[Congressional Record (Bound Edition), Volume 159 (2013), Part 4]
[Extensions of Remarks]
[Pages 5108-5109]
[From the U.S. Government Publishing Office, www.gpo.gov]




             IMPROVED HEALTH CARE AT LOWER COST ACT OF 2013

                                 ______
                                 

                           HON. JIM McDERMOTT

                             of washington

                    in the house of representatives

                        Thursday, April 11, 2013

  Mr. McDERMOTT. Mr. Speaker, it is widely accepted, on both sides of 
the aisle in both the House and Senate, that health care costs are the 
single major driver of our deficit and that we need better quality 
health care at lower costs--for our citizens and for our economy. When 
it comes to implementing carefully crafted gainsharing programs, 
existing law is in the way. To meet the three goals of (1) decreasing 
costs, (2) improving quality, and (3) not compromising access to health 
care services, the ``Improved Health Care at Lower Cost Act of 2013'' 
(the ``Act'') will require the OIG and CMS to issue regulations that 
define standards for gainsharing and similar arrangements that will be 
protected under the anti-fraud laws. The requirements that federal 
regulators set should include a primary emphasis on quality. OIG has 
vast experience in approving shared savings programs where the shared 
savings payment to physicians by the hospital was conditioned upon 
meeting certain quality metrics. The idea that shared savings payments 
should take quality into account seems obvious to me; no one should be 
permitted to share in savings that the hospital accrues without 
demonstrating that quality either improved, or at a minimum, was not 
adversely impacted by such arrangements. I am assuming that regulators 
will draw upon their vast experience with these programs and put in 
place sufficient protections to guard against fraud, waste, and abuse. 
Such protections may include requirements around quality; comparisons 
against historical data; a ceiling on savings that will inure to any 
given physician; and a requirement that arrangements be reduced to 
writing to ensure that it easier to identify arrangements that do not 
comply with the requirements that CMS and OIG set through rulemaking.
  The Act will allow hospitals and physicians to better align 
incentives in order to decrease

[[Page 5109]]

health care costs through allowing certain ``gainsharing'' 
arrangements. The term ``gainsharing'' refers to arrangements where 
hospitals share with physicians any reduction in the hospital's costs 
for patient care that the hospital gets as a result of the efforts of 
the physician. Currently, gainsharing arrangements are prohibited under 
several anti-fraud laws. First, the federal Civil Monetary Penalty 
statute prevents hospitals and physicians from engaging in 
``gainsharing'' arrangements. Second, the Office of the Inspector 
General for the Department of Health and Human Services (``OIG'') has 
indicated that gainsharing arrangements may implicate the federal Anti-
Kickback law. Finally, gainsharing arrangements may be prohibited by 
the Physician Self-Referral law. Because of the potential legal 
implications, hospitals and physicians have been reluctant to 
participate in gainsharing arrangements for fear of prosecution under 
all of these laws or even under the False Claims Act.
  Notwithstanding existing law, the government has acknowledged that 
there is potential benefit associated with gainsharing arrangements. In 
its 1999 guidance, the OIG said:

       [t]he OIG recognizes that hospitals have a legitimate 
     interest in enlisting physicians in their efforts to 
     eliminate unnecessary costs. Savings that do not affect the 
     quality of patient care may be generated in many ways[.] 
     Achieving these savings may require substantial effort on the 
     part of the participating physicians. Obviously, a reduction 
     in health care costs that does not adversely affect the 
     quality of the health care provided to patients is in the 
     best interest of the nation's health care system [emphasis 
     supplied].

  Then, in 2005, MedPAC issued a recommendation in its Report to 
Congress that hospitals and physicians be permitted to engage in 
gainsharing arrangements. In this report, MedPAC stated that:

       [t]he Commission believes that gainsharing arrangements 
     have the potential to improve patient care and reduce 
     hospital costs as long as safeguards are in place to minimize 
     the undesirable incentives. . . Due to the potential for 
     gainsharing arrangements to encourage physician and hospital 
     cooperation to lower costs and improve care, the Congress 
     should provide the Secretary with the authority to allow and 
     regulate these arrangements. The Secretary should develop 
     rules that allow gainsharing arrangements as long as 
     safeguards exist to ensure that cost-saving measures do not 
     reduce quality or inappropriately influence physician 
     referrals [emphasis supplied].

  Finally, in 2008, the Centers for Medicare and Medicaid Services 
(``CMS'') issued a proposed rule that would have created an exception 
under the Physician Self-Referral law to protect certain ``shared 
savings and incentive payment programs.'' In the preamble to the 
proposed rule, CMS stated the following:

       [s]hared savings programs have been recognized by 
     stakeholders as an effective means of controlling costs, 
     improving efficiency, and promoting quality in the delivery 
     of health care services. Government stakeholders have 
     recognized similar potential benefits when shared savings 
     programs are properly structured to ensure compliance with 
     Federal health care program requirements. Empirical evidence 
     suggests that the goal of patient care quality maintenance or 
     improvement can be achieved through a properly-designed 
     shared savings program.

  The rule was never finalized. However, based upon the assertions of 
OIG, MedPAC, and CMS, the evidence seems clear and convincing: properly 
structured gainsharing programs show substantial potential in reducing 
costs by aligning incentives between hospitals and physicians to make 
cost-saving improvements to healthcare delivery.
  In sum, the Act strikes the right balance between the need for 
innovation in promoting cost savings efforts and the need to guard 
against waste, fraud, and abuse. CMS and OIG can structure the 
requirements that hospital-physician arrangements must meet in a way 
that ensures federal health care programs will be protected from fraud, 
waste, and abuse. Federal regulators have been overseeing these 
arrangements for nearly a decade--either through demonstration 
authority or through the advisory opinion process--I am confident that 
this legislation holds genuine promise for being a ``game changer'' in 
getting us towards the goal of better care at a lower cost without 
compromising access to quality health care services.

                          ____________________