Hospital-doctor cost-saving plan gets OIG nod

An agreement that involves a hospital sharing a portion of its savings with doctors who implement cost-reduction measures in surgery raises red flags, but its proposed safeguards would prevent sanctions, according to a recent government ruling.

In a February advisory opinion, the U.S. Dept. of Health and Human Services Office of Inspector General told a hospital and a group of cardiac surgeons that because of the structure and openness of their agreement, it would not warrant government discipline. The OIG reviewed the case in light of federal anti-kickback statutes and laws prohibiting payments to physicians for limiting services to Medicare and Medicaid beneficiaries. The report stressed the opinion is only applicable to the parties that asked for it. However, physician groups often see these rulings as a positive sign that such arrangements will not automatically be considered illegal.

The hospital and physician group, the names of which were not disclosed, described a situation in which the doctors would share half the savings "directly attributable to specific changes in the surgical group's operating room practices," the opinion read. There were 27 proposed changes, primarily geared toward creating a common set of surgical items and eliminating waste by not opening medical supplies unless they were needed.

The OIG states most of the changes would serve as an inducement to reduce or limit services to Medicare or Medicaid patients and could be a way for the hospital to provide an incentive for physician referrals.

However, the government wouldn't apply sanctions because the arrangement intends to hold physicians accountable for any adverse effects, "including any difference in treatment among patients based on nonclinical indicators," according to the opinion. The agreement also will be disclosed to patients, and incentives are "reasonably limited," the OIG said.

"We caution that payments of 50% of cost savings in other arrangements, including multiyear arrangements or arrangements with generalized cost savings formulae, could well lead to a different result," the opinion read.

The ruling follows closely on the heels of a similar OIG opinion posted last month, which involved an agreement between a different hospital and cardiac surgery group to share in savings from cost-reduction efforts.