Insurers Stop Paying for Care Linked to Errors

Health Plans Say New Rules
Improve Safety and Cut Costs;
Hospitals Can’t Dun Patients


Health insurers are taking a new tack in a bid to improve patient safety and reduce health-care costs: refusing to pay — or let their patients be billed — for hospital errors.

Aetna Inc., WellPoint Inc. and other big insurers are moving to ban payments for care resulting from serious errors, including operating on the wrong limb or giving a patient incompatible blood.

See the National Quality Forum’s list of 28 medical errors, for which some insurers may refuse payment.

The companies are following the lead of the federal Medicare program, which announced last summer that starting this October, it will no longer pay the extra cost of treating bed sores, falls and six other preventable injuries and infections that occur while a patient is in a hospital. The following year, it will add to the list hospital-acquired blood infections, blood clots in legs and lungs, and pneumonia contracted from a ventilator.

Private insurers are looking first at banning reimbursements for only the gravest mistakes. But health-insurance executives say it is only a matter of time before the industry also stops paying for some of the more common and less clear-cut problems that Medicare is tackling, such as hospital-acquired catheter infections or blood poisoning. “I’d rather have the cudgel in place first than push the list too far,” says Aetna President Mark Bertolini.

Some hospitals and others are concerned that the new strategy could drive up medical costs in other ways as hospitals absorb or pass on the expense of introducing the safety and screening procedures needed to help avoid mistakes.

Ultimately, insurers say, the efforts will trigger safety improvements and savings for patients.


Medicare soon won’t pay for certain hospital injuries, including:
• Object left after surgery
• Surgical-site infections
• Blood incompatibility
• Urinary-tract infection from catheter
• Bedsores
• Falls in the hospital

Aetna, the country’s third-largest insurer by number of members, is beginning to stipulate in hospital contracts up for renewal that it will no longer pay nor let patients be billed for 28 different “never events.” Compiled by the National Quality Forum, a coalition of physicians, employers and policy makers, these mistakes include leaving an instrument in a patient after surgery, the death of a mother in a low-risk pregnancy, allowing a patient to develop bedsores or using contaminated devices. Such errors are so egregious “there can’t be any argument that they should ever happen,” says Troy Brennan, Aetna’s chief medical officer.

WellPoint, the largest insurer, is testing the same approach in Virginia with four errors from the forum’s never-events list, including leaving a sponge or other object in a patient after a procedure and performing the wrong procedure. It plans to extend the policy soon to its plans in New England, New York and Georgia. UnitedHealth Group Inc. and Cigna Corp. say they’re exploring policies similar to Medicare’s. The Blue Cross Blue Shield Association says that its 39 member health plans are looking at approaches similar to Aetna’s or working with hospitals on reducing errors.

The National Quality Forum’s so-called never events are rare enough that private insurers say they don’t expect to see a big financial savings at first. In Minnesota, where hospitals are required by law to report such errors, 154 never events were reported last year out of nine million hospital admissions. Rather, the idea is to spur more attention to safety and public reporting of mistakes.

“It’s not a matter of not paying for them. It’s about getting them not to happen in the first place,” says Thomas Granatir, director of policy and research at Humana Inc., which is working on a policy similar to Medicare’s.

The more common errors offer the biggest potential for savings — in both lives and money. The Centers for Disease Control and Prevention estimates that patients develop 1.7 million infections in hospitals a year, causing or contributing to as many as 99,000 deaths a year. On average, urinary-tract infections and hospital-acquired pneumonia — which are on the Medicare list but not on the never-events list — can add more than $10,000 to a patient’s hospital bill. A more serious antibiotic-resistant bloodstream infection can result in more than $100,000 in extra costs. Such common errors total more than $4.5 billion in additional health spending a year, according to the CDC.

Despite growing evidence that hospitals can take steps to reduce infections drastically, until recently, infections typically have been considered an inevitable part of care and billed accordingly. “It’s something that no one ever questions when you see it on the bill. But now that Medicare will, maybe that’s going to change,” says Nora Johnson, director of compliance and education at Medical Billing Advocates of America, a nationwide patient-advocacy network that deciphers hospital and insurance bills for consumers and advocates on behalf of uninsured patients.

As insurers roll out the policy across the country, they say they are structuring their contracts with hospitals so that the hospitals also won’t be able to charge patients for care made necessary by medical errors. Given the high rate of medical billing errors, however, consumer advocates advise patients to examine their bills carefully, especially if they are aware of errors or problems that occurred during their stay. People with health insurance should check their bills against the explanation of benefits they receive from the health plan, or press their insurers to make sure they haven’t been overcharged.

When it comes to medical errors, some hospitals say they forgive bills or adjust charges on a case-by-case basis. But the complex billing and payment arrangements between hospitals and insurers can make it hard to avoid paying for errors and for patients to know whether they’re being charged.

Last January, when Arlene Whitfield, a Los Angeles elementary-school teacher, underwent a hip replacement at Centinela Hospital in Inglewood, Calif., she accidentally received B-positive blood, instead A-positive.

The mistake lengthened her recovery time by two days and she ended up staying in the hospital for a week, for which Centinela billed accordingly. That is because Medicare’s hospital billing guidelines require hospitals to document and itemize all the care they provide to a patient, says Von Crockett, the hospital’s president and chief executive. “That’s different than what we expect to collect and get paid for it,” he says. “It’s a documentation of what happened to the patient.” He says Ms. Whitfield’s portion of the bill was forgiven.

Her health plan, WellPoint’s Blue Cross of California, ended up paying for only two days, not because it refused payment for the added stay because of the error, but because before the operation, WellPoint had only authorized a two-day stay and didn’t receive a request for an extension. (The average length of a stay for Ms. Whitfield’s procedure is 4.6 days.) The insurer says it noted nothing unusual about the claim filed by the hospital, although the bill did list the diagnosis code for an infusion of “mismatched blood.”

Spurred by laws requiring more public reporting of errors, some hospitals have adopted their own policies on billing for medical errors. All hospitals in Minnesota and Massachusetts, for example, have pledged not to charge for all or some of the errors on the never-events list.

But others say broader policies, such as Medicare’s, could punish hospitals unfairly and force them to absorb the costs of screening each patient for bedsores or infections at the time of admission.


Insurers are refusing to pay for care triggered by some complications they believe hospitals should prevent, including:
Object left in patient after surgery
Letting patient wander or disappear
Administering wrong blood type
Artificially inseminating wrong donor sperm or egg
Allowing patient to fall
Operating on wrong limb
Performing wrong procedure
Using contaminated drugs or devices
Discharging infant to wrong person
Mother’s death or serious disability in low-risk delivery
Hospital-acquired bedsores
Patient abduction or sexual assault

Some in the industry worry that hospitals may find ways to turn away or divert patients at greatest risk of developing infections or bedsores. “The concept of not paying for complications that are often a biological inevitability, regardless of safe practice, is discriminatory and could be punitive to those patients at greatest risk,” Michael Maves, executive vice president of the American Medical Association, wrote in a June letter to the federal Centers for Medicare and Medicaid Services.

Hospitals have an incentive to invest in reducing infection rates, health-safety advocates argue. Since health plans pick up only so much of the extra cost caused by infections, “hospitals are losing their shirts, too,” says former New York Lt. Gov. Betsy McCaughey, who formed the Committee to Reduce Infection Deaths, a national, nonprofit campaign to push hospitals to lower infection rates.

To lower its rate of infection, one hospital, Pitt County Memorial Hospital in Greenville, N.C., in February expanded its screening for methicillin-resistant staph infections to all patients coming into the hospital. By identifying and isolating those with the strain early, it lowered the number of MRSA pneumonia cases related to ventilator use by 67% and MRSA urinary-tract infections by 60% within eight months. In all, the expanded screening has cost nearly $1 million, $800,000 picked up by private and public insurers.

Steve Lawler, the hospital’s president, says it has more than recouped its $200,000 investment. Moreover, spending the money to make the hospital safer is a “better return on investment…than some billboard campaign,” he says.
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