Medicare pays hospitals $300 million a year to treat adverse events. Unfortunately for hospitals those payments cover less than a third of the additional treatment costs for patients after an adverse events.

Despite a growing emphasis on preventing medical errors
and paying providers for high-quality care, Medicare pays hospitals a
substantial amount of money for adverse events that occur during
hospitalization, according to a new AHRQ study published in the
September/October issue of Health Affairs. The study found that
Medicare paid an additional $300 million per year, or 0.3 percent of annual
Medicare hospital spending, for five types of adverse events in hospitals in
2003. However, these extra payments covered less than one-third of the
additional costs that hospitals incurred in treating these adverse events. Under
Medicare's hospital payment system, hospitals are reimbursed a set amount for a
patient's condition or Diagnosis-Related Group (DRG), determined at admission.
The study by AHRQ's Chunliu Zhan, M.D., Ph.D., found the DRG changed only in a
small number of cases. For example, the DRG changed in only 1 percent of cases
where a patient had post-operative bloodstream infections and 10 percent for
patients who experienced post-operative bleeding. Even if the DRG doesn't
change, adverse events may result in additional costs, for example if the
patient needs to spend more time in the hospital.

You can read an abstract
of the study, "Medicare Payment for Selected Adverse Events: Building the
Business Case for Investing in Patient Safety" to get a feel for potential ROIs from patient safety improvements.