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OIG: PODs “inherently suspect” under anti-kickback statute; Hospitals and ASCs warned of AKS risks to them if they purchase from PODs

27 March 2013
In its strongest statement so far on the subject, the HHS Office of Inspector General (OIG) today released a Special Fraud Alert which concludes that physician-owned entities that distribute the implantable medical devices ordered by the physician-owners for their own patients (PODs) are “inherently suspect under the [Federal Health Care Programs] anti-kickback statute” (AKS). OIG made a special point of warning that hospitals and ASCs purchasing from PODs are themselves at risk under the AKS.

Of particular significance, the Special Fraud Alert effectively rebuts the claims of POD promoters that PODs are lawful if they are structured as investment interests where the physician’s return is proportional to the capital invested. OIG reiterates that the test for whether an investment interest violates the AKS is not whether it is a “plain vanilla” investment, but whether the intent underlying the arrangement is to induce or reward referrals, and that such intent may be inferred from the POD’s characteristics. OIG emphasizes this point by observing that because the test for an AKS violation is an intent to use remuneration to induce referrals, “an arrangement may not exhibit any of the suspect characteristics and yet still be . . . unlawful.” See our Health Alert, OIG determines that PODs are ‘inherently suspect’ under the anti-kickback law, for additional information.

Ronald L. Wisor, Jr.

Ronald L. Wisor, Jr.,

Washington, D.C.

Tom Bulleit

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