Managing Malpractice in Medicare’s Never-Never Land

Brought to you by the Real Law Editorial Team

Some things just aren’t supposed to happen. In health care, they are referred to as “never events” and include hospital-acquired infections or injuries, medication errors and objects left inside patients during surgery. Yikes.

The Centers for Medicare and Medicaid Services (CMS) have actually codified some of these never events, listing specific preventable hospital-acquired conditions. Incidents that fall under this category won’t be reimbursed by Medicare—the hospital or physician has to absorb the costs.

Never Say “Never”

The problem with these never events is that they actually happen a lot—perhaps more than 4,000 times a year, in fact. These types of incidents drive more than one of every four claims, according to the 2012 Hospital Professional Liability and Physician Liability Benchmark Analysis. This study also found that these claims constituted 29 percent of total hospital professional liability costs—a growing proportion of a growing total. According to Surgery Journal,malpractice payments for surgical never events totaled $1.3 billion between 1990 and 2010.

With thousands, if not millions, of dollars per case and a very difficult defense, plaintiff attorneys watch this space closely. It’s easier for them to settle quickly, since hospitals and insurance companies don’t want to risk losing even more in court. This makes never events a favorite subject for malpractice attorneys, their firms, and related professionals.

New Medicare Rules Add Fuel to the Fire

In October 2012, Medicare also started penalizing hospitals for prematurely discharging patients when the patient was readmitted within 30 days. Today, nearly one in five Medicare beneficiaries is readmitted within a month, costing Medicare $17.5 billion in additional hospital bills. The new rules apply only to Medicare patients with heart attacks, heart failure and pneumonia—conditions that carry a very high rate of readmittance. But, like most aspects of Medicare, the number of conditions to which the rules will apply will surely expand in the future.

Like never events, these penalties are publicly reported and are almost absurdly common. For example, 2,189 hospitals (67 percent of all the hospitals that Medicare evaluated) will have their Medicare reimbursements reduced because of high readmission rates related to these specific conditions. One complication is the fact that the patients affected by this regulation may be readmitted even with the best of care. These conditions are often concomitant with being elderly or having serious chronic conditions. In that context, it’s tough to know how fair these new rules really are.

The Wider Implications for Civil Lawyers

Along with these new penalties comes public disclosure, which will be extremely valuable to medical malpractice plaintiff attorneys. They often use regulations to support their claims, characterize hospitals and possibly establish patterns of neglect. As a result, getting penalties admitted into evidence can be extremely persuasive to juries. Although these penalties just started, advertisements for early discharge cases are already starting to appear.

For hospitals and their attorneys, this becomes complex. Any readmission of a Medicare patient has now become a potential source of a penalty and a potential piece of evidence in a trial. In the short term, some hospitals will be looking for loopholes. Other hospitals will be working with both doctors and attorneys to ensure that their processes—right down to the patient discharge papers—are established and defensible. Some hospitals will also find new ways to focus on better outcomes and improved care. Some health-care providers worry that these rules won’t have a real impact on admission, but will instead simply increase their already considerable Medicare paperwork load.

In the long term, there will be more discussion about the efficacy of this regulation and how to improve the Medicare system and the allocation of funds. Health-care providers will continue to negotiate with the government over Medicare payments. If the costs of medical care continue to go up, there will also continue to be discussion about the role of the civil justice system, and efforts to cap malpractice claims.

Perhaps add that last one to your own list of “never events.”