Background Physician-owned entities are frequently referred to as physician-own distributorships, or "PODs," and include device companies and distributors that offer substantial equity positions to physicians apparently, 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 new 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.  

OIG Special Fraud Alert 03.26.13 - 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.
[LINK]                    [AdvaMed Press Release]
OIG Study 10.23.13 - 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.
[OIG Study: Report (OEI-01-11-00660)
]    [AdvaMed Press Release
Morgan Lewis POD White Paper 03.01.13 - White Paper titled, "Anti-Fraud Concerns for Physician-Owned Distributors For Medical Device Products: What's New Us Old. We Won't be Fooled Again," by Kathleen McDermott and Jacob J. Harper.
CEO Blog
Jeff Binder, CEO of Biomet and former Chair of AdvaMed's Board Committee on Ethics and Health Care Compliance, posts here and here about physician-owned distributors on his blog
Senate Finance Committee Report  Senate Finance Committee Report, Physician Owned Distributors (PODs): An Overview of Key Issues and Potential Areas for Congressional Oversight (June, 2011)
[LINK] [Press Release]
Senate Letter Senate Letter to Inspector General Dan Levinson (June 9, 2011) [PDF]
AdvaMed Statement AdvaMed Statement on Transparency and Physician-Owned Companies [PDF]
OIG Letter to AdvaMed Office of Inspector General response letter (Oct. 6, 2006) [PDF]
AdvaMed Letter to OIG AdvaMed Letter to the Department of Health & Human Services’ Office of Inspector General /Industry Guidance Branch, requesting guidance concerning Certain Physician-Device Firm Arrangements (Sept. 6, 2006) [PDF]
WLF Comments Washington Legal Foundation Comments  [Link]


10.24.13 CBS News investigation reports on physician-owned companies
10.23.13 OIG publishes study on Spinal Devices Supplied by Physician-Owned Distributors [Study]
03.26.13 OIG issues Special Fraud Alert on Physician-Owned Entities (see left)
03.26.13 Senators React To Special Fraud Alert Involving Physician-Owned Entities   [Press Release]
Warning Over Doctor-Run Groups, The Wall Street Journal, by John Carreyrou [LINK]
03.26.13 Doctor-Owned Device Distributors Have Fraud Risk, U.S. Says, Bloomberg, by Alex Wayne [LINK]

AdvaMed Codes of Ethics

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