New York Medicaid Program Ceases Hospital Payments for Never Events: Parallels Other State and Federal Efforts to Promote Quality of Care

06 June 2008 Publication
Author(s): Nathaniel M. Lacktman Lawrence W. Vernaglia Judith A. Waltz

Legal News Alert: Health Care

On June 5, 2008, the New York State Department of Health issued a press release announcing that its Medicaid program will no longer reimburse hospitals on 14 “never events” — avoidable hospital complications and medical errors that are identifiable, preventable, and present serious consequences for patients. The move parallels efforts by states and the federal government to emphasize and promote patient safety and quality of care by, among other payment reforms, denying payment for certain hospital complications.

The 14 “never events” identified in New York’s policy reflect many of those targeted by national quality measurement organizations. In 2002, the National Quality Forum created the Never 27, a list of events that should never occur in a hospital. These events include surgical errors such as procedures performed on the wrong body part or wrong patient, serious medication errors, and other identifiable, preventable, and serious errors. The Institute for Healthcare Improvement found that over 40,000 patients are harmed each day as the result of medical errors. A 2008 HealthGrades report identified over 230,000 hospital inpatient deaths attributable to preventable patient safety incidents during 2004 – 2006. Those errors cost Medicare approximately $2 billion, according to the report.

New York Health Commissioner Richard F. Daines, M.D., stated, “Reform [of New York’s Medicaid hospital payment system] isn’t solely about balance sheets — quality of care and patient safety are paramount. This policy change will improve the value of Medicaid’s payment for hospital patients who receive acute care and provide further incentives for hospitals and clinicians to improve the quality and safety of inpatient care.”

New York’s Medicaid payment denial on “never events” becomes effective October 2008. Participating Medicaid hospitals must now report whether these conditions or secondary diagnoses were present on admission to the hospital or whether they occurred after admission. Medicaid will use that information to determine whether or not the hospital will be reimbursed for the cost of treating that condition.

Part of a National Trend on Quality of Care
Commissioner Daines recognized how New York’s policy reflects that of the federal government’s Medicare Program. Effective October 1, 2007, Medicare required hospitals to report on eight hospital-acquired conditions (i.e., never events). On October 1, 2008, Medicare will no longer reimburse hospitals for these eight conditions, unless the condition was present when the patient was admitted to the hospital. The list of Medicare hospital-acquired conditions will evolve and expand (two more conditions are set to be added October 1, 2008).

Last year, California enacted a law requiring hospitals to report 28 “never events” or face significant penalties and investigations.

New York Medicaid “Never Events”
The 14 non-reimbursable New York Medicaid “never events” are:

  • Surgery performed on the wrong body part
  • Surgery performed on the wrong patient
  • Wrong surgical procedure on a patient
  • Foreign object inadvertently left in patient after surgery
  • Medication error
  • Air embolism
  • Blood incompatibility
  • Patient disability from electric shock
  • Patient disability from use of contaminated drugs
  • Patient disability from wrong function of a device
  • Incidents whereby a line designated for oxygen intended for patient is wrong item or contaminated
  • Patient disability from burns
  • Patient disability from use of restraints or bedrails
  • Patient disability from failure to identify and treat hyperbilirubinemia (bilirubin in blood) in newborns

New York’s Department of Health will continually review this list of “never events,” which will be modified and expanded over time.

You can access a copy of the New York Department of Health Press Release at

You can access a copy of the New York Office of Medicaid Inspector General Work Plan at

Legal News Alert is part of our ongoing commitment to providing up-to-the minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals: 

Janice A. Anderson
Chicago, Illinois

Nathaniel M. Lacktman
Tampa, Florida

Lawrence W. Vernaglia
Boston, Massachusetts

Cheryl L. Wagonhurst
Los Angeles,  California

Judith A. Waltz
San Francisco, California

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