Published 10/1/2011
Madeleine Lovette

Medicare Fraud and Abuse 103

Relationships between physicians and medical device manufacturers are essential to the development of new technologies and innovative treatments. When engaging in relationships with manufacturers, however, physicians must be careful to avoid any arrangements that could be interpreted as violating antikickback or self-referral statutes. The AAOS, AdvaMed (the association of medical device makers), and PhRMA (the association of drug manufacturers) have all established ethical codes to guide interactions between companies and healthcare professionals. These codes prohibit companies from using financial agreements and other gratuitous arrangements to encourage physicians to use their products.

Surgeons who are presented with the opportunity to work as paid consultants or promotional speakers should evaluate whether the compensation being offered for the service(s) is fair and at market value. An inflated figure could be seen as an attempt to induce physician loyalty and promote bias in the presentation.

All consulting arrangements should be in writing and describe all services to be provided. Agreements covering clinical research services should include a written research protocol. Additionally, consulting arrangements should be based on a legitimate need for the services and consultants should be chosen on the basis of their qualifications and expertise.

Arrangements with device companies that influence a physician’s decision to use a specific device based solely on financial incentives violate antikickback statutes, as explained in “Medicare fraud and abuse 101” (August 2011 AAOS Now). As a result, the physician could incur hefty fines.

Other arrangements that might be seen as violating antikickback statutes include preferred lease agreements with a hospital where the physician practices; research support; gifts, travel, or entertainment unrelated to the provision of services; and food or meals provided by an industry representative for the physician and office staff.

Innovations initiated by orthopaedic surgeons may result in the payment of royalties by a manufacturer. To avoid the inference of impropriety, surgeons should disclose their role in the device’s development to patients—as well as their receipt of royalties for its use. Although many patients may be pleased that “their doctor” contributed to the device, the situation may also be viewed as one in which the doctor puts personal payments above the patient’s best interest.

Transparency and gift reporting
The AdvaMed Code of Ethics on Interactions with Health Care Professionals states that companies “may not give health care professionals any type of non-educational branded promotional items, even if the item is of minimal value and related to the health care professional’s work or for the benefit of patients.”

Under a provision in the Patient Protection and Affordable Care Act (PPACA), drug, device, and biologic companies are required to track all payments and transfers of value to U.S. healthcare providers made on or after Jan. 1, 2012. The law also requires companies to report any payment or transfer of value with a minimum value of $10/payment or $100/year (cumulative) to HHS and to publicly disclose the information on their websites, beginning in 2013. Some academic institutions have also chosen to regulate interactions between faculty members (or affiliated physicians) and industry. Physicians who are affiliated with such institutions should reference their institution’s policies before engaging in industry-sponsored research, applying for industry-sponsored educational or research grants, or serving as a consultant or director for a device company.

CME imposters
Although many device manufacturers offer educational sessions for orthopaedic surgeons, some of these courses may focus more on product marketing than education.

Physicians should carefully note the distinctions between promotional sessions, which generally focus solely on a particular device brand, and education sessions, which take a broader approach, assessing all available treatment options and devices for a specific condition. Physicians should also pay attention to the conflict of interest disclosures made by the presenters, as well as the degree of bias in the presentations.

A compliance program
Under PPACA, physicians who treat Medicare and Medicaid beneficiaries must establish compliance programs. Although the law does not specify when this mandate will be implemented, initiating a program now is an excellent idea.

According to the OIG, an adequate compliance program should include the following components:

  • Internal monitoring and auditing
  • Written compliance and practice standards
  • A compliance officer or contact
  • Appropriate training and education
  • Appropriate response to offenses and timely corrective action
  • Open lines of communication
  • Enforcement of clear, well-publicized disciplinary standards

Madeleine Lovette is the communications specialist in the AAOS office of government relations. She can be reached at lovette@aaos.org


Standards of Professionalism on Orthopaedist-Industry Conflicts of Interest (PDF)

Relationships with Industry

Practice management compliance

Transparency: The ‘silver bullet’ in compliance

Department of Health and Human Services, Office of the Inspector General Compliance

AdvaMed Code of Ethics on Interactions with Health Care Professionals