Giving physicians incentives to adopt practices that achieve hospital cost and quality goalsknown as gain-sharinghas been viewed with skepticism and even fierce opposition from regulators, some physicians and medical-device manufacturers.
But gain-sharing is getting new life through two CMS demonstration projects expected to begin next year as well as fresh individual efforts to prove their wortheven as some early forays have fallen flat.
The jury is still out on whether gain-sharing can remove waste while maintaining quality, and sustain any cost savings over timeall questions expected to be answered over the coming months and years.
Theres interest for sure because hospitals are struggling with what to do about costs, says Joane Goodroe, president and chief executive officer of Goodroe Healthcare Solutions, a consulting firm based in Norcross, Ga., that helps hospitals develop gain-sharing proposals for federal approval. But there is a legal hurdle. We have no flexibility in the way we approach it.
Federal anti-kickback statutes, the Stark law preventing physician self-referrals, and Social Security Act provisions have kept gain-sharing efforts modest. But in 2005 HHS inspector generals office began approving a series of narrow gain-sharing efforts. And the Deficit Reduction Act of that year authorized two CMS demonstration programs to test and evaluate these arrangements.
The CMS demonstration projects will run for three years and will likely begin in 2008, but no date has been set. In the larger program, up to 72 hospitals are being selected in a limited number of areas nationwide. A smaller project involving six hospitals, of which two are rural, will look at the short-term effects of gain-sharing. Both will test whether financial incentives made by hospitals to physicians improve quality while reducing costs.
Lisa Waters, a project officer at the CMS, says the programs go beyond traditional gain-sharing. We wont be focusing on the obvious of reducing medical supply costs, Waters says. Were looking at projects that focus on quality and efficiency.
She says the agency is still going through the final approval process, which has been under way for some time. Contractors to oversee implementation and monitoring and to evaluate outcomes have been selected for the smaller project, she says. The CMS declined to name the selected contractors.
Participating hospitals will be monitored throughout to make sure there is no decrease in quality or efficiency at the sites, Waters says. A final report will be issued about a year after the three-year projects are completed.
At least one hospital, which asked not to be named, has already heard from the CMS that it did not make the cut. The reasons for that action were not revealed.
The New Jersey Hospital Association is still waiting to hear on its application, a spokesman says. The association is hoping to take another stab at gain-sharing after its previous effort was foiled by a lawsuit in 2004. Four New Jersey-area hospitals had sought the injunction against a three-year CMS demonstration project, approved under the 2003 Medicare prescription drug law. The four hospitals, which had been excluded from the experiment, had argued successfully that gain-sharing would create an uneven playing field in the region.
The association declined to comment on its efforts to revive gain-sharing in New Jersey prior to receiving word on its application from the CMS.
Eight Goodroe gain-sharing projects have been approved by the inspector generals office, all focused on anesthesia, cardiac care, orthopedics and spine surgery, and more applications are being submitted, Goodroe says. Participants include PinnacleHealth System in Harrisburg, Pa., and Sisters of Charity Providence Hospitals in Columbia, S.C.
Some hospitals have seen overall costs reduced by about 10%, Goodroe says, while quality has remained the same. Cardiac surgeons have received payments of about 10% to 15% of their annual salary, she says, in return for maintaining quality while achieving cost savings for the hospitals.
Those savings are in contrast to HCAs gain-sharing experience, launched in 2005 and shut down less than a year later. HCA received inspector generals office approval to implement gain-sharing in orthopedics at many of its hospitals. Orthopedic surgeons participating on a volunteer basis could choose from limited medical-device vendors and in return share in cost savings. The for-profit hospital chain was hoping to shave 10% off its costs, but fell short of that.
The decision was made in 2006 not to pursue it further, says Ed Fishbough, an HCA spokesman. We determined it wasnt going to achieve our goals.
The American Medical Association has not come out for or against gain-sharing. The Medical Device Manufacturers Association is strongly opposed on the grounds that it would stifle research and development and lower quality, so it is watching the new CMS demonstration project rollouts carefully, says Thomas Novelli, director of federal affairs at the association.
The association may have a powerful ally, Rep. Pete Stark (D-Calif.), who in January regained the chairmanship of the House Ways and Means Health Subcommittee. Stark remains opposed to gain-sharing, a spokesman says. Its unlikely more CMS demonstration programs will be approved on Starks watch because of his concerns about the possibilities for fraud and abuse. In 2005, at a congressional hearing on the topic, he warned that gain-sharing was potentially dangerous, and called any discussion on implementing it misguided.
Goodroe says that physicians are in the best position to help hospitals reduce costs and eliminate waste. Its not about getting them to all do the identical thing and use identical products, she says. The part they like is for them to have control over the products that make a difference in patient care.