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PODs—
A Vexing Issue The O&P Alliance asks OIG to treat physician-owned O&P labs as they do physician-owned distributorships
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hysician-owned distributorships (PODs), where O&P services are provided in a physician’s office through various arrangements, have long been the subject of conversation in the O&P community. To address the issue, the O&P Alliance submitted a thoughtful analysis in a May 23, 2013, letter to Daniel Levinson, inspector general of the Department of Health and Human Services, suggesting a course of action that would ensure that both the “Medicare program and beneficiary interest continue to be served, that access to quality orthotic and prosthetic care is maintained, and to mitigate the potential for fraudulent and abuse activities.”
OIG’s Stance on PODs The Office of Inspector General (OIG) issued a Special Fraud Alert on March 23, 2013, addressing PODs—physicianowned entities that derive revenue from selling or arranging the sale of implantable medical devices ordered by their physician-owners for use in procedures the physician-owners perform on their own patients at hospitals or ambulatory surgical centers. This alert
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acknowledged that while the focus was on implantable devices, “the same principles would apply when evaluating arrangements involving other types of physician-owned entities.” In its May 23 letter, the O&P Alliance noted prior OIG references to this problem by observing the following: “Through previously published guidance, the OIG has made it clear that an opportunity for a referring physician to earn a profit, including through an investment in an entity for which the physician generates business (e.g., through referrals to the business), could constitute illegal remuneration under the antikickback statute.”
Physician-Owned O&P Labs The O&P Alliance letter observed that PODs addressed in the Special Fraud Alert closely resemble the relationship of physician-owned O&P laboratories, and urged “the OIG to apply the same principles when considering the legality of physicianowned O&P laboratories under the anti-kickback statutes.”