Hospital Gainsharing Programs—Ten Years of Guidance – Over the last ten years, measuring from the date the Department of Health and Human Services Office of Inspector General (OIG) first addressed the issue of gainsharing arrangements in a Special Advisory Bulletin issued July 8, 1999, the OIG has offered analysis of several proposed gainsharing arrangements. Although the OIG advisory opinions cannot protect other hospitals structuring shared savings programs with physicians, most opinions offer guidance on necessary safeguards to avoid sanction under the Civil Monetary Penalty Law and Anti-Kickback Statute. The opinions provide no protection under the Stark rule; however, there has been no Stark enforcement against the gainsharing programs approved by the OIG.
Common safeguards cited in OIG Advisory Opinions on proposed gainsharing arrangements include the following:
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Specific program features: |
- Transparency in hospital cost saving actions and resulting savings (i.e., clearly identified and separately measured);
- Credible evidence identified by the hospital that (i) the program does not adversely affect the quality of patient care and (ii) appropriate safeguards are in place to ensure physicians’ treatment options are in no way limited by the program;
- Use of objective historical and clinical measures by the hospital to establish baseline cost data; Cost-savings baseline for a multi-year program should be reset each year to avoid duplicate payments for performance levels already achieved;
- Payments by the hospital to the participating physician group (i) based on actual costs; (ii) that do not take into account the type of insurance held by the patient; (iii) with a limitation on the duration and amount of financial incentives;
- Written disclosure of the gainsharing program by the hospital to patients.
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- Restriction in program participation to physician groups consisting of five or more physicians who are members of the hospital medical staff at the time of the gainsharing program implementation;
- Hospital program to include an independent auditor review prior to program implementation and at least annually thereafter;
- Payment of cost savings by the hospital to the physician group on an aggregate basis, and payment by the group to each physician on a per capita basis;
- Payments by the hospital to the physician group(s) not to exceed 50 percent of cost savings;
- Duration of the arrangement not to exceed three years;
- Written notice provided to all patients before admission or otherwise before the relevant procedure.
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Over the past several years, CMS has implemented different demonstration projects on gainsharing, adhering to specific statutory program requirements. The Medicare Hospital Gainsharing Demonstration, established under Section 5007 of the Deficit Reduction Act of 2005, includes six projects, each consisting of one hospital. The demonstration project requires standardization of quality and efficiency improvement initiatives, internal cost savings measurements, and physician payment methodology. Each participating hospital must clearly identify actions that result in cost savings and a committee of physicians and hospital administrators provides oversight. The Physician Hospital Collaboration Demonstration, established under Section 646 of the Medicare Modernization Act, is a three-year demonstration program specifically designed to determine whether aligning the financial incentives of hospitals and physicians can improve patient quality of care and eliminate unnecessary costs. In both demonstration projects, CMS has restricted the incentive payments by a hospital to individual physicians, whose participation must be voluntary, to 25 percent of the physician’s normal fees.
The OIG gainsharing opinions are available by clicking here. The Medicare Demonstration Projects are available by clicking here. Reporter, Laura C. Dunlop, Atlanta, (404) 572-3540, ldunlop@kslaw.com.
CMS Issues Final 2010 Call Letter for Medicare Advantage and Prescription Drug Plans – On March 30, 2009, the Centers for Medicare and Medicaid Services (CMS), issued the final 2010 Call Letter for Medicare Advantage (MA) and Prescriptions Drug (PD) Plans. The annual Call Letter is issued to organizations that intend to offer MA and PD plans in 2010. The guidance in the 2010 Call Letter will assist these MA and PD organizations in their preparation of bids which will be submitted to CMS on June 1, 2009 and helps to ensure that beneficiaries have the information they need to choose the best plan for them during the annual enrollment period which begins Nov. 15, 2009. Key components of the 2010 Call Letter include:
- In 2010, CMS will take new steps to review MA plans cost-sharing to ensure that sicker beneficiaries will be protected from discriminatory out-of-pocket charges. CMS will specifically examine plan benefits to ensure that cost-sharing for such services as renal dialysis, Part B drugs or home health or skilled nursing services is not discriminatory. In an effort to establish more transparent cost sharing, CMS will also encourage MA plans to cap beneficiaries out-of-pocket costs for all original Medicare services.
- Indicating that many MA plans have fewer than 10 enrollees, CMS has requested that MA eliminate plans with low enrollment in 2010. CMS will assist any beneficiaries affected by their MA plan being terminated in enrolling in a similar MA plan offered by the same organization in order to avoid any disruption of benefits. According to CMS, the elimination of these plans will allow beneficiaries the opportunity to better identify differences in the types of plans offered and will enable beneficiaries to select plans that best fit their individual needs. CMS expects that MA organization will offer no more than three MA plans by plan type in a particular market area.
- CMS, as part of its oversight activities, has asked MA and PD sponsors to conduct audits of the data provided to CMS regarding the operations of their plans. These audits are in addition to the current CMS financial and compliance audits. For 2010, existing compliance audits will be strengthened by focusing on high-risk areas that have the greatest potential for beneficiary harm, such as enrollment operations, appeals and grievances, and marketing.
The CMS 2010 Call Letter is available by clicking here. Reporter, Kinshasa K. Williams, Atlanta, (404) 572-3506, kwilliams@kslaw.com.
King & Spalding Partners Listed as Washington D.C. Super Lawyers – Dennis Barry and Chris Keough, two partners in King & Spalding’s Healthcare Industry practice group, were, for the third straight year, named in the Washington, D.C., Super Lawyers for health care, putting them in the top five percent of Washington, D.C., attorneys. Washington, D.C. Super Lawyers is an annual publication of Law & Politics that identifies lawyers who have attained a high degree of peer recognition and professional achievement as indicated by an extensive poll of lawyers in the Washington, D.C., area. King & Spalding previously announced in a March 6 press release that the following six partners in its Atlanta office were named as 2009 Atlanta Super Lawyers for health care: James Boswell, Robert Keenan, Glen Reed, Kim Roeder, Richard Shackelford, and Sara Kay Wheeler. The results of the Houston Super Lawyers survey have not yet been published. The press release is available by clicking here.
Greater New York Hospital Association – Rob Keenan and Dennis Barry will be speakers on a program presented by the Greater New York Hospital Association on April 15, 2009. The program will cover Stark and related legal issues affecting hospital-physician relationships.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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