The "never event"

Dr. Pauline Chen writes in today's New York Times that Medicare's and Medicaid's (and, consequently, private insurers') refusal to pay for so-called "never events" -- complications caused by egregious physician errors -- could lead to denial of care to the sickest patients.

On the surface, refusing to pay for a "never event" makes sense. As John Galt puts it after his capture by a totalitarian government, you wouldn't pay a doctor to set your leg if he were the man who broke it. If a surgeon leaves his scissors in a patient's body after an operation and the patient needs additional surgery and hospital care to remove the scissors, the patient obviously should not have to pay. If a patient is given an oxygen mask that has been inadvertently hooked up to a container of another gas, and the patient suffers poisoning as a result, he should not have to pay for the care required to correct the poisoning. Indeed, in cases like these, the patient probably has grounds for a lawsuit, if the damage is permanent.

But, as Dr. Chen shows, Medicare, Medicaid, and private insurers have expanded the definition of "never events" to include many medical "mistakes" that are not the doctor's fault. If a patient picks up an infection after having surgery, is it the fault of the medical staff? Maybe -- but it's also possible that the patient has an underlying condition, like diabetes, that makes him more susceptible to infections than other patients in the hospital. Cases like these do not represent egregious errors on the doctor's part, but rather the expected risks of caring for sicker patients. If a doctor knows ahead of time that he's not going to be paid if a sicker patient has complications that an insurer deems are the doctor's fault, he'll respond by turning those sicker patients away -- "cherry-picking" the healthiest patients and leaving the sickest without any care at all.

In a free market, doctors would be able to work out payment on a case-by-case basis. If a doctor's egregious error on one surgery led to the need for extra care for Joe, but Jerry needed similar "extra" care after the same surgery because he has a comorbid condition, the doctor can waive fees for Joe and charge them to Jerry, explaining to each the reasons for the charges or lack thereof. In fact, the doctor can explain to Jerry beforehand that his surgery carries a higher risk of complications than it does for most patients, and that X, Y, and Z might happen, and does Jerry still want to go through with the procedure?

When the government pays for medical care, it has to do so by statistical averages to determine what should and should not happen in a medical practice; private insurers follow suit. In a free market, where more of us would pay out-of-pocket for most of our medical care, we'd be more likely to have individual conversations that reflect the particular risks of a given procedure for the patient on whom it's being performed -- and doctors wouldn't need to avoid the sick for fear that their work will be deemed a mistake.