WASHINGTON (March 26) – The Office of the Inspector General of the Health and Human Services Department has issued a Special Fraud Alert that physician-owned distributorships (PODs) are “inherently suspect” under the anti-kickback statute (AKS) and has listed suspicious characteristics that may increase the risk of fraud and abuse.
The alert focused on physician-owned businesses / PODs that obtain revenue from selling implantable medical devices ordered by their physician owners to use in procedures they perform on their patients at hospitals or ambulatory surgical centers.
“The opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute,” said the IG alert .
One purpose of the anti-kickback statute (AKS) is to protect patients from inappropriate medical referrals or recommendations made by health care professionals who may be unduly influenced by financial incentives. It a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, referrals of items or services reimbursable by a Federal health care program. When remuneration is paid purposefully to induce or reward referrals of items or services payable by a Federal health care program, the AKS is violated. Parties on either side of an impermissible “kickback” transaction are exposed to criminal liability. Violation of the AKS statute is a felony punishable by up to 5 years imprisonment, a maximum fine of $25,000 or both. Individuals convicted of violating the AKS are excluded from Federal health care programs, including Medicare and Medicaid. OIG also has the right initiate an administrative action to exclude persons from the Federal health care programs or to impose civil money penalties for fraud, kickbacks, and other prohibited activities under sections 1128(b)(7) and 1128A(a)(7) of the Act.
The financial incentives that PODs offer to their physician owners may influence them to perform medically unnecessary procedures and to use the devices the PODs sell instead of other more appropriate devices.
According to the Special Fraud Alert, the OIG is “particularly concerned about the presence of such financial incentives in the implantable medical device context because such devices typically are ‘physician preference items,’ meaning that both the choice of brand and the type of device may be made or strongly influenced by the physician, rather than being controlled by the hospital or ambulatory surgical center where the procedure is performed.”
If you or someone you know has been accused of violating the anti-kickback statute, for serious health care fraud defense, contact attorney Robert Malove (954)861-0384.