Birmingham Medical News: OIG Issues New Special Fraud Alert on Physician-Owned Entities

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On March 26, 2013, the Office of Inspector General ("OIG") issued a strongly worded Special Fraud Alert calling "inherently suspect" physician-owned entities that "derive revenue from selling, or arranging for the sale, of implantable medical devices ordered by their physician-owners" for use by their physician-owners in hospitals or ambulatory surgery centers ("ASC"). According to the OIG, these physician-owned entities or distributors ("POD") could represent an unlawful opportunity for a referring physician to earn a profit, including through an investment in a POD, for which the physician generates business. Of importance, the OIG states that the same concerns noted in the Fraud Alert can apply to other arrangements involving physician-owned entities. Further, the OIG warns hospitals and ASCs that they may be at risk if purchasing devices from a POD in order to maintain or secure referrals from the POD's physician-owners.

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