Medicare Payments for Unused Organs Raise Concerns

A federal audit has revealed that Medicare spent an estimated $380 million to $400 million over six years on organs not used in Medicare-covered transplants. This has prompted questions regarding how the program reimburses transplant centers and the alignment of existing federal guidance with the law. The Department of Health and Human Services Office of Inspector General (OIG) conducted the audit and identified a mismatch between statutory requirements and guidance from the Centers for Medicare & Medicaid Services (CMS).

The audit uncovered that Medicare reimbursed centers for acquiring organs that were either transplanted into non-Medicare patients or not used at all. Michael Ryan, a finance expert, stated that CMS guidance and federal law were not aligned, resulting in additional taxpayer costs. “Medicare was paying acquisition costs under guidance that assumed an organ would be used for a Medicare patient. Sometimes it wasn’t,” Ryan explained.

Why It Matters

This audit emerges as federal health-care spending, particularly Medicare’s finances, face increased scrutiny. Organ transplantation is one of the most costly services Medicare covers. In 2023, Medicare reimbursed centers for over $3 billion in organ acquisition costs, involving approximately 39,000 organs, according to the OIG. Current reimbursement practices might not comply with federal law, potentially costing taxpayers millions.

What To Know

Federal law permits Medicare to reimburse centers only for organs used in Medicare-covered transplants. Yet, CMS guidance instructs centers to consider many transferred organs as “Medicare usable organs” on the presumption they will be used in such procedures. In reality, some organs are transplanted into non-Medicare patients or not at all.

The audit investigated organ acquisition reimbursements from 2017 to 2022, finding CMS guidance at odds with federal statutory requirements. Michael Ryan pointed out that, “Every unnecessary dollar coming out of Medicare is money that isn’t available for actual patient care, especially in a program already under enormous financial pressure.”

What the Audit Found

Auditors examined a sample of 180 organs labeled as Medicare-usable from 12 centers, totaling $12.3 million in Medicare reimbursements. Findings include:

• Medicare paid around $2.8 million for 55 organs that didn’t meet reimbursement qualifications.
• Of those organs, 43 went to non-Medicare patients, and 12 were never transplanted.

Using these findings, the audit estimated $380 million in Medicare payments for non-Medicare organ transplants over six years. Despite this, some argue the waste level isn’t significant. Drew Powers from Powers Financial Group noted that 2% waste over six years is within reasonable efficiency.

Why Did This Happen?

OIG states federal law restricts reimbursement to organs used in Medicare-covered transplants. However, CMS guidance presumes removed and transferred organs will be used for a Medicare beneficiary, which is not always the case. This assumption led Medicare to share costs for organs not benefiting enrollees.

What Happens Next

The OIG recommends CMS direct contractors to recover $154,210 from two centers that lack documentation for certain claims. Additionally, CMS is urged to revise guidance to count only organs transplanted into Medicare enrollees as Medicare-usable.