Safety Measures.

A national debate on medical errors highlights insurers' role in reducing tragedies--and claims.

In the two decades before he became vice president of strategic development for American Re-Insurance's Health Care division, Dr. James B. Couch practiced medicine, defended doctors and hospitals in medical-malpractice lawsuits and served as medical director in charge of quality management for two large health insurers.

"During that time, I saw hundreds if not thousands of medical errors occur because of systemic problems," Couch said. When Couch, who holds degrees in medicine and law, began working with American Re three years ago to develop the company's health-care strategy, he pressed the idea that the reinsurer could distinguish itself and reduce its loss ratio if it focused on preventing medical errors and resulting catastrophic health events.

American Re HealthCare, Princeton, N.J., had been working for several years on its medical error-reduction strategy when the prestigious Institute of Medicine issued a report that pushed the project into high gear. Published in November, To Err Is Human: Building a Safer Health System turned a spotlight on the healthcare industry's disastrous record concerning medical errors, including stunning and controversial statistics that 44,000 to 98,000 people die each year from medical errors that occur in hospitals. Although the higher estimate has recently been disputed in medical journals, more people die from medical errors than from breast cancer, AIDS or motor vehicle accidents. The report emphasized that most errors are induced by faulty systems, and it highlighted the need for dramatic, systemwide changes. The report suggested that changes include mandatory reporting of errors and safety systems designed to prevent, detect and minimize hazards and the likelihood of errors. It also called for a national cente r for patient safety to do for health care what federal agencies have done to improve aviation and worker safety. And it called for a national campaign to reduce preventable errors by 50% within five years. In response to the Institute of Medicine's report, President Clinton in February launched a national initiative to reduce medical errors and improve patient safety in federally funded health-care programs. (See "Federal Initiatives;' page 42.)

As the problem hit the national agenda, it reverberated within the walls of insurance and reinsurance companies.

"The Institute of Medicine report really galvanized our efforts to develop and implement a strategy geared toward predicting, preventing and protecting against the potentially catastrophic impact of medical errors," Couch said. "Needless to say, this is a very big societal issue, and we, as catastrophic insurers, believe that it is in our enlightened self-interest to get to the bottom of it."

The high rate of medical errors was no secret to insurers and their reinsurers. Medical-malpractice insurers pay liability claims to patients injured by medical errors, and health insurers pay for the additional treatment to deal with the medical complications of those errors. The report estimated the national costs of preventable errors resulting in injury at between $17 billion and $29 billion. Health-care costs represent about one-half that figure, with the rest accounting for lost income, lost household production and disability costs.

Nevertheless, insurers' efforts to reduce medical errors did not receive much attention. The Institute of Medicine report may be changing that. Health insurers are feeling pressure from private and public purchasers as well as the National Committee for Quality Assurance, which is changing its accreditation requirements to include patient safety. Physicians and hospitals are seeking help from medical-malpractice insurers in identifying problems and implementing risk-management programs.

"We've had questions from clients asking: What are you going to do to help us?" said Corbette Doyle, chief executive officer for Aon Healthcare Alliance, Nashville, Tenn. "Most of the medical-malpractice insurers are trying to figure out what to do." Although some medical-malpractice insurers are on top of the issue, Doyle said, "I don't think that as a class they've been overly responsive."

The most outstanding exception, Doyle said, was MMI Cos., Deerfield, Ill., which was acquired in April by St. Paul Cos. When the Institute of Medicine report landed on her desk in November, Pamela Lockowitz, formerly of MMI and now senior vice president of clinical services and strategies for St. Paul Healthcare, had a mixed reaction. "As a person involved in health care since the 1970s and risk management for going on 20 years, I thought, 'Where have they been?'" Lockowitz said. "On the other hand, this is exactly what we need. It puts the patient-safety issue into a more public forum and people will be more likely to take action and implement the kinds of things we've been trying to do for 20 years."

Medical-malpractice insurers can be effective in helping their insureds reduce medical errors only if they can expand their influence beyond the risk-management department, and Lockowitz has noticed a surge of interest at higher levels of management.

St. Paul recently participated in a kickoff meeting for the Allina Health System's campaign for "building a culture of safety." Allina, based in Minnetonka, Minn., owns hospitals, clinics and health plans. The meeting included 150 employees, the physician leadership and the entire senior management team, including the chief executive officer of the entire organization.

"Some insureds have really taken up the charge and made it a board-level issue," she said.

On the health insurance front, the Leapfrog Group, a coalition of large purchasers of health care, expects employers representing tens of millions of covered lives to reach out to their health insurers for increased accountability for patient safety from network hospitals. In October, the Leapfrog Group expects to announce the lineup of large employers that commit to including a common set of patient-safety standards for providers in their assessment and selection of health insurers. (See "Leapfrog Initiative," page 40.)

"This is an important market signal to the health insurance industry that it's time to scale up the intensity of their quality and safety-improvement efforts to the magnitude of the problem," said Leapfrog steering committee member Dr. Arnold Milstein, medical director of the Pacific Business Group on Health.

Scared and Bewildered

For the most part, executives in the health insurance industry have responded to the Institute of Medicine report with fear, defensiveness and bewilderment, said co-author Dr. David M. Lawrence, chairman and chief executive officer of aiser Foundation Health Plan, Oakland, Calif.

They fear for the safety of themselves and family members who seek medical care. They argue that insurers arrange and finance care but aren't responsible for delivering care. Finally, many of them are bewildered, not knowing what they can do to influence the quality of care that their members receive.

Health insurers can play a role in reducing medical errors by financially rewarding those institutions that invest in safety systems and provide a higher quality of care. "But insurers are not at that point yet," Lawrence said. "The general view of the insurance industry is we shouldn't be held accountable."

The pressure on health insurers to take an active role in reducing medical errors comes at a time when the industry is struggling with its role: "There's some ambivalence about whether they want to be in risk and underwriting or medical-care management," Lawrence said. "The more they've moved toward medical-care management, the more they've been vilified."

But the problem is not necessarily a lack of will on the part of the industry, Lawrence said; it's a lack of power. Those who think that managed-care companies can be held accountable overestimate the influence that they have on medical-care delivery, he said. "They are contractors and care arrangers and financiers. They have minimal influence on the way health care is delivered."

The situation is very different for an organization like aiser Foundation Health Plan and other tightly constructed health maintenance organizations that integrate the delivery and financing of health care by working with an exclusive network of providers.

aiser has been doing research on safety and efficacy for decades, Lawrence said, but his work with the Institute of Medicine "brought it up to the front burner and gave it a higher level of visibility."

Recent efforts include a clinical information system that includes com puterized entry of physicians' orders, an electronic prescription system with tracking for drug interactions and systems that identify the best medications for particular clinical conditions. About 1,800 doctors currently are using prototypes for the system, and within three years all 10,000 aiser Permanente doctors and some of the other 90,000 of the company's health-care employees will be using it. "Using that clinical information has tremendous implications for patient safety," Lawrence said.

The company also has a national working group on best practices for patient safety, and in March it announced an agreement with its union to launch a nationwide patientsafety initiative. At the end of March, union officials participated in a gathering of aiser Permanente staff from throughout the country to catalogue current patient-safety efforts in the local operations and to develop a master plan for coordinating those efforts nationally.

Without that strong connection between health insurer and care provider, Lawrence said, health plans should develop partnerships that support the efforts of the doctors and hospitals in their networks.

The 800-Pound Gorilla 

That's what Aetna U.S. Healthcare, the largest U.S. health insurer, is trying to do. The company is taking a three-pronged approach to the medical-errors issue: increasing the visibility of the problem through information-sharing meetings, funding research on error-reduction strategies and providing information to network doctors and hospitals for them to use as the basis for their own patient-safety initiatives, said John T. elly, director of physician relations.

In June, the semiannual meeting of the Academic Medicine and Managed Care Forum focused on the issue of medical errors. The forum, which Aetna established in 1996, is an alliance of 50 academic medical centers, teaching hospitals and pharmaceutical companies. The meeting featured experts on medical errors, including the Harvard School of Public Health's Dr. Lucian L. Leape, one of the authors of the Institute of Medicine report.

Speakers shared research about proven methods for reducing medical errors, including the use of medical simulation as a teaching tool and the use of handheld computers to reduce medication errors, which are estimated to account for more than 7,000 deaths annually. Jim Conway, chief operations officer for the Dana-Farber Cancer Institute in Boston, described how the institute responded after Betsy Lehman, a health reporter for the Boston Globe, died of an overdose during chemotherapy. Bruce E. Bradley, director of managed-care plans for General Motors and chairman of the Leapfrog Group, talked about how employers can make safety part of their health-care purchasing decisions.

Aetna also is urging doctors to use a handheld electronic device that allows them to prescribe medications for its members via the Internet. Aetna is not buying the devices or paying for subscriptions to the service. Rather, it is contracting with Allscripts Inc. to include the health insurer's list of covered medications, or formulary, in its system. Network doctors using the Allscripts' Touch-Script Personal Prescriber will receive information about potentially harmful drug interactions and side effects. The prescription will be sent electronically directly to the patient's pharmacy.

"There is significant research that demonstrates that the management of pharmaceuticals can be improved by the use of automated tools that reduce the likelihood of incorrect information entered in the first place or errors being made in course of filling orders," elly said.

Aetna U.S. Healthcare notifies doctors when its claims data indicates that a patient may be taking medications that can cause problems if taken together. The more medications that a person takes, the greater the probability of adverse reactions, so the health insurer also sends doctors a list of their patients who are taking six or more medications, elly said.

Aetna also committed $1 million to fund research on patient safety. After reviewing research proposals, Aetna expected to choose its grant recipients in July.

After several years of reporting to doctors on how their treatments of certain illnesses, such as asthma, compare with recommendations for best practices, Aetna this year plans to expand the program to hospitals. "We have committed to providing information to the hospitals that can be used as the foundation for their internal patient-safety initiatives," he said.

The health insurer is exploring what kind of information to make available to its members. For several years, Aetna has provided consumers with information

about how physicians in the network perform on quality measures.

And while Aetna has programs to reward primary-care physicians financially for improvements in quality-performance measures, "it is not part of the way in which we contract with hospitals at this point," elly said.

"We really believe that expanding awareness among hospitals and others is the most effective way at this stage to accelerate awareness of the significance of reducing errors and awareness of specific approaches," he said.

On a Smaller Scale

Other health insurers also are taking steps to reduce errors. Guardian Life Insurance Company of America, New York, is working with a company whose software compares diagnoses for paid claims and prescription drug claims to identify potential adverse drug interactions, said Susan O'Connor, Guardian's director of managed-care operations.

Within the next year or two, Guardian expects to make the software available over the Internet so patients can check for potential problems before they start taking a new medication.

In June, Guardian was still looking for ways to address the privacy "dilemma" created by the fact that the insurer would have to disclose patient information to the software vendor, O'Connor said.

"We're working through the privacy issues," she said. "We believe there are tremendous opportunities to get at those drug interactions."

Holding Feet to the Fire

Several months after the release of the Institute of Medicine report, the National Committee for Quality Assurance proposed changes to its accreditation program that will encourage health plans to focus on reducing medical errors and improving patient safety. Beginning next year, plans would have to provide a comprehensive description of how they are addressing patient-safety issues, such as poorly coordinated care and adverse drug interactions. NCQA cited several examples of programs: working with hospitals and providers on patient-safety initiatives; steering patients to hospitals with better outcomes; or collaborating with other managed-care organizations to develop data-sharing systems that would better coordinate care.

Leapfrog member Milstein said to better promote patient safety, health plans need to adopt and incent common provider clinical performance measures and safety standards. Otherwise, physicians and hospitals that contract with several plans are in the untenable position of having to respond to different reporting and performance specifications. "The issue of standards for inter-HMO quality improvement cooperation in geographic areas where provider networks overlap has not yet been addressed by state insurance regulators or accreditors, but I'm hopeful that it will."

To Milstein, managed-care organizations that cooperate with each other to help providers significantly advance quality and patient safety "have a great opportunity to improve their public image."

"Many health plans have made progress on quality, but it is often grossly underscaled and undercoordinated across plans," he said.

Health Reinsurance

American Re is trying to get in on the ground floor of the medical-errors issue. It is working with software companies to develop advanced medical-management systems that can detect specific errors in real time and identify large-scale patterns that will help predict which patients are most likely to be at risk for particular types of errors. Through the use of various types of artificial intelligence, these systems may identify opportunities for improving clinical care for individuals and for large patient populations.

The software testing and evaluation stage, now just beginning, will last about a year. Once it's fully up and running, American Re plans to integrate the risk-management applications of these software systems with its first-dollar quota share, HMO stop-loss reinsurance, HMO reinsurance, provider excess and employer stop-loss reinsurance products.

"We're trying to bring our clients an extra level of care and medical-management sophistication that has the greatest chance of predicting, preventing and protecting against medical errors and catastrophic health events," Couch said. "By doing the right thing, by focusing on quality and minimizing catastrophic health events and costs, that will have the impact of lowering medical loss ratios to differentiate us, our clients and our clients' clients. That really hasn't happened yet, but the stars are coming into alignment."

Treasure for Trial Lawyers

The Institute of Medicine report pointed to medical-malpractice lawsuits as a barrier to reducing medical errors, because the fear of liability can inhibit physicians from reporting them.

And while medical-malpractice insurers urge their insureds to report errors as soon as possible, like much of the health-care industry, they have not embraced the Institute of Medicine's call for mandatory reporting. Much of the concern about reporting is steeped in fear that the information will provide a treasure trove of information for plaintiffs' lawyers.

"Practitioners won't want to come forward to share information in an environment where they know there's a trial attorney waiting around the corner to sue them," Lawrence E. Smarr, president of the Physician Insurers Association of America, said following release of the report.

While saying that the most serious medical errors that result in harm should not be shielded from public disclosure, the Institute of Medicine report recommended protections to ensure that information not be released until an investigation confirmed that an error caused the injury.

The authors also urged Congress to pass legislation that protects from legal discovery data that health-care organizations collect and analyze for the purpose of improving safety and quality, even if they share the data with other organizations.

Beyond protecting confidentiality, the Institute of Medicine report called for further study of proposed legal reforms, including no-fault compensation for medical injuries and "exclusive enterprise liability," which shifts liability for medical injuries from individual practitioners to responsible organizations.

Risk Management

In trying to reduce the legal liability of their clients, medical-malpractice insurers offer risk-management consulting and education programs.

From April through June, Phico Group, Mechanicsburg, Pa., held four conferences around the United States focused on medication errors, said Dr. Robert Pendrak, vice president and medical director. "We wanted to bring in the heavy hitters to say it's a serious problem, and the feedback has been tremendous," Pendrak said. Next year's national program will focus on how proper communication systems can reduce medical errors and reduce the likelihood of claims.

Phico's risk and safety consultants also do on-site visits at health-care facilities to ensure that hospitals have proper policies and procedures to prevent serious errors, such as procedures for ensuring that doctors don't operate on the wrong patient or the wrong part of the body.

TIG Specialty Insurance Solutions sees a greater demand for its consulting services from smaller and rural hospitals, which don't have the sophisticated risk-management resources that larger health-care facilities do, said imber Lantry, director of programs for TIG Specialty Insurance Solutions' healthcare business.

One of the hot topics is how to change the environment so that nurses and other health-care workers are not afraid to question the decision of physicians if they suspect an error. It's the same situation that the aviation industry once faced. "It was a rank-and-file mentality. The navigator never questioned the decision of the captain. It's not unlike a surgical suite or an emergency department," said Lockowitz of St. Paul.

For the last decade, MMI and now St. Paul have hired aviation safety expert John Nance to bring lessons from the aviation industry to health care. "He talks about how you teach that crew to be a team," Lockowitz said. "When you are in a high-stakes game like aviation or health care, you need good communication, trust and mutual respect. The question is, how do you build that?"

St. Paul also is focused on using data to educate clients about ways to improve patient safety. As the leading writer of medical malpractice with 1999 direct premiums of $411.6 million, St. Paul has an extensive claims database and collects clinical practice and outcomes data from its insureds. The data will be published in the fifth edition of the 14-year data summary report, scheduled to be released this summer. It looks at issues such as the rate at which premature babies are moved to facilities that specialize in neonatal intensive care and the use of pulse oximetry to measure oxygen in the blood while surgical patients receive intravenous anesthesia.

"We've really dug in to learn what it is in health-care systems that breaks down and leads to patient injury," Lockowitz said. "If we understand where the breakage is, we can help providers fix it."

Collecting and analyzing data is important, but health-care organizations often fail to take the next critical steps: implementing programs to correct problems and monitoring the effectiveness of those programs. That's been a focus for the health-care risk-management-consulting arm of American International Group Inc. AIG Consultants Inc. (AIGC) has been conducting a national seminar series in eight cities to promote evidence-based risk management, said Charles Benda, senior vice president, AIGC Healthcare Management Division.

"If there's an area where claims are rising or you feel you have exposures or deficiencies in operations, it's a matter of collecting the appropriate information to monitor the quality of the care or service that's being provided. A real key component is having a benchmark or standard that you can compare yourself to," he said.

Next year's seminar will include a half-day workshop on measurement skills for risk management. "You have to be able to measure whether or not the remediation is having a positive impact," he said.

The work that AIG Consultants does with health-care insurance clients is very focused on the types of systemic problems highlighted in the Institute of Medicine report. But Benda emphasized that medical-malpractice insurers view the issue of medical errors differently.

"For liability insurers and for the tort system, the questions we deal with more typically are issues of negligence--adverse events or outcomes that are the result of negligence on the part of an individual or institution," he said. Research cited by the institute found no probability of negligence in 83% of liability claims paid because of adverse outcomes, Benda said.

"Health-care providers, if they want to protect themselves from liability claims, have to cast a broader net to cover more than what simply might be defined as mistakes."

Benda, like others interviewed, also expressed concern about the ultimate impact of the Institute of Medicine report.

"The whole notion of reducing medical errors is a positive goal. Nobody can argue that," he said. "The issue is how it will be implemented. Is it going to become a mechanism to improve the quality of care or a way to assign blame to individuals or facilities?"

Leapfrog Initiative

The Leapfrog Group is a coalition of large public and private purchasers focused on improving the safety and overall value of health-care providers who serve their employees.

"Many Leapfrog purchasers will turn to their health insurers to encourage provider safety improvements," said Leapfrog steering committee member Dr. Arnold Milstein, medical director of the Pacific Business Group on Health, the country's largest regional health purchasers' coalition. "Insurers that deliver on this will be very much appreciated by their large employer customers."

The Leapfrog Group is focused on two dimensions of provider improvement. The first dimension is focused on safety improvements. Leapfrog purchasers will ask their health insurers to encourage network hospitals to have the following three research-supported safety features:

* Computerized entry of physician orders. When doctors enter medication orders by computer rather than writing them by hand, the chance of medication errors can be reduced significantly through software that flags adverse medication interactions and orders that are mismatched to the health status, weight or age of the patient. Today's automated systems can intercept 55% to 75% of prescribing errors. The Leapfrog Group wants hospitals to report whether their physicians are using systems that can intercept at least 55% of errors in standardized test cases.

* Physician certified in critical-care medicine monitoring patients in intensive care units. Published studies have found 10% to 15% reductions in mortality when hospital ICUs were staffed during the day with such physicians, Milstein said. "That's a huge opportunity to save lives, and surprisingly, it's not standard practice."

* Evidence-based hospital referral. Research over the past 20 years shows that hospitals that perform a minimum volume of certain complicated procedures tend to achieve the best outcomes.

The second dimension is for health-care providers to begin participating in comparative performance-reporting programs and to document distinguished performance. "This will be a major development effort. A number of medical specialty societies initiated performance-reporting systems, but very few doctors participated," Milstein said. Leapfrog purchasers will ask their health insurers to document the ways in which they are encouraging providers to participate in scientifically valid systems of comparative performance reporting, as they are adopted by specialty societies, national accrediting organizations and the Quality Forum, Milstein said.

Employers that commit to the Leapfrog Group's patient safety initiative agree to offer market incentives to health plans and providers that take an active role and demonstrate tangible safety improvements and provider performance reporting. If no significant progress is made, employers commit to intensify the market incentives.

For example, employers could offer educational materials and incentives that steer employees to health plans and providers that are doing a good job on patient safety. Incentives for plans might include lower employee contributions toward premiums. Incentives directed at hospitals might include higher reimbursements or lower enrollee copayments.

This is an important signal to the health insurance industry that many responsible purchasers care about safety and overall value at the provider level, Milstein said. "If you are in the health insurance business and manage care, this is an opportune time to take a short list of clearly proven safety methods into account in provider reimbursement as well as patient education and channeling. If all insurers did this, these critical improvements would occur more quickly because hospital CEOs and physicians would see a clear business case for safety."

Federal Initiatives

In response to the Institute of Medicine report on medical errors, President Clinton in February proposed a series of measures to improve patient safety. He adopted the Institute of Medicine's goal of reducing medical errors by 50% within five years. Here are some of the proposals:

* A new Center for Quality Improvement in Patient Safety. The center, for which Clinton budgeted $20 million, would invest in research, develop national goals, issue an annual report on the state of patient safety and translate findings into better practices and policies.

* Regulations requiring the 6,000 hospitals participating in Medicare to have patient-safety programs in place to prevent medical errors, including medication mistakes.

* A uniform, state-based system of reporting medical errors to be phased in over time. This will include mandatory reporting of preventable medical errors that cause death or serious injury and voluntary reporting of other medical mistakes and so-called "near misses," or "close calls." Although 21 states already have mandatory reporting systems, Clinton emphasized the need for a uniform system based on a common set of patient-safety measurements.

"Reporting is vital to holding health-care systems accountable for delivering quality care and educating the public about the safety of their health-care system," Clinton said. "It is critical to uncovering weaknesses, targeting widespread problems, analyzing what works and what doesn't and sharing it with others."

* Legislation that protects provider and patient confidentiality but that does not undermine individual rights to remedies when they have been harmed. "People should have access to information about a preventable medical error that causes serious injury or death of a family member, and providers should have protections to encourage reporting and prevent mistakes from happening again," he said.

* Expanding the mandatory reporting system already in place by the Department of Veterans Affairs to the 500 Department of Defense hospitals and clinics.

* New standards to be developed by the Food and Drug Administration to prevent medical errors caused by drugs that sound similar or packaging that looks similar. Clinto also proposed new label standards that highlight common drug interactions and dosage errors.

* Computerized entry of medication orders at VA hospitals.