Specialty Hospitals and Gainsharing Alert!
Audio Conference
Recorded February 24, 2006

Faculty: Dan Mulholland & LeeAnne Mitchell-O'Brien

On February 1, 2006, the House of Representatives took final action on the Deficit Reduction Act of 2005, which had already been approved by the Senate. The bill is now on its way to President Bush for his signature. The new law contains important provisions relating to physician-owned specialty hospitals and gainsharing, which will be of great interest to hospitals and physicians.

With respect to specialty hospitals, Congress declined to continue the moratorium on new physician ownership under the Stark Law. But the Act directs HHS to develop a "strategic and implementing plan" to address the following issues regarding physician investment in specialty hospitals:

• Proportionality of investment return received by physicians;
• What constitutes a bona fide investment;
• Annual disclosure of investment information;
• The provision by specialty hospitals of care to Medicaid and charity patients; and
• Appropriate enforcement.

A report is due to Congress. In the meantime, HHS is directed to continue the suspension of Medicare enrollment of new specialty hospitals.

On the gainsharing front, HHS was directed to implement a "demonstration program" by November 1, 2006, to test and evaluate gainsharing methodologies and arrangements between hospitals and physicians. "Gainsharing" is described in the Act as "arrangements designed to govern the utilization of inpatient hospital resources and physician work to improve the quality and efficiency of care provided to Medicare beneficiaries and to develop improved operational and financial hospital performance with sharing of remuneration as specified in the project." Up to six demo projects, including at least two in rural areas, are authorized.

Among other things, gainsharing arrangements under the demonstration program have to include a number of features similar to those described in OIG Advisory Opinions last year, including quality and efficiency measures, patient notification, independent review and referral limitations.

This audio CD reviews these new developments in detail. Attorneys Dan Mulholland and LeeAnne Mitchell-O'Brien analyze the new law, tell you where HHS may be going on these issues, and update you on other pertinent developments, including recent litigation involving specialty hospitals and the practical pros and cons of gainsharing.

Questions? Contact us via E-mail or call 1-800-245-1205