In health care, gainsharing is an arrangement by which a hospital gives physicians a share of any reduction in the hospital’s costs for patient care attributable in part to the physician’s efforts. The U.S. Department of Health and Human Services Office of Inspector General (OIG) has recently issued a remarkable series of six interrelated advisory opinions that give more favorable treatment to gainsharing arrangements between physicians and hospitals.The new gainsharing opinions represent a significant change in tone, if not position, by the OIG. For the first time, they open the door for hospitals to influence the cost of medical devices and, by extension, drugs, where equivalent clinical safety and effectiveness is maintained and proper disclosure is made to the patients affected.

As recently as 1999, the OIG issued a Special Advisory Bulletin concluding that gainsharing arrangements involving payments to physicians to induce a reduction or limitation of services to Medicare or Medicaid patients were “flatly prohibited.” Since then, hospitals and physicians have generally avoided such arrangements. In 2004 the Centers for Medicaid & Medicaid Services (CMS) approved a “Hospital Performance–Based Incentives Demonstration,” a 3-year gainsharing demonstration project developed by the New Jersey Hospital Association, which was to begin early that year. All of the new advisory opinions involve arrangements between hospitals and cardiac surgeon groups or cardiologists in which the hospitals would pay the physician groups 50% of any cost savings achieved through specific cost-savings measures during a 1-year period.

Since there is still legal uncertainty surrounding gainsharing arrangements, hospitals and oncologists considering such a program should evaluate the possible need for an OIG advisory opinion.