Beginning in fiscal year 2009, Medicare will begin withholding payment for serious preventable adverse events. The announcement of this initiative has prompted significant debate in the safety community, with a past economic analysis suggesting that adverse events account for a small but significant proportion of overall Medicare hospital spending. This commentary outlines the details of the proposed policy, the estimated impact on costs, and the expected challenges in implementation. The latter include the capacity of health care systems to adequately measure when these events occur, whether evidence-based practices exist to prevent them, and how to ensure that such events were not “present on admission”—a new coding category to identify patients whose events occurred prior to hospitalization. While the authors raise caution about monitoring its effects, they applaud the efforts of this landmark policy and remain hopeful that it will ultimately drive necessary system improvements.