OIG Issues Unfavorable Opinion on MAO’s Proposed Gainshare Program

The Department of Health and Human Services, Office of Inspector General (“OIG”) recently released an unfavorable advisory opinion, OIG Advisory Opinion No. 24-08 (the “Opinion”), to a Medicare Advantage Organization (“MAO”). In the Opinion, OIG analyzes the proposed structuring of a plan in which the MAO, under certain circumstances, would share a percentage of its savings with certain groups to which it provides coverage. The MAO inquired whether the contemplated gainsharing plan (the “Proposed Arrangement” or “Gainsharing Plan”) would constitute grounds for sanctions under the civil monetary penalty provisions at sections 1128A(a)(5) and (7) of the Social Security Act (the “Act”), as those sections relate to the commission of acts described in section 1128B(b) of the Act (the “federal Anti-Kickback Statute” or “AKS”) or prohibition of inducements to beneficiaries. The MAO also sought confirmation that the Gainsharing Plan would not expose it to sanctions under the exclusion authority at section 1128(b)(7) of the Act. OIG concluded that the Gainsharing Plan would generate prohibited remuneration if the requisite intent were present, which would constitute grounds for sanctions under the Act.

The Advisory Opinion

The Opinion requestor is an MAO that contracts with the Centers for Medicare & Medicaid Services (“CMS”) to offer various Medicare Advantage (“MA”) plans, including Employer Group Waiver Plans (“EGWPs”). MAOs contract with CMS to provide basic benefits to Medicare enrollees under Medicare Parts A and B, and may also provide drug benefits under Medicare Part D as well as other supplemental benefits. But MA plans offered to EGWPs have certain distinctions from those offered to individual Medicare enrollees that were relevant to OIG’s analysis of the requestor’s Gainsharing Plan. Specifically, MAOs that offer EGWPs are exempt from requirements to: (1) submit a bid to CMS representing the EGWP’s anticipated costs of providing basic benefits to a Medicare enrollee; (2) impose uniform premium requirements for members in the same plan (instead negotiating with groups about the scope of benefits offered to enrollees or any additional premium amounts the group must pay); (3) report which permissible rebate method (e.g., premium reductions or supplemental benefits payments), if any, it provides; and (4) rebate to enrollees a specific percentage of its overall payment from CMS.

Under the Gainsharing Plan, the requestor would give groups the opportunity to share in a percentage of the requestor’s savings. Group eligibility for this “Gainshare Payment” would be based on a negotiated medical loss ratio, which would be calculated by dividing certain of the requestor’s expenses by certain of its revenues. The amount of the Gainshare Payment could exceed any additional premium amount paid by the group and could be paid to groups that do not pay an additional premium to the requestor. Further, under the requestor’s contract with a group, the Proposed Arrangement could be modified or terminated under several circumstances, including if the number of enrollees in a group falls below a negotiated threshold. The requestor would not restrict how a group could use the Gainshare Payment, though it noted that the group might nonetheless be subject to the Employee Retirement Income Security Act (“ERISA”) or state laws that impose fiduciary requirements, which could impact how the group uses the Gainshare Payment.

OIG concluded that the Gainsharing Plan would involve remuneration to participants (in the form of sharing a percentage of its savings) that could induce the group to refer its enrollees to the requestor so that the requestor, via its EGWP, would arrange for the furnishing of items or services that are reimbursable by a federal healthcare program. No safe harbor would apply. Per OIG, the risk of fraud and abuse under the Gainsharing Program was too high because: (1) the Gainshare Payment could incentivize a group to choose a plan that would arrange for federally reimbursable items and services to enrollees, potentially impacting competition; and (2) the aforementioned steering concern would not be offset by any guaranteed benefits to enrollees, as would be the case if the group did not contract for enhanced benefits that would generate extra costs to the group, thereby increasing the group’s chance of earning the Gainshare Payment.

Analysis

Though the Gainsharing Plan under review posed too high a risk of fraud and abuse, OIG emphasized that it was conceivable that a gainshare payment arrangement could be designed to be compliant with the AKS. Arrangements structured to pose a heightened potential for patient steering, such as the Proposed Arrangement, would be considered suspect. However, previous OIG advisory opinions suggest that this risk may be mitigated by monitoring pre- and post-gainshare plan implementation enrollment patterns for consistency, and imposing consequences (up to and including disenrollment) for groups whose patterns indicate that they steered enrollees toward the requestor’s plans versus to other plans not providing such incentives.¹ OIG is also less likely to find a high risk of fraud and abuse where incentive calculations take quality outcomes into account and do not rely solely on cost savings.² The unfavorable Opinion issued in this case reinforces that healthcare stakeholders should work with experienced counsel when developing gainsharing arrangements to ensure that appropriate safeguards are in place to avoid penalties under the AKS. For more information on OIG Advisory Opinion No. 24-08 or other issues addressed herein, please contact AGG Healthcare attorney Lisa Churvis.

[1] See, e.g., OIG Advisory Opinion 17-09 (steering risk mitigated where hospital shared savings program oversight committee could terminate a physician not admitting a historically consistent selection of patients).

[2] See, e.g., OIG Advisory Opinion 09-06 (arrangement that cannot be adequately and accurately measured for quality of care would pose a high risk of fraud or abuse, as would one that rewards physicians based on overall cost savings without accountability for specific cost reduction measures).