OIG Releases Special Fraud Alert for Physician-Owned Entities

The Office of Inspector General (OIG) issued a special fraud alert concerning physician-owned distributorships (PODs), physician-owned entities that receive revenue from the sale of implantable medical devices to hospitals. The OIG described PODs as “inherently suspect” under the Federal Anti-Kickback Statute. Physician investment in PODs yields financial incentives associated with kickbacks that, according to the OIG, could lead to the corruption of medical judgment, overutilization of devices, unfair competition, and increased costs to Federal health care programs and beneficiaries.

In the alert, the OIG highlighted suspect characteristics of PODs that raise concerns associated with fraud and abuse. Some of these characteristics include, but or not limited to, the following:

• Physician-owners condition their referrals to hospitals or ambulatory surgical centers based on the facility’s purchase of the POD’s devices via coercion or promises.
• Physician owners are coerced to use, recommend, refer, or arrange for the purchase of devices sold by the POD.
• Physicians with higher expected or actual volume or value of devices are offered larger investment opportunities.

OIG’s Special Fraud Alert concerning PODs is available at:
https://oig.hhs.gov/fraud/docs/alertsandbulletins/2013/POD_Special_Fraud_Alert.pdf.

Department of Health and Human Services, Office of Inspector General. “Special Fraud Alert: Physician-Owned Entities.” Special Fraud Alerts. 26 Mar. 2013.