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“Never events” is the colloquial term applied to serious, preventable, and costly errors in the provision of health care services—such as surgery on the wrong limb or infusion of the wrong blood type—that should "never" occur.  The terms "adverse event" and "hospital-acquired condition" are also used to describe never events. 


The National Quality Forum (NQF) developed a list of 28 never events, defined as adverse events that are deemed to be preventable events that should never occur in the hospital setting.  Charles Brown, et al., Litigation Impacts of Never Events, Health Lawyers News, Vol. 12, No. 2 (Feb. 2008), at 26.  NQF and the LeapFrog Group publicly questioned the Centers for Medicare and Medicaid Services (CMS) concerning Medicare reimbursement for services that result in never events.  The LeapFrog Group endorsed the NQF’s list and encouraged hospitals to, among other things, waive all charges for healthcare required as a result of a never event.  Id.


Congress passed legislation requiring that CMS select at least two diagnoses that have a high cost and/or high volume, result in a higher payment when present as a secondary diagnosis, and could reasonably have been prevented by application of evidence-based guidelines.  42 U.S.C. § 1395ww(d)(4)(D)(iv)).  CMS complied by promulgating regulations stating that several hospital-acquired conditions (HACs) will no longer be reimbursed by Medicare for hospitalized patients unless the HAC was present upon the admission of a patient.  See  Because CMS' criteria for selection of HACs are similar, but not identical to the NQF selection criteria, CMS' HACs overlap with eight of the NQF never events.  See

Effective for discharges beginning October 1, 2008, a hospital will not receive payment for HACs that were not present upon admission and occurred during a Medicare beneficiary’s inpatient stay.  The case will be paid as though the secondary diagnosis was not present.  72 Fed. Reg. 47130, 47200 (Aug. 22, 2007); Charles Brown, et al., Litigation Impacts of Never Events, Health Lawyers News, Vol. 12, No. 2 (Feb. 2008).  The HAC payment provisions are part of CMS' transformation from a simple payor of health services to a well-informed purchaser of quality healthcare services.

Agency Guidance

In April 2007, CMS published for comment a list of conditions that it was considering as HACs subject to denial of reimbursement.  72 Fed. Reg. 47130 (Aug. 22, 2007);  The proposed HACs were: (a) foreign object retained after surgery; (b) air embolism; (c) blood incompatibility; (d) stage III and IV decubitus ulcers; (e) falls and trauma resulting in fractures, dislocations, intracranial injuries, crushing injuries, burns, or electric shock; (f) catheter-associated urinary tract infection; (g) vascular catheter-associated infection; and, (h) surgical site infection—mediastinitis after coronary artery bypass graft surgery (CABG).  73 Fed. Reg. 23528 (Apr. 30, 2008);

These eight conditions reportedly cost Medicare approximately $21.3 billion annually.; Charles Brown, et al., Litigation Impacts of Never Events, Health Lawyers News, Vol. 12, No. 2 (Feb. 2008), at 26.  Calculations are based exclusively on CMS data, wherein CMS listed the number of cases associated with each HAC diagnosis/procedure code and the total charge for a patient discharge record based on the CMS standardization file.  The total amount of estimated costs was obtained by multiplying total charge for a patient discharge by total number of cases annually.  The most prevalent conditions are stage III and IV decubitus ulcers, with 257,412 cases reported under the current reimbursement codes at an average cost of $43,180 per hospital stay.  The most costly condition is mediastinitis following a CABG with 69 cases reported at an average cost of $299,237 per hospital stay.  Id. 

On April 14, 2008, CMS identified nine additional conditions that it is considering for denial of reimbursement effective for discharges beginning in October 2008.  Id.  These were: (a) certain surgical site infections following elective procedures (e.g., total knee replacement, laparoscopic gastric bypass and gastroenterostomy, and ligation and stripping of varicose veins); (b) Legionnaires’ Disease; (c) glycemic control conditions; (d) iatrogenic pneumothorax; (e) delirium; (f) ventilator-associated pneumonia; (g) deep vein thrombosis (DVT)/pulmonary embolism (PE); (h) staphylococcus aureus septicemia; and (i) clostridium difficile-associated disease.  Id. 

On July 31, 2008, CMS announced its decision to include certain surgical site infections, glycemic control conditions, and DVT/PE following certain procedures as HACs, effective October 1, 2008.  CMS reserves the right to revisit the remaining six conditions at a later date.  Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2009 Rates et al.; CMS-1390-F; CMS-1531-IFC1; CMS-1531-IFC2; CMS-1385-F4, pp. 171-240 (July 31, 2008). 

In December 2008, the U.S. Department of Health & Human Services (DHHS) Office of Inspector General (OIG) released three reports focusing on adverse events, which the OIG defined as any harm to a hospital patient because of medical care.  See U.S. Dept. of Health & Human Svcs., Adverse Events in Hospitals: Case Study of Incidence Among Medicare Beneficiaries in Two Selected Counties, available at; Adverse Events in Hospitals: Overview of Key Issues (OEI-06-07-00470), available at; Adverse Events in Hospitals: State Reporting Systems (OEI-06-07-00471), available at

Future Direction

HAC payment provisions apply only to Inpatient Prospective Payment System (IPPS) hospitals.  At this point, critical access hospitals, long-term care hospitals, inpatient psychiatric hospitals, and inpatient rehabilitation facilities, among others, are not subject to HAC payment provisions.

CMS determined that not all conditions on the NQF list of never events could adequately be addressed by the HAC nonpayment provisions.  As a result, CMS proposed national coverage determinations (NCDs) to bar Medicare payment for three types of procedures (a) wrong surgical procedure performed on a patient; (b) surgical procedure performed on the wrong body part; and, (c) surgical procedure performed on the wrong patient.  The proposed NCDs affect reimbursement to hospitals, physicians, and any other ancillary providers involved in the procedure.

Common Areas of Concern

The concept of denying payment for never events quickly found support among public and private payors.  In November 2007, the BlueCross BlueShield Association announced that it would phase in non-payment for never events.  Cigna and WellPoint recently announced similar decisions.

Minnesota hospitals have decided that patients and health plans should not pay for any of the NQF’s 28 never events.  The Vermont Association of Hospitals and Health Systems and the Washington State Hospital Association adopted policies prohibiting billings for some or all of the NQF never events.  Robin J. Fisk, Esq., What Are Never Events And Why Do They Matter?, 21 The Health Lawyer 34, 35 (Oct. 2008).  Sixty-one Massachusetts hospitals will stop charging for nine of the NQF never events.  Nationally, approximately 1,300 hospitals intend to waive all costs directly associated with never events.

States are also considering the idea.  CMS recently sent a letter to state Medicaid directors encouraging the adoption of the CMS non-payment policies.  The New York Medicaid program announced that it will deny reimbursement for 14 never events.  Massachusetts will no longer pay for care related to the 28 NQF never events for the 1.6 million patients covered through its four state agencies.


Never events are so described because they are without justification.  See generally Robert K. Michaels, MD, MPH et al., Achieving the National Quality Forum’s Never Events Prevention of Wrong Site, Wrong Procedure, and Wrong Patient Operations, 245 Annals of Surgery, p. 526, 532 (Apr. 2007).  Tying payment to quality makes sense, and is the standard in many other industries.  Therefore, denial of payment related to never event seems to be the next logical step as healthcare purchasers increasingly demand assurance that the services they pay for are of high quality and efficiency.  Robin J. Fisk, Esq., What Are Never Events And Why Do They Matter?, 21 The Health Lawyer 34, 39 (Oct. 2008).


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