We all know what doctors are and that they have to be licensed to practice medicine. But what is a POD and what do they have to do with doctors?

POD —

A POD stands for Physician Owned Distributorship. An example of a POD could be a medical device distributorship of hip replacements, heart pace makers or other devices. The distributorship is owned by a group of physicians and those physicians can order or determine which supplier/device is inserted or purchased for part of the medical treatment provided by the physician. Hence, the need to know if a hospital employed physician is an owner of a POD is critical in order to avoid possible STARK law violations and for transparency, according to the OIG.

According to the OIG, it is not always clear which doctors have ownership interests in both PODS and the hospitals they sell the devices.

How and why is this so difficult to determine? 

Transparency depends somewhat on disclosure by the Physician and somewhat on due diligence and public record searching. Since PODS are typically in the name of a corporate entity, such as POD, LLC, the name itself will not be transparent to a doctor’s name. So, a due diligence search should include a search of Secretary of State documents, possible Dun & Bradstreet or Hoovers’ database information, as well as asking for ownership in the procurement vetting process.

How many hospital procurement systems or processes ask for ownership?  Not many, if at all.  So this exposes the hospital to possible STARK and other healthcare fraud and abuse.  

Enter the Physician Payments Sunshine Act, (required under the Affordable Care Act) which requires PODS to disclose Physicians ownership in PODS. Of the 12 PODS the OIG examined, only 2 disclosed the physician ownership on their website. The OIG determined physician ownership of three other PODS through a due diligence search of state business records sites and filings. 

According to an article in Modern Healthcare:

The OIG said CMS’ implementation of the Sunshine Act may make it easier in the future to identify owners of PODs. It requires manufacturers and group purchasing organizations to report physician ownership interests to the CMS, which publishes the information on its Open Payments website. The OIG said it will monitor the database to see how it affects transparency within Medicare.

So now you know what a POD is and why it is important to know if a Physician owns a POD. The OIG is concerned and is doing its homework — so should you. 

 For Further Reading:
5 Steps to Ensure your Vendors are in Compliance
Examining the Financial Health of your Vendor
Medicaid fraud: Loss of Privileges 
ABC’s of OIG Exclusion Monitoring 

Michael Rosen, ESQ

Written by Michael Rosen, ESQ
ProviderTrust Co-Founder, mrosen@providertrust.com

Michael brings over 20 years of experience founding and leading risk mitigation businesses, receiving numerous accolades such as: Inc Magazine’s Inc 500 Award and Nashville Chamber of Commerce Small Business of the Year
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