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Gainsharing gaining some government support

MedPac recommends that Congress give the Department of Health and Human Services authority to allow limited gainsharing arrangements.

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Federal officials have now allowed six agreements between hospitals and various cardiac physician groups to create modified gainsharing agreements.

In March, Orthopedics Today reported that a recent ruling by the U.S. Office of Inspector General (OIG) had allowed one hospital to directly compensate one cardiac surgery group for saving money by using more efficient technology or lower-priced medical devices, including cardiac implants. As part of the agreements, the OIG has required hospitals and surgeons to inform patients about such arrangements.

Recently, at least one large hospital group had also approached the OIG with a request to approve a similar plan for orthopedic implants.

Critics of gainsharing contend it constitutes an illegal kickback to physicians. Advocates argue it offers a safe and legitimate way to encourage efficiency that can help contain the burdensome rise of health care costs.

Now gain-sharing has a big new supporter. The Medicare Payment Advisory Committee, (MedPac) in a new 108-page “Report to the Congress on Physician Owned Hospitals,” says gainsharing could help some hospitals that are now losing business to physician-owned specialty hospitals to compete better.

The MedPac report notes that, “Gainsharing could capture some of the incentives that are animating the move to physician-owned specialty hospitals while minimizing some of the concerns that direct physician ownership raises.” MedPac recommends that Congress give the Secretary of the Department of Health and Human Services authority to allow gainsharing arrangements, “and to regulate those arrangements to protect the quality of care and minimize financial incentives that could affect physician referrals.”

For more information:

• Physician-owned specialty hospitals. Statement of Glenn M. Hackbarth, JD, Chairman Medicare Payment Advisory Commission, before the Subcommittee on Health, Committee on Ways and Means, U.S. House of Representatives. March 8, 2005. Available at: http://www.medpac.gov/publications/congressional_testimony/030805_TestimonySpecHosp-Hou.pdf.