PODs Under Senate Scrutiny
Written By: Rheingold, Valet, Rheingold, Ruffo & Giuffra LLP
Recently, five United States senators reached out to the Inspector General of the Department of Health and Human Services, seeking an investigation into physician-owned distributorships, more commonly known as PODs. PODs are "middleman" outfits that offer profits to surgeons for the medical devices they use on their patients. The investigation will look into the legalities of these entities. The senators included the Senate Finance Committee's report, which was completed by Utah Senator Orrin Hatch's office.
PODs create, said the report, "financial incentives for physician investors to use those devices that give them the greatest financial return," which can pose violations on an anti-kickback statute and other federal fraud and abuse laws. With the entities working as a liaison between medical device manufacturers and hospitals, there is an exchange in marketing, stocking, and selling in which PODs receive a sales percentage. In cases in which surgeons own a POD, they receive commissions for devices sold. Since surgeons typically decide for the hospitals where they operate what devices they want to use in their procedures, POD surgeons can often move business to themselves.
Such is the case with neurosurgeon Dr. Vishal James Makker, who performed multiple spine surgeries on the same patients using spinal implants provided to him by the Omega Solutions POD. It turns out that Omega POD data revealed it paid its investor surgeons as much as $500,000 annually to use its medical devices.
The financial relationships between the drug and medical device industries and the health care industry have led to enormous controversy; as such relationships create conflicts of interest and could unduly influence everything from research findings to prescribing practices.
The Senate report highlights those concerns. "Physician investors in PODs may perform more procedures than are medically necessary" because they can earn more money every time they are implanting one of these devices into their patients. For instance, Dr. Makker operated on some patients' spines up to seven times.
The report also discusses another surgeon who "provided examples to the Committee of elderly patients in a POD area who were receiving eight to 10 fusions in their back despite the serious health risks posed by these procedures"; patients who "died from multiple operations"; and an increase of over 300 percent in spinal reoperations in one hospital following a new POD being established in its area.