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Gainsharing arrangement constitutes improper inducement but would not draw OIG sanctions

Pharma Compliance Alert, October 29, 2006

A proposed gainsharing arrangement between a hospital and cardiac surgeons would constitute an improper inducement reduction or limitation of services under the Social Security Act, but the Office of Inspector General (OIG) would not impose sanctions against the hospital proposing the arrangement, OIG explains in a recent advisory opinion.

OIG also states that the arrangement proposed by the unnamed hospital would potentially generate prohibited remuneration under the anti-kickback statute, if the requisite intent to induce or reward referrals of Federal health care program business were present, but that the OIG would not impose administrative sanctions under the civil monetary provisions of the social security act.

Under its proposed arrangement, the hospital would pay a group of cardiac surgeons half of the first year cost savings directly attributable to specific changes in the Surgeon Group's operating room practices.

The hospital studied the historic practices at the Hospital's cardiac surgery department and identified twenty-four specific cost-saving opportunities in three broad categories:

• Limiting the use of certain surgical supplies by requiring the surgeon to make a patient-by-patient determination as to whether these items are clinically necessary. As a safeguard to ensure clinically important items are not cut to save money, the hospital would apply objective historical and clinical measures reasonably related to the practices and the patient population at the hospital to establish a "floor" beyond which no savings would accrue to the surgeons;
• Substitution of less costly items for the items currently being used by the surgeons that will not make an appreciable clinical difference. For example, currently a disposable warming blanket is used to maintain the patient's temperature after an open heart procedure, but reusable warming blanket would likely work just as well, according to the hospital; and
• Standardization of some types of cardiac devices "where medically appropriate." The surgeons would be required to work in conjunction with the Hospital to vendors and products to get the best bulk deal possible on devices. However, the arrangement would still allow individual physicians to use a device outside of that deal if they deem it medically necessary for a particular patient.

OIG emphasizes that this opinion is predicated on the specific arrangement proposed by the hospital that requested this advisory opinion, in is limited to that specific arrangement. "Other apparently similar arrangements could raise different concerns and lead to a different result."

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