Medicare Cuts Hospital Reimbursements for Malpractice

On Oct. 1st, Medicare, the government health insurance program for the nation's elderly and disabled, began reducing reimbursements for many hospital-acquired conditions such as surgical-site infections, certain catheter-related infections, advanced bed sores, injuries resulting from falls and trauma, signs of poor blood-sugar control such as diabetic ketoacidosis and hypoglycemic coma, and deep-vein thrombosis and pulmonary embolism following certain orthopedic surgeries. Medicare also is targeting the "never events" (events that should never happen in a hospital) such as the wrong kind of surgery, surgery on the wrong body part or surgery on the wrong patient, for which it will eliminate payment altogether. The agency estimates the savings from paying hospitals a lower rate for preventable hospital-acquired conditions will amount to $21 million a year. Several private insurers have announced plans to follow Medicare's lead.

Forcing hospitals to bear the cost of preventable complications is accelerating efforts by hospitals to tighten up their safety systems and treatment protocols. According to 2002 data from the Centers for Disease Control and Prevention, the most recent available, patients acquire an estimated 1.7 million infections each year in U.S. hospitals, leading to about 99,000 annual deaths. Nearly one third of these are urinary-tract infections, 22% are surgical-site infections, 15% are pneumonias and 14% are bloodstream infections. There are about 750,000 sepsis cases every year in the U.S., resulting in more than 200,000 patients deaths. Observers believe Medicare's new stance on reimbursement is likely to result in steps by hospitals to increase prevention and early diagnosis of infections that can lead to sepsis.

Some believe the new Medicare rule has advantages and disadvantages. While efforts to reduce or eliminate preventable complications is a worthy goal, some fear that the rule changes could result in doctors and hospitals becoming much more selective about which patients they treat. Another concern is that hospitals will try to pass the costs onto patients, and that patients will receive hospital bills for the preventable medical errors or conditions they suffer.