One More Reason to Repeal the Stark Law

First, the good news.  Cardiologists with stent patients were invited to make cost-reducing improvements in the way they practice medicine and share in the financial savings they generated.  A study finds the physicians engaged in bulk buying and switched to more efficient devices-saving an average of $17,000 per year per physician (shared 50/50 with the hospital).  Extended nationwide, this behavior would save $195 million.

Now for the bad news.  If other doctors try this, they will be breaking the law.  In fact, they could go to jail!

The problem: doctors and hospitals (at least under Medicare) are forbidden to enter into contracts under which doctors profit by reducing costs and saving the health care system money.  The culprit: Congressman Pete Stark (D-CA), whose name graces the amendment governing such things.

The doctors in the study described above got a special dispensation under a Health and Human Services pilot program that allowed them to participate in "gain-sharing."

Even this experiment was very, very limited.  For example, doctors were not allowed to profit from more efficiently scheduling their operating room time, prescribing less expensive (but equally effective) drugs, using drug therapy rather than surgical therapy, communicating with patients by e-mail or  telephone, using error-reducing electronic software, etc.

You can see the problem here.  Too much laxity and things could easily get out of hand.

Comments (4)

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  1. John Greene says:

    As usual, it always sounded good at the time – in the early 1990’s. As with American style single payer, it never seems to keep up with modern times.

  2. Paul Eckel says:

    Malpratice reform could include the elimination of creative solutions between doctors and hospitals. Elimination of CON laws would be required.
    Paul Eckel

  3. Pat King says:

    The Stark law and anti-kickback statute probably account for more legal expenses paid by health care providers than anything other than liability defense. The Stark regulations are immensely complex, change at least twice a year, and expose well-intentioned health care providers to massive potential civil and criminal liability. They are way overdue for a major re-thinking, but just continue to grow by accretion. I believe that physicians should be required to tell patients when they have a financial interest in an entity they are sending the patient to, and “rent-a-patient” schemes should be prosecuted to the full extent of the law. Beyond that, these laws do more to enrich my fellow health care attorneys than protect patients and insurance companies from unscrupulous doctors.

    Patricia King, J.D., M.B.A.
    Principal, Digital Age Healthcare LLC

  4. Marshall Maglothin says:

    OIG Approves Gainsharing Program for Ortho and Spine
    AUGUST 14, 2008

    The OIG has approved the first orthopedic and spine gainsharing project.

    No details have been released on the participating hospitals or the particular procedures and technologies that will be covered in the project. Additionally, no financial terms have been publicized, though the Goodroe press release says that most arrangements allow participating physicians to be paid as much as 50% of the savings generated under the program. According to Goodroe, up to $75 million in potential savings has been identified in the existing programs, so these benefits could be significant. A 2006 survey found that most physicians felt that gainsharing was an effective way to align financial incentives for hospitals and physicians, though they were divided on what constitutes gainsharing and whether it should be disclosed to patients.

    In her guest blog for HealthpointCapital, Goodroe Healthcare Solutions founder Joane Goodroe commented, “Gainsharing is first about assuring quality of care for patients and secondly about increasing efficiency.” Industry groups such as MDMA and AdvaMed have taken issue with these objectives, suggesting that gainsharing may reduce the quality of patient care, slow development of new technology and discriminate against smaller manufacturers.

    I’ve present Gainsharing to MGMA Annual, BONES, MGMA FMS and MSO Societies.

    The docs have to approach the hospital – the hospital is not going to be very aggressive about sharing their savings.

    Marshall Maglothin MHA MBA
    President, Blue Oak Consulting, LLC
    COO, Inpatient Specialists, P.A.
    Fairfax, VA / Rockville, MD