Blog, Reimbursement, The Hospital Finance Podcast®

Medicare Organ Acquisition Reimbursement [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Jimmy Mendez, Senior Manager at BESLER, to discuss Medicare Organ Acquisition Reimbursement.

Learn how to listen to The Hospital Finance Podcast on your mobile device.


Additional resource: To learn about the issues hospitals can face with compliance during organ acquisition Medicare cost reporting, listen to our podcast episode with BESLER’s Jimmy Mendez titled “Compliance Issues Related To Organ Acquisition”


Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast

Today, I’m joined by Jimmy Mendez who is a Senior Manager on our Reimbursement Services Team here at BESLER. And he’s joined us to discuss organ acquisition Medicare reimbursement. This is a topic that Jimmy is a specialist in. And we welcome him to the program!

Jimmy Mendez: Thank you!

Mike: So Jimmy, first, why don’t you start off by telling us what organ acquisition reimbursement is.

Jimmy: Well, Mike, organ acquisition is a “pass through” costs reimbursement on the Medicare cost report that, in general, represents the necessary cost attributable to acquiring an organ and preparing the potential donor and transplant recipient for organ transplantation. The most common organs are kidney, heart, liver, lungs and the pancreas.

Mike: So Jimmy, what are some examples of these costs?

Jimmy: Well, Mike, there’s a variety of them. It includes stuff such as all the tissue typing and cross-match services, including services furnished by independent labs, living donor and recipient evaluations, and any related diagnostic testing, fees to register the patient with UNOS (which is an acronym for United Network of Organ  Sharing), operating room and other inpatient ancillary services applicable to the donor in a living donor transplant event.

It includes surgeon fees to excise the diseased donor’s organ. It also includes the cost of acquiring the actual organ, the cost of personnel in your facility engaged in pre-transplant activity to include salaries, benefits and other related administrative costs; other overhead costs such as depreciation, housekeeping, operation of plants, services or areas that are involved in pre-transplant activities; in addition, the preservation and perfusion costs of the organs, also the cost of transporting the organs to and from the transplant hospital.

Those are some examples.

Mike: And Jimmy, which hospitals are eligible for organ acquisition reimbursement?

Jimmy: Well, these would be hospitals with transplant centers that are certified by CMS. A hospital may transplant a variety of solid organs, but only those organs belonging to a certified program are eligible.

In addition, they must be members of the OPTN which stands for Organ Procurement and Transplantation Network. And CMS contracts with UNOS to administer the OPTN. CMS relies on UNOS for notification of program non-compliance with volume and quality outcome which may result in losing your certification status.

Mike: And how many hospitals across the country have programs certified for one or more organ types?

Jimmy: Right now, there are over 200—I believe it’s closer to 250—that may have at least one organ program certified.

Mike: What would you say is the most common compliance issue for hospitals receiving Medicare reimbursement?

Jimmy: In my experience, the most common compliance issue relates to billing. CMS regulations require that hospitals refrain from billing Medicare for organ acquisition services provided to Medicare beneficiaries. Instead, the hospital is required to claim these costs related to these services on the Medicare cost report for pass through reimbursement.

It is not uncommon to discover hospitals inappropriately billed for these services, and in addition, fail to claim the cost as organ acquisition cost.

Mike: It is a pretty intricate issue. So can you talk about an area where someone may think an issue is non-compliant, but in reality, they are compliant or could be compliant?

Jimmy: Yes. From time to time, compliance hotlines and compliance officers will receive complaints that hospitals are including non-Medicare organ acquisition costs on their Medicare Cost Report. They erroneously believe that Medicare will be reimbursing the hospital for these costs. In fact, hospitals should include all organ acquisition cost regardless of payer.

The reason for this is that Medicare, once a hospital establishes their total organ acquisition cost, will apply a Medicare ratio and only reimburse for Medicare’s share of the costs.

Mike: And so far, we’ve focused on organ acquisition, but what are the various ways Medicare reimburses hospitals with certified transplant programs?

Jimmy: Well, Mike, there are basically three ways.

For the transplant event, and then related inpatient stay of the recipient, the hospital will get reimbursed just like any other inpatient, via the MS-DRG as part of the prospective payment system.

Once the transplant event takes place and the patient is discharged, the subsequent outpatient services or post-transplant services will be reimbursed via APCs again as the prospective payment system.

Organ acquisition cost for Medicare is only reimbursed via the cost report as a pass through payment.

Mike: Previously, you mentioned that all organ acquisition cost should be captured on the Medicare cost report because Medicare applies a Medicare ratio and only reimburses Medicare’s portion of the costs. What is the Medicare ratio?

Jimmy: Well, it’s a simple formula. What the CMS requires hospitals to do is to calculate it based on dividing your Medicare usable organs by your total usable organs.

Mike: Okay. And what is considered by Medicare a “usable” organ?

Jimmy: Well, in Medicare, usable organ includes the following. It would be the number of organs that were transplanted where Medicare was the primary insurer, plus the number of cadaver donor organs recovered in the hospital and procured by the OPO (which stands for the Organ Procurement Organization) or organs that were procured and sent to another hospital or the transplant center.

In addition, it includes, or may include, the number of organs that were transplanted for Medicare was secondarily liable on the recipient’s account when a variety of other requirements are met.

Please note though that managed care Medicare patients are not considered a Medicare usable organ. This is only for traditional Medicare. Also, in general, discarded organs and organs used for research are also excluded.

Mike: So, which organs then are included in the total usable organ count?

Jimmy: So, in the denominator of the Medicare ratio, you will have your total usable organ count. And this includes the number of organs that were transplanted during the fiscal year, plus the number of cadaver donor organs recovered in the hospital and procured by the organ procurement organization or sent to other centers in paired exchanges.

In general, discarded organs are excluded from the total usable organ count.

Mike: And subsequent to the determination of Medicare’s share of the organ acquisition costs, are there any other modifications made to the reimbursable amount?

Jimmy: Yes. Once you’ve identified your total pool of organ acquisition costs that includes all payers, then you apply the Medicare ratio to identify Medicare’s share of the organ acquisition cost. Once you get to that point, then there’s an offset that needs to occur. And revenues generated from the selling of organs to OPOs and to other transplant centers must be offset against the Medicare organ acquisition cost.

In addition, under certain circumstances where Medicare secondary accounts have been identified as Medicare organs, an additional offset is required related to a portion of the primary insurance payment.

Mike: Jimmy is our resident expert on these very complex issues. And if you’d like to know more about organ acquisition Medicare reimbursement and how it may affect your hospital, you can reach out to Jimmy directly at jmendez@besler.com.

Jimmy, thanks so much for spending some time with us today on the Hospital Finance Podcast.

Jimmy: Thank you for having me.


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