Medicare Compliance & Reimbursement

Caution: You'll need careful planning and plenty of oversight

Arrangements that allow hospitals to share savings with physicians who implement money-saving strategies typically draw fire from the Office of Inspector General. But a plan submitted in a Feb. 4 Advisory Opinion (No. 05-01) won tentative approval for both protecting patient care and guarding against referrals.

The plan: Over a one-year period, a hospital paid a cardiac surgeon group 50 percent of the savings achieved by curbing the inappropriate use or waste of specific medical supplies during designated surgery procedures. For example, performing blood cross matching only when a transfusion is required, or substituting less expensive catheters for more commonly used ones.

Some key safeguards that clicked with the OIG:

1. The hospital clearly and separately identified specific cost-saving actions. The hospital also allowed for public scrutiny, including written disclosures to patients.

2. The arrangement capped savings gleaned from procedures on Medicare beneficiaries.

3. A committee periodically assessed the plan's impact on the hospital's clinical care. If reductions in services exceed an established baseline threshold, the doctors received no payment.

4. Individual surgeons were not rewarded for generating extra savings. However, they were held accountable for any adverse effects on patient care.

To read the opinion, go to www.oig.hhs.gov/fraud/docs/advisoryopinions/2005/ao0501.pdf.