WASHINGTON -- Medicare is adding to its do-not-pay list for hospitals two new categories of preventable conditions it won't cover, a much smaller number than it had been contemplating.

Last year, the Centers for Medicare and Medicaid Services set new ground by determining it would no longer pay extra costs for treating certain preventable conditions, referred to as "never events." An example of a never event is a transfusion with the wrong blood type.

Medicare officials announced Thursday that it will no longer pay the extra-care costs associated with treating dangerous blood clots in the leg following knee or hip-replacement. The program will also not pay extra for complications stemming from poor control of blood sugar levels.

The changes were made as part of a final rule setting payment rates for inpatient hospitals for the next fiscal year, which begins Oct. 1.

Medicare had been looking at not paying hospitals for complications stemming from seven additional preventable errors but backed off after protests from many in the medical community. Examples of those conditions include ventilator-associated pneumonia and Legionnaire's disease.

"Some of these measures require additional work, but the agency will come back to these and others each year," said Kerry Weems, the acting administrator for CMS.

Medicare's policy often sets precedent for private insurers, and many of them have already begun to adopt their own never-event policies. Dozens of states are also considering such policies for their Medicaid programs.

Medicare also said it would expand one of its never events to include surgical-site infections following certain elective procedures.

The American Medical Association, the trade association representing doctors, said the federal government's decision would harm patient care.

"We are working hard to improve quality and efficiency, but simply not paying for complications or conditions that while regrettable are not entirely preventable is not the way to do it," said Dr. J. James Rohack, president-elect of the AMA.

Medical errors, including those that result in hospital-acquired conditions, may be responsible for as many as 98,000 deaths annually, at costs of up to $29 billion, according to the Institute of Medicine, an arm of the National Academies that advises the government on medical and health issues.

Medicare officials also said payments to nursing homes will increase by about $780 million next year, a 3.4 percent increase. CMS had considered recalibrating its payments to the nursing homes to correct a previous error but delayed that change after the industry and lawmakers protested.

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