The OIG recently issued an Advisory Opinion (No. 08-09) addressing a medical center's arrangement with groups of neurosurgeons and orthopedic surgeons by which it would share cost savings from the surgeons' implementation of 36 specific operating room cost reduction opportunities during designated spine fusion surgery procedures. The OIG determined that although the arrangement has the potential to induce physicians to reduce or limit items or services furnished to their Medicare and Medicaid patients, it would not impose civil monetary penalties because the arrangement provides sufficient safeguards. Such safeguards include (1) the transparency of the arrangement allowed for public scrutiny and sufficient physician accountability; (2) the medical center offered credible medical support for the position that implementation of the recommendations did not adversely impact patient care; (3) the amount paid under the arrangement was calculated based on all surgeries regardless of the patient's insurance coverage, subject to the cap on payment for federal healthcare program procedures; and (4) the arrangement protected against inappropriate reductions in services by establishing a "floor" beyond which no savings would accrue to the surgeons. In addition, the fact that (1) the medical center and surgeon groups provided written disclosures of their involvement in the arrangement to patients whose care might have been affected and provided patients an opportunity to review the cost-savings recommendation before admission; (2) the financial incentives were reasonably limited in duration and amount; and (3) the surgeon groups would distribute profits to their respective members on a per capita basis were critical to the OIG's analysis. Similarly, the OIG determined that although the arrangement, if the requisite intent to induce referrals were present, could potentially generate prohibited remuneration under the anti-kickback statute, it would not impose administrative sanctions, concluding that several factors were present that reduced the risk that the arrangement might be used to induce referrals. The OIG highlighted such factors as (1) the participation was limited to surgeons already on the medical staff who perform spine fusion surgery; and (2) the surgeons had responsibility for the change in operating room practices and carried the increased risk of liability for those changes. Although the OIG chose not to impose sanctions for this arrangement, it made a point to reiterate its concerns regarding the potential pitfalls of arrangements between hospitals and physicians to share cost savings. This opinion closely tracks the requirements imposed by the Centers for Medicare and Medicaid Services in the new proposed Stark Law exception for gainsharing arrangements. See the July 10, 2008, Health Law Update.