Chuck Grassley (R-Iowa) and U.S. Senators Orrin Hatch (R-Utah), Max Baucus (D-Mont.), are raising concerns about what may be unnecessary surgeries and the cost to taxpayers.
It's in response to a new report from the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) that shows a direct correlation between doctors who have a financial relationship in spinal medical device companies, known as Physician Owned Distributorships (PODs), and an increase in spinal fusion surgeries.
The report, which was requested by Finance Committee Ranking Member Hatch, along with Committee Chairman Max Baucus (D-Mont.) and Judiciary Committee Ranking Member Chuck Grassley (R-Iowa), found PODs supplied devices that were used in roughly one in five spinal fusions surgeries and billed to Medicare in fiscal year (FY) 2011.
According to the report, in FY 2012 surgeons performed more spinal surgeries at hospitals that purchased from PODs than those that did not purchase from PODs.
In June 2011, Hatch released a report which identified the rapid proliferation of PODs in at least 20 states, exposed the lack of specific legal guidance issued by the Office of Inspector General for HHS to govern the structure and establishment of PODs and brought into question the utilization and appropriateness of services provided by doctors participating in some of the PODs, particularly with respect to Medicare, which is funded by taxpayers.
The HHS-OIG report confirmed that in recent years there has been a significant increase in the number of hospitals that do business with PODs, which allow physician investors to purchase ownership shares in an entity that, in turn, purchases or serves as a medical device distributor for the products the physician utilizes in surgery.
Thursday's report was a direct result of the Senators’ 2011 letter to HHS-OIG asking them to investigate whether the structure of PODs were a breeding ground for fraud within the Medicare program. The Senate Finance Committee has jurisdiction over Medicare and Medicaid.