Mark Leahey10.06.06
Industry Cautious as CMS Unveils Gainsharing Demo Program
Mark Leahey
On Sept. 6, the Centers for Medicare and Medicaid Services (CMS) announced the three-year Physician-Hospital Collaboration Demonstration. This program permits hospitals to share savings with physicians who improve patient outcomes without increasing cost. While most in the medical device industry expected a gainsharing demonstration program announcement in 2006, it was a surprise that the CMS used its authority under Section 646 of the Medicare and Modernization Act of 2003 and not its authority under the Deficit Reduction Act (DRA), which was signed into law in February.
While the intent of the demonstration program is noble, the healthcare community must pay close attention to how this demonstration is structured and how it is implemented to ensure that patients and innovation are not negatively impacted.
As readers of this column know, the medical device industry, patients, venture capitalists and physicians have been vocal with their concerns regarding device contract gainsharing initiatives. These programs seek to provide a financial incentive to physicians for using a particular brand or model of product or delivering less care.
Many believe that the delicate patient/physician relationship is compromised under these scenarios because doctors would not focus on quality or best outcomes. Rather, the focus becomes product standardization and short-term price concessions—both of which are supply chain issues, not quality issues.
Fortunately, on Sept. 6, CMS Administrator Dr. Mark McClellan said the new demonstration “is very different from traditional ‘gainsharing’ with its short-term focus.” He added, “We are aiming to support the best efforts of physicians and hospitals to improve quality and efficiency in the overall care for their patients.”
Others seem to view the new demonstration as an opportunity to expand the number of “traditional” gainsharing models.
On Sept. 8, Joane Goodroe, president of Goodroe Solutions, issued a national press release noting that she has “created the only model that has been approved by the government.” In addition, she said her firm “is running a series of gainsharing projects that meet the government’s high standards for safeguarding quality.”
When one looks closely at the existing Goodroe models, the primary focus is on product standardization—not quality. Since Goodroe now works for an organization (VHA) that is the owner of the nation’s largest group purchasing organization (Novation), it is not surprising that she is an advocate for standardization.
However, no scientific evidence has demonstrated that product standardization enhances patient outcomes. In fact, physicians understand that because the needs of patients vary significantly, it is important that they have access to a variety of brands and models of a particular technology to deliver the most appropriate and effective care.
If the new CMS gainsharing demonstration is going to be effective in achieving its stated goal of rewarding physicians for improving quality, it must be carefully structured. Savings under these projects should arise from such actions as reducing medical errors; reducing complications from surgery; reducing hospital-acquired infections; reducing lengths of stay by better discharge planning and better scheduling of operating time; use of information technology to improve patient care; and better management of chronic disease.
Furthermore, physicians must not be financially rewarded for using a particular brand or model of device or reducing the delivery of appropriate care. These are not quality issues and should not be included in any “healthcare quality demonstration programs” authorized under the MMA.
Another Gainsharing Demo Ahead?
In addition to the CMS gainsharing demonstration announced on Sept. 6 under Section 646 of the MMA, it is expected that the CMS will announce another gainsharing demonstration this month under the DRA authority.
However, one may ask the question, “Why did Congress determine that legislation was required this year for the CMS to move forward with a gainsharing demo if that authority already existed under legislation from 2003?”
That is a very good question and one that many in Washington are asking and have yet to receive an adequate response. Some have indicated that due to the CMS’s commitment to Congress to limit the DRA gainsharing demo to six hospitals, the agency needed to find another way to “back in” to a gainsharing project. I certainly hope that this is not the case, and I have no reason to doubt the CMS’s desire to structure a thorough and comprehensive program that focuses on enhancing patient outcomes—not on one that provides perverse financial incentives to physicians for delivering less care or using the least expensive products.
What Does the Future Appear to Hold?
This is the $64,000 question. While the CMS has announced its gainsharing solicitation and the general parameters, there is a significant amount of provider discretion to develop a proposal. Ultimately, the CMS will approve or deny these proposals based on the structure established by providers. Given that providers must submit their bids by Jan. 7, 2007, it is likely that we will know more in early spring.
The CMS also has indicated that it would like to consider a variety of models, so it could have a more diverse set of experiences and information. However, it is imperative that all proposed projects prohibit physicians from receiving financial payments for using a particular brand or model of device. In addition, the projects must prohibit payments to physicians for reducing the delivery of appropriate care.
If the CMS chooses to permit these types of incentives to exist within the gainsharing demonstrations, patients, physicians, the device industry and the American public all will be hard pressed to find any real meaning in “personalized patient care.”
In addition, gainsharing would run the risk of being viewed as nothing more than a one-size-fits-all approach to medicine focused on short-term price concessions and having nothing to do with improving the quality of care in this country or demonstrating long-term savings.
Let’s hope for everyone’s sake that this does not occur.