One idea for improving the medical professional liability environment involes disclosing medical errors. This was explored in the paper, “Retooling Medical Professional Liability.” Here is an excerpt:
Often, all an injured patient and family may really want is to hear an explanation and perhaps apology from the doctor and to receive a reasonable monetary award—one that will see to his or her immediate medical and other needs with regard to recovery from the event. In an effort to facilitate this type of exchange, as many as 35 states and the District of Columbia have passed what are called I’m Sorry laws allowing a physician to discuss openly an adverse outcome with a patient and express empathy.
A new study looks at this dynamic at the health system level. Here are details from a recent article in American Medical News:
One health system that has embraced the practice for nine years has concluded that those fears are unfounded. Disclosing medical errors and offering timely compensation to patients or family members do not increase medical liability lawsuits, according to a new study on the University of Michigan Health System’s disclosure-with-offer program published in the Aug. 17 Annals of Internal Medicine.
Under the program, the health system conducts an internal investigation of all medical error reports, notifies patients and offers compensation when employees are found at fault.
The health system has had fewer lawsuits, lower liability costs and faster resolution of medical-error cases since the policy was implemented in 2001. Although researchers could not definitively link those trends to disclosure, they were able to conclude that instituting the program did not lead to more lawsuits.
Medmal medical errors, Medmal
The Health Beat blog revisits a study from last year, “Imagining 16 to 12.” Here is an excerpt summarizing the article:
Could we bring our nation’s health care bill down from 17% of GDP to 12%? An intriguing study from Milliman, the independent consulting and actuarial firm, says”yes.” Looking at actuarial data from some of our best and most efficient health care plans, Milliman’s analysts conclude that, in theory, it would be possible to trim our bloated health care system by 25%.
Before you dismiss the idea, consider this: not that long ago, we brought health care inflation down to less than 3% a year for six years running (1994-1999). During that time, the nation’s health care bill remained flat as a percentage of GDP.
And Milliman points out that today, our most efficient , high quality health plans are achieving similar savings by “reducing unnecessary inpatient stays” and “inappropriate imaging.” The site of service also changes to emphasize lower cost settings—for example, home care instead of nursing-home care, or office-based primary care instead of emergency room care. The authors of the Milliman report acknowledge that 12% is only a “target for what is possible, not a budget.” They are not suggesting that we try to cap health care spending at 12% of GDP.
But the actuarial firm points that that in the not-so-distant past (1991) health cared did consume just 12% of GDP. Now it equals 17% of the economy. Granted, medical technology continues to advance, but have we really made that much progress since the ‘nineties?
Read the full article here.
Cost, Reform 16 to 12, Bruce Pyenson, Kate Fitch, Sara Goldberg
A new analysis looks at the cost of Medicaid expansion in the state of Nebraska and, as might be expected, the numbers are being interpreted a number of different ways. National Public Radio/Kaiser Health News has the story. The unique characteristics of Medicaid in Nebraska are another reminder of the diversity in healthcare costs from one state to another.
This report looks only at Medicaid, which is how it arrives at the cost of between $526 million and $766 million for the state. The cost of uncompensated care has been held up as justification for the state to foot these kinds of costs.
As is so often the case anytime we talk about the cost of care, in addition to considering the specifics it can be helpful to step back and look at the underlying factors driving the healthcare cost trend.
Cost, Medicaid Medicaid expansion, Nebraska, Rob Damler
Accountable care organizations (ACOs) must manage toward actuarial targets, which is a key means to attain the end of more efficient care. This process requires both “supply-side” medical management and “demand-side” medical management. Here is an explanation of each:
Supply-side medical management services are what many consider the more challenging side of medical management but they are also what produce the savings. These services are intended to reduce utilization and payment for medically unnecessary services and also ensure that care is delivered in the most appropriate setting, which for an ACO should mean delivered by an ACO-associated provider. Clinical guidelines help evaluate the medical necessity of requested (or, retrospectively, rendered) services…
Demand-side medical management services optimize a population’s health so that demand for services will be lower. In particular, these services can impact ambulatory care sensitive admissions, preference sensitive admissions, readmissions, and ER visits.
For more on managing to actuarial targets, read the recent paper, “Nuts and bolts of ACO financial and operational success.” For more on medically unnecessary services, view this blog post or this paper.
Accountablity, Cost ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch
A new article in Business Insurance looks at the complexity of modeling the impact of healthcare reform. Here is an excerpt:
To determine whether a health benefit plan might become subject to the 40% excise tax that begins in 2018 and apply to premium costs that exceed certain amounts, modelers look at plan design as well as employee and employer contributions, and then project year-to-year increases in medical costs based on estimated future trends.
“Some employers could have Cadillac plans if health care costs continue their current trajectory,” said Robert Schmidt, a consulting actuary in the Boise, Idaho, office of Milliman Inc. “It depends in part on geography. If an employer operates in Southern California, their premiums are higher than they would be in Idaho.”
“Another variable is how rich the benefits are. A lot of employers, especially in the collectively bargained sphere, have low deductibles and low out-of-pocket maximums,” Mr. Schmidt said, which could elevate their health plan’s cost beyond the thresholds that trigger the tax. The thresholds are $10,200 for individual coverage and $27,500 for family coverage.
“Even if they aren’t quite Cadillac in 2018, the threshold only goes up by (the Consumer Price Index) plus 1%. So unless health care costs fall below that, more and more plans will be Cadillac plans,” Mr. Schmidt said.
Reform Cadillac plan, Robert Schmidt
Health Leaders looks at a recent report on avoidable medical errors and highlights the most costly such errors. Here are the top ten.
1. Pressure ulcers—374,964 errors, $10,288 per error and $3.858 billion total.
2. Postoperative infections—252,695 errors, $14,548 per error, $3.676 billion total.
3. Mechanical complication of a device, implant or graft—60,380 errors, $18,771 per error, $1.133 billion total.
4. Postlaminectomy syndrome—113,823 errors, $9,863 per error, $1.123 billion total.
5. Hemorrhage complicating a procedure—78,216 errors, $12,272 per error, $960 million total.
6. Infection following infusion, injection, transfusion, vaccination—8,855 errors, $78,083 per error, $691 million total.
7. Pneumothorax—25,559 errors, $24,132 per error, $617 million total.
8. Infection due to central venous catheter—7,062 errors, $83,365 per error, $589 million total.
9. Other complicaitons of internal (biological) (synthetic) prosthetic device, implant and graft—26,783 errors, $17,233 per error and $462 million total.
10. Ventral hernia without mention of obstruction or gangrene—53,810 errors, $8,178 per error and $440 million total.
Read the full article here and the full report here.
Cost, Quality of Care Jon Shreve, medical errors
A new study commissioned by the Society of Actuaries looks at the cost of avoidable medical mistakes and quantifies the economic impact of such mistakes as $19.5 billion annually. Here is a description of the study from the Wall Street Journal:
Medical errors and the problems they can cause — including bed sores, post-op infections and implant or device complications — cost the U.S. economy $19.5 billion in 2008, according to a study released today. (That’s enough to buy almost 1.3 billion copies of The Checklist Manifesto, Atul Gawande’s bestseller on reducing such errors via the lowly checklist.)
The study, commissioned by the Society of Actuaries and carried out by the actuarial and consulting firm Milliman, is based on insurance claims data. The cost estimate includes medical costs, costs associated with increased mortality rate and lost productivity, and covers what the authors describe as a conservative estimate of 1.5 million measurable errors. The report estimates the errors caused more than 2,500 avoidable deaths and over 10 million lost days of work.
The Hill also picks up on this story. Here’s an excerpt:
Preventable medical errors cost the country $19.5 billion in 2008 — or roughly $13,000 for each avoidable case, according to a report published Monday by the Society of Actuaries (SOA).
And that number is likely low, according to consultants at Milliman, who crunched the data.
“We used a conservative methodology and still found 1.5 million measureable medical errors occurred in 2008,” says Jonathan Shreve, an actuary for Milliman who co-authored of the report. “This number includes only the errors that we could identify through claims data, so the total economic impact of medical errors is in fact greater than what we have reported.”
Read the study here.
Cost, Efficiency Jon Shreve, medical errors
The latest Client Action Bulletin examines a new interim final rule related to the Patient Protection and Affordable Care Act (PPACA). The interim final rule—which offers guidance on claims, appeals, and reviews—implements a provision included in the PPACA and applies to all non-grandfathered group health plans.
Reform Grandfathered status
Accountable care organizations (ACOs) need to properly deploy medical management in pursuit of certain utilization and cost targets. This dynamic is explained as part of a recent briefing paper on the nuts and bolts of ACOs. Here is an excerpt:
ACO’s should focus initial medical management efforts on reducing leakage to hospitals and specialists that are not part of the ACO. This will increase volume to ACO providers and help offset revenue loss due to improved utilization management. Inpatient utilization management is another target for initial medical management efforts particularly since inpatient costs make up approximately 30% of total costs for a commercially insured population and 37% of total Medicare Part A and B spend. Successful ACOs will focus medical management efforts both on avoiding potentially unnecessary admissions and on reducing inpatient hospital leakage (admissions to hospitals not associated with the ACO). Potential reductions in admission vary significantly by admission type, so identifying real opportunities requires analyzing historical data to identify impactable and non-impactable admissions. In particular, ambulatory care sensitive admissions, preference sensitive admissions, and readmissions are considered as impactable (see Definitions). Claims data logic available from the Agency for Healthcare Research and Quality and published reports can help identify benchmark rates for these impactable admissions—and a sense of how many can actually be eliminated.
See the full paper for more detail and for citations.
Accountablity, Reform ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch
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