Medicare Ends Coverage for Hospital Errors
-Newark Star Ledger
August 13, 2007

Beginning next year, Medicare will stop paying for hospital mistakes. Under rules issued last week, the government insurance program will no longer pay extra to treat certain infections that patients pick up in the hospital. Nor will Medicare pay for second surgeries to retrieve objects left behind in bodies or treatment for transfusion patients given the wrong blood type.

Hospitals themselves will pay to fix these and other medical complications that are considered largely preventable.

Government regulators and consumer groups say the changes give hospitals a powerful incentive to keep patients safe, especially from infections. Such infections kill nearly 100,000 Americans each year and cost hundreds of millions of dollars to treat.

"We think this is groundbreaking that Medicare now says, 'We're not going to pay you extra when you've done something to harm a patient,'" said Lisa McGiffert, who directs a campaign to stop hospital infections that is run by Consumers Union, based in Washington, D.C. McGiffert said Medicare pays to treat more than 60% of the hospital infections that Americans contract, and that the changes will force hospitals to use established prevention guidelines.

Officials at the Centers for Medicare & Medicaid (CMS) say the new rules reflect a changing philosophy at the nation's largest health care payer, which covers disabled and elderly Americans.

"We are transforming Medicare from a passive payer simply processing claims to an active purchaser with a stake in quality and efficiency," said Tom Valuck, a physician and administrator at CMS.

Valuck said he did not know exactly how much the new rules could save Medicare, though others suggested it could easily reach into the tens of millions. Valuck predicted a cascade of savings if hospitals greatly reduce costly complications. "You could have less home health care, less nursing home care and ambulatory services. Less physician follow-up," he said.

The new rules go into effect in October, 2008, and emanate from a 2005 law passed by Congress. Valuck and others said private insurers may follow the Medicare lead. The changes focus largely on infections known to develop in hospitals: those associated with urinary catheters, blood lines and coronary bypass surgery.

The U.S. Centers for Disease Control and Prevention has reported that there are more than 500,000 catheter-associated urinary tract infections alone each year, and that they cost $451 million to treat. Valuck said hospitals will not be allowed to pass the cost of mistakes on to patients.

For Medicare to withhold payment, the complications must be considered preventable. For instance, stringent hand washing and other protocols - such as getting patients quickly off catheters and intravenous lines - can substantially reduce the spread of hospital infections. Some New Jersey hospitals, aware the new rules were on the way, already have made changes and documented striking drops in infections rates.

"The new regulations are an added incentive for hospitals to keep improving," said Ron Czajkowski, a spokesman for the New Jersey Hospital Association. "If they don't, they'll run the risk of losing part of their much needed Medicare funding."

In addition to hospital infections, the changes mean no extra payments to treat patients affected by:

• Injuries resulting from a fall in the hospital.
• Reactions when transfusion patients get the wrong blood type.
• Air embolism, when air invades the blood stream.
• Bed sores that patients develop while in the hospital.
• Objects, such as sponges or surgical tools, left in patients during surgery.

"I hope this makes a huge difference," said David Knowlton, chairman of the New Jersey Health Care Quality Institute, a nonprofit organization to improve patient safety. "We have had a perverse system that said, 'If you screw up, you can bill to get more money,;" he said.

Knowlton said changes in reimbursement, along with efforts to publicize hospital infection rates, will make hospitals safer. Gov. Jon Corzine has said he soon will sign legislation requiring hospitals in New Jersey to make their infection rates public, and a recently enacted state law requires hospitals to aggressively combat MRSA, or methicillin-resistant staphylococcus aureus, a particularly virulent bacteria spreading through many hospitals.

Knowlton said Medicare officials must be reasonable, so that victims of medical mistakes are not left without coverage to treat their infections or botched surgery. Meanwhile, McGiffert, of Consumers Union, said CMS will "be on the lookout" for hospitals that game the system by falsifying codes to increase Medicare payments.

Medicare policy often influences the private insurance industry, and Valuck, of CMS, cited one insurer, Health Partners or Minnesota, that will no longer pay for so-called "never events," or clear medical mistakes. Mohit Ghose, a vice president of America's Health Insurance Plans, a trade organization based in Washington, D.C., said private insurers are looking carefully at the Medicare changes. "This is one of the areas our members have to look at to advance the cause of improved patient safety and to create better value," he said. "But it won't happen overnight."