OIG imposes severe limits on gainsharing arrangements
July 12, 1999 3 minutes read
OIG imposes severe limits on gainsharing arrangements
The Department of Health and Human Services’ Office of Inspector General (OIG) issued a special advisory bulletin last week on hospital-physician "gainsharing" arrangements that experts say will require many existing agreements to be dismantled.
"Although hospitals have a legitimate interest in enlisting physicians to help eliminate unnecessary hospital costs, existing federal law clearly prohibits hospitals from paying physicians to reduce or limit care to fee-for-service Medicare and Medicaid patients," stated the OIG’s July 7 advisory.
While there is no fixed definition of a gainsharing arrangement, the term typically refers to an arrangement in which a hospital gives physicians a percentage share of any reduction in the hospital’s costs for patient care attributable in part to the physicians’ efforts, according to the OIG.
The advisory represents both good news and bad news, according to Mary Grealy, counsel for the Chicago-based American Hospital Association. The good news is that it provides clear guidance, she says. "I think the OIG says some very positive things about these arrangements if they are done in the right way and with appropriate regulatory safeguards," says Grealy. She also predicts the OIG would not oppose legislation that cleared the way for these agreements but says Congress would have to modify the physician incentive provision under the current civil monetary penalty (CMP) statute.
The OIG says it recognizes hospitals have "a legitimate interest in enlisting physicians in their efforts to eliminate unnecessary costs" but that "given the clear statutory prohibition on hospital-physician incentive plans," it can’t provide any regulatory relief without authorizing legislation.
The bad news is that some existing arrangements will have to be eliminated, adds Grealy. "In the absence of any evidence that a gainsharing arrangement has violated any other statutes or adversely affected patient care, the OIG will take into consideration whether a gainsharing arrangement was terminated expeditiously following publication of this bulletin," the advisory warns.
"In a word, I think [the advisory] is disappointing," says Robert Homchick, a partner with the Seattle-based law firm Davis, Wright, Tremain. "I was surprised by the strident tone in interpreting the hospital-physician incentive plan regulations. It certainly was not clear to me that all gainsharing arrangements were prohibited by that provision."
Homchick says the proposed regulations issued in 1994 that followed the provision in the 1986 Social Security Act dealing with hospital-physician incentive arrangements concerning Medicare and Medicaid arrangements were "not helpful" in terms of explaining what arrangements would be acceptable and gave "very little guidance" in this area. "Nothing has been done in terms of enforcement activity or interpretive guidance on these regulations and statutes," he says.
The special advisory comes in the wake of seven requests for advisory opinions about the legality of these arrangements based on fears that these arrangements could trigger the anti-kickback statute or Stark anti-self referral laws. "We have determined that gainsharing arrangements raise significant issues that cannot be resolved through the advisory opinion process," says HHS Inspector General June Gibbs Brown. "Without adequate safeguards, gainsharing could pose a risk of abuse, could adversely affect patient care, and could be manipulated to reward physicians for patient referrals."
"The statutory proscription is very broad," argues the OIG. "The payment need not be tied to an actual diminution in care, so long as the hospital knows that the payment may influence the physician to reduce or limit services to his or her patients." The advisory adds that there is no requirement that the prohibited payment be tied to a specific patient or to a reduction in medically necessary care. "In short, any hospital incentive plan that encourages physicians through payments to reduce or limit clinical services directly or indirectly violates the statute," the advisory concludes.
The special advisory bulletin will be published in the Federal Register later this month. It is available on the Internet at www.os.dhhs.gov/oig.
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