Medicare commission looks at tighter rules for physician-owned medical distributors

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A Medicare commission is considering tightening up oversight of physician-owned medical distributors.

Worried that conflicts of interest could lead to fraud, the Medicare Payment Advisory Commission is considering recommending tighter rules to govern physician-owned companies that distribute medical products.

MedPAC members are looking to tighten oversight with tougher requirements in their recommendations to Congress, according to a report in The Hill. Some members argued the practice should be outlawed entirely because of the conflict that could result from doctors profiting on the devices they are recommending for surgical use on their patients.

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Physician-owned distributors (PODs) originally started as a way for physicians to cut costs by increasing their buying power and saving on devices. The PODs operate as middlemen, buying a device from manufacturers and selling them to a hospital at a higher price, the article said. Some hospitals have set up barriers to avoid anti-kickback problems with device distributors.

Critics say the PODs create incentives for their physician owners to perform more surgeries because they directly profit from the sale of more devices.

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A Michigan surgeon, Aria Sabit, was sentenced to nearly 20 years in prison in January for $2.8 million in fraud, charged with performing unnecessary surgeries and overbilling for products, the report said. Two court cases related to Apex Medical Technologies, the POD he partially owned in California, are pending.

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