The legality of physician-owned distributorships or PODs, a growing part of the medical device industry, has come under the scrutiny of the Senate Finance Committee.
Typically, medical devices are sold to hospitals or surgery centers through manufacturer representatives. In a POD the physician-investor serves as a middleman between the manufacturer and the hospital or surgery facility.
The Senate Finance committee issued a report, Physician-Owned Distributors: An Overview of Key Issues and Potential Areas for Congressional Oversight, examining the structure and activities of PODs within the medical device supply chain. The committee is concerned that PODS may exist for no other reason than to give physician investors the opportunity to profit from the sale and utilization of the medical devices they use for their patients and sell to hospitals.
In a letter dated June 9, a bipartisan group of five senators headed by Sen. Orrin Hatch (R-Utah) asked Donald R. Levinson, Inspector General of the Department of Health and Human Services, to conduct an inquiry to determine "how these arrangements square with federal law."
Joining Sen. Hatch in seeking an investigation are Max Baucus (D- Mont.), who chairs the Senate Finance Committee, Bob Corker (R-Tenn.), Charles Grassley (R-Iowa) and Sen. Herb Kohl (D-Wis.) The senators asked CMS to respond by July 15 and set Aug. 12 as the deadline to receive a report from the Inspector General.
The group also sent a letter dated June 9 to Donald Berwick, M.D., administrator of the Centers for Medicare & Medicaid Services, requesting that CMS address PODs as it finalizes reporting requirements for the Patient Payments Sunshine Act and rules for accountable care organizations. The letters were accompanied by the report prepared by Senate Finance Committee staff.