The Office of the Inspector General has issued a special fraud alert, warning patients about doctors who also own businesses that sell medical devices that those physicians may then implant in their patients.
Such businesses, known as physician-owned distributorships, pose substantial fraud and abuse risk and may be dangerous to patients, according to the inspector general’s office, which is a part of the U.S. Department of Justice.
For several years, the inspector general, which is part of the U.S. Department of Health and Human Services, has voiced concerns about physician-owned distributorships.
The most recent fraud alert, issued Tuesday, focuses on practices of those businesses that may be harmful to patients.
The businesses include entities that derive revenue from selling or arranging the sale of implantable medical devices, including ones that may be designed by the physicians themselves.
In those situations, the distributorships may offer financial incentives to their doctor-owners that may cause them to perform more procedures than are medically necessary and to use devices the distributorship sells instead of more appropriate devices, the inspector general’s office said in its fraud alert.
While such businesses are lawful, the inspector general said that, depending on how they operate, they can violate anti-kickback laws.
“We believe PODs (physician-owned distributorships) are inherently suspect under the anti-kickback statute,” the inspector general’s fraud alert said.
“OIG is concerned about the proliferation of PODs,” it said.
Diana Zuckerman, who has done research on conflicts of interest in medicine, said she was glad to see the fraud alert.
Zuckerman, president of the National Research Center for Women and Families, said patients trust their doctors to act in their best interest.
“But when doctors have a financial interest in specific medical devices, that can cloud the doctor’s judgment in ways that are terribly harmful to patients’ health and finances,” she said.
Simply informing a patient of the financial conflict is not sufficient, Zuckerman said.
“It is necessary to do away with those financial relationships whenever possible,” she said.