Some insurers and the federal government are refusing to pay for treatments related to serious medical errors. This is a fairly new approach, sparked by rising health costs and movements promoting evidence-based medicine and transparency in health care quality.

On Aug. 1, the Centers for Medicare & Medicaid Services announced a new ban on payments for treatment of preventable conditions acquired at a hospital, including surgical site infections, pneumonia caused by ventilators, infections from contaminated catheters, falls at the hospital and bedsores.

Hospitals will not receive additional payment from CMS for cases in which one of the selected conditions occurs, but was not present when the patient was admitted to the hospital. CMS plans to add three more conditions to the list next year.

"Implementing this type of provision will give hospitals a financial incentive to take steps to prevent hospital-acquired conditions that are reasonably preventable," says CMS spokeswoman Ellen Griffith.

Similarly, the National Quality Forum has issued a list of 28 serious, adverse health events that largely are preventable. They include surgery on the wrong body part, surgery on the wrong patient, discharging an infant to the wrong person, giving the wrong medication dose and giving medication to the wrong patient.

Some states have recently enacted legislation requiring health care providers to report these medical errors, sometimes called "never events."

Insurer action

A few insurers have already followed in CMS's footsteps. Health Partners, a Minnesota-based health plan, in 2005 adopted a policy of refusing to pay for never events, after the state passed legislation requiring hospitals to report never events to the state health department. It wanted to protect its customers and pay only for quality health care. It views this policy as an extension of its pay-for-performance program.

Babette Apland, senior vice president of health and care management at Health Partners, says it's a "marker of success" that the idea is being adopted by national entities. "We have been happy with the policy, and we've been happy to see it spread throughout the country."

It's not just a way for the insurer to save money, she asserts. "The financial impact of this policy is not significant for the health plan. It can be significant for the individual. No individual should be accountable for the financial impact of a never event. These never events are rare, but of course when they happen to an individual, they are very significant," Apland comments.

Initially, there was a concern that hospitals might sometimes try to deny or cover up a never event, but Apland says hospitals have been cooperative. "Hospitals are taking this very seriously. They understand the value that comes from reporting [mistakes]. I don't think that fear [of cover ups] has been realized," she explains.

Humana, a Louisville, Ky.-based insurer, is working on a policy that would be similar to the CMS rules. "We're certainly taking a look at this very important topic," says Humana spokesman Dick Brown.

In response to serious medical errors, The Leapfrog Group urges hospitals to apologize to the patient, report the event, perform a root-cause analysis and waive costs directly related to the event. At least 52% of hospitals responding to Leapfrog's recent survey have agreed to take those actions when a never event occurs. Leapfrog is an employer coalition that advocates for patient safety and health care quality.

Opponents

Not surprisingly, some doctors and hospitals have objected to the nonpayment policy.

In a letter to CMS, Michael Maves, executive vice president of the American Medical Association, wrote, "We are very concerned by this provision, as we believe it could have significant unintended consequences for patients. 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.

"Certain patients, including those who are older, have medical comorbidities or have otherwise compromised immune systems, are more susceptible to infection and other complications," he adds. "Continued access for these patients has already become more difficult due to the costs of care, and this policy could significantly compound the problem by leading hospitals to erect barriers to admission of these types of patients.

"Ironically, while the intent of this provision is to improve quality and reduce costs, it could have just the opposite effect if it results in delay or denial of care to vulnerable patients until their condition has deteriorated and more extensive and expensive treatment is necessary."

'Missing the mark'

Employers have plenty of reasons to be concerned about hospital-acquired infections. Each year, 2 million Americans contract an infection during a hospital stay, and 90,000 of them die. On average, hospital-acquired infections add over $15,000 to a patient's hospital bill, amounting to over $30 billion a year wasted on avoidable costs, The Leapfrog Group estimates.

The group also finds 87% of U.S. hospitals do not have all of the recommended policies in place to prevent many of the most common hospital-acquired infections.

Jill Berger, chair of The Leapfrog Group and vice president of health and welfare for Marriott International, comments, "There are protocols that every hospital should have in place to prevent infections. Unfortunately, many hospitals are missing the mark, and that spells trouble for everyone: the patient, the hospital and the health care system," as well as employers.For insurers and local governments that want to implement policies of not paying for medical mistakes, Apland recommends building on the model that CMS and Leapfrog have already established. "I think the stage has been set," she says.