Now that the new year is upon us, today’s post will look at the Department of Health and Human Services’ Office of Inspector General (OIG), in particular, OIG’s priorities for 2013.   According to OIG’s Fiscal Year 2013 Work Plan, it will be focusing upon a number of topics of interest – including some items not addressed last year.

OIG’s planned reviews of Medicare Part A and Part B will include:

● Billing patterns for nursing home stays.

● Accreditation of medical equipment suppliers, with a particular focus on quality standards.

● Claims submitted by medical equipment suppliers for lower limb prosthetics, power mobility devices and vacuum erection systems.

● Replacement of medical equipment, especially the frequency and necessity of that replacement.

● Independent physical therapists’ claims and whether the claims are reasonable, medically necessary and properly documented.

● Billing for electrodiagnostic testing.

● Ensuring that payments are not made for alien beneficiaries who were unlawfully present in the United States.

● Reviewing payments for Part A and Part B services to avoid claims starting after a beneficiary has died. 


Special attention should be paid to these areas in the coming year given OIG’s additional scrutiny.


A recent U.S. Department of Justice (DOJ) settlement with a medical device manufacturer highlights the need for physicians to pay close attention to their dealings with medical device companies.

The settlement, announced in December, calls for the payment of $23.5 million to resolve allegations that a medical device manufacturer was manipulating post-market studies to improve the results and to encourage doctors to increase usage of the company’s products. [;] Specifically, the company was allegedly paying per-patient kickbacks of $1,000 to $2,000 to doctors in order to encourage the use of company medical devices in lieu of competitors’ devices. Because the fees were payable only when the company’s devices were used, the DOJ was concerned that the ultimate goal was to discourage the use of other devices. 


Because the law imposes criminal liability upon both sides of a situation involving illegal kickbacks [See Section 1128B of the Social Security Act, 42 U.S.C. § 1320a-7b;] the consequences are enormous, and can include:

● A felony conviction;
● Criminal fines and civil penalties;
● Prison; and
● Exclusion from federal health care programs. 


Although there are regulatory “safe harbors” that specify certain acceptable situations, it is nevertheless imperative that medical professionals monitor their practice to ensure that all physicians avoid situations where the use of medical devices is essentially conducted on a “pay-to-play” basis.


Finally, keep in mind that the DOJ investigation was triggered by company whistleblowers, which serves as an ever-present reminder that internal compliance programs are an essential tool in the fight against fraud.

Physician/Medical Device financial arrangements continue to draw scrutiny by regulators. According to an article in the New York Times, Senator Charles Grassley has instituted an inquiry into payments between device-maker Medtronic and Dr. David Polly that Grassley says were not disclosed by Dr. Polly when he testified before Senate Panel in 2006. Specifically, Dr. Polly allegedly failed to disclose during his testimony that Medtronic was paying him $6,000 for his appearance before the committee.

Although the amount not disclosed is small, documents released by Senator Grassley show that between 2003 and 2007, Medtronic paid Dr. Polly in excess of $1.14 million in consulting fees and expenses from Medtronic. The lesson for physicians: As medical costs and quality emerge as the buzzwords for health care reform, financial arrangements which create or which give the appearance of conflicts of interest are increasingly likely to come under scrutiny by regulators and enforcement authorities. Physician contemplating these arrangements must carefully evaluate the benefit of the arrangements and the potential pitfalls.

Massachusetts has joined the small but growing list of states regulating gifts and payments by pharmaceutical and device manufacturers to physicians.  According to a Boston Globe article, Massachusetts regulators have adopted regulations banning gifts to physician and mandating disclosure of consulting/speaking payments to doctors in excess of $50. The regulations apply to any pharmaceutical and device company doing business in Massachusetts and take effect July 1, 2009.

This is yet another indication that the landscape surrounding physician-industry relationships is undergoing major changes.  As regulators push for greater transparency, physicians must be careful to avoid arrangements with pharma and device companies which might not only violate state or federal laws (including the federal anti-kickback statute) but which could attract unwanted public attention and scrutiny.