Hospital Errors No Longer Covered by Medicare

• Abstract
• Characteristics of this policy
• Purpose and process analysis
• Expected outcome
• References

Featured in half-yearly report: Health Policy Developments 10

Abstract

As of October 2008, Medicare no longer pays hospitals for costs associated with treatment complications for certain conditions that could have been avoided if proper quality improvement procedures were in place. Since the policy change took effect, Medicare has gone even further - adding additional conditions to the list, and extending the policy to include physician payments in the case of certain preventable errors.

Recent developments

The Centers for Medicare and Medicaid Services (CMS) initially introduced a policy in September of 2008 to improve the quality of care that patients receive in the hospital setting and to reduce Medicare expenditures associated with the treatment of preventable errors, injuries and infections. By shifting the cost of medical errors onto hospitals, it was thought that hospital staff would have an increased incentive to improve the quality of care. 

Despite objections from some hospital leaders and physicians over the original policy, CMS decided to expand its list of conditions deemed "reasonably preventable" in late 2008 to include 9 additional conditions: surgical site infections associated with elective procedures, Legionnaires disease, poor glycemic control, iatrogenic pneumothorax, delerium, ventilator-associated pneumonia, deep vein thrombosis/pulmonary embolism, staphylococcus aureus septicemia and clostridium difficile-associated disease. In addition, in early 2009, CMS announced its intention to stop all payments to hospitals and physicians for three so-called 'never events': surgery on the wrong patient, the wrong surgical procedure and surgery on the wrong body part.

Degree of Innovation	traditional		innovative
Degree of Controversy	consensual		highly controversial
Structural or Systemic Impact	marginal		fundamental
Public Visibility	very low		very high
Transferability	strongly system-dependent		system-neutral
current    previous

The program is just being implemented and so far has had little impact. The impact will occur as the list of conditions expands.

Purpose and process analysis

Current Process Stages

	Idea	Pilot	Policy Paper	Legislation	Implementation	Evaluation	Change
Implemented in this survey?

Initiators of idea/main actors

• Government: Introduced by the Centers for Medicare and Medicaid Services, this policy is aimed at reducing Medicare costs and improving outcomes for Medicare beneficiaries.

• Providers: Though most are supportive of efforts to improve health care quality, hospitals and physicians continue to express concerns about CMS' policy.

• Payers: A number of private insurance companies have followed Medicare's lead on not paying for preventable medical errors.

• Patients, Consumers: Medicare beneficiaries are largely supportive and believe that the policy change will reduce medical errors.

Stakeholder positions

Stakeholder positions on CMS' policy have largely remained the same. Physicians and hospital leaders still support the concept of quality improvement, but continue to argue that Medicare's policy of non-payment for certain conditions creates a punitive environment that perpetuates blame and secrecy. Moreover, the position of hospital leaders and providers has grown more nuanced over time: while providers largely agree with a policy of non-payment for certain errors (particularly wrong person, wrong surgery and wrong site errors), they argue that other errors, such as hospital acquired infections (HAIs), are less clearly preventable. In addition, some argue that CMS' policy may change individual physician behavior, but without system-level changes in the culture and organization of services, non-payment has limitations in creating incentives for improved quality.   

Actors and positions

Government
The Centers for Medicare and Medicaid Services	very supportive		strongly opposed
Providers
Hospitals	very supportive		strongly opposed
Physicians	very supportive		strongly opposed
Payers
Private health insurance companies	very supportive		strongly opposed
Patients, Consumers
Medicare beneficiaries	very supportive		strongly opposed
current    previous

Influences in policy making and legislation

The original policy went into effect on October 1, 2008. In late 2008, CMS expanded the policy so that beginning in 2009, 9 additional conditions deemed "reasonably preventable" would also no longer be reimbursed by Medicare. These conditions include surgical site infections associated with elective procedures, Legionnaires disease, poor glycemic control, iatrogenic pneumothorax, delerium, ventilator-associated pneumonia, deep vein thrombosis/pulmonary embolism, staphylococcus aureus septicemia and clostridium difficile-associated disease.

In early 2009, CMS announced its intention to stop all payments in cases of surgery on the wrong patient, the wrong surgical procedure and surgery on the wrong body part.

Legislative outcome

Enactment

Actors and influence

Government
The Centers for Medicare and Medicaid Services	very strong		none
Providers
Hospitals	very strong		none
Physicians	very strong		none
Payers
Private health insurance companies	very strong		none
Patients, Consumers
Medicare beneficiaries	very strong		none
current    previous

Positions and Influences at a glance

Adoption and implementation

Hospitals and providers have been highly affected by the implementation of this policy.  In order to receive payment, providers must evaluate and report conditions are 'present-on-admission', so new efforts to collect data prior to the admission of a patient have been implemented. "Present on admission" conditions are not part of the payment policy and would be reimbursed by Medicare. However, providers argue that the ability of hospital staff to diagnose and report 'present-on-admission' conditions is limited and can be time-consuming.

Monitoring and evaluation

Alongside non-payment policy, CMS added new quality reporting requirements and expanded the list of quality measures for which hospitals must report data in order to receive a full annual payment update. This, together with Medicare expenditure data and claims data, will help in the monitoring and evaluation of the policy. To date, no impact assessment has been published. Preliminary estimates suggest that few hospitals will be penalized initially because the events that are targeted occur rarely. However, as the list expands the penalities could become more severe.

Expected outcome

CMS has continued to expand its policy on non-payment of preventable complications.  Although the overall reduction in Medicare payments to hospitals as a result of the policy has been estimated at just 0.01 percent nationwide, other potential by-products of the policy continue to worry stakeholders. Particularly prominent are concerns that non-payment for errors that truly are not preventable could further reduce provider buy-in and could potentially result in decreased access to care for patients whom doctors perceive to be at high risk for complications.

The main concerns arise as the list expands.

Impact of this policy

Quality of Health Care Services	marginal		fundamental
Level of Equity	system less equitable		system more equitable
Cost Efficiency	very low		very high
current    previous

Despite ongoing concerns voiced by providers, the Centers for Medicare and Medicaid Services believe strongly in this policy. This policy continues to have the potential to significantly reduce the occurrence of preventable medical errors and to improve quality of care.

References

Sources of Information

Centers for Medicare and Medicaid Services Press Release. CMS Proposes to Expand Quality Program for Hospital Inpatient Services in FY 2009. April 14, 2008. Available at: http://www.cms.hhs.gov/apps/media/press/release

Mattie AS, and B.L. Webster. Centers for Medicare and Medicaid Services' "Never Events": An Analysis and Recommendations to Hospitals. The Health Care Manager. (27) 4: 338-349. October/December 2008.

Milstein A. Ending Extra Payment for "Never Events" - Stronger Incentives for Patients' Safety. New England Journal of Medicine. (360) 23: 2388-2390. June 4, 2009.

Pronovost P, Goeschel CA, and R.M. Wachter. The Wisdom and Justice of Not Paying for "Preventable Complications". JAMA. (299) 18: 2197-2199. May 14, 2008.

Author/s and/or contributors to this survey

Emily Adrion and Gerard Anderson

Suggested citation for this online article

Emily Adrion and Gerard Anderson. "Hospital Errors No Longer Covered by Medicare". Health Policy Monitor, October 2009. Available at http://www.hpm.org/survey/us/b14/3