MedPAC recommends changing Stark law to limit physician-owned distributorships: 6 things to know

Written by Laura Dyrda | June 19, 2018 | Print  | Email

In its most recent report, MedPAC questioned whether any value from physician-owned distributorships was worth the risk of the potential for fraud and conflict of interest for the physicians involved.


Here are five things to know:

1. Stark law, which governs provider self-interest influencing medical decisions, doesn't require the government to prove intent, as the anti-kickback statute does. MedPAC proposed a change. "The goal of any change to the Stark law would not be to ban PODs per se, but rather to prohibit physician self referral involving PODs."

2. The commission suggested revising Stark law to eliminate the "per unit of service" rule for PODs or making PODs an entity of DHS. Removing the "per unit of service" rule would eliminate the physician's ability to refer their patients for surgeries using the POD devices, barring exemption.

3. If PODs become a DHS entity, the physician with ownership stake in the POD would not be able to refer their patients for services that used the POD's device outside of exemptions. This would restructure how CMS defines DHS entities and may require additional accommodations.

4. MedPAC doesn't believe any proposed changes or limitations of POD use would inhibit medical device innovation, and the changes wouldn't stop physicians from making investments in companies developing new devices. However, Medicare would not pay for cases where surgeons used devices supplied by the company a referring physician has interest.

5. In regards to physician innovation, MedPAC stated, "the Commission believes physicians would still be able to profit from contributing significant intellectual capital to the development of medical devices if the use of PODs were limited. The Commission argues that a device is unlikely to be innovative if the only manner in which physicians profit from it is through using it themselves."

6. MedPAC encouraged POD and physician relationships become more transparent to help patients, payers and providers make the best decision possible. While CMS supports the Open Payments program, data released in January 2017 found eight PODs reported general physician payments and 16 reported physician ownership, showing a gap in reporting. The commission aims to have PODs identify as a POD when reporting to the Open Payments program.

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