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CCH® BENEFITS — 08/26/10

Medical Errors In 2008 Cost The U.S. Some $20 Billion

from Spencer’s Benefits Reports: An estimated 1.5 million medical errors during 2008 cost the United States approximately $19.5 billion, according to a study prepared by Milliman, Inc., for the Society of Actuaries’ (SOA) Health Section. These are just the quantifiable costs, including higher medical costs attributable to the errors, and costs associated with higher mortality rate and costs resulting from lost productivity, which may be researched from medical claims data bases, Milliman explained. Not included in the cost estimate are the costs of pain and suffering, malpractice costs, insurance payments, or costs related to error prevention. Milliman’s assignment from the SOA was to measure the annual frequency of medical errors in the U.S. and the total measurable cost of these errors to the nation’s economy.

The study defined “error” as “a preventable adverse outcome of medical care that is a result of improper medical management (a mistake of commission) rather than a progression of an illness due to lack of care (a mistake of omission).” The study did not review mistakes of omission, which also may be considered a medical error.

The greatest share of the $19.5 billion cost ($17.0 billion, or 87%) of medical errors was attributed to increased costs of medical care; approximately $1.4 billion was related to increased mortality rates; and approximately $1.1 billion due to lost productivity resulting from related short-term disability claims. Seven percent of inpatient hospital admissions in 2008 resulted in a medical “injury,” a total of 6.3 million injuries, Milliman determined. These errors also contributed to more than 2,500 unnecessary deaths and more than 10 million excess days missed from work due to short-term disability; Milliman noted that these figures were likely underestimated.

“It is important to note that not all material costs related to medical errors can be identified using medical claims data,” Milliman writes in the report’s summary. “Errors which are uncoded in claim databases are not measured….Unmeasured costs of errors also include deaths which occur in a location other than a hospital, and mortality and disability costs more than one year after the error….As such, the actual costs of medical errors could be much higher than is measurable.

“Medical errors are not coded in claim databases; however, medical injuries can be coded using a set of ICD-9 (diagnosis) codes. Medical injuries are any adverse events which occur due to medical intervention, but not all injuries are necessarily errors. A medical error is defined as an injury which results from inappropriate medical care. For example, an allergic reaction to a medication is a medical injury. This injury is only a medical error if the allergy to that medication was known prior to administration of the medication. Medical errors are therefore, by definition, a subset of medical injuries, and we relied upon clinicians to estimate the rate that any injury might be caused by an error. Errors could be identified by review of the medical charts, but generally cannot be individually discerned using claim databases.”

The most costly medical errors included pressure ulcers (which Medicare deems a “never-event”); post-operative infections; “mechanical complications of a device, implant, or graft”; “post-laminectomy [surgery to remove the lamina—the back part of the vertebra that covers the spinal canal syndrome]; and hemorrhage that complicates a procedure. These medical errors result in a cost of at least $10 million dollars annually.

For more information, visit http://www.soa.org.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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