Plans not paying for mistakes

November 1, 2008

Insurers follow updated CMS rules regarding financial responsibility for egregious medical mistakes, do not pay list and never events

There was a time in which true medical mistakes, such as removing the wrong kidney, received little attention outside of the operating suite. That time has run out.

Since Medicare's announcement that it will no longer pay for certain preventable errors beginning last month, hospitals and providers are moving quickly to reduce costly errors that not only risk life and limb, but present a financial burden. A new report from the Agency for Healthcare Research and Quality (AHRQ) determined that potentially preventable medical errors that occur during or after surgery cost employers nearly $1.5 billion a year.

Based on a nationwide sample of more than 161,000 patients in employer-based health plans, insurers paid an additional $28,218, or 52% more for surgery patients who experienced acute respiratory failure. The study also says insurers paid an extra $19,480, or 48% more for surgery patients who developed post-operative infections.

Following CMS's lead, major insurers are pursuing similar and sometimes more aggressive policies of nonpayment in reference to the expanded do-not-pay list.

In January, Aetna announced that it wouldn't pay for any of the 28 never events, as identified by the National Quality Forum. WellPoint has introduced a similar program. UnitedHealthcare and all 39 Blue Cross and Blue Shield plans are also considering restrictions.

Going further, however, Aetna also is pushing hospitals to embrace quality patient care measures as part of contracting.

The insurer already requires hospitals to waive patient bills when certain medical errors occur and to apologize to families of the patients hurt by the mistakes. Aetna reports that since the beginning of the year, one in three hospitals with which it has negotiated either a new or renewed contract has agreed to adopt the insurer's policy in tackling never events.

"We are encouraged by the response to this new concept and believe as we, and others, continue to have dialogue about the intent of this language, more hospitals will include never events language in their contracts," says Aetna Spokeswoman Karin Rush-Monroe.

CIGNA is exploring internal guidelines regarding nonpayment of never events, not as a cost savings initiative, but as a way of improving patient safety, explains Doug Hadley, MD, CIGNA's medical officer.

"Our policy is designed to be consistent with Medicare's rules because we believe those rules provide hospitals flexibility on avoidable hospital conditions and the rules surrounding other complications and [chronic illnesses]," Dr. Hadley says.

CMS's policy has the support of some hospital systems as well.

Last November, Massachusetts hospitals announced that they would not charge for nine serious medical errors. Other state hospital trade groups adopting similar non-billing policies include Colorado, Minnesota, Tennessee, and Vermont.

Despite the stricter mandates from Medicare and other health plans, medical mistakes are routine in many American hospitals.

For instance, the California Department of Public Health in August fined 18 hospitals for state health code violations in which patients were victims of accidents ranging from surgical tools left inside bodies to procedures performed on the wrong body parts.

In July, the Joint Commission, a nonprofit that accredits hospitals in the United States, updated its guidelines for preventing wrong-site surgeries. Beginning in 2009, doctors must conduct a preprocedure verification process, as well as mark the body area they plan to incise before surgery begins. Also, nurses are supposed to run through a checklist of steps in the operating room before the procedure begins-and call a halt when something falls below standards.

Some observers say enacting such a checklist is sensible, but flies in the face of the hierarchical culture in some operating rooms where doctors typically aren't inclined to perform by the numbers. Furthermore, some nurses feel uncomfortable taking a leading role in an operation.