Medicare Compliance & Reimbursement

Question: Many of our surgeons have agreed to cut back on surgical costs -- which saved Medicare and our hospital a vast amount of money. We'd like the hospital to give us a cut of the money it saved, but a recent OIG advisory opinion warns that physicians should be careful when trying to collect money from hospitals as a reward for saving money on surgical procedures. Should we ask the hospital to share?

Answer: In many cases, this type of cost-sharing is illegal, so you've got to navigate the regulatory minefield carefully if you're trying to get a cut of the savings.

The scenario: A neurosurgery group and an orthopedic group made an agreement with a local medical center. Under the agreement, the hospital would pay the physicians a share of the cost savings that they generated by making changes to their operating room practices. In return for standardizing and limiting procedures, the hospital agreed to pay the medical practices 50 percent of the cost savings attributable to those surgeons.

The problem: The OIG studied the case and said that several aspects of the arrangement violated the Civil Monetary Penalties law, which specifically notes that the government can impose a civil monetary penalty against any hospital that pays a physician as an inducement to reduce services to Medicare patients when not clinically appropriate, says David Harlow with The Harlow Group in Newton, Mass.

The OIG noted its concern that the arrangement "could be used to disguise remuneration from the medical center to reward or induce referrals" from the physicians, the advisory opinion indicated.

No penalties: The OIG chose not to crack down on the parties involved in the arrangement because neither the hospital nor the surgeons had the intent to induce referrals, according to the advisory. To read the full opinion, go online to http://www.oig.hhs.gov/fraud/docs/advisoryopinions/2008/AdvOpn08-09B.pdf.