Medicare to Cease Payment for Hospital Error

It’s official—starting tomorrow, Wednesday October 8th, Medicare will no longer pay hospitals for additional care for patients who acquire “reasonably preventable” conditions while hospitalized. Institutions also will be banned from charging the patients directly, meaning the hospitals must absorb the costs for their own mistakes. Officials say the new rule will not save much money at first, perhaps $21 million a year, but as the conditions are expanded and more insurers follow their lead, the savings could become substantial. However, the most important benefit could come if hospitals are persuaded to work harder to prevent errors and improve the quality of care for their patients.

The rule, proposed over a year ago, covers 10 conditions for which Medicare will no longer reimburse hospitals for. They include: injuries from falls, severe bedsores, urinary tract and vascular infections that result from improper use of catheters, poor blood sugar control, and infections after certain surgeries. In addition, the rule covers three “never events”: incompatible blood transfusions, objects left in the body during surgery and air embolisms. Medicare reports that in 2007 more than 250,000 people had a serious bedsore while hospitalized, for which the hospitals were paid approximately $43,000 for each case.

This move could mark the beginning of a growing trend, as many private insurance companies intend to follow suit. And many states are considering or have implemented a similar policy for Medicaid patients. In the past year, at least four state Medicaid programs announced that they will not pay hospitals for as many as 28 “never events,” and several large insurers, including Aetna, Cigna, Blue Cross Blue Shield and WellPoint plans in seven states, have issued similar rules. Under a law passed in 2005, Medicare-participating hospitals are required to report on 42 quality measures. At least 20 states have also passed laws requiring hospitals to report clearly preventable medical errors caused by hospital workers or preventable infections publicly.

So far, the policy only focuses on hospitals, not doctors. If a surgeon leaves an object in a patient and has to perform a second operation to retrieve it, the hospital will not be paid for the second procedure but the surgeon will be. However, Medicare intends to add conditions to the no-pay list in 2009 which may begin to address this inequity.

In another development, federal officials last week approved a new company to begin inspections as part of its hospital accreditation program—DNV Healthcare. DNV becomes the first new accreditor in more than 30 years, according to the Houston-based company. Until recently, the Joint Commission on the Accreditation of Healthcare Organizations has effectively held a monopoly on the hospital reviews, which are a requirement in order to participate in Medicare. “We’re ready to go,” said DNV’s President, Yehuda Dror. “Our role is to be a leader in hospital accreditation, not just to offer another option.”

Patients can go to www.medicare.gov for Medicare’s hospital quality data.