Gainsharing provides a stepping stone by beginning the process of getting physicians and hospitals to work together to successfully transition to value-based models.
Gainsharing is the direct payment by hospitals to physicians, based on quality of care improvement and efficient inpatient performance. Gainsharing programs focus on reducing inpatient service costs by improving the efficiency of care delivered at the point of service and eliminating medically unnecessary services. By working cooperatively to decrease inpatient costs, hospitals share a portion of the cost reductions with physicians.
This article discusses the five steps to physician alignment in "large-scale" gainsharing, which involves all inpatient cases, all inpatient costs and all DRGs except psych, normal deliveries and newborns. These gainsharing programs are established under CMS' Innovation models, particularly the Bundled Payment for Care Initiative Model 1(acute-care only) used by the New Jersey Hospital Association, and commercial gainsharing programs such as those with the Greater New York Hospital Association. Similar programs are being implemented in Maryland and Pennsylvania.
By aligning physicians with hospitals, gainsharing initiatives provide a foundation and act in concert with advanced structures like accountable care organizations or patient-centered medical homes. Gainsharing provides a stepping stone by beginning the process of getting physicians and hospitals to work together to successfully transition to value-based models. Large-scale gainsharing does this cost effectively by utilizing the current payment system and data to take advantage of the established infrastructure.
There are five key steps that are necessary for a large scale gainsharing program to be effective in aligning physicians with hospitals to lower costs, improve quality, and sustain long term change.
1. Secure physician buy-in.
To secure physician involvement, the program recognizes the fundamental role of physicians in the care taking process. The gainsharing program needs to allow for physician autonomy.
Physician participation has to be voluntary, with a thorough understanding of the goals of the program and the structure of the incentives. Simply, if the physician does not want to participate in gainsharing, he or she should not have to participate.
Physician investment in the program is more important than payment of financial incentives. It is necessary to provide physicians with the tools to support their practice of medicine, the data needed to make clinical decisions and a pathway for them to develop and implement the solutions to improve care. Gainsharing appeals to the highest levels of physician motivation which revolves around dong the best that they can for their patients by solving problems.
Unlike ACOs or other shared savings programs, gainsharing does not change the way physician professional fees are billed. Physicians do not have to join a group or be employed; they join the program through a participation agreement. The most significant change is that they receive an incentive if they become more efficient, reduce costs and improve quality.
The incentives must be aligned. For example, for physicians paid on a per diem, reducing LOS decreases their professional fees although such reductions decrease hospital costs. Effective gainsharing programs help to protect physicians by including as part of the incentive protection against loss of income that may occur as a result of decreasing LOS.
2. Provide relevant information.
Physicians are scientists interested in information to help them practice better. The data needs to be relevant at the individual physician practice level. Payments are made to the “responsible physician”, or physician of record, as designated in the hospital claims data. For medical cases, the attending physician receives the incentive payment. For surgical cases, the operating physician, i.e., the surgeon of record, receives the incentive payment. Consultants and ancillary physicians may be included at the discretion of the hospital.
Reports provided to physicians need to have an ongoing feedback loop. Best practice is to have physicians receive their incentive checks from the chief medical officer or department chair who will review their reports and discuss areas for opportunity.
3. Ensure program meets core physician requirements.
The gainsharing program should recognize that physicians must be able to use their professional judgment to treat complicated patients with the resources that the physician determines are necessary. Core physician requirements are as follows:
- The gainsharing program adjusts cases by severity of illness to provide for an apples-to apples comparison.
- Incentives are provided only for lowering costs with no penalty applied for patients with complex conditions that result in higher cost. Physicians simply do not receive an incentive for complicated cases where the physician does not compare favorably to best practices.
- The gainsharing program needs to be inclusive of all types of physicians. By opening up gainsharing opportunities to all service lines, the hospital engages a broad group of physicians, and removes perceptions of favoritism. This also expands hospital cost savings opportunities.
- The program conditions incentive payments based on performance on quality metrics, including institution-specific objectives. Measures may include quality data such as returns to the operating room or attendance at hospital grand rounds.
4. Incorporate best practices.
To promote physician acceptance, performance is evaluated based on regionally derived Best Practice Norms. The program establishes inpatient BPNs based on the 25th percentile of lowest patient costs by APR DRG in the region. Using regional BPNs at the 25th percentile enables the physician to see that peer physicians practicing nearby are meeting these performance standards.
Typically, state data is used to establish the BPNs, but in some cases larger health systems may provide enough cases to generate BPNs.
5. Incentives should reward both improvement and performance.
The gainsharing program allows hospitals to incent physicians for improvements in efficiency in their own practice. Incentives for "improvement" encourage physicians who are not at the BPN to improve relative to their own practice. Incentives based on BPN "performance" enable hospitals to reward physicians that are performing at high standards.
The typical gainsharing program starts out with financial incentives based on an index of 2/3 improvement and 1/3 BPN performance. At the hospital discretion, based on how the physicians respond to the program, the financial incentives typically change over time to increase the weight of the reward more toward BPN performance.
Conclusion
Gainsharing centers on the acute inpatient setting. This encourages specialists, hospitalists and surgeons to decrease use of higher cost modalities (i.e., reduce ICU utilization, decrease LOS, and lower service costs), while coordinating with the primary care physicians to provide post-discharge support to reduce readmissions and potentially avoidable admissions. The incentives align physicians with the goals of lowering cost and improving outcomes.
Gainsharing enables health care organizations to more fully collaborate with their physicians in providing care that promotes lower cost without sacrificing quality. Because it fosters hospital-physician alignment, gainsharing can be used in conjunction with, and as a stepping stone to, advanced shared savings programs such as ACOs and patient-centered medical homes.
Jo Surpin is the president of Applied Medical Software (AMS) in Collingswood, N.J. AMS has developed a gainsharing program that aligns hospital and physician incentives approved by CMS for BPCI Model 1, as well as programs for commercial gainsharing. Jo serves as the Chair of the Board of Salus University, a health sciences university, in Elkins Park, Pa.
Anthony Stanowski, DHA, FACHE, is vice president at AMS. He is a member of the AHA's Committee on Governance and also serves on the Board at Bon Secours Baltimore Health System in Baltimore.
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