Insurer says facilities won’t get paid when serious adverse events occur

Providers fear policy may spread to other geographic and medical areas

Your facility experiences a rare adverse event. The wrong patient had surgery, or surgery was performed on the wrong body part. Things couldn’t get worse . . . or could they? You receive a financial blow when you find out the insurance company won’t pay the facility fee for the case.

In what is apparently a history-making move, HealthPartners, Minnesota’s third largest insurer, is scheduled to put a policy into effect on Jan. 1, 2005, as we go to press, which states it will not pay hospitals and surgery centers for cases involving adverse events, often referred to as "never" events because they should never happen. The adverse events include performing surgery on the wrong body part or on the wrong patient or leaving a foreign object in a patient after surgery. They are defined by The National Quality Forum, a Washington, DC-based nonprofit national coalition of physicians, hospitals, businesses, and policy-makers. HealthPartners, which has 630,000 customers, says physician fees are not included. The never events will not be publicized, but the number of events will be tracked, according to HealthPartners.

While some facilities do waive fees in cases involving adverse events, many do not, sources say.

HealthPartners’ action follows Minnesota’s new adverse event reporting legislation, which requires hospitals and, as of Dec. 6, 2004, surgery centers to report any of the 27 adverse events identified by the National Quality Forum to the state.

The law was pushed for and lobbied heavily by the Minnesota Hospital Association.

While the St. Paul-based Minnesota Department of Health expects to release a report on hospitals’ adverse events in early 2005, one community already has identified adverse events in its surgical area.

"What we’re finding in this community, as we’ve implemented that reporting, is that wrong-site surgery, wrong procedure, and retained objects are some of the most common [errors]," explains Barbara Balik, RN, EDD, executive vice president for quality and safety at Allina Hospitals and Clinics in Minneapolis/St. Paul.

Be prepared for other states and insurers to examine the option of not paying facilities for cases involving adverse events, predicts Joseph Van Camp, MD, president of the Minnesota Surgical Society and chief of cardiovascular and thoracic surgery at Hennepin County Medical Center in Minneapolis.

"If one company can do something to lower the costs and prove it works, then I’m sure it will spread to other states and insurance providers," Van Camp says.

In fact, 22 states have adopted laws requiring hospitals to report adverse events, and some of those states also require surgery centers to report such events, according to the National Academy for State Health Policy. (To see a list of states that require adverse event reporting, go to the academy’s web site at Under "Quality and Patient Safety," click on "State mandatory reporting rules and statutes.")

Also, providers express concern that such policies could expand beyond adverse events.

While the policies initially may affect surgical adverse events, the concern is the "slippery slope of this type of policy that could expand to all types of medical practice," says Brian Zelickson, MD, medical director of Abbott Northwestern Hospital Laser Center in Edina, MN. "The biggest concern is where this may be going it is easy to see them expanding this to not pay for medical interventions that may produce recognized side affects, partial improvement, or other nonperfect outcomes," he says. "This is not realistic in the practice of medicine."

Many surgery providers contacted by Same-Day Surgery say that the HealthPartners policy won’t affect the number of "never" adverse events because they are so rare.

The Minneapolis-based Minnesota Medical Association released a statement saying that using serious medical errors for purposes other than quality improvement and learning potentially could have negative repercussions and could move the state further away from the goal of improving safety in health care. "HealthPartners’ new policy of withholding hospital payment when one of these never events occurs is a use of the new reporting system that was never intended," the statement says.

"The new HealthPartners’ policy shifts the focus from improving safety to fostering a punitive, blame-focused environment." In the long run, this trend is not good for patients, the statement says.

In recent years, almost all hospitals have put in place safeguards in the ORs to avoid as many errors as possible, and these changes largely were initiated by the Joint Commission on Accreditation of Healthcare Organizations, Van Camp stresses.

"In my hospital, we had an OR-wide push to pause for the cause, or at the start of every case, the nurses, physicians, and anesthetists would stop, check the patient’s name, diagnosis, operative site, and labs," he says. This was done to make a concerted effort to eradicate major errors, Van Camp says. "Most centers are fueled by the desire to do the best for their patients, not to try to avoid nonpayment from insurance providers," he adds.

David K. Wessner, president and CEO of Park Nicollet Health Services in St. Louis Park, MN, points out that the hospitals of Minnesota were the impetus for the state adverse event reporting law. "We sponsored that ground-breaking legislation in order to create accountability for these events so that working together we would drive their occurrence to zero," he explains.

Wessner notes he finds it interesting that HealthPartners is announcing a policy on nonpayment as an effort to create accountability for adverse events in Minnesota.

"The information they are using to administer their policy did not exist until hospitals created it in the interest of eliminating these events," he says. "HealthPartners’ policy will have no impact on our resolve to do the right thing for our patients."

HealthPartners probably is testing the waters to see if it can affect other types of potential errors by negative reinforcement, Van Camp says.

He points out that many insurance providers are providing monetary incentives for good care. In fact, HealthPartners pay-for-performance program this year will award $16 million to physicians in areas such as diabetes care, patient satisfaction, and tobacco advice. The company says.

"This new policy seems to be the opposite tact," Van Camp explains.

The potential consequence of this action is that it might diminish reporting of adverse events by providers, Balik says. "The whole intent of the adverse reporting bill was to encourage reporting so we can learn from one another," she adds.


For more on HealthPartners’ policy of not paying the facility fee when a case involves an adverse event, contact:

  • Brian Zelickson, MD, Medical Director, Abbott Northwestern Hospital Laser Center, 4100 W. 50th St., Edina, MN 55424. Phone: (952) 929-8888.