Oct , 2013/Milwaukee Journal Sentinel/MedPage Today/John Fauber/–Doctor-owned firms that distribute medical devices supplied 19% of the products used in spinal surgeries billed to Medicare in 2011, according to an investigation by the Office of Inspector General.In fiscal year 2012, Medicare paid hospitals a total of $3.9 billion for 178,789 spinal surgeries, or an average of $21,613 each, the report said.In March, the OIG 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, the OIG said at the time.For several years, the inspector general, who is part of the U.S. Department of Health and Human Services, has voiced concerns about physician-owned distributorships.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 March alert said.
In its report issued Thursday, the inspector general looked at a sample of 971 Medicare claims from 596 hospitals paid in fiscal year 2011. About one-third of the hospitals in the sample reported buying devices from PODs.
The report found that surgeons performed more spinal surgeries at hospitals that purchased from PODs, and those hospitals had higher rates of growth in spinal surgeries compared with hospitals that did not buy from the doctor distributorships.
“Taken together, these factors may increase the cost of spinal surgery to Medicare over time,” the report said.
It said PODs represent a substantial presence in the spinal device market and noted that 94% of hospitals that bought from PODs reported surgeon preference influenced their buying decisions.
Medicare Tab for Spine Surgery Is $3.9 Billion
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