10 Key Concepts from OIG’s Favorable Opinion on Co-Management Arrangements

January 28, 2013

On Jan. 7, 2013, the Office of Inspector General (OIG) issued Advisory Opinion 12-22 providing a favorable review of a co-management arrangement between a hospital and a group of cardiologists that included performance-based compensation for patient and employee satisfaction, quality, and cost-savings measures. Clinical co-management arrangements, as they are commonly referred to, involve an agreement between a hospital and a group of physicians who agree to assist the hospital in co-managing the clinical and operational activities of a hospital-based service line in exchange for a management fee, which typically includes a fixed payment amount, as well as some form of performance-based incentive fee.

In Advisory Opinion 12-22, the OIG concluded that the hospital’s co-management arrangement with the physician group would not incur sanctions under the Anti-Kickback Statute or Civil Monetary Penalties Law. While the Advisory Opinion is based upon a nuanced factual background, the factors that the OIG considered in making this conclusion are instructive for other hospitals contemplating similar co-management arrangements with performance-based compensation. The OIG’s favorable analysis is an indication that clinical co-management arrangements, when properly structured, can be useful tools for hospitals in building clinical and operational management schemes that are effective and beneficial to the delivery of patient care.

For a summary of the Advisory Opinion and more information on key concepts for hospitals considering development of similar arrangements, review this article.

If you have questions about the Advisory Opinion or if you would like assistance in developing a co-management arrangement, please contact one of the authors or a member of McGuireWoods’ Healthcare Department.