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April 09, 2009

Gainsharing starting to get traction

Extending its string of positive advisory opinions involving gainsharing arrangements, over the past few months the OIG has issued three new, favorable gainsharing opinions. While the three gainsharing arrangements reviewed by the OIG in the recent opinions bear striking similarities to gainsharing arrangements that received favorable treatment in the past, there are some differences that suggest a broadening of the type of gainsharing arrangements that will receive OIG approval.

For instance, OIG Advisory Opinion 08-09 involves the first gainsharing arrangement that did not involve a hospital cardiology program. Rather, this opinion involved sharing savings from waste and cost reduction measures in certain surgical procedures with orthopedic surgeons and neurosurgeons. 

 

OIG Advisory Opinion 08-15 addresses a gainsharing arrangement involving cardiologists that has a term of three years. Previously, all gainsharing arrangements approved by the OIG were limited to one-year deals. By structuring the annual payments in a manner that ensured the participating cardiologists were not compensated twice for achieving duplicate savings, the OIG was receptive to approving a multi-year arrangement. This development is significant because a considerable downside to gainsharing arrangements had been the perceived one-year limitation. The 3 year term here is consistent with the maximum term proposed by CMS in the proposed Stark Law gainsharing exception.

 

Finally, OIG Advisory Opinion 08-16 is the first gainsharing arrangement to involve a commercial insurer and corresponding pay-for-performance initiatives. The hospital and commercial insurer developed a pay-for-performance program under which the insurer pays the hospital bonus compensation if the hospital meets specified quality and effeciency standards. The hospital entered into an agreement with a group of physicians to assist in meeting those standards and, if met, the hospital shares a portion of the bonus compensation from the insurer with the physicians. The program analyzed in this opinion represents an expansion of the type of quality-promoting arrangements the OIG is willing to accept.

 

Despite their unique characteristics, the arrangements in these opinions still incorporated key safeguards the OIG views as critical to protecting against potential fraud and abuse. Such safeguards include:

 

§            Transparency. The specific cost-saving actions and resulting savings are clearly and separately identified. The hospitals and participating physicians disclose the arrangement to patients.

§           No Adverse Impact on Patient Care. The parties provided credible medical support for the position that implementation of the cost-saving recommendations does not adversely affect patient care.

§           No Disproportionate Impact on Medicare Patients or Medicare Program. Amounts paid under the arrangement are based on all procedures regardless of a patient's insurance coverage and a disproportionate amount of such procedures are not performed on Medicare patients. If a participating physician's volume of procedures performed on Medicare patients in the current year exceeds the volume of like procedures performed on Medicare patients in the base year, there is no sharing of cost savings for the additional procedures.

§           Protections Against Inappropriate Reductions in Services. The arrangement utilizes objective historical and clinical measures to establish baseline thresholds beyond which no savings accrue to the participating physicians.  

§           Product Standardization Without Limiting Selection. Participating physicians still have available the same selection of devices and supplies after implementation of the arrangement as before. The arrangement is designed to produce savings through inherent clinical and fiscal value, not from restricting the availability of devices and supplies.

§           Compensation Cap and Per Capita Distribution. A cap on total compensation to the participating physicians is established based on projected cost savings and the compensation is distributed by the participating physician groups to their members on a per capita basis.

§           Participation Limited to Physicians on Staff. Participation in the arrangement is limited to physicians already on the hospitals' medical staffs. Also, the arrangement is limited to specific specialties (i.e. cardiology, orthopedics), so no surgeons or other physicians who refer patients to the participating physician groups can be rewarded through the arrangement.

§           Minimizing Incentive to Steer Costly Patients to Other Hospitals. Case severity, ages and payors of the patient population treated under the arrangement are monitored by a committee of hospital personnel and participating physicians. If significant changes from historical measures indicate a physician has altered his/her referral patterns to steer sicker, costlier patients away from the hospital, the physician can be terminated from the arrangement.

 

When structured appropriately to limit risk under the Anti-Kickback Statute and the Civil Monetary Penalties Law, the OIG has continually recognized the positive attributes of gainsharing programs. Gainsharing continues to be an evolving area with regard to fraud and abuse law and further developments are anticipated. CMS has issued requests for comments on several questions related to its proposed gainsharing exception to the Stark Law and it will be interesting to see how those questions and comments influence the development of the proposed exception.

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