Risk Management Implications of “Never Events”

June 2008

Paula G. Sanders, EsquirePartnerPost & Schell, PC

Risk Management Implications of “Never Events”

Paula G. Sanders, Esquire

Post & Schell, PC

17 North 2nd Street, 12th Floor

Harrisburg, PA 17101

717-612-6027

PSanders@postschell.com

The “Never Event” Conundrum

Treatment Event

Documentation

Reimbursement impact & liability exposure

Physician/patient communication

Carrot or Stick?

• Pay for performance

• Quality initiatives: high quality, patient-centered and efficient

• Punitive measures?

• Payors move from passive to active purchasers of care

• “A joint effort between the healthcare provider and the coder is essential. . . The importance of consistent, complete documentation in the medical record cannot be overemphasized.”

(CMS Transmittal #1240 (May 11, 2007))

Historical Overview

• Reports of the Institute of Medicine (of the National Academy of Science)

– To Err is Human (1999)

• Up to 98,000 deaths occur annually as a result of medical error

– Crossing the Quality Chasm (2001)

• Addresses broad quality issues and establishes six aims of care: safe, effective, patient-centered, timely, efficient and equitable

Historical Overview

• Interests of federal and state payers, employers, commercial insurers and consumers in:

– Quality, safety and cost controls– Leads to ever evolving reimbursement

schemes designed to address these control issues

– Payment solutions to quality problems

Pay-for-Performance

• New Pay for Performance models

– At the federal and state level, models are being implemented in the hospital setting (movement from financial incentive for voluntary reporting to mandatory reporting, and finally, results- driven payments)

– CMS intends to implement appropriate like models in the physician setting as next step (physicians at financial incentive for voluntary reporting stage)

• Physician Quality Reporting Initiative started 2007

What’s in a Name?

• IPPS: inpatient prospective payment system

• MS-DRG: Medicare-Severity DRG

• CC/MCC: “complications & comorbidities” AND “major complications & comorbidities”

• POA: present on admission

• HAC: hospital-acquired condition

Present on Admission Indicators

• Y: Diagnosis present at time of inpatient admission

• N: Diagnosis not present at time of inpatient admission

• U: Documentation insufficient

• W: Condition is clinically undetermined

• 1: Code is not reported/not used and is exempt for POA reporting

Federal Mandate for “Never Events”

• Established by the Deficit Reduction Act, Section 5001(c), Medicare FY 2008 IPPS Final Rule

• Identifies “serious reportable events” or “never events”

• Must be reasonably preventable through the application of evidence-based guidelines

• No payment under a higher DRG despite services rendered if condition not Present On Admission (POA)

• Applies to 8 Hospital Acquired Conditions (HAC’s)

Medicare Never Events – Reasonably Preventable

• High cost, high volume, or both

• Assigned to a higher paying DRG when present as a secondary diagnosis

• Reasonably prevented through the application of evidence-based guidelines

• And acquired during hospitalization if not POA

Medicare is Not Alone• Several states no longer pay for “never events” or

preventable serious adverse events (PSAEs)– Pennsylvania has a no-payment policy for 28

PSAEs (copy attached as handout)– PA legislation to extend non-payment authority

to all health care payors passed by a vote of 201-2

• Commercial payors follow suit– 11/07: B/C B/S announces its plans to

implement nonpayment for “never events” – 1/08: Aetna announces it is incorporating

“never events” in its new hospital contract templates and follows Leapfrog recommendations (report, remediate, waive costs, apologize)

Medicare Never Events: 10/1/08

• Object left in surgery

• Air embolism

• Blood incompatibility

• Catheter-associated urinary tract infection

• Decubitus ulcers – stages 3 & 4

• Vascular catheter-associated infection

• Surgical site infection –mediastinitis after coronary surgery

• Falls – fractures, dislocations, intracranial injury

Proposed Never Events – Comments Due 6/13/08

• Surgical site infections following elective procedures

• Legionnaires’ Disease

• Glycemic control

• Iatrogenic pneumothorax

• Delirium

• Ventilator-associated pneumonia (VAP)

Proposed Never Events – Comments Due 6/13/08

• Deep vein thrombosis (DVT)/Pulmonary Embolism (PE)

• Staphylococcus aureus Septicemia

• Clostridium Difficile-Associated Disease (CDAD)

• Methicillin-Resistant Staphylococcus aureus (MRSA)

• Deletion of “N” & “U” POA indicators

Critical Elements

• Assessment and documentation of POA conditions (conditions existing at the time the order for inpatient admission occurs)– ED notes– Admitting note– H&P– Progress notes

• How can coders capture the POA indicators at time of admission?

Changing Practices

• Avoiding HAC’s:– Use of evidence based practice guidelines– Reliance on risk management best practices

• Goals: to identify patient risks, anticipate needs, and protect reimbursement

• Despite best efforts, it is inevitable that a patient may sustain a preventable injury

Disclosure

• Why disclose to the patient?– American College of Physicians Ethics Manual

(2005): “…physicians should disclose to patients information about procedural or judgment errors made in the course of care if such information is material to the patient's well-being. Errors do not necessarily constitute improper, negligent, or unethical behavior, but failure to disclose them may.”

Disclosure

• State law requirements to other agencies?

• State law requirements to patients?

• Other considerations?– Diffuses anger (no appearance of a cover-up)

• Explanation of benefits and patient notice– What will the EOB say about non-payment?

• Is risk management notified?

Disclosure or Apology?

• Patient Disclosure/Apology programs – Leapfrog Recommendations

• Report, remediate, waive costs, apologize

• Elements of disclosure– Explain what happened (to the extent known)– Say “I’m sorry” it happened (empathy)– Emphasize that you (and/or the institution)

take the matter seriously and will evaluate any and all steps necessary to avoid recurrence

– Communicate results

Disclosure or Apology?

• After initial disclosure– All care appropriate?

• Reinforce empathy and share basis for conclusion

– Below the standard of care?• Apologize and admit fault (take

responsibility)?• Discuss compensation?

• A better model?

Disclosure or Apology?

• What happens with the apology?– Limitation on admissibility of apologies

• 29 states have laws protecting a provider’s apology from being used as evidence or as an admission of liability in a lawsuit

– Admissions of fault are admissible as evidence

• Insurance ramifications– Coverage?– Duty to cooperate?

Liability Exposure

• “Never Events” and use at trial

• “Reasonably preventable through the application of evidence-based guidelines”

• May depend on state by state rulings – Negligence per se– Use of expert testimony

• If admitted, practical effect of shifting burden to defendants to show injury/outcome was not avoidable or does not reflect a departure from the standard of care

Criminal and/or Civil Exposure

• What is the liability for submitting a claim for payment of a “never event?”

• Recoupment or non-payment

• Potential false claims liability

• Repeated failures to identify POA

• Pattern of erroneous submissions

• Data matching between state and federal databases by Medicare Program Safeguard Contractors/RACs

• Maine prohibits knowing or willful submission of claims for payment (copy of law attached)

Overcome the Confusion

How Do You Break Down The Silos?

• Who is training about “never events” and POA?

• Are staff aware of “never event” consequences?

• If only the facility suffers a financial impact as a result of “never events,” how does a facility get staff buy-in and support?

• How best to integrate risk management, compliance, clinical teams -- nursing and physicians, utilization review, peer review, mandatory reporting, quality improvement, HR, coding, medical records and billing?

How Do You Break Down The Silos?

• How do you keep track of the different reporting requirements and definitions?

• Who is responsible for tracking?

• How do you handle potential whistleblowers?

Continuing Challenges

• How do you ensure consistency between all of the various reports and the medical record?

• Who reviews patient notifications, disclosures and apologies?

• What mechanisms are in place for capturing information on a timely basis?

• What are the consequences of submitting a claim for a never event?

• How do you make this an issue for your institution if it is not already looking at this?

• What happens to peer review and other privileges?

How Do You Foster a “Zero Tolerance” Environment?

• Review and revise job descriptions

• Develop and enforce more rigorous policies and procedures designed to increase accurate POA reporting and to eliminate “never events”

• Subject staff, including independent practitioners, to more rigorous scrutiny at time of appointment, reappointment, and as part of the ongoing peer review process

• Be more proactive in disciplinary and corrective action processes

How Do You Foster a “Zero Tolerance” Environment?

• Avoid cumbersome corrective action processes that are costly, lead to litigation, and result in NPDB reporting issues or staff reductions

• Review employee handbooks and codes of conduct

• Follow a “never event” through your health system from start to finish

• Educate and train

• Develop and continuously monitor and refine systems and fail-safes

How Do You Foster a “Zero Tolerance” Environment?

• Structure your “never events” initiatives through “informal” peer review processes that do not give rise to “formal” corrective action except in the most egregious cases

• Create structures for immediate physician feedback, “education” and “informal intervention” as opposed to formal corrective action

• Network and look for innovative models that might work for your institution– We are all in this together

Resources

• CMS fact sheets on hospital-acquired conditions and POA reporting: www.cms.hhs.gov/HospitalAcqCond/07_EducationalResources.asp

• CMS Proposal for Additional HACs: http://www.cms.hhs.gov/apps/media/press/factsheet.asp?Counter=3042&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&srchOpt=0&srchData=&keywordType=All&chkNewsType=6&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date

• CMS Transmittal #1240 (May 11, 2007): http://www.cms.hhs.gov/Transmittals/downloads/R1240CP.pdf

Thank You