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Medicare will no longer cover hospital mapractice costs and could eliminate liens

I read an interesting newspaper article over the weekend by Robert Pear for the New York Times News Service.  Read the article here.  Another good version of the article can be read here.

The article says that the Bush administration "will no longer pay the extra costs of treating preventable errors, injuries and infections that occur in hospitals."  The new rules go into effect in October, 2008

Charges can not be passed down to patients. The administrative rule stems from a 2006 law but the implementation was delayed for fear that hospitals would pass along the charges to patients.

Under the rules, the charges CAN NOT be passed along to the patient.

Common Errors and Infections.  There is no indication exactly how the program will determine which fees are the results of preventable errors.  However, it does look like certain issues will be considered "per se" error, such as bed sores, bladder infections resulting from catheters, and preventable infections such as those stemming from staphylococcal infections.

The rule identifies eight conditions — including three serious types of preventable incidents sometimes called "never events" — that Medicare no longer will pay for. Those conditions are:

• Objects left in a patient during surgery

• Blood incompatibility

• Air embolism

• Falls

• Mediastinitis, which is an infection after heart surgery

• Urinary tract infections from using catheters

• Pressure ulcers, or bed sores

• Vascular infections from using catheters

• The Centers for Medicare and Medicaid Services said it also would work to add three more conditions to the list next year.

$20 Million Dollars Worth of Malpractice.  The Bush administration expects this will save $20 million per year, which to me means there is $20 million per year worth of treatments designed to "fix" malpractice.  You can count this as one of the first times this Administration has recognized the prevalence of medical negligence.

Implications for Attorneys.  The implementation of this policy only seems to have positive implications for victims of malpractice.  The most obvious would be that if Medicare does not pay for these services, then there can not be a lien from recovery.  I would suppose that if one gets a verdict or settlement on a malpractice claim that if Medicare has paid, the attorney for the patient could argue that Medicare should receive a refund from the medical provider rather than a lien against the Plaintiff's recovery.  Right now I don't know the effective date of the policy change.

I will be doing further research to see how the regulations will be implemented.  I'm assuming that Medicare's refusal to pay for "malpractice" will not be admissible to prove negligence in malpractice cases.

A further question is what happens when the victim of malpractice needs medical treatment for the remainder of their lives?  Will the hospital be paying for all the bills?  I'm thinking this will be a difficult issue in some cases.

Check back for updates on this post.

Chris Nichols 1.800.906.5984

Allstate Pleads Guilty to Criminal Charges

A friend forwarded me a great article by a columnist who writes for a Philadelphia newspaper.  It exposes some of the horrible practices that I've noticed over the years by one of America's largest insurers, Allstate.  Some of Allstate's practices are so extreme that I've had Allstate adjuster say to me "I know this case is worth more, but this is all I'm authorized to pay.  I don't blame you for filing a law suit."

Herb Denenberg writes for The Bulletin. Denenberg notes Allstate's recent guilty plea to six federal indictments and discusses several anti-consumer practices of Allstate, including complaints by CFA, the Consumer Federation of America ( Part of his article quotes the CFA report,

"The Allstate Corporation has been at the forefront of the insurance industry in unjustifiably raising home and automobile insurance rates relative to the amount paid out in claims, in using questionable practices to settle claims and in attempting to shift costs to taxpayers."

EXCESSIVE RATES AND PROFITS BUT ANEMIC PAYOUTS TO POLICYHOLDERS. The report notes that Allstate paid out only 59 percent of the premium dollar on claims to policyholders from 1997 to 2006. The industry average is 65 percent. In other words, CFA argues Allstate should have cut its premiums or perhaps paid out more in claims. But in CFA’s view, Allstate is now charging too much for the benefits delivered to its policyholders.

HIGH CONSUMER COMPLAINTS. The complaints filed against Allstate, many relating to claims practices, are more numerous than almost all of its major competitors. Of 13 major auto insurers, Allstate had the second highest complaint ratio in two recent years. This is based on data collected by the National Association of Insurance Commissioners.

QUESTIONABLE CLAIMS SETTLEMENT PRACTICES. CFA says Allstate has adopted an automated claims settlement procedure designed to cut claims payments to policyholders, without regard to the validity of the claim and without an examination of the claim. As a result, CFA says it can document a systematic underpayment of claims based on aggregate data. The data show that Allstate reduced its payouts by about 20 percent relative to the industry for the year 1996 through 2006.

You can read the entire report at The Denenberg Report

Chris Nichols 1.800.906.5984