New Hampshire Outlawing PODs? (Walter Eisner @ OTW)
The New Hampshire House of Representatives recently passed legislation to prohibit health care practitioner self-referrals for medical devices.
Larry Biegelsen, senior analyst at Wells Fargo wrote on April 10, that he understands the bill was intended to outlaw physician-owned distributors (PODs) and is expected to pass the state’s Senate chamber as well.
HOUSE BILL 1725-FN states:
II. Notwithstanding any provision of law to the contrary, a health care practitioner, including an immediate family member, shall not:
(a) Profit indirectly or directly from the sale of a medical device by any supplier in which the health care practitioner has a direct or indirect ownership interest.
(b) Make a referral of a person to a supplier for a medical device if the health care practitioner has a direct or indirect ownership interest in the supplier.
(c) Enter into a contract or business arrangement with another entity where the purpose or effect of the contract or business arrangement is to accomplish prohibited self-referrals indirectly, such as through the use of a third party, or through the use of a cross-referral agreement. Such prohibited contracts or business arrangements shall include any arrangement that requires or has the purpose or effect of causing the purchase of such medical devices from a specific supplier as a condition of, or incident to the provision of medical care by the health care practitioner.
III. No claim for payment shall be presented to any individual, third party payer, or other entity, for any medical device provided incident to the provision of a medical device furnished in violation of this subdivision.
PODs – 10% Market Share
“In our view, this law could provide positive momentum for clarity around PODs at the local and federal level. As we wrote in our NuVasive, Inc. initiation report on April 9, PODs continue to take share from the larger spine companies.” Biegelsen added that, according to NuVasive, PODs have captured about 10% of the U.S. spine hardware market or roughly $500 million in sales.
In June 2011, five US senators requested that the Office of Inspector General (OIG) within the US Department of Health and Human Services (HHS) investigate the legality of PODs. Biegelsen says his D.C. consultants say the OIG is just at the beginning stage of doing its report but we could see something this fall.
There is continued interest among the five Senators involved with this topic to ask more questions and maybe have an informal roundtable or similar “nonhearing” event to give the issue some attention, added Biegelsen.
In Biegelsen’s view, any curtailment of PODs would be positive for spine companies that do not sell to PODs