On March 19, 2019, Leaders of the Senate Finance Committee wrote to the Department of Health and Human Services Office of Inspector General (HHS OIG) and the Centers for Medicare and Medicaid Services (CMS) regarding the potential failure of physician-owned distributorships (PODs) to disclose physician ownership interests and related payments as required under the Physician Payment Sunshine Act.
Committee Chairman Chuck Grassley of Iowa and Ranking Member Ron Wyden of Oregon start the letter out by noting that it has “come to [their] attention” that some PODs may not be properly disclosing physician ownership or investment as required by the Sunshine Act.
The senators refer to the POD relationship as “inherently suspect” because they believe it “could encourage physicians to perform unnecessary surgeries or to choose a device in which they have a financial interest for the purposes of generating more profit for the POD and thereby themselves.” The Senators continued, stating, “Congress passed the Sunshine Act to promote transparency and accountability in taxpayer-funded government healthcare programs…We look forward to working with the Administration to ensure that the Sunshine Act is up-to-date and that the penalties for non-disclosure are implemented against bad actors who fail to report.”
They go on to ask the Agencies several questions regarding POD compliance. The questions included topics such as: what steps are being taken to determine the extent of POD compliance, what regulatory changes and guidance are being considered to ensure compliance, and what current enforcement measures are taken when there is a failure to comply. It also mentioned the 2015 HHS OIG memorandum in which HHS OIG described plans to monitors the CMS’ Sunshine Act database and determine how best to assess its impact on transparency within Medicare and asked several follow-up questions on the memorandum.
Senate Finance Committee Has Focused on PODs Before
In 2011, several senators, including then-Chairman Orrin Hatch and now-Chairman Grassley, expressed concern about the proliferation of PODs and about their potential to run afoul of the Anti-Kickback Statute, particularly those selling devices for spinal surgeries. In response to that letter, HHS OIG found that spinal surgeries for hospitals that purchase medical devices from PODs increased at a rate three times faster than for hospitals overall in FY 2011. At that time, HHS OIG also reported that PODs may be driving up healthcare costs due to overutilization and that surgeries using POD devices were more expensive than non-POD surgeries.
In 2015, the committee also held a hearing on the risk of PODs to patients’ health and to health care costs.
Conclusion
Last time the Finance Committee sent a letter requesting information on PODs, they received information that helped them to better understand PODs and the way they interact with hospitals. It will be interesting to see if any information comes out in response to this most recent request; industry should keep an eye on the response and whether Grassley decides to hold another hearing on the issue.