The Office of the Inspector General released a new report on physician-owned distributorships related to spine surgery devices.
In 2012, Medicare reimbursed hospitals $3.9 billion for spine surgeries. A rise in physician-owned distributorships played a part in the increasing costs, according to the report.
The report found that in 2012, hospitals that purchased spinal devices — such as spinal plates, fusion devices, pedicle screws and rods — from PODs performed 28 percent more spine surgeries than hospitals that did not purchase devices from PODs. In addition, the complexity, and consequently reimbursement, of spine surgeries in those hospitals was higher.
The report also contended that the POD devices were not cheaper than devices from other companies, and in the case of spinal plates it was significantly higher: the average cost of POD spinal plates was $2,475 compared with $1,630 for non-POD devices. The report also found that pedicle screws and other screws were slightly more expensive from PODs.
"This, combined with the volume of spinal surgeries we found at hospitals that purchase from PODs, may increase the cost of spinal surgery to the Medicare program and beneficiaries over time," the OIG concluded.
Finally, the report noted that 94 percent of hospitals noted surgeon preference influenced their decision to purchase from PODs, and 91 percent said device quality had an influence. Around 40 percent of hospitals purchased only from PODs that manufactured their own devices and 19 percent of hospitals purchased only from PODs that bought devices from other entities.
At hospitals that purchased from PODs, the rate of complex spinal fusion grew 16 percent, according to the report, while the rate of spinal fusions at all hospitals during the same period of time grew 5 percent. Regular spinal fusions at hospitals using PODs grew 21 percent after the purchase, as compared to 9 percent for hospitals overall during the same period of time.
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