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of costs in public providers.  If these funds are not made available public hospitals will be forced to cut services and costs.  These reductions will further erode the funding base for California’s health safety net.  The waiver could seek to realign financing to move from cost-based reimbursement into a payment structure that rewards system integration and providing services at the lowest cost setting.  

4-C. Ways to Reduce Medical Errors, Never Events, and Readmissions

Quality care means providing the right care at the right time in the right place.  Far too often, patient care fails to meet this standard.  Poor quality can take the form of overuse, underuse, misuse or some combination.  One-third of health care that is delivered in the U.S. is estimated to be of questionable valuable, and nearly half of all Americans do not receive recommended preventive or primary care.22

The Institute of Medicine’s (IOM) groundbreaking 1999 work, “To Err is Human: Building a Safer Health System,” clearly outlined the burden of medical errors in the health care system.  IOM estimated that between 44,000 and 98,000 people die every year from preventable medical errors.  The total cost of medical errors in additional health care, as well as lost economic productivity, is between $17 billion and $29 billion per year.  Given the exponential growth in health care costs, the burden of medical errors is likely much more today.

The federal Medicare program has begun to use its significant purchasing power to drive quality improvements in the health care system.  Medicare has reduced reimbursement rates for certain medical errors called “never events” –medical errors that not only could have been prevented, but should never occur.  They include operations conducted on the wrong limb, objects left in patients during surgery, certain preventable infections and other conditions patients may contract during a hospital stay.  

Medicare has also begun to address the challenge of reducing unnecessary hospital readmissions through a number of pilot programs.  Patients who are released from the hospital without adequate follow-up often end up back in the hospital with preventable complications.  CMS estimates that 1 in 5 Medicare patients who leave the hospital are readmitted within the month.  Furthermore, roughly three-fourths of those readmissions are preventable.23  An April 2009 study estimates that these readmissions cost Medicare $17 billion dollars in 2004.24  

Medicaid beneficiaries and budgets also are impacted by medical errors, particularly beneficiaries dually eligible for Medicare and Medicaid, and the disabled and medically needy.  Studies have shown that hospitals serving higher proportions of Medicaid patients tend to score

22 McGlynn, E.A., et al. 2003. The quality of health care delivered to adults in the United States. The New England Journal of Medicine, 348(26): 2635-2645.

23 Centers for Medicare and Medicaid Services, “CMS Proposes to Expand Quality Program for Hospital Inpatient Services in FY 2009,” News Release, April 14, 2009.

24 Jencks, Stephen F., Mark V. Williams, and Eric Coleman, “Rehospitalizations Among Patients in the Medicare Fee-For-Service Program,” New England Journal of Medicine, April 2, 2009 360 (4): 1418-28.

Health Management Associates/Harbage ConsultingPage 34

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