Doctors scrutinized for pushing unnecessary surgeries

By Robert King

November 18, 2015 - Senators are probing cushy arrangements in which doctors are getting paid for the sale of medical devices they prescribe to patients, causing a troubling conflict of interest.

The Senate Finance Committee on Tuesday held a hearing to learn more about physician-owned distributors, which are device suppliers that have physician owners.

"What is going on here are double-dip payments that are also a conflict of interest that puts American patients at risk," said Sen. Ron Wyden, D-Ore., the top Democrat on the committee.

He said the first dip is when the doctor gets paid for the surgery, and the second is what the doctor gets from the manufacturer that implants the device.

The setups are commonly used by hospitals for spinal surgeries such as spinal fusions that require a surgeon to fuse two bones in the spine together.

Kevin Reynolds told the committee of the ordeal his mother faced when she saw a doctor with an ownership interest in a distributorship. That ownership stake was not disclosed to Reynolds or his mother.

"When doctors recommend surgery, patients put their trust in that judgment," he told the committee.

His mother consented to one level of spinal fusion surgery but the doctor performed four levels of surgery, Reynolds said. This resulted in several infections and his mother died about seven months later due to related complications.

The surgeon, Aria Sabit, pleaded guilty in May to healthcare fraud for performing unnecessary spinal surgeries and billing insurers and the federal government about $11 million.

It is hard to nail down how many physician-owned distributors exist and which ones doctors are using irresponsibly.

A 2013 report from the Health and Human Services Department's Office of the Inspector General looked at 1,000 claims billed to Medicare in an attempt to discover the extent of the distributors.

The watchdog found that the distributors supplied devices used in nearly one in five spinal fusion surgeries billed to Medicare. Hospital policies also varied in whether physicians were forced to disclose their stake in a distributor.

The report, requested by Congress, found that physicians with investments in a distributor do 20 percent more surgeries on average than those who don't.

Wyden worried that some may be able to bypass a new federal disclosure law.

The Sunshine Act requires doctors to disclose payments from drug and device companies and also ownership and financial interests in such companies. The payment information is then published yearly on a federal database.

However, Wyden said some distributors use third parties as a workaround to not having to disclose the payments to the government.

There are "enough dishonest people to hide their involvement with blank companies and I just don't know a good way of monitoring that," said Dr. Scott Lederhaus, president of the Association for Medical Ethics.

Another doctor at the hearing said that not all surgeons who have stakes in the businesses are unethical.

Dr. John Steinmann told the committee he is a spine surgeon that has a stake in a distributor. He said the companies control prices by creating more competition for traditional manufacturers.

"It is an unfortunate fact that throughout the medical profession there will always be a few 'bad apples' [whom] can do serious damage to people's lives," Steinmann said in his written testimony.

Committee Chairman Sen. Orrin Hatch, R-Utah, isn't proposing any legislation at this time, but he said he hopes to create a balance between protecting patients and preserving physician entrepreneurship.

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