Medicare payment for selected adverse events: building the business case for investing in patient safety

Abstract

This study estimates that Medicare extra payments under the hospital prospective payment system (PPS) range from about $700 per case of decubitus ulcer to $9,000 per case of postoperative sepsis in the five types of adverse events identifiable in Medicare claims. Medicare extra payment for the five types of events totals more than $300 million per year, accounting for 0.27 percent of annual Medicare hospital spending. But these extra payments cover less than a third of the extra costs incurred by hospitals in treating these adverse events. We conclude that both Medicare and hospitals gain financially by improving patient safety.