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Course Correction?

By Jock Hoffman, CRICO

Related to: Communication, Emergency Medicine, Primary Care, Nursing, Obstetrics, Other Specialties, Surgery


CMS has announced that, starting in October 2008, it will stop reimbursing hospitals for the extra costs of treating certain patients whose illnesses are compounded by preventable errors. Four key areas of focus of the current “no-pay” proposals are hospital acquired infections, wrong site surgeries, retained foreign objects, and falls. Since January 2002, 210 claims related to these type events have been filed against a CRICO-insured hospital or clinician, reflecting more than $55 million in incurred losses. Indubitably, hospitals incur additional costs—for all patients impacted by such incidents, not just those who file malpractice claims—well beyond the treatment reimbursements they can recoup from CMS and other payors.

Our Recommendation

The payors’ policy shift may trigger alarms in hospital accounting departments, but the financial impact of medical errors has long been a motivation in concert with quality-of-care concerns pushing patient safety improvement ideas. Over time, high quality care is less costly to provide than care burdened with errors, but seeing that reality requires a broad and long-term perspective. A knee jerk response to the potential of non-reimbursement may be for naught if hospitals implement solutions before understanding the underlying problems. Quickly solving the wrong problem, or applying the wrong solution, will only serve to waste precious time, resources, and enthusiasm.

Addressing the fundamental concerns of CMS, private insurers, and patients requires careful analysis of the root causes of the errors nobody wants to pay for. CRICO has coordinated such analytical efforts in a number of high-risk areas, and that work has led to the development of decision-support guidelines and clinician incentives [pdf] that promise long term benefits to both health care patients and providers. In response to the new CMS challenges—and others that likely will follow—each organization has to invest in understanding specifically why these problems occur in their setting, and why previous improvement efforts have fallen short of success. Only then is it worthwhile to pursue systemic interventions—either homegrown innovations or field tested best practices—to adequately fix those problem(s).

October 1, 2007
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