A bipartisan group of senators are questioning the legality of physician-owned distributors (PODs). The group, lead by Sen. Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee, sent letters late last week to the Centers for Medicare and Medicaid Services and the U.S. Department of Health and Human Services Inspector General asking for an investigation into the legality of PODs.
The letters coincided with the release of a Senate Finance Committee Minority analysis that found a spike in the creation of PODs.
In PODs, physician investors purchase ownership shares in an organization that purchases or serves as a medical device distributor for the products the physicians use in surgery. The senators noted in their letter to Inspector General Daniel Levinson that there is evidence that doctors' financial interests may spur them to use particular products or facilities and may even influence them to order more surgeries.
"Patients should have peace of mind that a doctor's recommendation for treatment or care is in their best interest and isn't just a way of making money," said Hatch in a statement accompanying the release of the analysis. "The financial incentives created by these entities set a dangerous precedent that, as indicated in this report, can lead to serious overutilization and force unnecessary, invasive procedures for patients. This arrangement demands further scrutiny and should be investigated."
The analysis found that there is insufficient legal guidance to regulate these entities.
"There is as much confusion in your office's stance on PODs as there is confusion in the healthcare community about how to arrange these in a legal manner," the senators said in their letter to Levinson. "Until there is clarity, inappropriate versions of these entities could continue to proliferate, potentially driving up medical device costs to the Medicare and Medicaid programs putting patient safety at risk."