CMS is acknowledging the continued interest in Pay for Performance ("P4P") and gainsharing ideas, and is issuing a specific self-referral exception in Anti-Kickback Safe Harbor to permit these programs.  P4P programs are being hereinafter referred to as incentive payments, and gainsharing programs are now being referred to as shared savings programs. 


The links below contain both the actual regulatory proposals and the CMS discussion of the proposals, which comprises pages 261-316 of the July 7, 2008 Medicare Fee Schedule Proposals for 2009. 


CMS indicates that its concerns for both programs are the withholding of quality care ("stinting"), the selection of only healthier patients for programs ("cherry picking"), the redirection of sicker patients to other providers ("steering") and premature discharge to reduce length of stay ("quicker-sicker"),


CMS is proposing one set of standards, i.e. new 42 CFR § 411.357(x), to apply to both shared savings and incentive programs and has outlined a philosophy requiring three elements, i.e. transparency, quality controls and safeguards against payments for referrals. 




The program must include patient care quality or cost saving measures (or both) supported by objective, independent medical evidence indicating that the measures would not adversely affect patient care.  Specifically, all performance measures must use an objective methodology, be verifiable, be supported by credible medical evidence, and be individually tracked.  The measures must reasonably relate to the hospital’s practices and patient population in the interest of creating clear, bright line rules, we are proposing specifically that patient care quality measures be listed in CMS’s Specifications Manuel for National Hospital Quality Measures. 


CMS is proposing that the programs must review prior to the implementation and at least annually thereafter to ascertain the program’s impact on the quality of patient care services provided by the hospital.  The reviews must be conducted by an independent person or organization with relevant, clinical experience.


Independence requires an individual organization that is not (i) affiliated with the hospital operating the program under review; (ii) not affiliated with any participating physician or with any physician organization with which a participating physician is affiliated; and (iii) at the time of the review, not participating in any incentive payment or shared savings program operated by the hospital.  The reviews must be objective, accurate and complete and result in written findings.  These reviews should require contemporaneous documentation that would be made available to the secretary upon request. 


Self-Referral Payments.


The proposals apply only to payments by hospitals to physicians or physician organizations.  The proposals note that the programs involving non-physician practitioners ("NPP") might be possible, but also are not governed by the physicians self-referral statute.  Physician organizations, such as an existing private practice, could include physicians who are non-participating in the program.  All payments must be made to pools of five or more physicians who are members of the medical staff at the commencement of the program.  The pre-existing membership requirement is imposed out of the concern that these programs will be used to recruit physicians from competing hospitals.  CMS will consider comments on how to establish an appropriate process for the addition of physicians who join the medical staff in the normal course of business.


The hospital may not determine eligibility for physician participation in a program based on the volume or value of referrals or other business generated between the parties. 


To qualify for protection under the proposed exception, an incentive payment or shared savings program may not limit the discretion of physicians to make medically appropriate decisions for their patients, including, but not limited to, decisions about tests, treatments, procedures, services, supplies or discharge.


Payments made to physicians participating in either the incentive payment or shared savings program must be distributed on a per capita basis, although CMS will consider alternative proposals.


Medical Devices.


CMS is proposing that a physician (or qualified physician organization) could not receive a payment under an incentive payment or shared savings program for the use of an item, supply or device if the physician or physician organization has an ownership or investment interest, or a compensation arrangement with, a manufacturer or distributor of the item, supply or service, or GPO that arranges for the purchase of the item, supply or devise. 




To implement transparency and foster accountability, CMS has proposed that the arrangement require written disclosure to patients affected by the program regarding the nature of the program and the physician or qualified physician organization participation in the program prior to admission to the hospital, or, if preadmission disclosure is not feasible, prior to the procedure or other treatment to which the program is applicable.  CMS is also inviting comments on whether patients should have the opportunity to op-out of the program.  However, it would seem that patients always have the opportunity to opt-out of any treatment program, and the issue should be whether the opt-out opportunity is specifically disclosed in the program disclosure.