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Medicare and Medical Malpractice

In the Science section of the New York Times of November 27, 2012 ┬áthere is a lead article reporting that Medicare is imposing financial sanctions on those hospitals that readmit patients within a short time after they have been discharged. The penalty does not appear to be imposed on a case by case assessment of the conditions leading to the readmission or are the merits of the readmission but rather based on a blanket survey of the hospital’s propensity toward readmitting patients that have been discharged.


Although no one would disagree that Medicare costs must be kept under control, the question arises whether it is morally and ethically acceptable to blindly impose financial sanctions upon hospitals as a disincentive to admit sick patients to their institutions.

The penalty that is imposed is presently as much as 1% of the total Medicare billing for the entire year which will be raised to 3% in a few years. A sample hospital was reported to have incurred a penalty of over $2 Million.

In the same breath, Medicare incentivizes hospitals to kick patients out the door as soon as possible by setting a fixed fee for the admission however long it may actually be. Obviously, the shorter the patient stay, the greater is the hospital’s profit. Indeed, even if a patient contracts an unrelated or unanticipated medical condition during a defined hospitalization (infection, bedsore, pneumonia, etc.) the fixed fee for the admission is not modified to account for the potentially considerable protracted stay. The hospital must incur that considerable expense.

Implicit in Medicare’s position is that the hospitals are not giving ample attention to post discharge care of the patients — something that they often have little control over. Among those patients getting caught in this trap are the extremely sick and low income individuals who find themselves in need of ongoing medical care and vacillate from necessitating hospitalization or being able to fare on their own in an outpatient setting. For hospitals to have an incentive to withhold readmission to such patients is an invitation to malpractice litigation.

Although hospitals are required to admit patients in need of in-patient care regardless of financial considerations, there is a discretionary gray area where the emergency department and attending staff ultimately weigh in on that decision. Obviously, these physicians are going to be cautioned that it’s against the hospital’s interest (and presumably their interest) to lean toward discharging the patient from the emergency department rather than certifying them for admission.

Would it not be a much better system if there was an administrative body that reviewed the particular circumstances of those hospitals that have a high readmission rate and examine the individual cases to see whether the questionable admissions were justified or not. If the latter, then sanctions may appropriately apply — but to impose a penalty that reduces future payments for all Medicare patients for the discretionary abuses seems severe. The penalty should “fit the crime” with increasing fines for repeat offenders.

It would seem clear that this policy will result in “lawsuits waiting to happen”. One of the common themes of medical malpractice litigation is the failure of a hospital to timely recognize an acute condition that requires admission and to have the patient admitted and receive acute critical care. It has been well established by reputable studies that the incidence of medical malpractice in hospitals is quite significant. Are we asking for more? Will the ultimate cost savings that Medicare reaps be repaid in spades by the insurance carriers that insure for medical malpractice events? Is that what this shift is really all about with an injured or dead patient as the fallout? Or is it that the elderly and infirm have less of a claim to damages based upon their age and/or ill health so that injury to them is ultimately less costly if litigation arises? Or is it simply that those same people have less of a voice or spokesperson to protect them against cavalier hospital practices and hence they are the silent victims of these cost saving measures?

Steven E. North, Esq.