The Centers for Medicare & Medicaid Services (CMS) formed its no-pay policy based on the growing work of National Quality Forum (NQF) of “never events.” Meaning, CMS will no longer pay for certain conditions that result from what might be termed poor practice or events that should never have occurred while a patient was under the care of a healthcare professional.


The Centers for Medicare & Medicaid Services (CMS) has implemented a no-pay policy for certain conditions known as “never events.” These events refer to medical errors or adverse occurrences that should never happen during a patient’s care. The CMS policy aligns with the work of the National Quality Forum (NQF), which has identified a set of “never events” as indicators of poor practice within healthcare. Under this policy, CMS will not provide reimbursement for healthcare services related to these preventable events, intending to promote patient safety and incentivize healthcare professionals to deliver high-quality care.

Background of the No-Pay Policy

Medicare and Medicaid are federal healthcare programs providing insurance coverage to millions of Americans. CMS, an agency within the Department of Health and Human Services, administers these programs. Recognizing the need for improved patient safety and quality of care, CMS adopted the concept of never events, which had gained prominence through the work of the NQF.

The NQF is a nonprofit organization that identifies and endorses quality measures and standards for healthcare. In 2001, the NQF published its first list of 27 never events, categorizing them into seven groups: surgical, product or device, patient protection, care management, environmental, radiologic, and criminal events. These events include incidents such as wrong-site surgery, foreign objects left in the body, and medication errors resulting in patient harm.

The NQF’s work drew attention to preventable medical errors and illuminated the need for healthcare providers to adopt practices that prioritize patient safety. CMS recognized the significance of these never events and their impact on patients, leading to the implementation of the no-pay policy.

Implementation and Impact of the No-Pay Policy

CMS initially introduced the no-pay policy in 2007 as a pilot program and expanded it nationwide in 2008. Under this policy, CMS declared that it would cease reimbursement for additional expenses incurred due to never events. By refusing reimbursement, CMS aimed to hold healthcare providers accountable for delivering safe and high-quality care, ultimately reducing the occurrence of such events.

The policy applies to hospitals, ambulatory surgical centers, and other healthcare facilities participating in Medicare and Medicaid programs. These institutions are expected to report any never events to CMS, which not only triggers the no-pay provision but also allows for monitoring and evaluation of patient safety practices.

The no-pay policy has had a significant impact on the healthcare industry. Firstly, it motivated providers to establish robust preventive mechanisms and quality improvement initiatives to minimize the occurrence of never events. Hospitals implemented safety protocols, such as standardized patient identification procedures, checklists for surgical procedures, and medication reconciliation processes, to reduce the likelihood of errors.

Furthermore, healthcare providers faced financial consequences as a result of the no-pay policy. The loss of anticipated reimbursement for services related to never events led to increased financial burdens for institutions. This financial impact, combined with the potential damage to reputation and public trust, created strong incentives for healthcare providers to prioritize patient safety and prevent never events.

Evaluation and Future Implications

The no-pay policy has played a crucial role in driving improvements in patient safety and reducing the occurrence of never events. Various studies and reports have demonstrated a decline in the frequency of these events since the implementation of the policy. For instance, a study by Rosenthal et al. (2012) found a significant reduction in the incidence of surgical complications associated with CMS’s nonpayment policy for specific hospital-acquired conditions, including certain never events.

Nevertheless, the no-pay policy has also faced criticism and challenges. Certain cases have raised concerns about the fairness of refusing reimbursement in situations where a patient’s condition deteriorates unexpectedly, or when the event occurs despite the healthcare provider following best practices. Additionally, healthcare providers argue that the policy focuses on punitive measures rather than facilitating a culture of learning and improvement.

As healthcare providers continue to refine their practices and enhance patient safety, CMS may consider revisiting the no-pay policy and expanding its scope. Updating the list of considered never events and exploring additional performance-based payment models could further accelerate the adoption of safe practices and improve patient outcomes.


CMS’s implementation of the no-pay policy for never events aligns with the NQF’s efforts to address preventable medical errors and promote patient safety. The policy has incentivized healthcare providers to adopt comprehensive preventative measures and quality improvement initiatives, resulting in a reduction in the frequency of never events. However, ongoing evaluation and potential revisions are necessary to ensure the policy’s fairness and effectiveness in enhancing patient safety in the future.

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