PODs

Background

Certain physician-owned entities frequently referred to as physician-own distributorships, or "PODs," include device companies and distributors that offer substantial equity positions to physicians, in some cases, selected because collectively they are in a position to generate a substantial amount of business for the entities through ordering (or influencing orders for) devices sold or manufactured by the company. On March 26, 2013, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a Special Fraud Alert concerning Physician-Owned Entities.  In the Special Fraud Alert, the OIG notes that the POD business structure is inherently suspect, and cites OIG's 2006 correspondence with AdvaMed on the issue.

Key Developments and Papers

  • Senate Finance Committee Report: May 2016 [PDF]
  • Senate Finance Committee Hearing: November 17, 2015 – U.S. Senate Finance Committee holds hearing on PODs; AdvaMed submits written statement. [LINK]
  • OIG Study: October 23, 2013 - OIG Publishes a Report titled, "Spinal Devices Supplied by Physician-Owned Distributors: Overview of Prevalence and Use."  It found that surgeons performed more spinal surgeries at hospitals that purchased from PODs, and those hospitals experienced increased rates of growth in the number of spinal surgeries performed in comparison to the rate for hospitals that did not purchase from PODs. OIG concluded that taken together, these factors may increase the cost of spinal surgery to Medicare over time. The report also stated that because hospitals’ policies varied in whether they required physicians to disclose ownership interests in PODs to either the hospital or their patients, the ability of hospitals and patients to identify potential conflicts of interest among these providers is reduced. [AdvaMed Press Release]
  • OIG Special Fraud Alert: March 26, 2013 - U.S. Department of Health and Human Services Office of Inspector General (OIG) Special Fraud Alert: Physician-Owned Entities.  In the Special Fraud Alert, the OIG notes that the POD business structure is inherently suspect, and focuses on the specific attributes and practices of PODs that the OIG believes produce substantial fraud and abuse risk and pose dangers to patient safety. [AdvaMed Press Release]
  • Inspector General Levinson Response to Senate: Sept. 13, 2011 [PDF]
  • CMS Administrator Response to Senate: August 10, 2011 [PDF]
  • Senate Letter to CMS Administrator Donald Berwick: June 9, 2011 [PDF]
  • Senate Letter to Inspector General Dan Levinson: June 9, 2011 [PDF]
  • Senate Finance Committee Report: June 2011 - Senate Finance Committee Report, Physician Owned Distributors (PODs): An Overview of Key Issues and Potential Areas for Congressional Oversight (June, 2011) and issues requests to OIG and CMS to review POD arrangements.
  • OIG Response to AdvaMed: Oct. 6, 2006 - Office of Inspector General response letter  [PDF]
  • AdvaMed Letter to OIG: Sept. 6, 2006 - AdvaMed Letter to the Department of Health & Human Services’ Office of Inspector General /Industry Guidance Branch, requesting guidance concerning Certain Physician-Device Firm Arrangements [PDF]