Healthcare News & Insights

Justice Department gives thumbs up to hospital group’s gainsharing program

As you know, federal regulators haven’t been a proponent of gainsharing programs. In fact in 1999, the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) declared that gainsharing violated the Civil Monetary Penalties law. But now they seem to have changed their tune.

On Jan. 16, the Justice Department OK’d the Greater New York Hospital Association (GNYHA) to adopt a program that compensates physicians for reducing the cost of patient care, reports Thomson Reuters.

The association wanted the program to give physicians a financial incentive to lower healthcare costs to hospitals. For the hospital that participate in the program, the association will analyze the costs of inpatient services performed by specific physicians with the help of a medical technology company. And for physicians whose costs go down or remain low will share in a portion of the savings.

Change of heart

The Justice Department said the proposed program shouldn’t adversely affect competition because:

  • the hospitals won’t be exchanging any confidential information, and
  • each hospital will independently determine physician gainsharing amounts.

“Based on GNYHA’s representations, the proposed information sharing program is unlikely to facilitate collusion or otherwise raise competitive concerns,” noted Bill Baer, assistant attorney general in charge of the Department of Justice’s Antitrust Division, in a business review letter to counsel for GNYHA .

This isn’t the first program of its kind, however, to be approved. In 2001, the OIG approved the first gainsharing program for a hospital. Since then, more programs have been getting the governments approval, but only under strict conditions.

Preapproval wanted

GNYHA, which represent around 250 healthcare facilities in New York and nearby states, wanted a gainsharing program for its hospitals to give physicians a financial incentive to lower costs to hospitals. But the association was worried their programs would be viewed as limiting competition by setting caps on physician compensation at numerous hospitals.

To ease their fears, they decided to go straight to the Justice Department to get its personal approval.

And it did get the agency’s approval as previously stated. However, in the agency’s letter to GNYHA, it warned the association, “If (the Greater New York Hospital Association) uses these provisions as a pretense for coordinating hospital payments to physicians, such conduct would be subject to prosecution under the antitrust laws.”






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