After putting the kibosh on gainsharing programs in July, HHS in August gave the go-ahead to certain physician incentive plans under Medicare and Medicaid managed-care programs.
The ruling will allow organizations to offer incentives to doctors who participate in global risk-sharing without violating antifraud statutes. Global risk-sharing involves a partnership between hospitals and physicians in which they split a pool of money and provide both inpatient and outpatient care.
Gainsharing programs are partnerships that align hospital and physician incentives to achieve cost savings. Typically, physicians assume the management of a high-cost hospital department, such as cardiology, and implement cost-savings procedures. The hospital then pays physicians a percentage of any savings achieved.
In July, the HHS' inspector general's office issued a sweeping special advisory that declared most gainsharing programs illegal because they violate the civil monetary penalty law, a federal statute that prohibits hospitals from paying physicians to reduce or limit services to Medicare or Medicaid beneficiaries.
The healthcare community, including Sacramento, Calif., attorney David Salem, disagreed with the July opinion and the scope of its prohibition. He then petitioned HHS to relax gainsharing restrictions on global risk-sharing arrangements.
"The special advisory opinion was worded in so broad a way that it appeared to express the inspector general's hostility not only to traditional gainsharing arrangements but also to the type of global risk-sharing agreement that hospitals find so necessary if they're paid on a risk basis by an HMO," says Salem, a partner with the Sacramento-based law firm Salem & Green.
In his petition, Salem argued that hospitals that accept risk face the same concerns as managed-care companies and, therefore, should have the same utilization management tools.
"Physician incentive plans are the most important available utilization management tool," he wrote to the inspector general's office. In late August, HHS agreed and released a one-page letter giving the OK to physician incentive plans in global risk-sharing programs.
"The (inspector general's) response, while not removing the cloud surrounding most gainsharing arrangements, at least makes it plain that hospitals and physicians can work together to manage hospital capitated risk," Salem says. "Had the (inspector general's office) not issued its clarifying letter, then hospitals would be very unlikely to accept capitated risk for Medicare (and) Medicaid enrollee populations."
HHS spokeswoman Alwyn Cassil says the inspector general never intended to squash risk-sharing programs. In fact, Cassil says, both the original advisory bulletin and the subsequent letter clearly state that physician incentive plans under Medicare and Medicaid managed-care plans do not violate the civil monetary penalty law.
In the August letter, the inspector general wrote that the original civil monetary penalty law was "amended to delete the reference to Medicare or Medicaid managed-care plans and to add new subsections . . . that permitted Medicare and Medicaid managed-care plans to implement physician incentive plans," thereby giving the go-ahead to risk-sharing programs.
"We believe that from the beginning the bulletin was clear on the point that Medicare and Medicaid plans are governed under a different law and different regulation," Cassil says.