In recent weeks, the Department of Health and Human Services Office of Inspector General (OIG) has issued several advisory opinions approving 'gainsharing' arrangements in which hospitals agree to pay private practice physicians a portion of the cost-savings directly attributable to their adoption of certain cost-saving protocols. These opinions represent a significant development given the OIG's historical reluctance to approve gainsharing arrangements in any form and the recent federal court decision striking down a CMS gainsharing demonstration project in New Jersey as illegal.This program will provide an overview of the evolution, principal elements, and key safeguards incorporated into the gainsharing arrangements reviewed by the OIG, describe the process through which the gainsharing arrangements were developed, and discuss the manner in which program sponsors collaborated with the OIG in securing program approval.This program is the first of two sessions on gainsharing. The second session will focus on what the recent OIG guidance means for hospitals considering development of gainsharing arrangements: what safeguards are important, use of the advisory opinion process, and remaining legal questions.