Adverse Events Insurance Coverage for Employees and Plan Members

The Problem : Adverse Events

Adverse events are a major problem for the healthcare industry. Hundreds of thousands of patients are killed each year and millions more suffer non-fatal injuries. Payers of healthcare (patients, employers, and health insurers) may be impacted by the additional cost required to treat adverse events.

  • It is estimated that each year adverse events cost citizens up to $29 Billion in lost income, household production, disability, and health care cost. 1 1 National Cost of the Medical Liability System, Health Affairs, 29, no.9 (2010): p1570 citing; To Err is Human: Building a Better Health System, Institue of Medicine, Quality of Health Care in America Project, 2000, pages 1-2

  • Cost between $17 and $29 Billion each year in additional medical expenses, lost wages, productivity and out-of-pocket expenses 2 2 IOM’s To Error is Human, 1998

  • Cause between 220,000 and 440,000 deaths in the U.S., the 3rd leading cause of death behind only cancer and heart disease 3 3 Journal of Patient Safety, September 2013 - Volume 9 - Issue 3 - p 122–128, A New, Evidence-based Estimate of Patient Harms Associated with Hospital Care

  • Cause 10-20 times more non-fatal injuries each year 4 4 Journal of Patient Safety, September 2013 - Volume 9 - Issue 3 - p 122–128, A New, Evidence-based Estimate of Patient Harms Associated with Hospital Care

  • Cost patients and payors $17 Billion per year just in medical bills necessary to treat patients for injuries 5 5 The Economic Measurement of Medical Errors, Milliman, 2010



Patients and Payers, not medical providers, bear the cost of Adverse Events.

“Approximately 78 percent of the costs of all injuries are externalized to other parties—primarily injured patients, their families, and their health insurers.” 6 6 Journal of Empirical Legal Studies, Volume 4, Issue 4, 835–860, December 2007: Who Pays for Medical Errors? Michelle M. Mello, David M. Studdert, et al.

“to the extent that there is a business case for safety in current markets, it exists primarily at the payer level, not the provider level.” 7 7 Journal of Empirical Legal Studies, Volume 4, Issue 4, 835–860, December 2007: Who Pays for Medical Errors? Michelle M. Mello, David M. Studdert, et al.



How Much Does Your Company Spend on Adverse Events?

Companies need to understand how much of their healthcare dollars are wasted on adverse events. The Leapfrog Group is a non-profit organization made up of large employers and other healthcare purchasers. Leapfrog’s mission is to educate employers about the impact medical complications have on healthcare spending. AMRC has partnered with Leapfrog to utilize its “Hidden Surcharge Calculator” to help self-funded employers calculate the costs of adverse events. The above chart represents the hidden costs paid by various sized employer groups. How much do adverse events cost your company?

Payers Need a Solution »