor-proprietors perform by themselves patients in hospitals or ambulatory surgery centers (ASCs).”

The Committee’s Report takes the positioning the POD structure creates an “inherent conflict of interest” between your physician’s incentive to advertise certain medical devices (for purchasing which she or he is going to be compensated) and also the patient’s welfare. The Report particularly concentrates on spine surgery like a practice area the SFC believes is especially prone to fraud and abuse for 2 reasons: (1) spine patients depend on their own physician’s medical device recommendations and (2) hospitals usually purchase spine devices their physicians prefer-so known as “physician preference products.” Thus, based on the Report, the doctor reaches the epicenter from the medical device decision-making and also the physician’s arrangement using the POD results in a perverse incentive for that physician to select medical devices provided through the POD over non-POD suppliers.

The Report provides a litany of reasons meant for the SFC’s argument that participation in PODs influences physician behavior and helps to create individuals above-described perverse incentives. The Report noted that data published by CBS News signifies that spine surgeons who take part in PODs saw more patients, performed almost two times as numerous spine fusion surgeries, and performed surgeries in a greater rate than non-POD surgeons. Hospitals, in addition to physicians, are now being affected by PODs based on the Report. The speed of spine surgeries at hospitals purchasing from PODs keeps growing for a price faster compared to non-POD purchasing hospitals.

Citing a of Health insurance and Human Services, Office of Inspector General (OIG) study, the Report claims that POD-provided spine products are not less expensive than non-POD spine devices. SFC can also be worried about overutilization and elevated lengthy-term Federal healthcare program costs, noting that “PODs provided the devices to one in five spine fusion surgeries billed to Medicare this year.Inches Competition is another concern from the SFC. The Report claims that where PODs can be found, a possible anti-competitive threat can appear between POD and non-POD physicians. Based on the Report, because POD physicians can supplement their earnings from medical device sales, theoretically, POD physicians may accept lower reimbursement rates from insurance providers and cost the non-POD physicians from the market creating an anti-competitive atmosphere. The Report admits this assertion is dependant on anecdotal evidence.

The Report provides the following recommendations:

  1. Federal law should require physicians to reveal possession privately device companies towards the hospital where they practice and also to the patients they treat.
  2. CMS should require hospitals and ASCs to examine Sunshine Act Open Payments data and document they have taken the information into consideration when creating purchasing decisions.
  3. CMS and also the OIG should think about supplementing their guidance about PODs.
  4. The Federal Government Accountability Office should perform a cost-benefit analysis of requiring CMS to conduct enhanced quality assurance and utilization reviews of hospitals that obtain PODs.
  5. Police force should still prosecute PODs, hospitals, and physicians that violate what the law states.
  6. Hospitals should evaluate the OIG Special Fraud Alert (SFA), issued March 26, 2013 and then any other guidance to tell and implement policies regarding relationships with PODs. CMS should set to start dating ? through which hospitals must implement POD policies and non-compliant hospitals shouldn’t be reimbursed until they implement and enforce POD-specific policies.
  7. CMS should undertake elevated enforcement actions to make sure compliance with Sunshine Act reporting needs.
  8. HHS OIG should read the impact from the SFA and up to date litigation increase its 2013 report and SFA when needed.

Hospitals that obtain PODs and physician-proprietors thinking about joining or structuring a POD should talk to a lawyer to find out if the particular POD’s structure (structure may differ) and compensation arrangement presents a substantial risk underneath the fraud and abuse laws and regulations or even the Sunshine Act. For more reference, the HHS OIG SFA outlines “suspect characteristics” of PODs that needs to be reviewed just before creating or joining a POD.

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