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Medical Error Cost Calculator Riles AHA

 |  By cclark@healthleadersmedia.com  
   July 26, 2013

An online tool from the Leapfrog Group, which determines the "hidden surcharge" or costs of a hospital's medical errors, employs a methodology that is "seriously flawed," says the American Hospital Association.

The Leapfrog Group's new "Hidden Surcharge Calculator," a web-based tool, enables employers to add up how much of their health premium dollars go to manage hospital medical errors that harm their employees. The tool determines the costs based on the safety track records of each hospital where their workers received care.

"Employers already know they're spending a lot of money on hospitals when their employees need acute care," says Leah Binder, Leapfrog President and CEO.

"But what they don't know is that a certain percentage of that money they're spending is avoidable. And what we're saying is 'Wait a minute. Here's some money that's sitting there, and you can actually address this issue'" by choosing safer hospitals. Otherwise, she says, the amount a hospital spends to correct medical errors is buried in the overall premium cost.

"What employers need to know is that they are, in fact, paying millions of dollars for errors and accidents" that occur in acute care settings.

Employers simply enter the number of admissions at each hospital required for all the employees they cover, then look up and enter the letter-grade safety score Leapfrog assigns to each of 2,500 hospitals.

Each hospital's grade is based on Leapfrog's 26-part algorithm that includes such quality measures as mortality rates after surgery, rates of infections, pressure ulcers, or avoidable surgical lacerations, and whether the hospital has installed a physician computerized order entry system (PCOE).

The cost of each medical error is calculated using federal equations prepared by the Agency for Healthcare Research and Quality and the Centers for Medicare & Medicaid Services, which are considered valid, Binder says.  

A patient who develops a central line-associated bloodstream infection generally requires another 10 days of hospital care. Those costs, Binder says, are embedded in the rates hospitals charge each health plan, which hides those costs in the contract rates it charges employers.

"I think employers will want to use this tool to get a general sense of the hidden surcharge they're paying," says Binder, whose organization represents 45 large employers or business coalitions that employ 32 million people.

She likens the hidden surcharge of treating medical errors—for example removing sponge left behind during surgery and treating subsequent infection—to "paying $5,000 more for a car that is not as safe, which is ridiculous."

"When they look at these raw numbers and see, I think this is going to be a shock to purchasers and employers—people outside of healthcare"—that this practice goes on, she said.

Hospital organizations, however, strongly objected to the release of the tool.

"The information provided on the Leapfrog Group's new safety tool makes a number of erroneous assumptions in methodology, which are not referenced or validated," says a statement from the American Hospital Association.  

"First, it looks at infection data from California and projects that data onto the rest of the county without clearly defining how the methodology adjusts for a variety of factors.  

"Second, more complex patients tend to need more procedures, therefore creating more chances for errors due to the greater number of procedures and other possible co-morbidity factors.

"Third, the methodology also compares reported data to claims data, with any differences between the data sets attributed to unreported errors. A number of other factors could be the reason for the differences in the data, so that making this assumption is not methodologically sound.  

"Finally, the literature in this area has a wide range of other factors that account for changes in regard to cost, not the narrow definition provided in this tool. Without additional reference points or validation, the methodology of this new tool is seriously flawed."

The Leapfrog tool calculates costs of medical errors on the basis of medical error rates for patients who underwent surgery or who required care in an intensive care unit during their hospital stay. There is a spot in the tool for employers to "estimate how much you lose on employee productivity for every dollar spent on inpatient care."

Binder says that employers she represents are increasingly concerned about having to pay for medical mistakes, especially after a report in the Journal of the American Medical Association in April by Atul Gawande, MD, and others found that hospitals profit when surgeries go wrong.

Not only do they make more money through outlier payments, but private insurance companies pay much more than government payers for medical errors.

For example, when the complication occurred in a Medicare patient, the federal government reimbursed hospitals $3,629. But when it occurred in a commercially insured patient, the health plan paid $55,953.

In a press release Leapfrog released Thursday, Binder said that "every year, more than 180,000 Medicare beneficiaries die from hospital-acquired infections, errors, accidents and injuries."  

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