On October 30, 2008 the Centers for Medicaid and Medicare Services (CMS) posted the 2009 Physician Fee Schedule Final Rule. The rule was published in the Federal Register on November 19, 2008. CMS did not finalize the Gainsharing Incentive Payments and Shared Savings Program exceptions for hospital-physician arrangements under the Physician Self Referral Act (the Stark law) but instead extended the comment period another 90 days, to February 16, 2009, and requested specific and detailed comments with practical examples
on 55 subject areas, as well as general comments on any issues relevant to the incentive payments and shared savings programs exceptions.

Department of Health and Human Services Office of Inspector General (the “OIG”) has issued 14 Gainsharing Advisory Opinions to date. The latest, Advisory Opinion 08-21, issued on November 25, 2008, involved an acute care hospital offering cardiac catheterization procedures with four cardiology groups participating in gainsharing involving 23 cost savings measures.

CMS is interested in comments on recommended combinations of conditions or models for the exceptions that would provide “sufficient flexibility to encourage development and implementation” of these programs but adherence to the “no risk” of program or patient abuse standard. CMS encouraged comments on any alternative strategies that would achieve the goals of transparency and accountability; ensure quality, cost effective care to beneficiaries; and prevent disguised payments for referrals.

The Incentive Payments and Shared Savings Program discussion in the Physician Fee Schedule Final Rule can be found at 73 Federal Register 67925-70238 (November 19, 2008) pp. 69793-69798.

The 55 areas for which CMS is requesting specific comments are outlined below:

Distinction between “Incentive Payment” and Shared Savings” Programs Comments (73 F.R. 69795)

  1. How to define the terms “incentive payment program” and “shared savings program.”
  2. Whether the terminology “incentive payment” and “shared savings” programs is appropriate or whether different terminology would better describe the range of nonabusive programs CMS intends to cover under the proposed exception(s). Whatever terminology CMS employs, it must define the terms with sufficient
    clarity to enable parties to determine which exception, if more than one is finalized, would be applicable to the specific arrangement being analyzed.
  3. Identify with specificity which conditions should be made applicable to incentive payment programs (and why).
  4. Identify which conditions need not or should not be made applicable to incentive payment programs (and why).
  5. Indicate why it would not be necessary to impose the same safeguards against program or patient abuse on both types of programs.
  6. Whether a program involving cost savings measures that also improves quality should be treated as an incentive payment or shared savings program.
    Risk of Program or Patient Abuse Comments (73 F.R. 69795)
  7. CMS is interested in comments that specifically address in greater detail the “no risk of program or patient abuse” authority it has to create additional exceptions and how to establish a set of safeguards for a shared savings program to guard against patient and program abuse.
  8. How CMS can satisfy the requirements of section 1877(b)(4) of the Act if CMS does not include a condition prohibiting payment to a physician (under the incentive payment or shared savings program) for reducing or limiting items or services furnished to Medicare or Medicaid beneficiaries under the physician’s direct care.
  9. The utility of an exception that incorporates conditions that are the same as or similar to conditions that have appeared in favorable advisory opinions issued by the OIG on gainsharing arrangements.

Design of the Program/Objective Medical Evidence and Independent Review Comments (73 F.R. 69795-69796)

  1. How CMS might avoid protecting payments based on sham measures or measures that do not reflect objective quality outcomes or standards but instead may be vehicles to reward referrals.
  2.  Whether, assuming that there is a need for independent medical review, the need would be greater if the exception were to include outcome measures that are not on the CMS-approved list. CMS also seeks comments on an alternative to independent medical review that would provide an objective, accurate and complete review.
  3. How, if no independent medical review is required, CMS could ensure that a hospital is objective in the review of its incentive payment and shared savings program, that programs operate appropriately to improve (or maintain) patient care quality, and that the incentive payment or shared savings program results in no diminution of patient care quality or inappropriate reduction in care.
  4. How, when and what type (for example, further review, corrective action, or termination of the incentive payment or shared savings program) of recommendations should be made by the independent medical reviewer when the program review identifies concerns with patient care quality or the diminution in patient care.
  5. Requirements (including timeframes) for the hospital to take corrective action based on the independent
    medical reviewer’s recommendations.
    Participating Physicians and Payments Comments (73 F.R. 69796-69797)
  6.  If pools of less than five physicians are permitted, what the minimum number of physicians should be.
  7. Whether all participating physicians must be in the same specialty, and, if not, what issues are raised by protecting arrangements between hospitals and multi-specialty physician groups.
  8. Whether participating physicians should be required to be on the medical staff at the hospital at the commencement of the program and, if not, how CMS should address the risk that programs will be used inappropriately as recruiting tools.
  9. Whether medical staff members may be added during an ongoing program and, if so, how CMS should address the risk that payments would be made to recruit physicians from other area hospitals, especially
    hospitals that might not be able to afford to offer a similar program.
  10. Whether CMS should impose a cap on the payment made per participating physician, regardless of the amount of cost savings or achievement of patient care quality goals attributable to a particular physician.
  11. Whether payments should be limited in duration and, if so, whether 3 years or some other period should be the maximum time period for payments.
  12. Whether protected payments should be reasonably related to the measure that is achieved and, if so, how a reasonable relationship should be determined, and, if not, how CMS could protect against excessive payments that might induce referrals.
  13. Methods for protecting against excessive payments to referring physicians who participate in the program but may contribute little or no work or expertise to the program.
  14. The types of physicians who should be protected participants and what it should mean to be a “participating”
  15. The concept of restricting physicians from receiving payments for previously achieved cost savings or for meeting quality improvement goals that are, or have become over time, standard practice (for example, CMS is concerned about payments that amount to little more than supplemental payments to physicians to do nothing more than what they are already doing).
  16. Outline with specificity how a hospital would track or otherwise determine the “personal efforts” of a physician and correlate the achievement of performance measures to a particular physician’s personal efforts and, in turn, to the amount of the payment.
  17. Specifically address how to account for legitimate fluctuations in the volume of federal health care patient procedures or services and consider the potential that volume increases can indicate altered referral patterns when a physician is participating in an incentive payment or shared savings program.
  18. Possible ways to ensure against increases in total Medicare expenditures for patients for whom services
    are provided under an incentive payment or shared savings program.
  19. Conditions that could be imposed to ensure no risk of program or patient abuse including, for example, conditions on the use and distribution of payments made to physician organizations on behalf of participating physicians.
    Cost Savings for Shared Savings Programs Comments (73 F.R. 69797)
  20. What safeguards CMS could include in an exception if it does not include a cap on the total amount of cost savings available for distribution to participating physicians.
  21. What safeguards CMS could include in an exception to ensure that physicians are not paid for achieving
    performance measures they achieved in prior periods of the program if it does not require rebasing of the baseline against which reductions in waste or costs are performance measures.
  22. Whether it is appropriate to permit payments for continued achievement (or maintenance) of performance
    measures, waste reduction or cost savings.
  23. If the answer to Question 31 is yes, what safeguards could CMS include in an exception if it were to permit continued payments after achievement (or maintenance) of performance measures. For example, should there be reduced payments for maintenance of patient care quality compared with payments for the achievement of targets, or should there be limitations on the payments for continued achievement or maintenance
    of the achieved goals after the physician(s) has/have received an incentive payment for achievement of the measures or goals of the incentive program or shared savings programs.
  24. Whether the limitations should differ for incentive payment programs as opposed to shared savings programs.
  25. The calculation of the amount of total cost savings available for distribution under a shared savings program, including a discussion of formulae used by parties to existing arrangements. CMS recognizes that in its proposed rule it proposed to require payments that result from cost savings be calculated based on acquisition costs for the items at issue, as well as the costs involved in providing the specified services and that the costs be calculated on the basis of all patients regardless of insurance coverage. CMS received many comments indicating that the term “acquisition costs” was unclear or it was difficult to determine the actual costs involved in providing the services. Commenters were seeking additional guidance regarding these concepts.

Protecting Quality of Care Comments (73 F.R. 69797-69798)

  1. Whether and, if so, how CMS should address the situation in which the implementation of an incentive
    payment or shared savings program results in a diminution in patient care quality measures not included in the incentive payment or shared savings program.
  2. Whether CMS should permit payments based on the global improvement in patient care quality instead of individually identified and tracked patient care quality measures.
  3. If a program is structured to result in payments when global patient care quality improves, whether and, if so, how CMS should permit payments to be made if only some of the quality measures are met.
  4. Whether payments should be permitted for the maintenance of patient care quality (as opposed to the improvement of patient care quality).
  5. Whether payments should be permitted for the achievement of intermediate targets for patient care quality and how intermediate targets should be defined and measured.
  6. What types of medical evidence should support quality measures, and how CMS can ensure that quality measures are supported by credible medical evidence.
  7. Whether measures must have some relation to the patient populations and practices at the hospital and, if so, what the relation should be, and, if not, how CMS could protect against programs that are structured
    to reward physicians for reaching subjective or limited goals that do not substantially benefit the hospital’s
  8. How quality improvement should be measured, including how a baseline (that is, starting point) should be set from which to measure the improvement, how recent the baseline should be, and whether the targets should reflect regional data, national data, or some other data.
  9. Whether CMS should recognize a difference between “quality improvement” and “quality maintenance”
    and, if so, how CMS should define those terms in relation to each other, whether an exception should protect payments for both, and whether they should be valued differently (based on the supposition that improving quality may require more effort than maintaining it).
  10. How CMS can prevent protecting payments for programs that are not meeting their quality goals or for measures that, when achieved, result in a diminution of patient care quality.

Structure of Arrangement/Documentation Comments (73 F.R. 69798)

  1. Possible ways to reduce the administrative burden and cost for hospitals that would not hinder the government’s ability to enforce the physician self-referral law and ensure compliance with a final exception (or exceptions).
  2. The inclusion of an audit requirement with respect to the calculations of cost savings and payment amounts under the incentive payment or shared savings program. Many commenters supported such a requirement, and stated that CMS should permit the audit to be performed “in-house."
  3.  Whether such an audit could satisfy CMS concerns regarding the objectivity and accuracy of the audit.
  4. Whether parties should be required to monitor and track each cost savings or quality measure and, if so, how CMS should address the need for transparency and accountability.

Sharing of Global Savings Comments (73 F.R. 69798)

  1. Necessary safeguards to ensure that a final exception for shared savings programs, when considered in its totality, would not present a risk of program or patient abuse if CMS permitted the sharing of departmental or service line global cost savings.
  2. The impact that sharing such savings with physicians would have on other potential requirements of a final exception, such as the requirement that the calculation of cost savings and physician payments be audited.

Miscellaneous Comments (73 F.R. 69798)

  1.  Whether the exception should protect contracts/arrangements between hospitals and physician groups or only contracts/arrangements between hospitals and individual referring physicians (and, if the exception should allow contracts/arrangements between hospitals and physician groups, how CMS could protect against payments to physicians who do not actively participate in the program and who might be rewarded merely for making referrals).
  2. If a physician group participates, the physician group may be paid if some of its physicians fail to make quality improvements.
  3. Whether all physicians in the physician group should be required to participate in the same measures.

Availability of Other Exceptions Comments (73 F.R. 69798)

  1. The extent to which a “stand-alone” exception(s) for incentive payments and shared savings programs is necessary given the existence of other compensation exceptions under the Stark law.
  2. Whether it would be preferable for CMS to modify the aspects of the existing Stark exceptions to protect a broader range of beneficial, nonabusive incentive payments and shared savings programs.
    When submitting comments, commenters should reference the specific comment request numbers.