CMS Announces Three-Year Gainsharing Pilot

Early last month the Centers for Medicare and Medicaid Services (CMS; Baltimore) unveiled the agency's plan for a three-year gainsharing demonstration program. The program will explore whether hospitals providing financial incentives to physicians who support better care can improve patient outcomes without increasing costs. The program, officially known as the Physician-Hospital Collaboration Demonstration (PHCD) project, will track surgical and nonsurgical patients whose required care is at least 30 days in duration. CMS expects that the program will also track patients' care after they leave the facilities.

Under the provisions of PHCD, hospitals would receive standard Medicare payments and would also be permitted to pay physicians a portion of any documented savings that can be linked to doctors' efforts in providing improved patient care and implementing operational and procedural efficiencies.

“The most costly and intensive physician services are provided in hospitals, yet our payment systems do not support steps by hospitals and doctors to work together to improve care,” said then-CMS administrator Mark B. McClellan, MD, PhD, who left the agency earlier this month. “This demonstration program will support efforts to track and improve the overall episode of patient care, including follow-up and longer-term outcomes.”

By focusing on quality and efficiency improvements across an entire system of care, PHCD differs from earlier gainsharing arrangements that attempted to achieve a significant portion of the overall savings by standardizing the use of medical devices.

Medical associations appear to be divided on the issue of gainsharing. Some embrace the concept while others remain concerned about its potential to undermine the doctor-patient relationship.

“This is an important model for us to work with,” said Christopher Cates, MD, chair of the Society for Cardiovascular Angiography and Interventions (SCAI; Washington, DC) and director of vascular intervention at Emory University (Atlanta). “It gives physicians a lot of potential to work with hospitals to make decisions that will decrease costs and inventory requirements for the hospitals and put some pressure on industry to come up with more-aggressive pricing strategies. It will also allow physicians to benefit from improving cost-effectiveness while measuring and maintaining quality.”

Following the CMS announcement, David A. Halsey, MD, chair of the council on advocacy for the American Academy of Orthopaedic Surgeons (AAOS; Rosemont, IL), issued a statement that said, “AAOS is opposed to any gainsharing or similar arrangements that deny physicians the opportunity to select and utilize appropriate supplies and devices. The clinical judgment of the surgeon, in concert with the patient's unique needs and preferences, should drive patient care decisions, not the financial gain of the facility and surgeons.”

Although medical devices are not the primary focus of PHCD's cost-saving initiatives, medtech industry associations also remain wary.

Stephen Ubl, president and CEO of industry association AdvaMed (Washington, DC), commended CMS for its approach to gainsharing in the PHCD project, but he added, “We remain concerned that some demonstrations could be designed to reduce patient treatment options or place emphasis on cost savings at the expense of what is the best therapy for the patient.”

Similarly, Mark Leahey, executive director of the Medical Device Manufacturers Association (MDMA; Washington, DC), said, “We're concerned that if not properly implemented, this demo could adversely affect patient care and innovation.”

Seventy-two hospitals will participate in the PHCD project. Applications are due in early January , and the demonstration will begin later in the year.

© 2006 Canon Communications LLC

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