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VIEWPOINT

Medical Error Reimbursement Controversies

Patrice M. Weiss, MD; Frank G. Finch, MD; Eduardo Lara-Torre, MD; L. Wayne Hess, MD

The newly implemented Centers for Medicare & Medicaid Services (CMS) payment system that became effective in October 2008 will not reimburse Medicare- and Medicaid-certified hospitals for 11 types of medical errors and hospital-acquired conditions.1,2 This payment system was a result of an investigation into ways that Medicare can help reduce or eliminate the occurrence of “never events.”

CMS defines “never events” as “serious or costly errors in the provision of health care services that should never happen” (Table).3 CMS determined that paying for these errors was inconsistent with the Medicare payment reformed goals that support adjusted payments based on quality and efficiency of care. By reducing or eliminating payments for “never events,” more resources could be directed toward preventing these events, as opposed to paying for them after they occur. But will this new system really improve patient safety?

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TABLE. CMS “No-Pay” List*

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A Brief History

This new payment system is the latest development in patient safety awareness that essentially began with the release of “To Err is Human” by the Institute of Medicine in November of 1999. Subsequently, it was calculated that deaths from medical errors exceeded those from breast cancer, motor vehicle accidents, and AIDS.5 The costs are high in expenses as well as morbidity and mortality; a recent study by the Agency for Healthcare Research and Quality estimates that potentially preventable medical errors that occur related to surgery may cost employers nearly $1.5 billion yearly.6 The study found that for patients who experienced postoperative infections, insurers paid an additional $19,480, or 48% more than those not experiencing the “error.”

Next, the Deficit Reduction Act of 2005 allowed CMS (as of February 2008) to adjust payments for hospital acquired infections. CMS began working with Congress on further legislative steps to reduce or eliminate these payments. In 2006, quality care and outcomes were linked to physician payments; however, in October 2008, CMS ceased reimbursement for 11 types of medical errors and hospital-acquired infections.

In just 2 years, “never events” became a “no-pay” list. This list is estimated to save Medicare $21 million in each of the next 3 fiscal years and $22 million in each of the next 2 years after that. CMS administrators stated, however, that “these quality measures are not about savings but about changing hospitals and making them safer places.”7

Many state Medicaid directors have followed the CMS Medicare “no-pay” lead. Currently, 23 have approved nonpayment for specific mistakes. Also, many of the nation’s largest insurance providers (Cigna, Aetna, Blue Cross Blue Shield) have announced they, too, will no longer pay for serious preventable mistakes.

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The Controversy

The “no-pay” list has engendered much debate and controversy. Proponents of the measure cite that hospitals will be forced to do more to prevent errors and infections, thereby saving lives and reducing costs. Additionally, this list has consumer appeal because a lack of errors is a good indicator of consumer (patient) safety.

Opponents highlight that all surgical site infections are not preventable. Clearly defining what constitutes a mistake, whether it was preventable, and who is responsible, is difficult, and may involve a multitude of investigations. Also, a condition present on admission (POA) may not have been easily diagnosed, but was later blamed on the hospital.

The list may further shrink already critically low revenue rates, which could in turn jeopardize the solvency of hospitals around the country.1 Decreased revenue could lead to reduced staffing with a lower nurse-to-patient ratio. Ironically, the lower the nurse-to-patient ratio, the higher the incidence of pressure-sores that are prone to superimposed infection (both pressure sores and hospital acquired infections are on the list).

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What Clinicians Can Do

Despite these concerns, the new CMS payment system has been implemented. What can providers and hospitals do? First, familiarize yourself with the conditions on the list and enlighten your colleagues. Second, reliably report conditions POA to prevent the condition from assuming hospital-acquired status. Hospitals must report POA information for both primary and secondary diagnoses. Providers must resolve any inconsistent, missing, or unclear admission documentation, including emergency department notes if the patient presented there. A joint effort between the health care professional and the coder to standardize assessment and documentation of reporting the conditions is essential. Third, implement a concurrent compliance monitoring system so that alterations in accepted practice standards are readily identified and corrected. Finally, evidence-based patterns and protocols must be fully integrated to prevent these complications.

More information and a fact sheet on the new CMS payment guidelines can be found at www.cms.hhs.gov/HospitalAcqCond.

The author reports no actual or potential conflicts of interest in relation to this article.

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Patrice M. Weiss, MD, is Professor, Vice Chair, and Residency Program Director, Department of ObGyn. Frank G. Finch, MD, is Assistant Professor, Department of Internal Medicine. Eduardo Lara-Torre, MD, is Assistant Professor, Associate Residency Program Director, and Director of Ambulatory Gyn, Department of ObGyn. L. Wayne Hess, MD, is Professor and Chair, Department of ObGyn. All are at Virginia Tech Carilion School of Medicine, Carilion Clinic, Roanoke, VA.

References

1. White KM. The new CMS payment system: Too much, too soon? Nursing Management. 2008;39(10):38–42.
2. Cole C. Wrong-Site Surgery Won’t be Reimbursed By Medicare. www.injuryboard.com/national-news/wrongsite-surgery-wont-be-reimbursed-by-medicare.aspx?googleid=245602. Accessed April 1, 2009.
3. Centers for Medicare & Medicaid Services. Eliminating serious, preventable, and costly medical errors – never events [press release]. Baltimore, MD: CMS Office of Public Affairs; May 18, 2006.
4. Institute of Medicine. To err is human: building a safer health system. Committee on Quality of Health Care in America. Washington, DC: National Academy Press; 1999.
5. Institute of Medicine. Crossing the quality chasm: a new health system for the 21st century. Committee on Quality of Health Care in America. Washington, DC: National Academy Press; 2001.
6. Agency for Healthcare Research and Quality. New AHRQ Study Finds Surgical Errors Cost Nearly $1.5 Billion Annually [press release]. www.ahrq.gov/news/press/pr2008/surgerrpr.htm. Accessed April 3, 2009.
7. Centers for Medicare & Medicaid Services. Quality Initiatives—General Information. Overview. www.cms.hhs.gov/QualityInitiativesGenInfo. Accessed April 3, 2009.

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