Insurers start to tear up bills for major medical mistakes

Medical doctors take the oath of "Primum non nocere" in medical school, a Latin phrase that means "First, do no harm."

While no doctor intends to harm a patient, even the most skilled and well-intentioned medical professionals can make mistakes — mistakes that should never happen. Yet there are medical mistakes so serious, so outrageous, that they are called "Never Events."

What could possibly go wrong when you go the hospital? Doctors have operated on the wrong body parts, amputated the wrong limbs and left surgical devices and sponges inside patients. Some patients receive transfusions of the wrong blood type or are given an incorrect dose of medications.

Women have been artificially inseminated with the wrong donor sperm. Infants have been sent home with the wrong parents. That’s only for starters. (See end of article for a complete list of official Never Events.)

Stop sending us your bills!

Health insurers and Medicare have been footing the bill for these complications for years. In August 2008, 23 states decided that hospitals can no longer bill patients and insurers for medical mistakes beginning in 2009. There are currently 12 states that already operate this way. Under the old system, patients and their insurers experienced the added insult of receiving a bill for corrective surgery resulting from medical mistakes.

In October 2008, the Centers for Medicare and Medicaid Services (CMS) ended reimbursement to hospitals for the costs of fixing certain medical mistakes. Medicare annually provides care for 44 million elderly and disabled people. CMS expects to save $190 million over the next five years by shutting the door on payments for Never Events.

Insurers that provide medical malpractice coverage to doctors have been grumbling over Never Events for quite some time. Medical errors accounted for 12.2 percent of legal liability costs at health care facilities in 2007, according to research by insurance firm Aon Corp. The company surveyed roughly 78,000 patient claims from about 1,200 hospitals and found that medical errors cost around $9.3 billion from 1998 to 2007.

Kelly Drinkwine, a spokesperson for Aon Corp., says that one out of every six medical malpractice claims is the result of an infection contracted at a hospital, an injury suffered at a hospital, doctors forgetting surgical objects inside patients or patients developing bedsores. "This is unacceptable," she says.

Exactly when and how you could be billed for a Never Event is difficult to pin down.

For example, if your doctor leaves a surgical instrument inside your body, you would be billed for the initial surgery but not for the re-operation to remove the instrument. You shouldn’t be billed for whatever surgery or treatment is required to correct the "Event That Should Never Have Happened." If you’ve had the wrong limb amputated, or some other irreversible mistake, your recourse is a medical malpractice lawsuit.

"It’s complicated because so much depends on the type of event, when it occurred, and who is responsible," says David Feinwachs, general counsel for the Minnesota Hospital Association, which scoffs at bills for Never Events. "Our position is that no one should pay for care that is made necessary by an adverse event and they should not expect to pay for any event defined by the [National Quality Forum]" as a Never Event.

Even if you find yourself on the receiving end of a Never Event, don’t expect a hospital to write off your entire medical bill. Feinwachs says reimbursement depends on a number of factors.

"If someone develops a pressure ulcer [bedsore] while receiving care for a car accident, only the cost of treating the pressure ulcers should get kicked back to the hospital, not the total cost of the life-saving surgery the patient needed following the car accident," Feinwachs says.

It’s hard to predict how a hospital would handle billing for a Never Event because the situation is handled differently in every state, says Feinwachs.

Georgia advises hospitals not to charge patients or their insurers for 10 serious, preventable errors, and Indiana has guidelines that urge hospitals to waive fees for 12 preventable errors. Hospitals in Maine won’t charge patients or their insurers for 28 errors defined by the National Quality Forum (NQF) list. Out of all of these states, Minnesota was the first state to develop a process for reporting an event and a system to track the severity and frequency of the events.

Putting the bills in the "circular file"

Standing in the middle of Never Event messes are health insurance companies.

Just like Medicare, they’re tired of paying for Never Events and they want hospitals and doctors to be more accountable for their mistakes.

The debate over who should pay for medical mistakes shot to the forefront in 2005 when Minnesota’s HealthPartners became the first insurer to declare it would not pay hospitals for anything on NQF's list of Never Events.

After CMS announced it would be tearing up bills for Never Events as of Oct. 1, 2008, so did CIGNA. Although CIGNA says that Never Events made up only a small number of claims, it was the principle that led the insurer to follow CMS’s lead.

"We divided up the Never Events and categorized them under unavoidable hospital conditions versus avoidable hospital conditions. Medicare [guidelines] helped us select what to focus on first: What is the most prevalent and what is easiest to correct," says Mark Slitt, spokesperson for CIGNA Healthcare.

In January 2008, Aetna announced that it would stop paying for the 28 Never Events named by the NQF. WellPoint has initiated a pilot program in Virginia that will not pay for four types of medical errors, including surgery performed on the wrong body part, surgery performed on the wrong patient and the wrong surgery performed on a patient. When it comes to corrective surgeries that involve the removal of an object left inside the patient, or giving a patient the wrong blood type, WellPoint says that the hospital must now foot the bill. Along with other major insurers, UnitedHealthcare and all 39 Blue Cross and Blue Shield plans are considering putting Never Event bills in the "do not pay" file.

The consequences

Before you think that the hospital or surgeon is off the hook following an "adverse event," think again. Several things can happen following an egregious medical error.

A hospital or surgeon can be sued for medical malpractice, which would result in a substantial increase in insurance premiums. Doctors can lose their licenses in that state. A hospital can lose its accreditation from the Joint Commission, the accrediting agency that certifies and inspects health care organizations in the United States.

CMS can decertify a hospital. Decertification means the hospital will no longer receive reimbursement for Medicare or Medicaid patients, creating sizeable lost revenues and possibly putting the hospital out of business. In extreme circumstances, a state health department can shut down a hospital.

Some hospitals continue to charge for Never Events.