There has been a good deal of happy talk from the bird cage liners about Medicare’s new rule on medical errors. Unfortunately, the media (and even some health care bloggers who should know better) have it wrong.

Like most bureaucratic brainstorms, this latest CMS decree will almost certainly do more damage than good. Dr. RW has a couple of posts that provide some refreshingly accurate insights:

Despite the simplistic media spin this isn’t a simple matter of whether Medicare will “pay for mistakes?. It’s not as if Medicare even pays for the all the appropriate hospital care patients actually get.

This is a reference to PPS, Medicare’s Soviet-style price control mechanism under which a hospital stay is paid a fixed amount based on a DRG. This idiotic system leaves many legitimate hospital expenses unreimbursed.

Historically, hospitals have been able to reduce their PPS-induced losses by augmenting their Medicare claims with additional information about cost-increasing complications. However, as Dr. RW explains, the new rule includes:

A list of newly designated hospital complications which can no longer be coded to enhance the DRG payment. Thus hospitals can no longer recoup losses sustained as a result of certain complications which occur during hospitalization.

The new rule is very unlikely to reduce hospital errors. It will, however, reduce the number of hospitals. As I have pointed out here, hospitals cannot operate in the red and survive.

If you want to know why single-payer health care systems have so much trouble finding hospital beds for their patients, it is because they are imbued with the same bureaucratic mindset that produced Medicare's vaunted new rule.

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