Prepare Risk Management Strategies for Adverse Events

October 31, 2016

Why is it worth taking a second look at medical errors and their costs? Should your health care plan cover preventable conditions and event costs, including extended hospitalization or treatment for medical or surgical misadventures or hospital-acquired conditions or infections?

This is a major issue given that medical errors are among the largest causes of U.S. deaths, according to an NPR article detailing a Johns Hopkins medical study.

Collectively, these “never” or “preventable” events — situations that should never happen — and other incidents relating to medical and surgical misadventures are known as “adverse events”: preventable conditions not present on admission (whether inpatient or outpatient).

In today's evolving medical and financial landscape, many insurers, including Medicare, refuse to pay for treatment costs for medical or surgical human errors. Specifically, if a condition isn’t present upon admission but is subsequently acquired during the hospital stay, Medicare will no longer pay the additional hospitalization costs, but the patient isn’t responsible for the additional costs either. Other payers may reduce payments if providers delay discharge due to an adverse event.

Nonetheless, according to a 2016 study, these events are still occurring at high rates — even seven years after Medicare stopped paying for such mistakes. Never events occur in two-thirds of all U.S. hospitals and negatively impact one in every 25 patients.

Many large hospitals with recognizable brand names and seemingly high reputations for excellence do not do well in terms of certain infections such as MRSA (methicillin-resistant staphylococcus). What may be even more concerning is that “teaching hospitals” seem to have consistently lower scores. It’s not clear why this is happening, but the bigger teaching hospitals see more complex patients and may be at a greater statistical disadvantage. One thing is certain, however: Tolerance for never events or preventable conditions will continue to decline among patients and payers.

Final authority

Medical benefits are provided only for eligible services and ultimately plan sponsors have the final authority[RN1]  to say whether a specific benefit is covered or not. Provider contracts, medical coverage documents and provider manuals may specify policies. Questionable charges and/or services that are perhaps not eligible for payment include charges that result from provider errors and/or facility acquired conditions deemed “reasonably preventable” using evidence-based guidelines. Adverse event costs can easily run into the hundreds of thousands of dollars.

Given state-mandated higher levels of incident reporting and escalating hospitalization costs, health care plan providers should identify and implement risk management strategies.

These might include, for example,

  • Establishing and communicating provider policies to support provider initiatives,
  • Establishing guidelines to flag and review cases for adverse events uncovered during concurrent review processes,
  • Conducting detailed reviews for cases where adverse events are uncovered and
  • Ensuring provider accountability based on quality reporting and claim payment adjustments.

Plan providers may also utilize the PULSE + PlusTM Program to develop and implement these initiatives.

Through PULSE + PlusTM Program, we can help our clients proactively manage and reduce risk exposure. With our expertise, we assist with everything from high-dollar claims reviews and negotiations to specialty case management and independent medical reviews. Our goal is to provide you with peace of mind, knowing that the charges you’re paying are fair and appropriate.

Contact the experts at PartnerRe.

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