Health Law Daily OIG gives go-ahead to neurosurgeon–medical center shared savings arrangement
Tuesday, January 9, 2018

OIG gives go-ahead to neurosurgeon–medical center shared savings arrangement

By Victoria Moran, J.D., M.H.A.

The HHS Office of Inspector General (OIG) issued a favorable advisory opinion on an arrangement whereby a group of neurosurgeons will implement cost-reduction measures for select spinal fusion surgeries performed at a medical center and, in turn, the medical center will share a percentage of its cost savings with the neurosurgeons (the Arrangement). While acknowledging the Arrangement implicates Section 1128A(b)(1)-(2) of the Social Security Act (SSA) (the Gainsharing CMP) and Sections 1128(b)(7) or 1128A(a)(7) of the Soc. Sec. Act (the anti-kickback statute), the OIG was satisfied that the methodologies used and features of the Arrangement reduce the risks associated with the Gainsharing CMP and anti-kickback statute and no sanctions will be imposed (OIG Advisory Opinion, No. 17-09, January 5, 2018).

The parties. Four relevant parties are discussed in the Advisory Opinion: the Medical Center, Subsidiary, Group, and Program Administrator.

  • The Medical Center is a non-profit acute care hospital providing the spinal fusion surgeries chosen for the cost-reduction measures in the Arrangement.
  • The Subsidiary provides administrative and managerial functions and coordinates with the Program Administrator to calculate payments to the neurosurgeons.
  • The Group is a multi-specialty physician group of approximately 100 physicians. To participate in the Arrangement, a physician must be in the Group and be a spinal surgeon. Four neurosurgeons met the criteria to participate in the Arrangement (Neurosurgeons).
  • The Program Administrator is paid a fixed monthly fee to administer and manage the Arrangement.

The Arrangement. The Medical Center, through the Subsidiary, pays the Neurosurgeons a share of three years of cost savings attributable to changes the Neurosurgeons make when selecting and using products during spinal fusion surgeries. The changes made by the Neurosurgeons fall into two categories: (1) use of Bone Morphogenetic Protein (BMP) only on an as-needed basis, and (2) standardization of devices and supplies used during surgery. Safeguards such as monitoring and documentation requirements ensure patient services will not be unnecessarily reduced or limited. The Neurosurgeons also make patient-by-patient determinations related to the use of BMP, and must select the most appropriate device or supply for each patient. The same devices and supplies are available while the Arrangement is in place as was available prior to the Arrangement.

Gainsharing CMP. After evaluating the methodology used to develop the cost savings, the monitoring and documentation requirements, and methodology used to calculate the yearly savings, the OIG determined it would not impose sanctions under the Gainsharing CMP because those features reduce the risk that payments would induce the Neurosurgeons to reduce or limit medically necessary services.

Anti-kickback statute. At the outset, the OIG stated that "the Arrangement could result in illegal remuneration if the requisite intent to induce referrals were present." However, the OIG provided seven reasons the Arrangement presents a low risk of fraud and abuse:

  • the combination of safeguards mitigate any incentive to increase referrals to the Medical Center;
  • the structure of the Arrangement minimizes the risk that the Group’s portion would be used to induce or reward referrals (e.g., exclusive use of Group funds for admin and recruitment expenses);
  • annual rebasing method prevents improper duplicate payments;
  • compensation by the Medical Center to the Neurosurgeons for activities such as BMP guideline development and evaluation of product safety, and additional trainings would not be unreasonable;
  • cost-saving recommendations are separately identified in the executive summary providing greater transparency;
  • the selection of devices and supplies available to the Neurosurgeons is the same while the Arrangement is in place as it was prior to the Arrangement, and all determinations are made on a patient-by-patient basis; and
  • neurosurgeons from other physician groups are not participating in the Arrangement.

MainStory: TopStory OIGAdvisoryOpinions CMSNews AntikickbackNews BillingNews CMPNews FraudNews ProgramIntegrityNews

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