Will HACs spark a new insurance industry?

Starting Oct. 1, 2008, Medicare will no longer pay hospitals for costs of treating certain conditions that could have been reasonably prevented. The already low profit margins at hospitals mean that the organizations can’t be expected to absorb these costs, so they are likely to pass them along to patients or payers. However, a January 2008 article in The Massachusetts Nurse Newsletter, published by the Massachusetts Nurses Association, raised an interesting question about the issue. Could insurers create new “products” to insure hospitals against losses in the event of hospital acquired infections (HACs)? An excerpt from the article follows:

"Debates have already begun about what is (or isn’t) an error, let alone a preventable error, and about patients who come into the hospital with a condition vs. acquiring it in the hospital. Commenting on the proposed rules in June, the American Hospital Association said, ‘Certain patients, including those at the end of life, may be exceptionally prone to developing pressure ulcers, despite receiving appropriate care.’ As a consequence, legions of financial analysts and attorneys are going to be required to sort this out, which ought to drive up even higher the current 31 percent of the healthcare dollar that Americans spend on unnecessary administrative costs rather than on actual care. Finally, if insurance companies won’t be paying for these medical bill, who will? . . . The indirect costs are inevitably going to be passed along to patients. Another theory is that insurance companies will seize the opportunity to start writing coverage for medical errors—another potential bonanza for the insurance industry."

The full article can be read here.