The New Jersey Hospital Association/CMS demonstration project in physician gainsharing -- offering performance-based incentives to doctors who help their hospitals reduce inpatient Medicare costs -- could be revived if the CMS seeks an alternate opinion from HHS' inspector general. In a written opinion April 16, U.S. District Court Judge John Bissell in Newark said the project intractably violated the Civil Monetary Penalties law based on a 1999 opinion from HHS' inspector general that strictly prohibited such financial arrangements. But Bissell left open the possibility that the CMS could seek a new opinion from the inspector general that would overturn the previous opinion. The CMS is "powerless" to waive the Civil Monetary Penalties law without at least an advisory opinion, he said.
Bissell issued a permanent injunction against the project April 13 in response to a lawsuit by Robert Wood Johnson Health System, New Brunswick. Bissell said the monetary penalties law "takes aim at curtailing the diminution of patient care and services for the sake of increased profits or reduced losses -- the very goal and/or inevitable result of the demonstration project." NJHA officials said they still were studying the opinion, but it appears to open the door to resuscitating the project. CMS officials had no comment at deadline. -- by Cinda Becker