Scaling bureaucracy and industry opposition in a single bound (sort of), CMS RFP for gainsharing demonstration projects hits the streets

So, last week CMS announced that it’s soliciting proposals for gainsharing programs under Section 646 of the Medicare Modernization Act of 2003.  Great, I thought.  As the press release says, we’d all like to know

whether allowing hospitals to provide financial incentives for physicians to support better care can improve patient outcomes without increasing costs.

The press release continues:

In the demonstration program, the hospital would be paid its usual inpatient rate for the patient’s care, but would pay to the physician a portion of the savings resulting from quality improvement and efficiency initiatives taken by the physician.  Such incentive payments would only be allowed for documented, significant improvements in quality of care and savings in the overall costs of care.  The program is known as the Physician-Hospital Collaboration Demonstration (PHCD).

(Sidebar:  Why do we need a CMS demonstration project to get physicians and hospitals to collaborate and share cost savings that also improve care?  Because gainsharing used to be bad — see the OIG’s 1999 Special Advisory Bulletin — but now it’s good, sort of, some of the time — see the OIG advisory rulings issued in early 2005.  Thus, doing the right thing still requires special dispensation.  There’s a further concern that gainsharing deals would trigger prosecutions under Stark, but others are more concerned about that than I am (see example of this argument here; I think the government would exercise its prosecutorial discretion and not tag anyone for trying something a sister agency is promoting as a good idea.) 

So far, so good.  My acronym-laden brain, however, remembers that this demonstration program was authorized under the DRA (Deficit Reduction Act of 2006), not the MMA.  What gives?, I thought.  I more than half expected the DRA demonstration program to never get off the ground, since the implantables lobby saw it as a threat to their latest-and-greatest (and, dare I say, most expensive) products and progress, generally (see, e.g., the Medical Device Manufacturers Association website’s page on gainsharing).  The program under Section 5007 of the DRA (see DRA, P.L. 109-171) was supposed to have an RFP out this past spring, with demonstration projects up and running in November, but nothing has been done by CMS under this section.

The details on the MMA demonstration projects up on the CMS website bring this all into focus: CMS basically did an end run around industry opposition to a very specific mandate for gainsharing demonstration projects under Section 5007 of the DRA by rolling out the same demonstration under a much broader mandate to try stuff that could improve quality of care (see excerpt from MMA at the beginning of the CMS solicitation).

Works for me. 

I hope we get to see some positive results from these demonstration projects.  Applications from providers are due January 9, 2007.