A. Never Events Defined

No universal definition exists for Never Events. That is why, for now, it is wise to avoid mentioning them in your plan document and policy language.

For now, we can generally agree that “Never Events” are services, supplies, care and/or treatment that results from errors in medical care that are clearly identifiable, preventable, and serious in their consequence for patients, including but not limited to air embolism, blood incompatibility, object left during surgery, catheter-associated urinary tract infections, pressure (decubitus) ulcers, vascular catheter-associated infection, surgical site infection, mediastinitis after coronary artery bypass graft (CABG) surgery, surgery performed on the wrong body part, surgery performed on the wrong patient, wrong surgical procedure performed, criminal events (e.g., sexual assault of a patient), falls and trauma, burns, electric shock, Legionnaires disease, failed glycemic control (e.g., Diabetic Ketoacidosis, Nonketotic Hyperosmolar Coma, Diabetic Coma, Hypoglycemic Coma), iatrogenic pneumothorax, delirium, ventilator associated pneumonia, staphylococcus aureus septicemia, clostridium difficile-associated disease (CDAD), and hospital-acquired injuries.

B. The Impact of Never Events

Many employer groups are beginning to ask what their TPA is doing about using plan assets to pay for things that were medical errors, or resulted from medical errors. If a payer wants to exclude these types of charges, the administrator must retain discretionary authority to determine whether this exclusion will apply based upon information presented to the administrator, and they must ensure that their plan language allows them to do so. Finally, a wise payer will make it clear that a finding of provider negligence and/or malpractice is not required to apply.

An estimated 98,000 patients die each year due to preventable medical errors. This presents an enormous financial cost. Between 2002 and 2004 the Centers for Medicare and Medicaid Services (CMS) paid more than $9.3 billion in claims associated with medical errors.

Consider that two of every 100 patients admitted to the hospital experience a preventable adverse drug event, producing an average cost increase of $4,700 per case.

If the self-funded industry and TPAs in particular do nothing, they will lose their clients to the fully insured market. A growing number of insurers such as Aetna, Cigna, and Wellpoint are reacting to Never Events, and in so doing signal to payers the savings opportunity available to those that react.

C. A Joint Effort on the part TPAs and Stop-Loss is Essential

To prevent potential hostile disputes and litigation, TPAs and Stop-Loss must have a complete understanding, coordinating strategy, and cooperation in regards to Never Events. It is important to realize that not all unfortunate medical malpractice events qualify as ‘Never Events.’

Determining what constitutes a Never Event varies by the differing procedures of each hospital. Some events that may look like the surgeon was exceptionally careless might actually be a hospital responsibility. For example, in many hospitals the responsibility for verifying that all tools and sponges are out of the patient is with the hospital-employed surgical nurses. In the case of wrong-patient or wrong-appendage situations, there are so many duplications of verification between surgeons and hospital staff that it would be virtually impossible to nail down whether it was the hospital responsible or the surgeon.

ERISA Plan fiduciaries must not only protect plan assets, but also be sure that plan beneficiaries receive benefits and payment for what they would logically expect by reading the plan language. If a TPA or Stop-Loss carrier makes the unilateral decision to refuse to pay or reimburse what it arbitrarily believes is a Never Event, the plan beneficiary will get caught in the middle between the hospital demanding payment and the plan refusing payment. Further, in a reimbursement situation where the Stop-Loss carrier refuses to reimburse the plan for claims paid resulting from such Never Events, the benefit plan will end up paying every cent out of their trust.

In order to shield benefit plans from paying claims they are neither responsible for nor can they expect to see any reinsurance for and to keep up with the fully funded market, plan administration must be adjusted.

Emphasizing Never Events will ensure that hospitals and eventually all medical providers will not be able to hide or deny when such events occur. They need to apologize to the patient, and report to health-quality-tracking authorities.

This is a win-win opportunity to show your clients that their plan(s) will no longer be stuck paying for the medical provider mistakes.

It is imperative not to rush into a policy that may quickly become a destructive Catch-22 since very few events neatly fit under the term ‘Never Event.’ Instead, TPAs must create cost effective programs to identify these events and new plan language to fight these claims. TPAs & Stop-Loss need to work jointly on this so that we are all “on the same wavelength” about what is, and what is not, reimbursable, especially in light of the Centers for Medicare and Medicare Services (CMS) recent mandates.

D. CMS Mandates

(1) Hospital Acquired Conditions (HACs)

In 2007 the Centers for Medicare and Medicaid Services (CMS) selected eight conditions for the Hospital Acquired Conditions (HAC) provision of its proposed and now final rules. These included seven of the 27 (now 28) conditions identified by the National Quality Forum (NQF) as Never Events, with the falls, burns, and electric shock Never Events being treated as one HAC. In 2008 CMS proposed adding an additional nine categories of conditions (with multiple subsets) that when acquired in the hospital will no longer lead to higher Medicare payment, including one from the NQF Never Event list associated with hypoglycemia.

Effective October 1, 2008, the Centers for Medicare and the Medicaid Services (CMS) mandated that eight hospital acquired conditions will be subject to limitations and nonpayment under the payments policies and rates under the hospital inpatient prospective payment system (IPPS). Medicare will no longer pay at a higher weighted Medicare Severity Diagnosis-Related Group (MS-DRG) for the original eight conditions, as well as any conditions added to the HAC list by CMS following comments to this year’s proposed rule.

(2) Conditions that were Present on Admission (POA)

Effective October 1, 2007, CMS mandated diagnosis codes that hospitals were required to track in order to determine conditions that are Present on Admission (POA). These represent secondary diagnoses that are present on the admission of a patient. This mandate allows Medicare to create reduced payment DRGs for post-admission diagnoses that should have never occurred. CMS issued various sets of instructions in 2007 requiring IPPS hospitals to submit POA data for all diagnosis code are included in the ICD-9-CM Official Guides for Coding and

There are five POA indicator reporting options: “Y”, “N”, “W”, “U” and “1″. CMS proposes to pay the CC/MCC MS-DRGS only for those HACs coded with “Y” and “W’ indicators. See below for brief legend on these codes and acronyms:

CC = Complicating Condition
MMC = Major Complicating Conditions
MS-DRG = Medicare Severity Diagnosis-Related Groups
Y = condition present on admission
N = condition was not present on admission
W = providers has determined, based on data and clinical judgment, that is not possible to document when the onset of the condition occurs
U = medical records documentation is insufficient to determine whether the condition was present at time of admission
1 = unreported/not used, thus exempt from reporting (equivalent to a blank on the UB-04)

E. National Quality Forum and their Never Event Criteria

The National Quality Forum (NQF) defines Never Events as “Errors in medical care that are clearly identifiable, preventable, and serious in their consequence for patients.”

The government’s HHS Agency for Healthcare Research & Quality asked the NQF to create a set of patient safety measurements to be a medical errors reporting system. NQF listed 28 such “Never Events”.

The NQF criteria for Never Happen are events that are unambiguous, usually preventable, and serious – resulting in death, loss of body part, or disability. These are then subdivided into types of events:

(1) Surgical Events
Surgery performed on the wrong body part.

Surgery performed on the wrong patient.

Wrong surgical procedure performed.

Unintended retention of a foreign object (i.e. tool or sponge) in a patient after surgery/procedure.

Intraoperative or immediately post-operative death in a normal healthy patient.

(2) Product or Device Events
Patient death or serious disability associated with the use of contaminated drugs, devices or biologics provided by the healthcare facility.

Patient death or serious disability associated with the use or function of a device in the patient care, in which the devise is used or functions other than as intended.

(3) Care Management Events
Patient death or serious disability associated with a medication error (e.g., errors involving the wrong drug, wrong dose, wrong patient, wrong time, wrong rate, wrong preparation, or wrong route of administration).

Patient death or serious disability associated with hemolytic reaction due to the administration of ABO/HLA incompatible blood or blood products.

Patient death or serious disability associated with intravascular air embolism that occurs while being cared for in a healthcare facility.

Maternal death or serious disability associated with labor or delivery on a low-risk pregnancy.

Patient death or serious disability associated with hypoglycemia, the onset of which occurs while the patient is being cared for in a healthcare facility.

Death or serious disability (kernicterus) associated with failure to identify and treat hyperbilirubinemia in neonates.

Stage 3 or 4 pressure ulcers acquired after admission to a healthcare facility.

Patient death or serious disability due to spinal manipulative therapy.

Artificial insemination with the wrong donor or sperm or egg.

(4) Patient Protection Events
Infant discharged to the wrong person.

Patient death or serious disability associated with patient elopement (disappearance).

Patient suicide or attempted suicide resulting in serious disability.

(5) Environmental Events
Patient death or serious disability associated with an electric shock or elective cardioversion while being cared for in a healthcare facility.

Any incident in which a line designated for oxygen or other gas to be delivered to a patient contains the wrong gas or is contaminated by toxic substances.

Patient death or serious disability associated with a burn incurred from any source while being cared for in a healthcare facility.

Patient death associated with a fall while being cared for in a healthcare facility.

Patient death or serious disability associated with the use of restraints or bedrails while being cared for in a healthcare facility.

(6) Criminal Events
Any instance of care ordered or provided by someone impersonating a physician, nurse, pharmacist, or other licensed healthcare provider.

Abduction of a patient of any age.

Sexual assault on a patient within or on the grounds of a healthcare facility.

Death or significant injury of a patient or staff member resulting from a physical assault (i.e. battery) that occurs within or on the grounds of a healthcare facility.

F. Types of Claims

CMS/Medicare has designated 8 types of claims it will not pay, mostly based on the NQF items. More items are expected to be added over time:

1. Serious Preventable Event – Air embolism
2. Serious preventable death – Blood incompatibility
3. Serious preventable event – object left during surgery
4. Catheter-associated urinary tract infections
5. Pressure (Decubitus) ulcers
6. Vascular catheter-associated infection
7. Surgical site infection – Mediastinitis after coronrary artery bypass graft (CABG) surgery.
8. Hospital-acquired injuries – Fractures, dislocations, intracranial injury, crushing injury, burn and other unspecified effects of external causes.

Anthem Blue Cross Shields uses what they call Core 4:

1. Surgery performed on the wrong body part.
2. Surgery performed on the wrong patient.
3. Wrong surgical procedure performed
4. Unintended retention of a foreign object in a patient after surgery or other procedure.

Wellpoint uses the CMS 8 plus a Core 3:

1. Surgery on the wrong body part.
2. Surgery on the wrong patient
3. Wrong surgical procedure

The Leapfrog Group’s requirements for a hospital when a “Never Event occurs” are listed below.

1. Apologize to the patient or family.
2. Report the Never Event to at least one of the following agencies: Joint Commission on Accreditation of Healthcare Organizations (JCAHO) as part of its Sentinel Events policy; State reporting program for medical errors; or a Patient Safety Organization.
3. Perform a root cause analysis, consistent with instructions from the chosen reporting agency.
4. Waive all costs directly related to a serious reportable adverse event.

As previously mentioned, the 28 Never Events presently identified by NQF break down into six primary categories:

1. Surgical events (e.g., surgery performed on the wrong patient)
2. Product or device events (e.g. using contaminated drugs)
3. Patient protection events (e.g., an infant discharged to the wrong person)
4. Case management events (e.g., a medication error)
5. Environmental events (e.g. electric shock or burn)
6. Criminal events (e.g., sexual assault of a patient)

G. State Actions and Adverse Event Tracking Experience

One source reports that twenty five states currently mandate reporting of adverse events in hospitals and/or facilities while another reports that thirty nine states have no current policy on Never Events (although several are in various stages of development and discussions, which could explain the differences in the two reports). Policies under review may be limited to a position taken by the state hospital association or may involve development of mandated billing practices and prospective legislation. Eleven states have passed laws or adopted policies that address Never Events; the policy may restrict billing for some number of preventable events (up to and including all 28 of the NQF Never Events) or it may merely urge hospitals to waive fees. Many of the policies call for voluntary compliance and not all have been adopted through legislation. Some states mandate incident reporting and tracking but may not prohibit billing for Never Events. The types of events included are widely variable and under-reporting is suspected in many of these states.

State by State summary of medical mistake billing policies:

State/Policy

Alabama  No current policy.

Alaska  No current policy.

Arizona  No current policy.

Arkansas  No current policy; discussions continuing.

California  No current policy. Hospitals have adopted general guidelines suggested by the  American Hospital Association, but they have not agreed to waive fees for specific errors. Mistakes are evaluated on a case-by-case basis.

Colorado  No current policy; discussions continuing. Hospital now evaluate on a case-by-case basis.

Connecticut  No current policy. Expects new guidelines in March

Delaware  Yes. Nine Events Covered:

1. Surgery on wrong body part
2. Surgery on wrong patient
3. Wrong surgical procedure
4. Retention of foreign object not designed to be retained in the body
5. Incompatible blood-associated injury
6. Air embolism-associate injury
7. Medication error leading to serious injury or death
8. Artificial insemination/wrong donor
9. Newborn infant discharged to wrong family

Florida  No current policy. Discussions expected in March.

Georgia  Yes. Does not bill patients or insurers for 10 preventable events:

1. Surgery performed on wrong body part
2. Surgery performed on wrong patient
3. Wrong surgical procedure performed on patient
4. Unintended retention of foreign object in a patient after surgery or other procedure
5. Patient death or serious disability associated with a medication error
6. Patient death or serious disability associated with intravascular air embolism that occurs while being cared for in a health care facility
7. Infant discharged to wrong person
8. Patient death or serious disability associated with a hemolytic reaction due to the administration of ABO/HLA-incompatible blood or blood products
9. Death or serious disability associated with failure to identify and treat hyperbilirubinemia in neonates
10. Stage 3 or 4 pressure ulcers acquired after admission to a health care facility

Hawaii  No current policy.

Idaho  No current policy.

Illinois  No current policy. Guidelines developed but not yet adopted

Indiana  Yes. Adopted policy that urges hospitals to waive fees for 12 preventable errors:

1. Surgery performed on wrong body part.
2. Surgery performed on wrong patient.
3. Wrong surgery performed on patient.
4. Unintended retention of foreign object.
5. Patient death or serious disability associated with an air embolism that occurs while being treated in a hospital.
6. Patient death or serious disability with a hemolytic reaction to the administration of incompatible blood or blood products.
7. Stage 3 or 4 pressure ulcers acquired after admission
8. Patient death or serious disability associated with a fall or trauma after admission.
9. Patient death or serious disability associated with a catheter-associated urinary tract infections.
10. Patient death or serious disability associated with vascular catheter-associated infection
11. Patient death or serious disability associated with surgical site infection mediastinitis after a coronary artery bypass graft
12. Patient death or disability associated with a medication error.

Iowa  No current policy. Adopted general billing guidelines this week, but no specific events.

Kansas  No current policy. Considering changes; meets March 20

Kentucky  No current policy. Discussions continuing this week
Louisiana  No current policy; discussions continuing

Maine  No current policy; forming work group to discuss

Massachusetts  Yes. Does not charge patients or health plans for nine serious, preventable events indentified by the National Quality Forum, a nonprofit health care safety advocacy agency:

1. Surgery on wrong body part
2. Surgery on wrong patient
3. Wrong surgical procedure
4. Retention of foreign object
5. Incompatible blood-associated injury
6. Air embolism-associate injury
7. Medication error injury
8. Artificial insemination/wrong donor
9. Infant discharged to wrong family

Michigan  No current policy. Hospitals have adopted general guidelines suggested by the American Hospital Association, but they have not
agreed to waive fees for specific errors. Mistakes are evaluated on a case-by-case basis.

Minnesota  Yes. Will not bill patients or insurers for 27 serious, preventable events identified but National Quality Forum, a nonprofit healthcare safety advocacy agency.

Mississippi  No current policy. Hospitals have adopted guideline suggested by the American Hospital Association, but they have not agreed to waive fees for specific errors. Mistakes are evaluated on a case-by-case basis

Missouri  No current policy.

Montana  No current policy.

Nebraska  No current policy, discussions continuing

Nevada  No current policy. Formal policy expected in April

New Jersey  No current policy, discussions continuing.

New Hampshire  No current policy, discussions continuing.

New Mexico  No current policy.

New York  No current policy.

North Carolina  No current policy.

North Dakota  No current policy; pending in the fall.

Ohio  No current policy. Hospitals have adopted general guidelines suggested by the American Hospital Association, but they have not
agreed to waive fees for specific errors.

Oklahoma  No current policy.

Oregon  Yes. Hospital will not bill for 28 serious, preventable events identified by the National Quality Forum, a non profit health care advocacy agency.

Pennsylvania  Yes. Won’t bill Medicaid for 18 errors:

1. Wrong surgical procedure on a patient
2. Patient death or serious disability from contaminated drugs, devices or biologics
3. Patient death or serious disability associated with use or function of a device other than as intended
4. Patient suicide or attempted suicide resulting in serious disability
5. Patient death or disability associate with medication administration error
6. Patient death from a fall while in the facility
7. Unexpected removal of organ
8. Unexpected amputation of limb
9. Death during or immediately after an operation in a normally health patient
10. Death or disability cause by incompatible ABO blood or products, two events
11. Maternal death or serious disability during labor or delivery of a low-risk pregnancy
12. Stage 3 or 4 pressure ulcers
13. Sever allergic reaction
14. Retention of a feign object in a patient after surgery
15. Patient death or serious disability from a burn incurred from any source while in the healthcare facility.
16. Death or disability associated with a medication error, two events.

Rhode Island  No current policy.

South Carolina  Yes. Won’t bill Blue Cross Shield for 10 serious preventable events identified by the National Quality Forum, a non profit healthcare safety advocacy agency:

1. Surgery performed on wrong body part
2. Surgery performed on wrong patient
3. Wrong surgical procedure performed on patient
4. Unintended retention of a foreign object in a patient after surgery or other procedure
5. Patient death or serious disability associated with medication error
6. Patient death or serious disability with a hemolytic reaction due to the administration of ABO/HLA incompatible blood or blood products
7. Death or serious disability due to an air embolism
8. Falls that result in death or serious disability
9. Stage 3 or 4 pressure ulcers acquired after admission to a health care facility
10. Death or serious disability associate s with failure to identity and treat hyperbilirubinimia in neonates

South Dakota  No current policy.

Tennessee  No current policy. Hospitals have endorsed guidelines suggested by the American Hospital Association, but they have not agreed to waive fees for specific errors. Mistakes are evaluated on a case-by-case basis.

Texas  No current policy.

Utah  No current policy. Hospitals have adopted guidelines suggested by the American Hospital Association, but they have not agreed to waive fees for specific errors. Mistakes evaluated on a case-by-case basis.

Vermont  Yes. Won’t charge patients or insurers for eight serious, preventable errors identified by the National Quality Forum, a non profit health care safety advocacy agency:

1. Surgery on wrong body part
2. Surgery on wrong patient
3. Wrong surgical procedure
4. Retention of foreign object in a patient after surgery
5. Air embolism-associate injury
6. Medication error injury
7. Artificial insemination/wrong donor
8. Incompatible blood-associated injury

Virginia  No current policy.

Washington  Yes. Hospital, doctors and surgery centers won’t charge for 28 events identified by the National Quality Forum, a non profit health care advocacy agency.

West Virginia  No current policy. Expect on March 6 to adopt eight serious, preventable errors identified by the National Quality Forum, a non profit health care safety advocacy agency, plus guidelines suggested by the American Hospital Association.

Wisconsin  No current policy. Staff directed to develop a policy; expects to adopt a policy not to bill for 28 serious, preventable events identified by the National Quality Forum, a non profit health care advocacy agency.

Wyoming  No current policy; discussions continuing.

To set up an appointment with our legal team, and discuss this matter further, please call 888-986-0080 and speak to Cindy Monfils at extension 155. Ms. Monfils can be reached by email as well at cmonfils@phiagroup.com.

Never Events Articles + Links

1) Article: Medicare’s mistake – No-pay rules punish hospitals for the inevitable (by Kevin Pho)
Link: http://blogs.usatoday.com/oped/2009/01/medicares-mista.html

2) Article: No pay for “never event” errors becoming standard (by Kevin B. O’Reilly)
Link: http://www.ama-assn.org/amednews/2008/01/07/prsc0107.htm

3) Blog Entry: More never event absurdity
Link: http://ohiosurgery.blogspot.com/2008/10/more-never-event-absurdity.html

4) Notes from 8/7/08 Meeting; Agenda Item 5. b (Adverse (“Never”) Events
Link:http://www.mrmib.ca.gov/MRMIB/Agenda_Minutes_080708/Agenda_Item_5.b_Never_Events.pdf

5) Article: OIG Releases Reports on Hospital Adverse Events and State Reporting Systems
Link:http://medicareupdate.typepad.com/medicare_update/2008/12/oigadverseeventreports.html

6) Article: Study: Never events a major factor in hospital liability costs
Link: http://www.fiercehealthfinance.com/story/study-never-events-major-factor-hospital-liability-costs/2008-10-01

7) Article: “Never-Event” Lists and Their Use Create Confusion for Physicians
Link:http://www.massmed.org/AM/Template.cfm?Section=vs_oct08_top&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=23417

8) Article: Adverse Events in Hospitals: Overview of Key Issues (from the Department of Health and Human Services, Office of Inspector General – Daniel R. Levinson)
Link: http://www.oig.hhs.gov/oei/reports/oei-06-07-00470.pdf

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