When Hospitals Err, Who Pays For Their Medical Mistakes?


January 22, 2016

Most people avoid being hospitalized like the plague and rightfully so, medical mistakes in hospitals is the leading cause of death in the United States each year. According to the Health Grades Report, there were over 40,000 incidences of medical harm or death every day in 2011! These statistics are frightening enough for patients facing a hospital stay or procedure, but there is reason for added concern. If the hospital makes a mistake, who pays for the additional care, surgery, medications and rehabilitative processes? To most people the answer should seem a simple one; the hospital should pay for harm they caused, right? Well, in most cases that is not what occurs.

Who Pays When Something Goes Wrong?

So, you go in for a colonoscopy and the doctor punctures your colon, you need emergency surgery to repair the puncture and during the surgery you are given a medication you’re allergic to. The reaction causes you to go into cardiac distress on the operating table and several stents and a pacemaker are required to keep you alive. When something like this occurs who is responsible? Who pays? The answer may not be what you would expect.

Regardless of the national attention medical error has been getting in recent years and the Obama administrations focus on improving the quality of hospital care and patient outcomes, being hospitalized is still risky business. According to the Journal of Patient Safety, in 2013 it was estimated that in excess of 400,000 people died nationwide due to avoidable medical errors. In 2008, which is the last year the problem was studied in terms of cost; medical errors added an extra cost of $19.5 billion dollars in national spending, primarily on extra care and medications. So, who is paying that $19.5 billion dollars?

In the case such as described earlier in this article it would most likely be the patient and possibly the patient’s insurer. If this were a clear cut case of negligence a malpractice lawsuit may be the necessary route for the patient to take. But many cases seem pretty clear to the patients, but may not to an attorney who takes the cases on the basis that they are only paid if there is a settlement in favor of the plaintiff (injured patient). It may be difficult or near impossible to find an attorney to take the case unless there is solid evidence that the hospital or doctor was at fault. Before surgery or procedures are performed patients are provided information on the possible risks associated with the procedure/surgery and asked to sign an informed consent form which essentially protects the doctor/hospital from being sued, unless there is evidence of malpractice.

The problem is a patient can never actually know if there was malpractice if they cannot find an attorney to take their case. The only other alternative a patient is left with is to pay an attorney up front to investigate their case, for most people this is not a realistic financial option. Leah Binder, president of Leapfrog Group, a non-profit group that monitors and grades hospitals on their improvement of hospital error prevention in regards to errors, infection, injuries, and accidents said, “You would expect if health care providers make the mistake, they would make you whole.” “But that is not what happens. In health care, you pay and you pay and you pay.”

Pressure is Building to Regulate a Nationwide Policy

Currently there are no regulations on how doctors and hospitals decide how they handle the additional costs when patients experience medical error and fault is not a clear cut case of malpractice or is disputed. At some hospitals there are hospital regulations or policy that requires the hospital to tell the patient when a medical error has occurred and what caused it, if they know. Hospitals with this type of policies typically will pay for all follow-up care that is needed when the hospital has erred. Right now there are very few hospitals in the U.S. with these regulations, but there may be a new intensified focus for change.

There is growing pressure from professional groups, patient advocates and safety groups to encourage hospitals to adopt these policies, many supporters of the policy are powerful groups in the medical community such as; the American Medical Association, the federal Agency for Healthcare Research and Quality, the American College of Obstetricians and Gynecologists, and Leapfrog which is responsible for accrediting numerous healthcare organizations through it’s National Quality Forum and the Joint Commission. But even if hospitals adopt this policy, it doesn’t necessarily mean they will take responsibility for future health care costs when it is not a clear cut case of malpractice, such as operating on the wrong leg for example.

What Can You Do If It Happens To You

There are times when proper procedure is followed, but there is still a bad outcome, things occur as a result and it becomes increasingly difficult to determine if the bad outcome could have been avoided. In such cases hospitals typically deny responsibility, leaving patients to pay for the additional care. Some times patients with employer provided insurance can make their company aware of the situation and the company is successful at putting pressure on the hospital to pick up the expenses of additional care.

When that approach doesn’t help insurance companies often step in. Insurance plans that include a network of doctors and hospitals in their plan sometimes have stipulations in their contract with the hospitals that address the issue of medical errors. However, in order for the hospital to pick up the follow up care it must be clearly due to medical error, but insurance companies often have some leverage with the hospital to work out who will pay for what.

In terms of the federal government and Medicare the policy is crystal clear. Medicare will not pay for follow up care or surgery to correct medical error and the hospital is not allowed to charge the patient, the hospital must pay for the additional costs. The same policy applies to Medicaid although it seems to take longer to enforce the policy according to Rachael Morgan, the committee director at Health and Human Services. Even with the policy in place it only covers a limited set of medical errors, leaving the errors not set in stone unclear as to who will pay.


Until there is a set standard of policy on medical error and who is responsible for payment it is advisable for all patients to check with their insurer to see if they have a policy on this issue in your plan. If it doesn’t you may want to shop around to try and find a plan that does have provisions for medical error. There are not many hospitals with these types of provisions in their policy and may not be available in your area, but it is better to be informed ahead of a medical error than finding out after the fact. Writing a letter to your city, state and federal representatives encouraging them to regulate this serious problem in healthcare might help to effect change.