OIG lets managed care incentive plans off the hook
OIG lets managed care incentive plans off the hook
A new coalition of health care providers seeks to subvert federal gainsharing prohibition
While the Health and Human Services Office of Inspector General (OIG) scrambles to clarify its broad and unexpected prohibition against physician gainsharing arrangements, a coalition of health systems, hospitals and physician practice groups is gaining momentum in its bid to change the law behind the OIG’s controversial position.
Late last week, Lewis Morris, the assistant inspector general for legal affairs, issued a letter stating that the OIG’s July 8 advisory bulletin pertained only to fee-for-service gainsharing arrangements. Physician-hospital incentive plans for Medicare and Medicaid beneficiaries enrolled in risk-based managed care plans aren’t subject to the civil monetary penalty (CMP) provisions in the Social Security Act of 1986.
"There was a lot of concern about that after the advisory bulletin was published," says Marylou King, JD, an attorney with McDermott, Will & Emery in Washington, DC. King says that, to many physicians, the bulletin seemed to skirt the question of whether such managed care-based gainsharing arrangements were subject to CMPs. "It had always been assumed that physician incentive plan protections flowed down through the HMO organization to protect the providers. But then, nobody ever thought this July gainsharing bulletin would come out. It called into question [plans involving] Medicare and Medicaid beneficiaries enrolled in managed care plans."
Alwyn Cassil, a spokesperson for the OIG, admits the bulletin was vague: "While it drew some distinctions between managed care and fee-for-service, it never came right out and said that we find CMPs don’t apply to managed care arrangements," she says. "Consequently, we had a number of questions from people about that, so we wanted to go ahead and send a clear message to the industry."
The confusion arose in part because of the convoluted history behind the CMP sections of the Social Security Act. Initially, sections 1128A(b)(1) and (2) of the act prohibited payments by both hospitals and Medicare or Medicaid managed care plans to induce physicians to reduce clinical services. Four years later, however, the act was amended to allow managed care organizations to implement physician incentive plans, as long as the organization didn’t induce the reduction of medically necessary care or put physicians at financial risk for services they didn’t provide.
After the OIG dropped its July 8 bombshell against gainsharing, many industry experts began to wonder if some new and emerging types of physician incentive plans would create problems under the CMP provisions, even though they were technically managed-care based.
"The bulletin was so broad that it threw some doubt on how these plans should be treated — were they considered to exist at the provider level or at the HMO level?" King says. "This letter appears to take care of that concern by saying that, if [the beneficiaries for whom care is being provided] are in managed care plans, it’s the way we thought it was before the bulletin and everybody can just relax."
Gainsharing on the fee-for-service side of the fence, however, remain very much in the domain of the CMP statutes, and there’s no evidence that the OIG plans to soften its hard line against physician-hospital incentive arrangements.
That’s why King’s firm, McDermott, Will & Emery, is backing a newly formed coalition of health systems, hospitals, and physician groups pushing to change the CMP statute to allow certain types of fee-for-service gainsharing plans.
"The OIG bulletin suggested very strongly that the way to restore the ability of hospitals to enter into these arrangements is a legislative fix," King says. "We have a broad base of clients who have either entered into these arrangements or were considering them and believe they have value. So it seemed a natural thing for us to help facilitate this coalition."
The coalition’s main problem with the OIG’s interpretation of the law is that, by the OIG’s own admission, the law could discourage the creation of arrangements that achieve positive results both for patients and for Medicare.
"Obviously, a reduction in health care costs that does not adversely affect the quality of health care provided to patients is in the best interests of the nation’s health care system," the bulletin’s authors admit. "Nonetheless, the plain language of [the act] prohibits tying the physician’s compensation for such services to reductions or limitations in items or services provided to patients under the physician’s clinical care."
One option the coalition is considering is to add a medical necessity provision to the CMP statute. "It would remain illegal for hospitals and physicians to share savings that would result in the limiting of medically necessary services," King says. "But there would be other cost savings and other ways in which they could achieve cost savings without cutting into medically necessary services. None of these [gainsharing] programs was ever premised on the idea of saving money at patients’ expense."
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