By Christine Ayala, The Hill Extra – 04/18/17
Regulators are mulling tightened oversight over physician-owned distributors of medical products, on fears that conflicts of interest could lead to fraud.
Some hospitals have set up barriers to avoid anti-kickback entanglements with device distributors, and the Medicare Payment Advisory Commission (MedPAC) is looking at more specific requirements in congressional recommendations. Some commissioners argue these types of physician-owned distributors of medical products should be outlawed.
At issue are distributors making money by selling devices ordered by their doctor owners for surgical use on their own patients. Physician-owned distributors, or PODs, operate as middlemen, buying a device from manufacturers and selling the device to a hospital at a higher price, although ownership of a distributorship is not always obvious.
The practice developed as a way for physicians to cluster buying power and potentially save on device costs.
Devices from these distributors are bought at the same price or higher than those available from manufacturers, a practice which lead some to call these entities “inherently suspect,” according to a recent Office of Inspector General report.
The medical device industry also sees a need for caution.