OIG Lifts Gainsharing Restrictions?!

Payments to Doctors

At the end of every year in the three-year Arrangement, the program administrator was asked to calculate the cost savings for each of the 34 cost-savings recommendation. Specifically:

1. Determine the historical cost for each product covered by the Arrangement.
2. Calculate each product’s total costs and divide the total costs by the total number of units of that product.
3. The base year for the first year of the Arrangement is the most recent twelve-month period prior to the start of the Arrangement. Requestors reset the base year annually, so that the first year of the Arrangement becomes the base year for the second performance year, and the second year of the Arrangement becomes the base year for the third performance year.
4. Divide the total costs for each product used in the universe of spinal surgeries covered by the Arrangement in the performance year by the total number of products used in the surgeries during the performance year (the “performance year cost”)—regardless of the patients’ insurance coverage.
5. If there are no savings, then no payments are made to the neurosurgeons.
6. The savings from each recommendation are added together to arrive at the total savings in the applicable performance year.
7. Fifty percent of the total savings, after first deducting the program administrator’s fee for administering the Arrangement were paid to the surgeons on a per capita basis—subject to a few other details (like a reserve for any miscellaneous administrative costs).

Key Takeaways From This Example

The gainsharing Arrangement in this case had numerous checks and balances to guard against reducing or limiting medically necessary services to Medicare or Medicaid patients.

The OIG evaluated the methodology used to develop the cost-saving recommendations, the monitoring and documentation safeguards and concluded that they were reasonable and reduced the risk that the payments to the neurosurgeons would induce them to reduce or limit medically necessary services to their Medicare or Medicaid patients.

The OIG also looked at the gainsharing Arrangement in terms of the anti-kickback statutes. The worry is that these cost-saving measures were actually payments to induce or reward surgeon referrals or to attract referring physicians.

This Arrangement, in the OIG’s view, presented a sufficiently low risk of fraud and abuse under the anti-kickback statute for several reasons:

1. The Arrangement had safeguards that reduced incentives to increase their referrals to the Medical Center.
2. The incentive payments would be distributed on a per capita basis, which reduces the risk that the Arrangement may create an incentive for any particular neurosurgeon to generate disproportionate cost savings.
3. Savings were capped based on the number of spinal fusion surgeries performed by the neurosurgeons on federal health care program beneficiaries in the relevant base year.
4. Payments, when made, did not exceed 50% of the projected cost savings estimated by the program administrator at the beginning of the term of the Arrangement (after deducting the program administrator’s fee for administering the Arrangement).
5. Finally, the Program Committee collected and reviewed data on patient severity, age, and payor for the spinal surgeries covered by the Arrangement to confirm a historically consistent selection of patients.

Conclusion

Many more details are available in Advisory Opinion 17-09, but the conclusion and the tenor of this is 180 degrees from three years ago.

Gainsharing, under these kinds of programs, appears now to enjoy acceptance by the OIG and, we would expect, will prompt many more practices to work up their own gainsharing programs.