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Sharing Savings OK with OIG, Part II

Device Regulation Alert: Safety, Compliance and Reimbursement News, February 25, 2008

The February 18 issue of Device Regulation Alert detailed two arrangements that involved physicians and hospitals sharing the cost-savings from efforts to reduce use of supplies and devices. Cardiac surgeons and anesthesiologists agreed to standardize the medical devices used in cardiac surgeries and to use certain devices and supplies on an as-needed basis among other cost-saving measures. In exchange, the hospitals would share some of the savings with those cardiac surgeons and anesthesiologists.

The OIG said normally these arrangements would run afoul of the anti-kickback law and civil monetary penalty provision of the Social Security Act because the savings shared with the physicians could be an improper inducement to reduce services to Medicare or Medicaid beneficiaries. The percentage of cost savings paid to the cardiac surgeons and anesthesiologist also could be improper compensation intended to reward referrals in violation of the anti-kickback law. That's because the more surgeries the physicians participate in, the greater their share of cost savings could be.

However, in each Advisory Opinion, the OIG said it would not take action against the arrangements because of certain safeguards the parties put in place. Those safeguards include:

• The cardiac surgeons and anesthesiologists would not share in the savings below a certain level of savings
• The cardiologists and anesthesiologists can still make independent decisions about the device most appropriate for each patient
• The same selection of devices remain available
• The hospital and physicians had credible evidence that the cost saving measures would not adversely impact patients
• The arrangement wouldn't affect federal program beneficiaries disproportionately to patients with private or other insurance

Both Advisory Opinions, 07-21 and 07-22, appear on the OIG's Web site.

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