The Department of Health and Human Services issues proposed regulations on physician incentive payments by hospitals

Area of Science:

• Healthcare Law
• Medical Economics
• Health Policy

Background:

• Hospitals may implement physician incentive plans.
• Compliance with Omnibus Budget Reconciliation Act (OBRA) of 1986 is critical.
• Existing regulations preclude incentives that limit Medicare/Medicaid services.

Purpose of the Study:

• To alert hospitals to regulatory restrictions on physician incentive plans under OBRA 1986.
• To guide hospitals in reviewing their incentive structures for compliance.
• To highlight potential risks associated with supervising physician incentives.

Main Methods:

• Review of OBRA 1986 provisions.
• Analysis of proposed regulations and preamble guidance.
• Identification of potential compliance pitfalls in hospital incentive programs.

Main Results:

• Physician incentive plans must not offer payments to reduce or limit Medicare/Medicaid services.
• Supervising physicians receiving incentives cannot influence direct patient care in those departments, even indirectly.
• Incentives based on a supervising physician's medical group patient volume pose risks.

Conclusions:

• Hospitals must meticulously review physician incentive plans for prohibited payments.
• Proactive development of utilization and quality of care reviews is recommended.
• Ensuring patient undertreatment does not occur is paramount when designing incentive programs.