Three hospitals belonging to Robert Wood Johnson Health System, New Brunswick, N.J., have sued the CMS to block a physician gainsharing demonstration project approved last year. The three-year project, launched Jan. 1, allows participating hospitals to offer cash bonuses -- without the risk of invoking antikickback laws -- to physicians who help the hospitals reduce inpatient costs. The project was engineered by the New Jersey Hospital Association and limited to eight hospitals approved by the CMS. Robert Wood Johnson University Hospital and Robert Wood Johnson University Hospital at Hamilton, N.J., don't belong to the hospital association. The Robert Wood Johnson hospitals argue that the project "arbitrarily limits participation among competing health facilities" and that the CMS doesn't have the authority to waive antikickback laws. The project will "disrupt referral patterns and create an uneven playing field," the hospitals said in a news release. Modern Healthcare broke the story of the lawsuit on its Web site last night.
"Physicians will have a significant financial incentive to admit their patients to the eight hospitals authorized to participate in the gainsharing program," said Harvey Holzberg, president and chief executive officer of Robert Wood Johnson University Hospital in New Brunswick, in the release. The lawsuit was filed Jan. 14 in U.S. District Court in Newark. Besides the New Brunswick and Hamilton hospitals, the plaintiffs include Robert Wood Johnson University Hospital at Rahway, N.J. The Rahway hospital, which joined the Robert Wood Johnson system last year, belongs to the New Jersey Hospital Association. At deadline, hospital association officials could not be reached for comment. Officials at the CMS confirmed that they had received the suit but said they had not formulated a response. -- by Cinda Becker