OIG signals shift on gainsharing: HCA seeks OK for implant contract: participants say quality can be maintained; experts call for vigilance

HealthCare Benchmarks and Quality Improvement, June, 2005

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.

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 decisionmaking 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.