'Never' Land
Medicare declares "no pay for preventable errors." Private insurers are sure to follow.
The campaign to reduce errors and increase transparency in health care has moved emphatically to a new front: payment. Efforts by consumer organizations, state governments and now Medicare to increase hospitals’ accountability are fast accelerating, setting the stage for private and public payers alike to begin withholding reimbursement for preventable medical errors and so-called “never events.”
The new era of stricter payment policies began in earnest in August when the federal government announced that Medicare will stop reimbursing for the cost of treating infections, falls, objects left in surgical patients and certain other hospital incidents it says should not happen. Private insurers are almost certain to follow Medicare’s lead.
Nobody would dispute that averting errors is a critical goal. Nationwide, safety advocates and hospitals are rushing to get new programs in place to prevent conditions such as pressure ulcers—bedsores—one of the most prevalent items on the Centers for Medicare & Medicaid Services' list. "A lot of hospitals are saying to us that, 'Yes, this might be additional work for us but it's a noble cause,' " says Herb Kuhn, deputy administrator at CMS.
Hospital officials are concerned, however, about the financial implications, logistical challenges and unintended consequences of the CMS rule changes. How much will this squeeze hospitals that have adverse events? How do you determine what happened where and whose fault it was? If a patient is hurt in a fall and stays in a hospital 15 days for heart surgery, how do you determine the number of days from the surgery and the number from the fall? If someone falls and gets a fracture, do you not pay for the radiology services that determine the fracture? What about physical therapy, the removal of a cast, crutches, durable medical equipment—do those not get paid? Will individual caregivers eventually be targeted, too?
American Hospital Association officials are among those with reservations about CMS using the power of the pocketbook to get hospitals to provide safer care. "We believe that a more effective way to improve patient safety would be to enable hospitals and other providers to learn from each other about errors, about risks to patients," says Nancy Foster, vice president for quality and patient safety policy for the AHA.
Some predict a profusion of tests by hospitals to assess the condition of patients at the time of admission, while others wonder if the prospect of no reimbursement will alter what care is provided. Thomas Royer, M.D., president and CEO of Christus Health in Texas and active in the drive for greater hospital accountability, says a lot of his colleagues are "pushing back" against the changes because they're concerned about paying more and being burdened with having to collect more data.
Kenneth Kizer, M.D., founding president and CEO of the National Quality Forum when it devised the original set of 27 (now 28) never events in 2002, supports the intent of the new rules but acknowledges an ongoing debate among experts about whether withholding payment for never events and the complications that follow is unwisely punitive.
"People are hesitant to speak out publicly about this because it runs counter to what public sentiment is, and it's kind of illogical to say people should keep paying for these errors," says Kizer, now CEO of Medsphere, a health care information technology company in California. "Certainly in academic circles and in patient safety offices, people are questioning whether it will have untoward effects. I think all you can say is, 'We’ll see.'"
Minnesota’s experience might provide insight. Hospitals there have publicly reported data on never or adverse-health events since 2003. In September, it became the first state to formally adopt a policy under which hospitals will not bill for treatment needed to correct adverse events.
Not Just About Direct Financial Savings
Minnesota hospitals might be a step ahead in adapting to CMS' new rules. But a patient safety expert who helped institute the state's reporting law sees complications ahead for all hospitals. "To the extent that it focuses attention and aligns people with the financial rewards, it's great,” says Marie Dotseth, program director for the National Institute of Health Policy and formerly of Minnesota's state health department. "But, boy, I think there's going to be some challenges in figuring this all out."
The idea of not paying for errors was spawned by the quality improvement movement that has been sweeping through health care since 1999, when the Institute of Medicine issued its seminal report saying as many as 98,000 U.S. patients died annually because of medical errors. It came to the forefront in 2005 when HealthPartners in Minnesota became the first insurer to say it would not pay hospitals for NQF's designated never events. One year later, the Leapfrog Group and the Midwest Business Group on Health urged hospitals to waive any fees directly associated with such events.
CMS advanced the movement dramatically when, abiding by a provision in the 2003 Medicare reform law, it finalized a rule in August stipulating that it won't reimburse hospitals for eight conditions that could reasonably have been prevented, including: falls; mediastinitis, an infection that can develop after heart surgery; urinary tract infections that result from improper use of catheters; and pressure ulcers (see the complete list at left).
The agency's list came from a combination of quality organizations and public input. Three of the eight conditions are National Quality Forum never events. CMS expects to add three more conditions next year and possibly others as the process evolves. It's one of several initiatives intended to improve the accuracy of Medicare's payment for hospital patients who receive acute care and to encourage hospitals to improve the quality of their services.
The administration estimates it will save $20 million a year in direct Medicare payments, but the overall impact is far greater. CMS says these adverse events add significantly to hospital payments, citing one study that concluded that medical errors may account for 2.4 million extra hospital days and $9.3 billion in excess charges for all payers annually.
"You could say that our current system encourages these kinds of practices," Kuhn says. "Our system is almost on autopilot. The intended goal is really for CMS to try to become an active purchaser of health care, not a passive buyer. And part of that involves trying to improve the reliability of care for the nation’s hospitals."
In October, hospitals began reporting secondary diagnoses of conditions that are present when patients are admitted. Until now, they have received higher payment for the extra costs of treating patients when preventable conditions occur during their stay. But on Oct. 1, 2008, CMS will not pay for those conditions at the higher rate unless they are present on admission.
"We have a whole year to prepare," Kuhn says of the many payment-related issues.
Insurers Watching Closely
Private health insurers are pondering similar actions. "It makes sense because of what’s going on in health care—the renewed emphasis on patient safety and a focus on making sure that we're paying for good quality," says Susan Pisano, spokeswoman for America's Health Insurance Plans, a trade association.
Cigna Corp. is evaluating how it could implement a policy similar to CMS', according to spokeswoman Amy Turkington. Aetna Inc. officials say they are considering making non-payment for never events a standard part of its contracts. So is Health Net Inc. "If not paying is standard industry practice, then we will probably pursue that," says Mark El-Tawil, the company's chief Medicare officer.
HealthPartners officials say their 2005 move was intended to protect its members from the high costs of paying for never events, not to save itself money. The second goal was to give hospitals an incentive to improve quality, says Babette Apland, senior vice president for health and care management. "Whether or not we can say there are fewer never events as a result of that, I think it’s too early to tell," she says. "It's clear that hospitals are putting more robust procedures in place to prevent them."
Employers, Patient Safety Groups Approve
If the effect is to shift the burden somewhat from insurers to hospitals, that's fine with the Leapfrog Group, a nationwide coalition of large employers. "Health care is a messy business, and I think that preventing unnecessary complications in hospital care should be part of the cost of doing business," says CEO Suzanne Delbanco, who plans to leave the nonprofit group this year. Leapfrog urges hospitals to waive all costs directly related to a never event and not seek payment from a patient or third-party buyers.
Betsy McCaughey, chairman and founder of the Committee to Reduce Infection Deaths, called withholding payment for preventable errors long overdue. "Let me put it this way: If you take your car in for an oil change and they put a dent in your fender, would you expect to have to pay for it?"
Lisa McGiffert, a health policy analyst at Consumers Union and director of its Stop Hospital Infections campaign, says the policy "creates a financial incentive for the hospitals to do the right thing, to set up processes and systems to prevent these events that should never occur. And it adds another layer of incentives for hospitals on top of such things as public reporting of incidents and hospital infection rates."
Although he supports the rule change, Robert Burney, M.D., director of quality improvement for the State Department's Office of Medical Services and a faculty member for the American Society for Quality, says, "In a sense, this isn't going to work. What hospitals will do is raise their fees to compensate for any lost revenue from these never events."
Determining 'Present-on-Admission'
Concerns about the rule change are abundant, especially about the potential loss of revenue and extra costs. The National Association of Public Hospitals and Health Systems says it could significantly reduce payments and increase the administrative burden for its members, who get most of their income from government-sponsored health programs.
Richard Salluzzo, M.D., president and CEO of the 13-hospital Wellmont Health System in Kingsport, Tenn., says tinkering with a "very flawed" reimbursement system and making it punitive could backfire. "Hospitals are barely making margins now," he says. "If you take money away, you're just going to leave them in worse condition."
But perhaps an even larger point of contention is the new focus on whether a patient's condition was present when he or she was admitted, and what hospitals must do to determine that.
Experts say CMS' addition of present-on-admission indicators is bound to result in unnecessary testing. "You have a huge new measurement here, particularly on the 'present at admission’ issue," says Robert Wachter, M.D., chief of the medical service at the University of California at San Francisco Medical Center and author of two books on medical errors. "We will see some clinically inappropriate testing that's done for the sole purpose of finding out whether the patient already had the bad thing when they came in."
Present-on-admission indicators have been used in programs in a limited number of states for more than a decade, with mixed results. Skeptics say it is a prime area for hospitals to try to "game" the system when coding by making their care appear more flawless than it is.
Hospitals will have to submit a second diagnosis for present-on-admission codes, with the physician documenting whether a condition was present or not. Gina Pugliese, vice president of the Premier Inc. Safety Institute, likes the message CMS is sending but acknowledges it could be difficult to get doctors on board. The AHA's Foster says it took physicians in New York state and California a couple of years to learn what was expected of them under similar coding demands, but with the Medicare change, "We don't have a couple of years."
Trent Haywood, M.D., chief medical officer at VHA Inc. and deputy chief medical officer for Medicare in 2005-2006, says the new CMS measures will result in better care but leave hospitals without clear directions on how to implement steps to improve their safety performance. "The problem is that CMS has given us a picture of a perfect house, but health care providers at the moment have no clear plan on how to build it," he says.
Averting a 'Gotcha' Culture
Hospitals may learn something from the Minnesota model. Seventeen hospitals there formed a partnership on safety in 2001 and agreed to share data on errors, focusing initially on eliminating wrong-site surgeries. Among other things, they set a new policy that doctors would only mark body parts that required surgery—since established as common best practice nationwide.
Today, while close to a dozen other states have reporting laws, Minnesota remains the only one that publishes data on never events by individual hospitals. Many of its hospitals had stopped billing for preventable errors before that policy was formally adopted statewide this fall.
Minnesota Hospital Association President Bruce Rueben says the reporting on the 27 adverse events has provided useful information about errors and is an effective tool for improving safety—as long as hospitals share their corrective actions. "Other states seem to miss the most important part, and that is that this information is submitted to a Web-based registry so hospitals can share the information confidentially," he says. "If you don’t have that, all you have is kind of a report card, a ‘gotcha’ system."
Minnesota's numbers so far do not prove that safety has improved. The number of never events reported has increased from 99 to 106 to 154 in the program's first three full years. But state officials say that’s in part because of its increased cross-checking with death certificates and state licensing boards as well as facilities’ increased comfort level with public disclosure.
The state works closely with the Minnesota Hospital Association, spreads the word on best practices and enlists hospitals in safety campaigns on things like falls prevention and preventing pressure ulcers rather than imposing its regulatory power, says Diane Rydrych, assistant director of the state health department’s division of health policy.
Hospitals are more forthcoming now than they were at first. "I think we're seeing a diminishing of fear and a greater belief that there's value in the process," says Glenn Billman, M.D., medical director of patient safety at Children's Hospitals and Clinics of Minnesota.
Clinical staff members at Children's are even asked to go beyond never events to report any near-miss incident or "good catch" to the hospital's safety officer; for example, when a nurse spots something amiss with the color or label of an intravenous solution delivered to the bedside and it turns out to be the wrong one. The emphasis is on a constructive approach rather than punitive one.
"It's very different from 10 years ago, when something was done wrong and the approach was 'Find out who did it and let's get them,' " says CEO Alan Goldbloom. "The focus on transparency, the encouragement to report and the understanding that this is good for everybody have helped to build a safety culture at our hospital and many others around Minnesota."
Proactive Measures
Numerous groups and providers in other parts of the country also are being proactive on never events, safety and billing.
Geisinger Health System, a three-hospital not-for-profit organization in Danville, Pa., shuns traditional reimbursement practices by offering coronary artery bypass surgery for a flat fee that covers any complications occurring within 90 days. As part of the pilot program, surgeons adhere to 40 best-practice measures. Geisinger says the first 117 cases show the practice is working, with reductions in death rates from 1.5 percent to 0 percent, readmission within 30 days of surgery from 6.6 percent to 5.1 percent, and length of readmissions and hospital charges down 5.2 percent.
Nonprofit startup Prometheus Payment Inc. unveiled a payment model intended to improve quality while dividing the risk evenly between the clinical and insurance sides. It uses evidence-based case rates—a system that pays providers based on the expected cost for a patient diagnosed with a specific condition, rather than rewarding a high volume of service.
A pay-for-performance project involving CMS and the Premier Inc. health care alliance also uses a carrot rather than a stick. CMS says more than 260 hospitals participating in the CMS/Premier Hospital Quality Incentive Demonstration project, which awards bonus payments to hospitals for high quality in five clinical areas, have raised overall quality by 11.8 percent in the project’s first two years, based on 30 care measures.
More experiments involving payment are likely to follow the CMS’ change, according to the Leapfrog Group's Delbanco. "Now that the first couple of 'scary' steps have been taken, those who think about how to reform our payments system will look for ways to tie payment to quality and value of the care," she says.
Leapfrog says 1,285 hospitals committed in a survey this year to not bill for a never event. But when measuring the progress on preventing such events, it found that 87 percent of the hospitals surveyed did not have all of the recommended policies in place to prevent many of the most common health care-acquired infections.
Hospitals bracing for the uncertain impact of Medicare's new payment model should redouble efforts in the meantime to reduce the likelihood of never events, experts say—from using antibiotics an hour before surgery in order to reduce the chance of post-operative infections and making patient rounds every half-hour to using leverage on physicians and sharing best practices with other organizations.
"There are lots of little things hospitals can do," says Burney of the State Department. "I think it’s a matter of deciding that you want to do it."
Dave Carpenter is a writer in Chicago.