In a relatively short period for the healthcare industry, several insurers and hospital associations have adopted positions of not paying for certain medical errors; now, with the New York state Medicaid program establishing its own policy, the stage is set for an even faster growth in the trend, industry experts say.
New York, with the nations largest Medicaid budget at $47 billion, stands to garner attention as to how it structures its policy, which was announced earlier this month. New Yorks approach is noteworthy and has been met with approval by hospitals because they prefer a list of never events instead of the more complex hospital-acquired conditions that constitute Medicares nonreimbursement policy. The state is not the first to jump on the nonpayment bandwagon and its list of events is not as lengthy as lists of other groups with similar policies.
Specifically, New York state officials announced Medicaid would no longer reimburse providers for care related to never events and released a list of 14 events covered under the new policy (See chart, p. 7). Medicaid will no longer pay for events that clearly should not occur in patient care, said New York State Health Commissioner Richard Daines, a physician. We wanted to stick to a list of things that, frankly, should never happen, he said. New Yorks policy begins Oct. 1, the same start date Medicare has given for its own nonreimbursement plan.
New Yorks approach was praised by industry officials in the state. New Yorks Medicaid program takes a more reasonable approach than Medicare, said William Van Slyke, spokesman for the Healthcare Association of New York State, or HANYS. It doesnt go too far in penalizing hospitals for issues that might be out of their control, although theres still room for improvement in the new policy, he said. For example, the states never event of contaminated medications might not always be the fault of the hospital, he added.
New Yorks policy is a work in progress, but it is more sensible than Medicares approach, said Kenneth Raske, president of the Greater New York Hospital Association. CMS is going whole hog on matters that are controversial in relation to the science, he said. Neither the GNYHA or HANYS has estimated the financial impact of the states new policy on hospitals.
With New York making a move on the issue, even more states may also. States typically play follow the leader on healthcare policy, but when it comes to implementing those policies, they come out stronger than the federal government, said Bruce Greenstein, a former associate regional administrator for Medicaid in Boston. As more stakeholders get involved with nonpayment policies, states have an opportunity to shape what happens nationwide. Its going to take a few states that take bold leadership positions, Greenstein said.
Two other states recently adopted similar policies. Pennsylvanias Department of Public Welfare announced a policy in January, and Maine recently passed a law effective in July saying hospitals will not bill patients if an error occurs. California and Connecticut also are considering legislation. While many organizations seem to agree that such never events in patient care need to end, they are all approaching their lists and policies in slightly different ways. And none match what Medicarewidely considered to be the catalyst that sparked other payers and hospital associations to adopt their policiesdecreed last year (Dec. 10, 2007, p. 6).
Medicares list includes three never events, but it contains more hospital-acquired conditions, such as infections and pressure ulcersoutcomes that hospitals say might not always be in their control (March 10, p. 6).
The difference is found in those hospital conditions, according to the HANYS, which recently adopted its own list of events for which member hospitals will not bill patients. Where states are focusing on truly preventable events, Medicare has taken on conditions that might be largelythough not alwayspreventable, Van Slyke said.
Pennsylvania takes a different approach from New Yorks, although it still is focused on events rather than conditions. Calling its list preventable, serious adverse events, the state policy calls for a retrospective review of claims, said Paula Bussard, senior vice president for policy and regulatory services at the Hospital & Healthsystem Association of Pennsylvania. Using coding software to analyze data, the state will screen bills it wants to scrutinize more closely, and medical experts will look into those claims, she said. The policy is not that hospitals may not bill, but they may be refused, she said. The state, which has a payment lag time of 180 days, estimates it will review about 1,000 claims by January 2009, with about 200 claims affected by the nonpayment policy.
Some in New York would like to continue billing for all care, because thats a better way to track when an event has occurred, said the GNYHAs Raske. He suggests allowing the bills to reflect each item. Then care that should not be paid for could be extracted later. This isnt as simple as people think it is, he said.
New York has a total Medicaid enrollment of 4.1 million. The nonpayment policy currently affects only fee-for-service patients, or 1.5 million. The rest of the enrollees have a form of managed care in addition to Medicaid, and state officials are working with insurance companies on how to structure payments, said Foster Gesten, a physician and medical director for the Office of Health Insurance Programs in the state Department of Health. The state estimates it will save $6 million through the rest of its fiscal year after the never-events policy is implemented in October.
In 2007, there were 26 cases in which a medication error occurred, including six cases resulting in permanent patient harm and nine cases resulting in death, according to a spokeswoman. In addition, there were 20 cases of wrong-patient or wrong-site surgery and 122 cases of foreign objects left in the body.
The state is working to implement its policy so that type of information is reflected accurately in bills after October, he said. Currently the plan is for hospitals to leave off its bills any increased costs related to an event; and if the state while screening billing data finds costs it thinks are inappropriate, it will ask to review clinical data from the facility. While New York has a system for capturing some sentinel events for quality purposes, coding for these types of events are not uniform and require some standardization, Gesten said.
New York is using computer software to provide specific severity-of-illness classes, giving the state a boost in managing coding problems, said George Martin, a pediatrician and senior director of clinical services for VHA, an Irving, Texas-based purchasing and quality group. Most states are not using a DRG system to pay Medicaid claims, which can lead to unclear methodology and distractions in the care-delivery process, he said.
Clear criteria for accurate reimbursements still are missing from Medicares policy, according to some, including Premier, which is submitting comments on CMS 2009 draft inpatient prospective payment system that proposes to add more hospital-acquired conditions to its list (See story, p. 12).
At the core of the never-events trend is the National Quality Forums list of 28 adverse events approved in 2006 to guide hospitals in quality initiatives and creating reporting systems to capture information on such occurrences. The list was never intended to be used as a basis for determining payment models, so payers and hospitals are adapting it to fit their needs, said Mary Mayhew, a vice president of the Maine Hospital Association, which launched a voluntary nonbilling policy in January and helped the state draft its never-events law. The language and events covered in both lists match, she said.
The Wisconsin Hospital Association this month announced a nonbilling policy as an extension of its quality transparency initiatives, said George Quinn, a senior vice president of the association. But the plethora of lists established by payers and various organizations only leads to confusion for doctors who will feel overwhelmed and unsure of what they need to focus on. To believe that not paying for care will improve quality is wrongheaded, he said.
Going on record with a nonbilling policy publicly says doctors are working hard to prevent errors, and being transparent increases patient involvement in their own care, said Jeanne Scinto, vice president of corporate quality services for the one-hospital Aspirus system, Wausau, Wis. Aspirus established an aviation technique dubbed red rules to verify patient identification and reduce blood, medication and surgery errors, which includes a step for patients to verbally confirm who they are. Patients learn they have a role in preventing errors, she said.
In the end, providers have an opportunity to work with states and the CMS to influence how nonpayment policies are formed, said Mikele Bunce, director of quality at the not-for-profit Scripps Health system, San Diego. Scripps is monitoring California legislation that, if passed, would stop reimbursing for care related to 22 of the NQFs 28 events. The four-hospital health system already does not bill for never events and does not expect to feel a financial impact from such a policy, she said. Scripps will also submit comments on the CMS 2009 IPPS because of some of its definitions of never events. Even if you do everything accurately, Bunce said, youre still going to have some incidences.