Hospital associations put nix on billing for 'never events'

Observers say a dozen or more states considering similar policies

Within months of each other, the states of Minnesota and Massachusetts established policies whereby facilities in those states will no longer bill for some or all of a list of 27 adverse events identified by the National Quality Forum as "never events." In the case of Minnesota, the policy, adopted in September, covers all of the events. In the case of Massachusetts, the following nine events are covered:

  • surgery on the wrong body part;
  • air embolism-associated injury;
  • surgery on the wrong patient;
  • wrong surgical procedure;
  • medication error injury;
  • retention of a foreign object;
  • artificial insemination/wrong donor;
  • infant discharged to the wrong family;
  • incompatible blood-associated injury.

"No state has any experience in doing this; although Minnesota was ahead of us a month or two, they are still learning," says Karen Nelson, RN, MPA, the Massachusetts Hospital Association's senior vice president for clinical affairs, explaining why Massachusetts limited its policy to nine events. "There is no magic formula, so [we chose] the most actionable."

The NQF list was designed "as a dictionary of things to report on. It was never designed as a payment tool," she says. In choosing its nine items, she explains, the association used four criteria — the event has to be preventable, within the control of the hospital, the result of error, and actually result in patient harm.

As for Minnesota, Bruce Rueben, the Minnesota Hospital Association's president and CEO, says, "we've had much more experience with public reporting and tracking and have been able to refine our definitions; so rather than trying to parse [the events] we chose to take the approach that no matter which event occurs, we are not going to bill."

In the case of Minnesota, he adds, "these [never] events were specifically chosen [by the NQF] because they can be defined, are preventable, and can be measured. If they are not preventable, they will not be one of these events. You assume all these [preventive strategies] are in place, and if something was preventable, no one believes you should bill the patient for care; the same holds true if additional care is needed. And if you find the error later in the billing cycle, you will pull that bill out."

In any event, he continues, the knowledge base across the country is sure to grow. "I think this is already spreading; there are probably a dozen states that have similar laws or are about to have them, although they don't all approach it in the same way. I think as the others get more experience, they will see there's not all that much to worry about," he proffers.

A logical step

Officials in both states note that their policies do not represent a sudden break from tradition, but rather were the logical next step in an evolutionary process — which involved pressures from both within and outside the state boundaries.

"We immediately started to deal with this issue when we began formally collecting data on adverse events [now required by state law]," Rueben explains. "Obviously, once we identified what they are and report on what can be done to prevent them [Minnesota hospitals are required to perform root cause analyses and publish corrective measures on all adverse events], the whole issue comes to front of mind."

The state hospital association collaborated with the state's council of health plans and the governor's office to come up with the policy, and payers and hospitals were in agreement.

"So, within a few months we stated out loud what was already happening," Rueben continues. "If hospitals are aware of such an event, they do not let the care get into the billing cycle. It's only right that you do not bill the patient."

And what about the recent announcement by the Centers for Medicare & Medicaid Services (CMS) that it would no longer reimburse hospitals for a specified list of preventable errors? "The CMS announcement probably did have something to do with the timing," Rueben says.

"In our case, this came about over a long course of time," says Nelson. "We looked at the consideration of non-charges more than a year ago and brought it to some of our internal committees, but the timing was just not right. People understood the principles, but they could not come to agreement."

In the past year, she continues, things changed dramatically in Massachusetts, with increased calls for transparency as evidenced by the public availability of nurse staffing plans. "That gave our members more confidence that this was the right thing to do and that this was the time to do it," says Nelson.

As for the CMS announcement, says Nelson, "it is significant because it is consistent with the same philosophy — that is, hospitals should [only] get paid for good care. It will be a challenge, but we will implement both at the same time."

Tracking errors, boosting quality

Of course, in order to be proactive about the non-billing policy, hospitals must be able to keep an accurate record of adverse events. "We have a patient safety registry, which is web-based, where hospitals report the event," Rueben shares. "It then prompts you to share your findings with the other hospitals in the state. The hospitals have their own internal approaches, too, so it is a combination of an overarching collective approach."

"There is no consistency across the country," adds Nelson. "Here, we are blessed with two mandatory reporting systems, and you also have The Joint Commission sentinel events. But the agencies to which we report did not use the NQF taxonomy. When they do, we will be able to count more accurately."

These policies clearly are a boost to quality, says Rueben. "A policy that promotes patient safety and quality is one that requires a hospital to do root cause analysis and develop a corrective action plan — how and why, and what must be done," he asserts. "We exponentially add to that because the hospitals here share knowledge. If an adverse event happens in hospital A, hospital B has access to its information and can put the fix in at their hospital to keep it from happening. That is the way it becomes a very powerful safety improvement mechanism; the billing process is just an adjunct to that."

"It shines a light on these events, which heretofore was not done," adds Nelson. "It is a total acknowledgement."

Nelson is convinced this trend will spread. "I can say for certain the [American Hospital Association] is looking at it as well; they've adopted some principles also for partial or non-payment for certain serious events. I would expect to see acceleration of this across the county within a year. "

"It's simply the right thing to do," says Rueben. "It restores and establishes patient and public trust, since you have now made it a priority to keep these events from happening."

[For more information, contact:

Karen Nelson, RN, MPA, Senior Vice President for Clinical Affairs, Massachusetts Hospital Association, 5 New England Executive Park, Burlington, MA 01803. Phone: (781) 272-8000.

Bruce Rueben, President and CEO, Minnesota Hospital Association, 2550 University Ave. W., Suite 350-S, St. Paul, MN 55114-1900. Phone: (651) 641-1121.]