OIG signals shift on gainsharing: HCA seeks OK for implant contract
Participants say quality can be maintained; experts call for vigilance
A few short years ago it would have been unthinkable, but in six recent advisory opinions, the Department of Health and Human Services’ Office of the Inspector General (OIG) has indicated it would not seek sanctions against hospitals pursuing certain gainsharing arrangements.
In 1999, the OIG issued a Special Advisory Bulletin "raising serious concerns about gainsharing arrangements — in fact, suggesting they are illegal in most circumstances,"1 according to a recent article by the Minneapolis-based law firm of Gray, Plant, Mooty, Mooty & Bennett, PA "The OIG reiterated these concerns in its 2005 Supplemental Compliance Program Guidance for Hospitals."1
Perhaps encouraged by this recent shift, Nashville, TN-based HCA Inc., the largest U.S. hospital chain, is seeking approval for a gainsharing contract that covers orthopedic implants at its hospitals and outpatient surgery centers.
Why the OIG changed directions
What prompted the OIG’s apparent change of course? "Each of these advisory opinions involved an arrangement between a hospital and a cardiology group or cardiac surgery group," the law firm wrote. "Each arrangement set forth projected cost-saving opportunities.
"The hospital would pay the physician group a share of the first-year cost savings directly attributable to specific changes in the group’s practices. These cost-saving opportunities involved product standardization, substitution of less costly items, limiting the use of certain items, and performing certain procedures or opening certain supplies only as needed’ rather than routinely," it continued.
"Importantly, the OIG found that all of the proposed gainsharing arrangements would constitute improper payments to induce reduction or limitation of services in violation of civil monetary penalties [CMP] law and would potentially generate prohibited remuneration under the anti-kickback statute if the intent to induce or reward referrals were present. However, based on the safeguards in place, the OIG determined it would not impose sanctions under CMP law or the anti-kickback statute," Gray Plant Mooty noted.1
What do health care professionals say?
Just how do health care professionals view gainsharing — or sharing with physicians any reduction in costs for patient care that are attributable to the physicians’ efforts?
"I really hate the word; it has a negative connotation," says Christy Dempsey, BSN, MBA, vice president of perioperative services at St. John’s Regional Medical Center in Springfield, MO. "We’re in a little bit of a different position; as an integrated health system, our physicians are actually partnered with us."
She agrees, however, that attitudes may be shifting in favor of gainsharing. "The other incentive for physicians, aside from money, is autonomy and having a share in those decisions and responsibilities. We worked very hard to do that," Dempsey notes.
"I agree the term has a negative connotation," adds Virginia Bynum, vice president at Sioux Valley Hospital in Sioux Falls, SD, who would prefer to call it "making arrangements with nonemployed physicians to share financial rewards and risks."
Sioux Valley Hospital does not participate in gainsharing, she says. "Until two or three years ago, it was very frowned upon by the OIG and others," Bynum adds, noting the OIG’s apparent recent shift.
Since it has been considered illegal for so long, the hospital has been reluctant to pursue such arrangements.
"We have had some discussions about it, but we just don’t do it; one of our VPs is philosophically opposed to it," she explains. "What’s more, because of the fact that we already have a large group of employed physicians, we have not had to worry about it."
While gainsharing programs have their flaws and have generated concerns within the quality community that they may in and of themselves threaten quality of care, Patrice L. Spath, RHIT, of Brown-Spath & Associates in Forest Grove, OR, understands the rationale for pursuing these programs.
"Gainsharing programs are being developed to actively engage physicians in resource management initiatives and to overcome their frequent lack of interest and/or resistance to participating in hospitals’ cost-reduction efforts," she observes.
Quality concerns arise
Nevertheless, as gainsharing programs become more common, quality managers must become more vigilant and involve themselves in decision-making processes, Spath notes.
"A key factor to the success of gainsharing is ongoing objective monitoring of performance to assure that the gainsharing does not adversely impact patient outcomes," she says.
"For example, it may happen that a particular type of joint implant is no longer available to orthopedic surgeons. Does this change mean that patient outcomes will not be as good? Hopefully not, Spath notes.
"However, it is important that quality professionals understand the implications of any gainsharing initiatives that may be implemented and be prepared to implement monitoring systems that allow ongoing evaluations of clinical quality," she explains.
Discussions surrounding gainsharing should include an analysis of the impact of purchasing decisions on clinical outcomes, Spath points out.
"Critical components of that discussion include clear outcome goals with measures and a methodology and an action plan for performance monitoring. Ideally, the quality manager is at the table during these discussions," she adds.
Bynum agrees that gainsharing programs could affect quality negatively.
"However, anyone who would game the system and order tests that were not needed, for example, would find a way to do that whether in a gainsharing program or not; honest people would not do it," she notes.
In any event, "You have to have very good quality and utilization review functions. The tools are there," Bynum says.
At St. John’s Regional, there is a subcommittee structure for supplies that incorporates administrator and physician co-chairs, Dempsey notes.
"For example, my subcommittee looks at all high-dollar items that come into the hospital — orthopedic and spinal implants, pain pumps," she notes.
"What we do is we look at the opportunity for savings — i.e., consolidating vendors — but we put a structure in place for their usage," Dempsey continues.
Patient care quality is the No. 1 consideration, she asserts. "We look at the potential clinical quality first, then cost next. Then, our physicians drive the negotiation process with the vendors; it makes all the difference."
A major player commits
The fact that a large health care organization such as HCA has committed to a gainsharing program may mean the tide has turned in favor of such arrangements. But that may be a good thing for quality, according to an HCA spokesman.
"You can’t predict the future. We’ll have to see how this goes, but we feel very comfortable from the quality standpoint that we can ensure the quality of the products is good and the procedures are good," he says, noting that, at present, the program is limited to artificial knee and hip implants.
"We have a high degree of confidence that there will be enough savings to make it worthwhile," the spokesman notes.
At the core of his confidence in maintaining quality is standardization. "If you have standardization of the product, you help standardize the process," the spokesman asserts.
"We have the shared knowledge of 198 hospitals, plus standardized processes and procedures across that number of hospitals, so you get really good at it," he notes. "We have also built into our strategy a wide variety of assurances of quality — that the physicians who engage in these procedures have done a large number of them and have longstanding relationship with the hospital."
The spokesman explains that the initial rationale for pursuing such programs is a straightforward one: cost savings.
"But within that, there’s definitely an element of QA as well. If you standardize your products, you get those products done in the same manner by the same people over time. If you use the same quality products repeatedly, you have the ability to move a quality agenda and affect overall cost structure," he adds.
While the program has not yet been formally submitted to the OIG for approval, "We don’t anticipate there will be a problem," the spokesman continues.
"All the things are in place that need to be in place for the OIG to approve this," he points out. "The great thing about it is you can affect cost structure and, at the same time, ensure quality; that’s a win for everybody."
Is trend clear?
Despite the apparent OIG shift and moves by major players such as HCA, Gray Plant Mooty cautioned against a full-throttle race to start such programs.
"It is unclear what, if any, the value of the recent advisory opinions will be to hospitals and physicians," it wrote.
"First, such arrangements probably only make sense for high-cost procedures such as cardiovascular procedures where significant cost savings are achievable," it continued.
"Second, while the OIG apparently no longer prohibits all gainsharing arrangements, in each of the recent advisory opinions, it first came to the conclusion that the arrangements do violate the CMP law. It was only the existence of specific safeguards that led the OIG to decide that it would not proceed in any enforcement action in the six advisory opinions," the law firm wrote.1
Gray Plant Mooty, however, added, "It is significant that the OIG concluded that certain program recommendations regarding the as needed’ opening of packaged items and the substitution of less costly items would have no appreciable clinical significance, and thus would not implicate the CMP law. This may indicate that hospitals have more latitude in implementing gainsharing arrangements using these particular cost-saving methods."1
Still, says the HCA spokesman, "There is, no doubt, a palpable shift [in favor of gainsharing]. There are many hospitals and systems now requesting these arrangements from the OIG, and they are approving them."
Goal sharing’
Regardless of how significant or long lasting the shift is, Bynum warns that quality managers must become knowledgeable about gainsharing arrangements and how they may affect quality.
"This is a new question for us; I don’t think we, as quality professionals, know that much about it," she concedes. "And this is something we’d better be learning about."
Spath concludes with the following advice: "Instead of thinking of gainsharing in monetary terms, it would be wise to present the concept as goal sharing’ — with the goals being both cost reduction and clinical quality improvement."
Reference
- Health Law Hospital — Physician Gainsharing Arrangements: A Change in Regulators’ Position? Minneapolis: Gray, Plant, Mooty, Mooty & Bennett, PA; March 2005. Web site: www.gpmlaw.com/law/page_128_18_159.htm.
Need More Information?
For more information, contact:
- Virginia Bynum, Vice President, Sioux Valley Hospital, 1305 W. 18th St., P.O. Box 5039, Sioux Falls, South Dakota 57117-5039. Phone: (605) 333-6657. E-mail: [email protected].
- Christy Dempsey, BSN, MBA, Vice President, Perioperative Services, St. John’s Regional Medical Center 1818 S. Rogers Ave., Springfield, MO 65804. Phone: (417) 820-2302. E-mail: [email protected].
- Patrice L. Spath, RHIT, Brown Spath Associates, P.O. Box 721, Forest Grove, OR 97116. Phone: (503) 357-9185. E-mail: [email protected].
- HCA Inc., One Park Plaza, Nashville, TN 37203. Phone: (615) 344-9551.
For more information on the Gray Plant Mooty article on gainsharing, contact: Pat Carter, (612) 632-3036, or Tim Johnson, (612) 632-3208 with questions. Or for copies of the publication, contact: Gray Plant Mooty, 500 IDS Center, 80 S. Eighth St., Minneapolis, MN 55402. Phone: (612) 632-3000.
A few short years ago it would have been unthinkable, but in six recent advisory opinions, the Department of Health and Human Services Office of the Inspector General (OIG) has indicated it would not seek sanctions against hospitals pursuing certain gainsharing arrangements.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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