OIG's Proposed Gainsharing Regulation Seen as Potentially Significant Cost Saver

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By Eric Topor

Dec. 10 — The gainsharing component of a proposed rule from the Health and Human Services Office of Inspector General “is potentially the most important regulation the OIG will ever put out,” according to former chief counsel of the OIG Industry Guidance Branch Kevin G. McAnaney.

McAnaney spoke during a Dec. 9 panel discussion at the American Bar Association's Washington Health Law Summit, which also featured Senior Counsel for the Office of Counsel to the Inspector General Jennifer Williams.

The proposed gainsharing regulation was part of a proposed rule (RIN 0936-AA06) issued by the OIG Oct. 2 that included additional safe harbors to the anti-kickback law and exceptions to civil monetary penalties (CMP) law. 

The OIG has defined gainsharing as “a self-implementing law that prohibits hospitals and critical access hospitals from knowingly paying a physician to induce the physician to reduce or limit services provided to Medicare or Medicaid beneficiaries who are under the physician's direct care.” McAnaney, an attorney with the Law Offices of Kevin G. McAnaney in Washington, said the gainsharing regulation could “help bend the cost curve” and promote a medical care system that aligns care in “a way that promotes the public and patient interests.”

Williams said the OIG solicited comments on “what it means to reduce or limit services.” She also reiterated the OIG's position that “gainsharing arrangements are not an enforcement priority for OIG, unless the arrangement lacks sufficient patient and program safeguards.”

Cost of Care Concerns

The “single biggest concern” for federal health-care programs and beneficiaries is the “unaffordability of care,” McAnaney said, citing criticism that “we're doing too much, it's too expensive, much of it is unnecessary.” He said that the gainsharing regulation could allow the OIG to address those concerns, unless it chooses to adopt a regulation that simply continues an existing system “where we silo hospitals and physicians, and basically continue this problem of fraud and abuse laws competing [with] the alignment of where health policy really wants to go.”

McAnaney said the OIG should “go with a much broader gainsharing” regulation, similar to recent gainsharing demonstrations, and gave the example of the New Jersey Hospital Association's gainsharing demonstration. McAnaney said the NJHA's demonstration involved 12 hospitals and over 135,000 Medicare admissions over three years and showed an 8.5 percent savings of actual costs per admission versus the expected cost per admission. 

“Those are huge numbers,” McAnaney said. However, he said that if the final gainsharing regulation is “too narrow [or] too prescriptive, it will kill these deals.”

Free, Discounted Transportation Exception

Williams said the OIG received almost 100 comments on the proposed CMP regulations during the comment period that ended Dec. 2. She also discussed the CMP exception to free and discounted local transportation that was included in the proposed rule.

Williams said the proposed exception for free and discounted transportation was “very difficult exception to craft” because of the general difficulty of specifying the universe of requirements to satisfy any safe harbor, and specifically because “low-risk beneficial transportation arrangements often contain many of the same features as problematic arrangements.” Williams said it is difficult to distinguish elements of beneficial local transportation arrangements without including so many restrictions “that the safe harbor becomes impractical.”

The proposed safe harbor allows for local transportation of “established patients” to “medically necessary items and services.” The proposed safe harbor includes restrictions against air, luxury or ambulance transport, and prohibitions on marketing or advertising to patients or potential referrals. Additionally, provision of free or discounted transportation can't be related to past or anticipated use of federal health-care programs, and restrictions on the safe harbor's use included durable medical equipment companies, laboratories and home health providers in some cases, Williams said.

Access to Care CMP

Williams also highlighted a proposed exception to the beneficiary inducement CMP for remuneration that both promotes access to care and poses a low risk of harm to patients and federal health-care programs.

Williams clarified that the “promotes access to care” portion of the proposed exception means that “the remuneration would improve a beneficiary's ability to obtain medically necessary care.”

Williams said the OIG was still considering whether the term “beneficiary” in the proposed exception should refer to a specific beneficiary or “a defined beneficiary population more generally.” The OIG is also deciding whether “care” should encompass nonclinical care like social services if “reasonably related to a patient's medical care,” Williams said.

To contact the reporter on this story: Eric Topor in Washington at etopor@bna.com

To contact the editor responsible for this story: Ward Pimley at wpimley@bna.com