This paper estimates the excess cost of hospital inpatient care due to adverse safety events in the US Department of Veterans Affairs (VA) hospitals during fiscal year 2007. We measured adverse events according to the Patient Safety Indicator (PSI) algorithms of the Agency for Healthcare Research and Quality. Patient level cost regression analyses were performed using generalized linear modeling techniques. Accounting for the heavily skewed distribution of costs among patients having adverse safety events, results suggested that the excess cost of nine different PSIs for VA patients are much higher than previously estimated. We tested sensitivity of results to whether costs were measured by VA's Decision Support System (DSS) that uses local costs of specific inputs, or by the average costing system developed by VA's Health Economics Resource Center. DSS costing appeared to better characterize the high cost patients. Published in 2010 by John Wiley & Sons, Ltd.