Introduction
On July 8, 1999, the Office of the Inspector General of the Department of Health and Human Services ("OIG") issued a Special Advisory Bulletin on hospital-physician gainsharing arrangements. The Special Advisory Bulletin focuses on the law prohibiting any hospital from knowingly making a payment, directly or indirectly, to a physician as an inducement to reduce or limit services to Medicare or Medicaid patients under the physician's direct care. In the Special Advisory Bulletin, the OIG broadly interprets this prohibition and finds impermissible those gainsharing arrangements in which physicians receive a share of the savings to a hospital attributable to the physicians' efforts to control costs. While acknowledging the potential benefits of gainsharing, the OIG indicated that the clear statutory prohibition prevents it from providing any regulatory relief (through the advisory opinion process or otherwise) without a change in the law.
