OIG Opens The Door For More Impactful Clinical Co-Management

Many hospitals and health systems have been able to increase their alignment with a cross-section of their medical staff by engaging them in what could be generically described as a hospital-sponsored accountable care / pay-for-performance program; namely clinical co-management. Traditionally, clinical co-management is a model of physician-hospital alignment that provides a financial incentives to participating physicians within a given specialties in return for: their sweat equity; their intellectual capital; and for their attainment of critical performance goals.

Over the years, clinical co-management agreements have been developed and implemented across a broad spectrum of specialties and sub-specialties; from the highly prevalent models like cardiac and orthopedic services to the less prevalent models applied to endoscopic and infusion services. Independent of the specialty focus, clinical co-management typically offers participating physicians a base management fee for fulfilling a predetermined scope of management services and an incentive payment for realizing goals in relation to: quality-of-care; operational efficiency; service-line growth; and organizational alignment.

Since clinical co-managements conception many hospitals, health systems, and consultants have been frustrated by the noticeable absence of cost containment from clinical co-management model’s incentive structures. Although almost everyone involved with clinical co-management has expressed a desire to include direct measures of cost containment in their agreements, typically legal advisors have balked at the idea due to regulatory concerns. December 31, 2012 may be seen as the dawn of a new era of clinical co-management. On the last day of the year, the Office of the Inspector General issued its Advisory Opinion No. 12-22 which upheld a co-management agreement that directly incented cost containment. The inclusion of costs as part of a balanced service-line co-management scorecard has the potential to greatly increase the impact of this model going forward and will finally provide hospitals and health systems with a more direct means of measuring their programs return-on-investment. Any hospital or health system that is considering clinical co-management or has an agreement up for renewal should strongly consider including cost control in the model. As healthcare organizations do so, they would be wise to seek legal and consulting advice to ensure that cost is appropriately and optimally incorporated into their co-management contracts. -Dr. John Redding

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