Is Your Organization Implementing a Policy for “Never Events”?

I’m once again asking for information from you –

In November, 2006, the National Quality Forum released a list of 28 medical events that it called “serious reportable events.” Shortly after, the Leapfrog Group, an association of employers working to improve health care quality, issued a position statement on what it termed “Never Events”. The Leapfrog Group encouraged hospitals to: (i) apologize to the patient and family affected by the “Never Event”; (ii) report the event to an accrediting reporting agency for medical errors; (iii) analyze the root cause of the error and (iv) waive all costs related to the event.

Since then, the issue has picked up speed. It certainly has a gut-level appeal. Last August, Medicare announced that it would no longer pay for certain “preventable errors”. Link to earlier post on Medicare Payment for Preventable Errors  In addition several state Medicaid programs and insurers, including Aetna, and the Blue Cross Association have announced that they will not pay for “Never Events”.

More recently, the Minnesota, Massachusetts and Vermont Hospital Associations have adopted policies agreeing not to bill a patient who experiences an event which the hospital association has decided should never happen.  Massachusetts included the following events on its list:

- 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.

Although most of the events included in the Massachusetts Hospital Association’s list are fairly clear, many of the “Never Events” may not be cut and dried or the blame may not be easily placed. For example, one of the possibly more complicated “Never Events” is “patient death or serious disability associated with the use of contaminated drugs, devices, or biologics provided by the healthcare facility”. What was the source of the contamination? Was the hospital involved in causing or failing to detect the contamination?

Similarly, the hospital may not bear the blame for the “Never Event” identified as “patient death or serious disability associated with the use or function of a device in patient care, in which the device is used or functions other than as intended” if the device malfunctions.  

For those hospitals agreeing to this policy, what steps are you taking to operationalize it?

• How do billing personnel know which codes to bill for/not to bill for? 
• Do these non billed codes relate to the event itself or to all costs associated with the patient’s stay at the facility or to all costs associated with correcting the error?
• Who (as in what job title) makes the decisions for which codes are removed from the bill?
• Is all billing delayed while an investigation takes place?
• What written or verbal communications need to accompany the delivery of the bill?  What does it say – especially if responsibility for the event has not been established?
• For those charges that you do not write off, do standard collection policies apply?
• What changes, if any, are you making to your contractual arrangements with suppliers to protect you if they supply contaminated drugs or malfunctioning devices?

I am preparing a paper on the topic and would appreciate any information you would like to share. You can either post a response below or contact me directly at rf@FiskLawOffice.com/ As always, I appreciate your assistance.

Sources:

National Quality Forum List of Serious Reportable Events

For an article describing steps some facilities are taking to prevent these errors, see Washington Post Article

Comments

[Robin Fisk]

Here is a response sent to me directly by Jim Fouassier which he gave me permission to share:

Robin, you ask excellent questions which, as far as I know, no one yet has posed.

I have, however, addressed some of the possible consequences of a broad restriction on billing for "never events", since some commercial plans are jumping all over the idea.

Medicare dictates its own terms and conditions. My understanding is that Medicare will mandate reporting procedures based on coding. I initially was under the erroneous impression that Medicare requires some type of a "report" of the adverse event. I have learned that this is not how it works. There is no separate reporting requirement for Adverse Events ("Hospital Acquired Conditions") in the final CMS rule, adopted on August 22, 2007. Instead, the information goes to CMS via new or modified procedure coding elements implemented by the rules, and which presumably will be reported on the UB-04. In other words, the standard bill goes into Medicare and Medicare will figure out what items are never events from the specific codings.

Medicare apparently does not need separate reporting of the actual "event" because that does not matter for CMS payment purposes. As CMS explains it, the Medicare DRG system does not allow hospital complications to result in higher payments except in two ways. The first is in the case of cost outliers and the second is under the new MS-DRG rules, which establish subcategories of some 258 DRGs; some categories allow for higher payments for complications and CMS obviously does not want any hospital acquired condition to result in a higher payment under an MS-DRG for complications or cormorbidities. Some commercial contracts obviously will not have cost outliers, so that will not be an issue. Also, in a commercial context the Medicare MS-DRG schedule itself only will apply if the parties have a Medicare Advantage HMO product; other commercial contracts using some type of DRG-based reimbursement methodology are free to fashion the reimbursement provisions in any way in which they agree and are not bound to apply the MS-DRG schedule if otherwise not inclined.

By establishing coding for certain hospital acquired conditions CMS can factor out the conditions from the calculation of either cost outliers or MS-DRG payments. Obviously, this does not translate for commercial products. The commercial payor wants to use the "adverse events" to avoid any payment for particular service. The question is how the parties fairly and correctly can isolate a particular service when reimbursement is case based on a DRG? A provider cannot simply agree that the existence of the service justifies denial of the claim. How do the parties fairly break out the services related to the never event in the context of a DRG payment, even if they agreed to a schedule of never events in principle ?

To use a concrete example: appendectomy reveals a sponge left in from a previous surgery. Under the new Medicare MS-DRGs "object left in during surgery" codes out as 998.4CC and goes on the UB-04 that way. This allows Medicare to factor out the specific never event and avoid any additional payment for complications or for any outlier. If in a commercial context, however, the final diagnosis remains "appendicitis" and the principal procedure DRG still codes out as "appendectomy", the commercial payor pays nothing more than it would have paid without the 998.4. The payor may not be paying anything additional for complications like 998.4 because the commercial rate schedules, unlike the new Medicare DRG schemes, may not provide for additional payment for complications or outliers. Should the commercial payor be allowed to deny the claim ? A part of the claim ? If the latter, then what part ? How much ? If the additional code does not result in any DRG change the payor obviously is not paying anything extra for the never event. Why should any part of the claim be denied if the payor is only paying what it would have paid for the appendectomy without the removal of the sponge ?

Framing a hypothetical for per diems results in similar concerns. If the per diem for appendicitis is $1600, and we have a three day stay, how is it possible to discern whether day 3 was attributable to any extent to the sponge ? How is the issue of the sponge even to be "reported" if we have a commercial product and the contract has not established any MS-DRGs (i.e. how could a relevant code even appear on the UB-04 in the first place)? At the end, the same UR procedures as currently are in place will have to suffice: the case managers will examine the chart and fight over whether day 3 was or was not necessitated as a result of the sponge.

A second issue is the distinction between denying payment for a never event on the initial admission or service, and the consequences on payment for subsequent care and treatment reasonably related to the never event. This also is especially relevant in case based payment methodologies. A clamp is left in. The dx and procedure coding for the never event may not result in a different DRG or dollar payment for the first encounter, but the patient has to be readmitted to take out the sponge. Should the provider get paid anything on the readmission? What effect does the never event have on payment for the first admission ? What if the patient comes in 6 months later for an appendectomy; only then does the film shows the clamp from a prior procedure? Removal of the clamp and related charges affect the calculation of the DRG. Does the provider get denied all of the reimbursement even for the services necessary to the appendectomy ? The issues should be separately examined for the initial adverse incident and subsequent care or treatment arising from the initial incident.

One way to proceed is to agree in the contract on a short list of several clearly preventable "never events" as a basis for denial of payment for services (and addressing the distinctions between the initial admission or upon readmission) which are directly related to those occurrences, to minimize the likelihood that payors will contrive excuses improperly to deny payment on these grounds. If a determination may be made that the adverse event directly caused an increase in cost to the payor, then the increase in cost should be accommodated in the reimbursement provisions. If there is no increase in cost to the payor, the never event has no application to reimbursement. Medical records for plan members would be made available to the same extent as for any other UR or reimbursement validation purpose and the contracted appeal mechanisms would also apply to a resolution of these issues.

I'd be interested in what others have to say on this topic.

James G. Fouassier, JD
Department of Managed Care
Stony Brook University Hospital
188 Belle Meade Road
East Setauket, New York 11733