Senate report reignites concerns about physician-owned distributorships

Surgeons who have a financial interest in medical device companies are far more likely to perform certain surgeries, according to an updated report  by the Senate Finance Committee that calls for increased scrutiny of the financial arrangements on physician-owned distributorships (POD).

Building on previous concerns that that PODs inappropriately influence medical practices, an analysis conducted by committee staff members found that POD surgeons performed spinal fusion surgeries on 91 percent more patients compared to non-POD surgeons. The findings validated concerns identified by the Office of Inspector General (OIG) in 2013 that such financial relationships could trigger kickback violations.

The report included several recommendations, including new federal laws that would require physicians to disclose device company ownership to patients. The committee also called on both the Centers for Medicare & Medicaid Services (CMS) and the OIG to strengthen compliance guidance regarding PODs, and urged CMS to consider increasing penalties for those who violate the Sunshine Act, which requires pharmaceutical companies and device manufacturers to report payments made to physicians.

"Patients are strongly inclined to follow their physician's advice, and when doctors are able to recommend surgeries from which they financially benefit from the devices used, a clear conflict of interest is presented and the patients' health can be put at risk," Senate Finance Committee Chairman Orrin Hatch (R-Utah) said in an announcement. "Moreover, by recommending surgeries that may not be necessary, such arrangements can also inflate federal healthcare costs at the expense of taxpayers."

In some cases, hospitals have barred contracts with physician-owned distributorships, citing concerns about creating a conflict of interest. Previous studies on physician ownership of diagnostic equipment have raised concerns about utilization, and self-referrals for imaging services have reportedly cost Medicare as much as $109 million.

To learn more:
- read the Senate Finance Committee report
- here's the Committee's announcement