Mid-Atlantic Health Law TOPICS

The Office of the Inspector General (OIG) of the federal Department of Health and Human Services recently issued a fraud alert warning that certain physician owned distributorships (PODs) may violate the Anti-Kickback Statute, a federal law that makes it illegal to receive any money or other benefits for referring items or services for Medicare and Medicaid patients.

The OIG highlighted surgeons who implant devices sold by PODs that they own. The OIG claims that these PODs are inherently suspect because they encourage surgeons to perform unnecessary procedures, and to implant their POD's devices, in lieu of potentially more appropriate devices.

Factors identified by the OIG as posing an especially high risk of abuse include the following: (1) conditioning a physician's POD ownership, price of ownership, continuation of ownership, share of ownership, or compensation from ownership on the volume or value of the POD devices used by the physician; (2) conditioning referrals to hospitals on the hospital's use of a particular POD's devices; and (3) failure of a POD to perform common distributor tasks (such as maintaining inventory), which failure would suggest that the POD is a sham and not a true distributor.