Another Obstacle to Health Reform: Government Rules

Gainsharing, or the splitting of cost savings between hospitals and physicians, has been prohibited since 1999. But a new opinion from the Office of the Inspector General (OIG), in the Department of Health and Human Services, opens the door a crack to very limited kinds of gainsharing. At the same time, the opinion illustrates the legal difficulties that various kinds of payment bundling will encounter when providers try to divide up the reimbursement. Both gainsharing and bundling—which could be applied to procedures or episodes of care—have been mentioned as possible ways to reduce the costs of healthcare.

The OIG said that the proposed gainsharing arrangement between a hospital and three independent physician groups might be violations of the Civil Monetary Penalties Act, which prohibits any agreement to limit patient care, and the Anti-Kickback Act, which forbids hospitals from providing any incentives for physicians to refer patients to them. (It could also violate the Stark self-referral law, but the providers who requested the opinion didn’t ask about Stark.) But, given the way the arrangement was set up, the OIG said, it would not prosecute the hospital and the physicians if they went ahead with their plan.

As is customary in these opinions, neither the hospital nor the physician practices—which included cardiology, interventional radiology, and vascular surgery groups—is mentioned by name.

Here are some of the features that made this arrangement acceptable to the OIG:
•    The hospital hired a program administrator to manage the gainsharing arrangement, which means that it’s not paying the doctors directly.
•    The arrangement focuses on the choice of devices used in cardiac procedures, such as stents, balloons, catheters, pacemakers and defibrillators.
•    The cost of the devices reviewed by the participants was considered only after they had determined which ones were safe and effective and appropriate under clinical guidelines. (I got a chuckle out of this one, since the FDA is supposed to make sure devices are safe and effective before allowing them on the market.)
•    To prevent “inappropriate reductions in services,” all physicians still have access to the full range of devices in each individual procedure.
•    The program administrator has checked the hospital’s quality performance with the selected devices against the quality indicators established by the American College of Cardiology.
•    Cost savings are to be calculated only on the basis of the program administrator’s specific recommendations for each group. This is designed to prevent savings from being shifted from one group to another or from being achieved at the expense of quality.

There’s much more here, but you get the drift. Under current law and regulations, it’s very difficult for providers to work together to save any money, even on the procurement of medical devices. No wonder so many hospitals are hiring physicians instead of trying to collaborate with independent practices. It could save them from a world of hurt if they actually try to make health care more affordable. That’s why some health policy experts say we can’t achieve significant delivery system reform until we change some of the laws that block cooperation between hospitals and other providers.