What Are Never Events and Why Do They Matter?
Robin J. Fisk, Esq., Fisk Law Firm
Inception by
In 1999, the Institute of Medicine issued a report finding that medical errors were a leading cause of mortality and morbidity in the United States, exceeding deaths attributable to motor vehicle accidents, breast cancer and AIDS.(1) The report, concluding that medi[i]cal errors contributed to 98,000 deaths per year, “ignited public and professional dialog.”(2)
Following this report, in 2002 the National Quality Forum (“NQF”),(3) an organization created to develop quality standards and measure and encourage reporting endorsed a list of 27 serious, largely preventable conditions in which, it claimed should never happen to a hospital patient.(4) A 28th was added in 2006. The list included preventable errors arising from surgery, medical devices or products; inadequate patient protection; inadequate care management; unclean or unsafe environmental conditions; or criminal acts. The intent was to create national consensus around a common set of adverse events which needed to be investigated, analyzed for root cause and reported any time they occur – and the list was the start.
These events soon became known as “Never Events.” In truth, “Never Events” are claimed to be rare occurrences, but because they are occurrences that are largely or entirely preventable with reasonable care and because they cause harm to the patient, they are situations in which our fee-for-service payment system is seen as rewarding the negligent party for causing damage. This, combined with the irresistible name, has added to the speed in which the “Never Event” issue has grabbed the public’s attention.(5)Leapfrog Group.
In 2007, the Leapfrog Group, a coalition of purchasers of healthcare which focuses its buying power to improve healthcare quality, endorsed the National Quality Forum’s findings and offered recognition to hospitals that would adopt the Leapfrog’s Group’s policies.(6) Specifically, the Leapfrog Group asks hospitals that have experienced a Never Event to:
1. Apologize to the patient and family affected by the “Never Event”;
2. Report the event to at least one accrediting agency such as the Joint Commission on Accreditation of Healthcare Organizations (“The Joint Commission”), a state oversight agency, or a patient safety organization;
3. Perform a root cause analysis in accordance with the instructions of the accreditation agency; and
4. Waive all costs directly related to the event.
Medicare Adopts Rules for Serious Preventable Error
In 2005, Congress passed a law requiring the Secretary of the Department of Health and Human Services to select by October 1, 2007 at least two conditions that (a) are high cost and/or high volume; (b) result in a higher payment when the condition is present as a secondary diagnosis; and (c) could reasonably have been prevented through use of evidence-based guidelines.(7) Evidence-based guidelines are practices that have been proven, based on clinical research, to be best practices for performing certain medical procedures or treatments.(8)
The basis for this requirement, which is part of a larger “Value – Based Purchasing Initiative,”(9) was to encourage hospitals to treat patients efficiently. Although hospitals paid using the Inpatient Prospective Payment System (“IPPS”)(10) are paid a specific rate for an admission regardless of length of stay, and many of what Medicare terms “hospitals-acquired-conditions” or “HACs” don’t result in increased payment to the hospital, there are ways in which an HAC could lead to higher payment:(11)
1. If the cost of the HAC increased the cost of the treatment sufficiently to qualify the stay for outlier payments, then the hospital could receive an additional percentage of its costs above the outlier threshold.(12)
2. Some DRGs are more highly reimbursed based on the presence of a complicating condition (“CC”) or a major complicating condition (“MCC”) which could be the result of the HAC.(13)
The result was that on August 22, 2007, CMS posted it Final Rule of inpatient hospital payment reforms which excluded payment for several HACs if any of them occurred during a Medicare beneficiary’s inpatient stay.(14) Although CMS has published initial HACs and sought suggestions for additional HACs in its rulemaking for the 2008 IPPS payment year, these exclusions would become effective for discharges beginning on October 1, 2008. The proposed HACs were discussed and revised with the result that the August 19, 2008 Final Rule for the 2009 IPPS payment year excluded payment for CCs and MCCs for ten categories of HACs. These are:(15)
1. Foreign Object Retained After Surgery
2. Air Embolism
3. Blood Incompatibility
4. Stage III and IV Pressure Ulcers
5. Falls and Trauma
- Fractures
- Dislocations
- Intracranial Injuries
- Crushing Injuries
- Burns
- Electric Shock
Manifestations of Poor Glycemic Control
- Diabetic Ketoacidosis
- Nonketotic Hyperosmolar Coma
- Hypoglycemic Coma
- Secondary Diabetes with Ketoacidosis
- Secondary Diabetes with Hyperosmolarity
7. Catheter-Associated Urinary Tract Infection (“UTI”)
8. Vascular Catheter-Associated Infection
9. Surgical Site Infection Following:
- Coronary Artery Bypass Graft (“CABG”)-Mediastinitis
- Bariatric Surgery
-Laparoscopic Gastric Bypass
-Gastroenterostomy
-Laparoscopic Gastric Restrictive Surgery
- Orthopedic Procedures
-Spine
-Neck
-Shoulder
-Elbow
10. Deep Vein Thrombosis (“DVT”)/Pulmonary Embolism (“PE”)
When any of these complicating or major complicating conditions occur while a Medicare beneficiary is a hospital inpatient in a hospital paid under IPPS, Medicare will no longer pay the higher-weighted medical severity adjusted diagnosis related group (“MSDRG”) rate for the condition. If however, the patient had the complicating condition at the time he or she was admitted to the hospital, the hospital will be paid the higher rate reflecting the additional cost associated with the complicating condition. To enable this distinction, the hospital is required to add a code to its claim form which will identify the complicating condition as present on admission. If the code is not present, the complicating condition will be considered hospital-acquired and ineligible for any additional payment.
Those hospitals not paid using IPPS will not subject to the same disallowance for HACs.
States and Associations React
Reacting to the Leapfrog Group’s initiative, several state hospital associations have announced their endorsement of its suggested response to a “Never Event.” In September, 2007 Minnesota’s Governor announced that the Minnesota Hospital Association had adopted a policy of not billing any party for any of the then-27 events on the NQF’s Serious Reportable Event list. According to the governor’s statement, this announcement merely formalized the Hospital Association’s existing policy.(16)
Soon after, the Massachusetts Hospital Association adopted policies of not billing for eight of the Serious Preventable errors identified by the NQF.(17) The Vermont Association of Hospitals and Health Systems (“VAHHS”) quickly followed Massachusetts with its announcement that VAHHS members will not bill for eight of the events.(18) The Washington State Hospital Association adopted a policy prohibiting billing for any of the preventable medical errors identified by the NQF from time to time. This new policy supplemented its existing policy requiring hospitals to report these errors to the Washington State Department of Health.(19)
One report found that, during the period from Medicare’s announcement in August 2007 through early summer 2008, 23 state hospital associations had adopted policies forbidding or discouraging billing for serious preventable medical errors, up from 11 in February.(20)
Other states have taken a more cautious approach. Acknowledging the difficulties that can arise in determining whether a “Never Event” that has occurred is truly within the control of the hospital, the New Hampshire Hospital Association has issued a policy statement intended to ensure that hospitals bear the financial risk for only those adverse events that they or their staff could have reasonably prevented.(21)
Other Payors React
Meanwhile, the insurance companies took notice of the movement to discontinue payment for “Never Events,” starting with Aetna, in its role as a member of the Leapfrog Group.(22) This past spring, WellPoint and CIGNA announced that they will stop paying for serious preventable errors. (23) (24)
CIGNA contends that refusing to pay for these many of errors is not a new policy, but a continuance of its policy of denying payment for non-medically necessary care.(25) For other errors, conditions that could have been avoided by use of widely accepted industry standard procedures, CIGNA intends to discontinue payment when permitted by its contracts with hospitals. CIGNA is encouraging hospitals to adopt all of the four steps recommended by the Leapfrog Group and may raise a hospital’s quality rating based on its adherence to the Leapfrog measures.
In January 2008, the Pennsylvania State Medicaid program announced that it too would discontinue payments for certain serious preventable errors because they were not medically necessary.(26) In June 2008, the New York Medicaid Program made a similar announcement.(27)
Some Contracting Considerations
Several payors have indicated that they intend to incorporate the Leapfrog Group recommendations into their contract language. Hospitals will be required to report the occurrence of the error, apologize to the patient and/or his family, perform a root cause analysis and forego payment when a “preventable error” occurs. As with most things, the devil is in the details. When an insurer presents a hospital with the contract containing these four requirements for dealing with preventable errors, hospitals will want to look for the detail that will explain how these processes are administered.
For example, who decides when a preventable error has occurred? How long will the hospital have to reach that conclusion? Sometimes it takes a while to sort out whether a preventable error has occurred and where the blame lies. Will the timeline for identifying and reporting a preventable error affect the hospital’s claim submission deadlines? What appeal rights does the hospital have if the company determines a preventable error has occurred but the hospital disagrees? Does the insurance company have the ability to recognize codes indicating a condition was present on admission? Who determines whether and when to apologize to the patient or family members? What if the insurance company and the hospital disagree on whether an apology is due? Who ultimately decides? Does the contract require that the results of the root cause analysis be shared with the insurance company, or can the hospital simply report that is has conducted the root cause analysis? And finally, what payments will be disallowed and what uncompensated care will the hospital be obligated to provide related to this preventable error?
Summary
Is this a tempest in a teapot, or, as one astute health lawyer put it, “Is this Y2K all over again?”(28) In truth, even before the term “Never Events” entered the common vernacular, most hospitals would not have been paid for a “Never Event” – whether they committed the error, contributed to its cause, or merely hosted it. Many hospitals already had a policy for not billing for serious preventable medical errors taking place on their premises. Most insurers would deny payment for any procedures that could be considered not medically necessary, such as performing surgery on the wrong patient or surgical site. Some of these serious preventable errors may not be billable in the first place, such as criminal acts occurring at the facility.
“Never Events” policies present the other side of quality improvements efforts. In contrast to insurers’ “carrot” approaches to incentivizing quality through enhanced payments such as “pay for performance,” “Never Events” policies are the “stick.” We can expect that these efforts will continue as buyers of healthcare are increasingly asked for assurances that the healthcare services they are purchasing are delivered in a high quality and efficient manner. As an example, Medicare is actively looking at feasibility of expanding its practice of disallowing payment for healthcare-acquired conditions into other care settings.(29) Other payors will follow suit.
1 Institute of Medicine, To Err is Human: Building a Safer Health System, found at http://www.iom.edu/Object.File/Master/4/117/ToErr-8pager.pdf
2 The Commonwealth Fund, Five Years after “To Err is Human”: What Have we Learned? Found at: http://www.commonwealthfund.org/publications/publication_show.htm?doc_id=278113
3 http://www.qualityforum.org/
4 National Quality Foundation, Serious Reportable Events in Healthcare, found at http://www.doh.wa.gov/hsqa/orch/video_conf/2007_8_15/Handouts/NQFSeriousReportableEvents.pdf
5 See, for example, newspaper articles with such catchy headlines as “Some hospitals won’t bill you if they cause your death” By Victoria Wallack, Waldo Maine Statehouse Reporter, found here: http://waldo.villagesoup.com/Government /story.cfm ?storyID=108603
6 “Leapfrog Group Position Statement on Never Events” Found at: http://www.leapfroggroup.org/for_hospitals/leapfrog_hospital_quality_and_safety_survey_copy/never_even
7 Pub.L. 109-171 5001© at pg. 120 stat. 30.
8 For additional information about Evidence Based guidelines, including a compendium of guidelines for specific diagnoses and treatments, see the National Guideline Clearinghouse at www.guideline.gov
9 See August 19, 2008, Final Rule 73 Fed. Register 48434 at 48471.
10 See generally, 42 CFR SubPart A.
11 See August 19, 2008, Final Rule 73 Fed. Register 48434 at
The abbreviation “HAC” has also been defined “Healthcare-Acquired Conditions” to refer to similarly preventable conditions that arise from the failure to follow evidence-based guidelines in non hospital settings.
12 See generally 42 CFR SubPart F.
13 For example, a hospital paid under IPPS for treating a patient with a principal diagnosis of intracranial hemorrhage or cerebral infarction (stroke) could receive a payment of $5,347.98 while a patient with the same principal diagnosis and a complicating condition could be paid $6,177.43. 73 Fed. Reg. at 48472.
14 August 22, 2007 Final Rule with Comment Period, 72 Fed. Reg. 47130 at pg. 47200.
15 73 Fed. Reg. at 48473 – 48487; see also CMS list of HACs at http://www.cms.hhs.gov/HospitalAcqCond/06_Hospital-Acquired_Conditions.asp#TopOfPage
16 See January, 2008 Minnesota Hospital Association Serious Reportable Adverse Health Care Event Billing Policy, http://www.mnhospitals.org/inc/data/pdfs/AHE-billing-clarifications.pdf.
17 The Massachusetts Hospital Association announced that it would not bill patients for eight serious preventable medical errors specifically:
-surgery on the wrong body part
-surgery on the wrong person
-the wrong surgical procedure
-foreign object left in the body
-intravascular air embolism
-medication error
-administration of incompatible blood products
-artificial insemination using the wrong donor or egg
-infant discharged to the wrong family
18 The VAHHS list of preventable errors for which members would not bill are: air embolism-associated injury, artificial insemination/wrong donor, incompatible blood-associated injury, medication error injury, retention of foreign objects within a patient, wrong-patient and wrong-site surgery and wrong surgical procedure. Found at: http//www,fiercehealthcare.com/story/vt-hospitals-will-stop-billing-never-events/2008-01-08.
19 Washington State Hospital Association Pledge on Adverse Event Billing. Found at http://www.wsha.org/page.cfm?ID=AdverseEvent; see also: http://www.wsha.org/files/82/adverse-events-resolution.pdf.
20 Compare Feb. 29, 2008 MSNBC Report “Patients Still stuck with bill for medical errors-11 states waive fees for worst mistakes, but most will charge you or your insurer” Found at: http://ww.msnbc.msn.com/id/23341360/ with Aug 12, 2008 MSNBC Report “More states shred bills for awful medical error – Patients in 23 states will no longer pay for certain mistakes, hospitals say” found at: http://www.msnbc.msn.com/id/26081421/print/1/displaymode/1098
21 June 30 2008 Statement of the New Hampshire Hospital Association “New Hampshire Principles for Identifying Serious, Adverse Events for which Payment is Not Expected.” Found at http://www.nhha.org/WhatNewFiles/PrinciplesAdoptedJune2008.html
22 Troy Brennan, M.D. “A New Safety Initiative: Health Plans Join Push to End ‘Never Events’” at http://www.aetna.com/about/aoti/articles/2008spring.html.
23 April 2, 2008 WellPoint Press Release “WellPoint Announces Initiative Aimed at Preventing Serious Medical Errors”; found at http://phx.corporate-ir.net/phoenix.zhtml?c=130104&p=irol-newsArticle_general&t=Regular&id=1124709&.
24 April 17, 2008 CIGNA Press Release “Promoting Patient Safety: CIGNA to Stop Paying for Never Events and Avoidable Hospital Conditions,” found at http://newsroom.cigna.com/article_display.cfm?article_id=888.
25 April 17, 2008 Press Release “Promoting Patient Safety: CIGNA to Stop Paying for Never Events and Avoidable Hospital Conditions,” found at http://newsroom.cigna.com/article_display.cfm?article_id=888
26 Jan. 23, 2008 Associated Press Report “Pennsylvania says it won’t make Medicaid payments for serious hospital errors,” New York Times, International ed. Found at: http://www.iht.com/articles/ap/2008/01/23/america/Pennsylvania-Health-Care.php.
27 June 5, 2008 Press Release, New York State Department of Health, “Medicaid to Cease Reimbursement to Hospitals for ‘Never Events’ and Avoidable Errors.” Found at http://www.health.state.ny.us/press/releases/2008/2008-06-05_medicaid_cease_paying_never_events.htm.
28 Remarks of Lawrence Foust, Senior Counsel, Kaiser Foundation Health Plan, Inc. at the June, 2008 American Health Lawyers Association In House Counsel Program.
29 In August, CMS expanded the term HAC to mean “healthcare acquired conditions” and announced that it is studying whether infections, dementia and falls are preventable healthcare acquired conditions in skilled nursing facilities and inpatient rehabilitation hospitals. August 8, 2008 Final Rule 73 Fed. Reg. 46416 at pg. 46432 and 46389 – 46390.
Comments