Centers for Medicare and Medicaid Services' "never events": an analysis and recommendations to hospitals

In August 2007, the Centers for Medicare and Medicaid Services (CMS) released the inpatient prospective payment system for fiscal year 2008 prohibiting reimbursement for 8 hospital-acquired conditions. The changes were mandated by section 5001(c) of the Deficit Reduction Act of 2005. Beginning on October 1, 2008, hospitals will no longer receive higher payments for patients with these conditions, termed never events. For fiscal year 2009, a total of 9 additional events are proposed. This initiative signals a new reimbursement strategy of aligning payment to patient outcomes and represents a response to government and private entities' call for hospital accountability for health care quality. This article identifies key events leading to CMS' ruling regarding nonpayment for hospital-acquired conditions, outlines the main points of interest in CMS' new rules, identifies limitations and concerns with this policy, and suggests measures that each hospital should voluntarily take to comply with 2008 and 2009 deadlines.