Waste of the Day: Medicare Paid for Wrong Organs

Medicare spent an estimated $380 million acquiring human organs that were either transplanted into patients without Medicare or never transplanted at all, according to a new Department of Health and Human Services inspector general audit.

What’s wrong with the Medicare organ transplant reimbursement system

Key facts: Medicare reimburses hospitals for removing kidneys, hearts, lungs and other organs from donors after they die. Federal law says Medicare should only bear those costs when the organ is used in a Medicare-covered transplant.

But decades-old Centers for Medicare & Medicaid Services guidance tells hospitals to assume that any organ they send to a transplant center will eventually go to a Medicare patient — without checking whether that actually happens.

Auditors sampled 180 cases of organs that hospitals reported as Medicare-eligible from 2017 to 2022. Fifty-five were not used in Medicare-covered transplants, even though Medicare paid $2.8 million for them.

Of those, 43 went to patients whose transplants were not covered by Medicare. Another 11 were discarded or used for research. One supposed organ donor was still alive.

Based on the sample, the inspector general estimated Medicare spent $379.9 million on organs not used for Medicare patients during the six-year period.

CMS already identified the loophole in 2021 and proposed changing its rules. It abandoned the change after hospitals warned they could lose revenue.

Auditors are not recommending that Medicare recover the $380 million because hospitals generally followed CMS guidance. They did recommend recovering another $154,210 from two hospitals that could not document five organs they claimed were Medicare-eligible.

The system has been broken for years

Background: Medicare’s organ-acquisition costs increased 160% over 12 years, from $1.3 billion in 2011 to $3.3 billion in 2023. The number of organs rose only 77%.

Summary: Medicare knew its rules were making taxpayers subsidize transplants for other patients. Five years later, the costly loophole is still on life support.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.