More Insurers Refusing to Cover Hospitals’ Costly Mistakes

August 08, 2008 11:09 AM
by Cara McDonough
Blue Cross and Blue Shield of Illinois will no longer pay for major medical errors. Several insurers have done the same in other states, and more still are moving in that direction.

Insurer Takes a Stand

When a hospital has a “never event”—a medical error that should never happen—like leaving a sponge in a patient’s chest after open-heart surgery or causing a prolonged illness by mixing up a patient’s medication, Blue Cross and Blue Shield, the largest health insurance company in Illinois, says that it will no longer pay the claim.

“The idea is that forcing hospitals to absorb those costs will create an incentive to improve quality of care in a business where money typically rolls in regardless of patient outcomes and customers often feel lost in a complex, impersonal system,” reports the Chicago Tribune.

According to the article, other insurers in the state, like Aetna, are looking to implement similar policies as they negotiate their renewal contracts with hospitals.

Background: A growing trend

The Wall Street Journal’s Health Blog reports that many hospitals across the country have already stopped billing for “never events” and some states have developed specific lists of what constitutes a nonbillable medical error.
Health authorities in Massachusetts announced in June that hospitals that make major mistakes, such as operating on the wrong limb, will no longer be able to bill the state government or insurer Blue Cross and Blue Shield for costs related to fixing the error.

Starting in October in California, the federal centers for Medicaid and Medicare services will stop reimbursing hospitals for eight types of mistakes, including bedsores, objects left in patients after an operation and infections acquired during surgery or from catheters, the Los Angeles Times reports.

Other states are dealing with the problem, as well. Maine, Massachusetts, Pennsylvania and New York have restricted payments for avoidable medical errors, and hospital associations in Minnesota, Washington and Vermont have pledged never to bill patients for the cost of medical mistakes.

Opinion & Analysis: Illinois has a long way to go

Illinois’s largest health insurer may be putting its foot down when it comes to “never events,” but the state is slow to catch on, according to health writer Judith Graham.

“While other states move to prevent serious medical errors in hospitals, Illinois is dragging its feet,” she writes for Triage, the Chicago Tribune’s health blog.

The state was supposed to establish a system for publicly reporting serious medical errors under legislation passed in 2005, but the system has yet to be implemented.

“It’s fair to ask, what’s taking so long? Why are other states moving ahead while people are still talking about what to do here?,” writes Graham.

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