An audit by the Department of Health and Human Services Office of Inspector General (OIG) discovered that Medicare paid approximately $380 million to $400 million over six years for organs not used in Medicare-covered transplants. This finding raises questions regarding how Medicare reimburses transplant centers and whether federal guidance is in line with existing law.
Audit Findings
The discrepancy stems from a mismatch between federal statutory requirements and the guidance from the Centers for Medicare & Medicaid Services (CMS). Medicare provided reimbursement for acquiring organs that were either transplanted into non-Medicare patients or were never transplanted. Michael Ryan, a finance expert, pointed out that CMS guidance assumed organs transferred through the transplant system would be used for Medicare patients, which wasn’t always the case. Ryan highlighted the misalignment of CMS guidance and federal law, leaving taxpayers to cover the costs.
Current Concerns
The report appears amid scrutiny of federal health-care spending and Medicare’s long-term finances. Organ transplantation is a costly service under Medicare, with $3 billion reimbursed to certified transplant centers for about 39,000 organs in 2023 alone, as per the OIG. The findings suggest that current reimbursement practices may not fully adhere to federal law, potentially costing taxpayers millions.
Reimbursement Overview
Federal law allows Medicare to reimburse only for organs used in Medicare-covered transplants. However, CMS guidance instructs transplant centers to account for many organs as “Medicare usable” on the assumption they will be utilized in Medicare-covered surgeries. In practice, some organs are given to non-Medicare patients, while others remain unused.
Audit Details
From 2017 to 2022, the audit reviewed organ acquisition reimbursements and found CMS guidance conflicts with statutory requirements. Audit results from a sample of 180 organs showed Medicare paid $2.8 million for 55 organs not eligible for reimbursement. Of these, 43 organs went to non-Medicare patients, with 12 never transplanted. Consequently, Medicare paid around $380 million for unused organs in Medicare transplants over the six-year audit.
Different Perspectives
Not all agree on the waste’s significance. Drew Powers of Powers Financial Group stated that $380 million over six years translates to a 2% waste rate, which he views as efficient given the complexities of organ transplants. With $18 billion spent on transplants, $17.62 billion was utilized correctly.
Reasons Behind the Issue
Federal law restricts reimbursement to organs used in Medicare transplants, while CMS guidance assumes transferred organs will be used for Medicare beneficiaries. The audit shows this assumption isn’t always correct, leading to Medicare sharing costs for organs not benefiting its enrollees.
Next Steps
The OIG recommends CMS recover payments totaling $154,210 from two centers lacking documentation for reimbursement claims. The report also suggests CMS update its guidance so only organs transplanted into Medicare recipients are classified as “Medicare-usable.”
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