OIG Clears the Path for Physician Incentives

For health care reform to succeed (and for the nation to achieve fiscal balance) hospitals must shift their focus away from maximizing volume and reimbursement to improving quality and reducing cost. But change like this is hard, especially when it necessitates changes in the behavior of specialist physicians.

That’s why I’m pleased that the Office of the Inspector General (OIG) has determined that a hospital is allowed to offer bonuses to a cardiology group for reducing costs, improving quality, and increasing employee and patient satisfaction. There’s always a risk that financial incentives may be used for undesirable or fraudulent purposes but to me the risks are worth it in order to get the systemic change that’s so needed. The more that hospitals and physicians feel free to experiment with different, creative approaches without the fear of being imprisoned or fined the better.

In this particular example the 60 percent of the bonus is for cost reduction, 30 percent for quality improvement, and 5 each for employee and patient satisfaction. In a perfect world I’d like to see more weight on patient satisfaction but I do worry that if the number were too high it might lead to trouble, e.g., waiving co-pays the way car dealers used to give out free oil changes to people who let them fill out their consumer satisfaction survey.

In case anyone’s worried that OIG is getting soft, they did include some tough language in the opinion:

“Like any payment arrangement between a hospital and physicians who refer business to the hospital, payments purportedly intended to encourage quality improvements and cost savings might be misused by unscrupulous parties to induce limitations or reductions in care or to disguise kickbacks for federal healthcare program referrals.”