Health Care Provider Patient Safety- Health Cost Containment

Updated January 2016

Cost Containment header

The following NCSL Issue brief was distributed to state legislators and legislative staff across the country.

 Health Care Provider Patient Safety - Download PDF File
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Cost Containment Strategy and Logic

Patient safety refers to rules, practices and systems to prevent patient harm or injury, including efforts to prevent medical errors. These errors, also known as adverse events, are occurrences of unintended harm from medical care. The main categories of medical errors are treatment errors, failure to complete indicated tests, and avoidable delays in treatment. Patient safety also includes efforts to reduce health care-associated infections that result from treatment in a hospital or other medical care setting. The goal of patient safety initiatives is to reduce pain, suffering and deaths associated with preventable, unintended harm to a patient.

Summary of Health Cost Containment and Efficiency Strategies - Brief #15- Health Care Provider Patient Safety

State/Private Sector Examples  Strategy Description Target of Cost Containment Evidence of Effect on Costs
Montana, Iowa, New Jersey, Maryland, Pennsylvania, Maine, Minnesota, California, Wisconsin, Vermont, Colorado, Kansas, Missouri, New York, Washington, Massachusetts.  On a federal level, Medicaid, Medicare, etc. Medical errors are the eighth leading cause of death in the United States, higher than motor vehicle accidents, breast cancer or AIDS. Each year, between 500,000 and 1.5 million Americans admitted to hospitals are harmed by preventable medical errors. The estimated annual cost of additional medical and short-term disability expenses associated with medical errors is $19.5 billion. Longer hospital stays and the cost of treating medical error-related injuries and complications are the two major expenditures associated with medical errors. Examples of patient safety initiatives that improve patient care and reduce costs exist, but evidence of overall savings is limited. Recent strategies include e-prescribing, non-payment for “never events,” regulating medical work conditions and error reporting.

Additional Resources

  • 2014 Guide to State Adverse Event Reporting Systems. A 2015 report by NASHP highlights state action:
    According to the National Quality Forum (NQF), approximately two million healthcare-associated infections occur annually in the United States, accounting for an estimated 90,000 deaths and more than $4.5 billion in hospital healthcare costs.  State governments are among the stakeholders concerned about the human and economic toll of these events. As large purchasers, regulators, conveners, and providers of health care services, states have unique opportunities to improve patient safety and safeguard the public. One strategy in place in just more than half of states is the implementation of an adverse event reporting system. This report describes the status of and trends in state adverse event reporting systems as of November 2014. Read the full report published Jan. 2015. 
  • Hospital acquired conditions decreasedThe Department of Health and Human Services announced that "new preliminary data show an overall nine percent decrease in hospital acquired conditions nationally during 2011 and 2012.  National reductions in adverse drug events, falls, infections, and other forms of hospital-induced harm are estimated to have prevented nearly 15,000 deaths in hospitals, avoided 560,000 patient injuries, and approximately $4 billion in health spending over the same period.  The Affordable Care Act is also helping reduce hospital readmissions.  After holding constant at 19 percent from 2007 to 2011 and decreasing to 18.5 percent in 2012, the Medicare all-cause 30-day readmission rate has further decreased to approximately 17.5 percent in 2013.  This translates into an 8 percent reduction in the rate and an estimated 150,000 fewer hospital readmissions among Medicare beneficiaries between January 2012 and December 2013." You can view the HHS report here, released 5/7/2014.
  • For bariatric surgery treating morbid obesity, about two-thirds of the readmissions are preventable; with the most common reasons for readmission are dietary indiscretions and medication reconciliation. In California, best practices enabled Stanford's bariatric program to reduce its readmission rates from 8% to 2.5% in four years. Stanford's 2008 pilot project on reducing readmissions evolved into the nationwide Decreasing Readmissions through Opportunities Provided program, which aims to reduce 30-day readmissions nationwide by 20%. In Massachusetts, Metro West, a Medicaid and commercial plan provider, established a program in 2014 to manage medications for comorbidities and pain, avoiding pills and using easy-to-swallow liquids, and tracking the patient’s need for basic, but accurately measured hydration. Read details from Health-Leaders, Jan. 2016.

  • Hospital Readmissions: Conditions, Cost, and Utilization Differences in Medicare, Medicaid, and Private InsuranceKip Piper Report 1/16/2015.

  • Reducing Avoidable Hospital ER Use, 2014 - Summary report, available at no charge. HIN publishing 9/2014.

  • Quality Data Added to Physician Compare Website: Patients Get More Information to Help Find a Doctor -  Press release from the Centers for Medicare and Medicaid Services: "The Centers for Medicare & Medicaid Services (CMS) announced that... quality measures have been added to Physician Compare, a website that helps consumers search for information about hundreds of thousands of physicians and other health care professionals."
  • Healthcare-Associated Infection (HAI)  Costs Detailed  - Surgical site infections are the most frequently occurring HAI, accounting for one-third of the annual cost or about $3.3 billion. But central line-associated bloodstream infections are the most expensive, researchers report, in Healthcare-Associated Infection Costs Detailed. Published by HealthLeaders News 9/5/2013.
  • The Impact On Hospitals Of Reducing Surgical Complications Suggests Many Will Need Shared Savings Program With Payers - a report reexamines the business case for hospitals’ embracing surgical complication programs. Surgical complications are something that neither patients nor hospitals want. With low complication rates being increasingly recognized as an important measure of good hospital performance, initiatives to lower complication rates are being pursued with the expectation of helping patients and reducing payers’ reimbursement expenses as well as providers’ costs. Published in Health Affairs, October 2012. See:
  • Provider Preventable Conditions Federal Rule Becomes Effective— On June 6, 2011, CMS issued a final rule implementing provisions of the ACA affecting payment for Provider Preventable Conditions (PPCs) under the Medicaid program. The rule prohibits federal payments to states for any amounts expended providing medical assistance for health care-acquired conditions. The rule provides incentives quality improvement at the provider-level and cost savings for states by requiring states to reduce payments at the occurrence of hospital errors and Never Events in specific health care settings. The rule became effective July 1, 2011, but CMS provided states with an additional year to meet these new requirements. In preparation for full implementation, states should have submitted a state plan amendment (SPA) for their Medicaid programs to institute the changes. In preparation for the approaching final implementation date of July 1, 2012, CMS is offering technical assistance, and has provided on their website basic information about the requirements, SPA pre-prints and instructions, as well as a Frequently Asked Questions page.  (Information provided by NCSL health federal affairs staff, D.C, 5/15/2012.]
  • A survey on Reducing Hospital Readmissions, conducted in February 2012, documented the highest rates of targeted programs to reduce readmissions in the survey’s three-year history. The survey captured details on these programs to curb readmission rates, along with the conditions most likely to trigger readmissions. Published as HIN's Third Annual Survey on Readmissions, 2012.
  • Medicaid Program; Payment Adjustment for Provider-Preventable Conditions Including Health Care-Acquired Conditions: Final Rule- The CMS announced in 2011 that it will stop paying hospitals and health care providers under the Medicaid program for reasonably preventable health care-acquired illnesses or injuries, such as an air embolism or blood incompatibility. States have until July 2012 to comply with the rule. "These steps will encourage health professionals and hospitals to reduce preventable infections and eliminate serious medical errors," CMS Administrator Dr. Donald Berwick said. "As we reduce the frequency of these conditions, we will improve care for patients and bring down costs at the same time."
  • The Drive to Patient Safety - In this new research and analysis, top healthcare executives and clinical leaders offer patient safety insight, including: 69 percent say that important patient care information is sometimes, often, or always lost during shift changes; 73 percent say improved infection control practices are among the new initiatives designed to improve patient safety;  53 percent are devoting more financial resources to patient safety programs; 49 percent say that lack of communication skills poses the greatest risk to patient safety during handoffs or transition of care. Health Leaders Media Council, 5/11.
  • Making Health Care Safer, CDC National Center for Emerging Zoonotic Infectious Diseases, Division of Healthcare Quality Promotion.  Published in Vitalsigns by CDC, March 2012.
  • What resources are available for constituents interested in learning more about patient safety?  The Empowered Patient Coalition provides information for consumers on preparing for surgery, questions to ask at a doctor's visit, facts on hospital acquired infections, and provides additional resources prompting patients to be involved in their own care.
  • Hand Hygiene Noncompliance and the Cost of Hospital-Acquired Methicillin-Resistant Staphylocaccus aureus Infection.  Keith Cummings, MD, MBA, Deverick Anderson, MD, MPH and Keith Kaye, MD, MPH.  Infection Control and Hospital Epidemiology.  April 2010, Vol. 31, No. 4.   Web:
In the News

According to the New York Times, Hospitals Face Pressure to Avert Readmissions (November 26, 2012). "Medicare last month began levying financial penalties against 2,217 hospitals it says have had too many readmissions. Of those hospitals, 307 will receive the maximum punishment, a 1 percent reduction in Medicare’s regular payments for every patient over the next year, federal records show."

About this NCSL project

NCSL’s Health Cost Containment and Efficiency Series describes more than 20 alternative policy approaches, with an emphasis on documented and fiscally calculated results. The project is housed at the NCSL Health Program in Denver, Colorado. It is led by Richard Cauchi (Program Director) and Martha King (Group Director) with Barbara Yondorf as lead researcher. 

NCSL gratefully acknowledges the financial support for this publication series from The Colorado Health Foundation and Rose Community Foundation of Denver, Colorado.