Blog, Reimbursement, The Hospital Finance Podcast®

Organ Acquisition Overview [PODCAST]

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In this episode, we’re pleased to welcome back Cody Bales, Senior Reimbursement Consultant at BESLER, to discuss organ acquisition reimbursement on the Medicare Cost Report.

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Highlights of this episode include:

  • Why is organ acquisition important?
  • Types of expenses that are considered allowable for cost-based reimbursement
  • Worksheet D-4
  • How the Medicare ratio is calculated
  • Recent updates for organ acquisition

Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back Cody Bales, a Senior Reimbursement Consultant here at BESLER. In this episode, we’re going to discuss organ acquisition. Thank you so much for joining us today, Cody.

Cody Bales: Thanks, Kelly. Good to be with you again.

Kelly: And we’re just going to jump right into it today. Why is organ acquisition important in terms of Medicare reimbursement?

Cody: Reporting of organ transplants and acquisition costs is really an extremely important area for hospital reimbursement. So, hospitals that are certified by CMS as certified transplant centers, sometimes just referred to as CTCs or TCs, are eligible to receive pass-through reimbursement from Medicare for the cost of acquiring organs for transplant. Specifically, hospitals will receive cost-based reimbursement for the Medicare portion of total acquisition cost. This is inclusive of several types of organs: kidney, heart, liver, etc. And it’s also important to understand that the amount of payment that hospitals receive for acquisition in a given year is calculated and paid through the annual Medicare cost report, which is to say that the reimbursement happens entirely separate from the facility’s regular IPPS payments. Again, this is specifically for the organ acquisition cost. The costs associated with the actual transplant are still reimbursed separately through IPPS.

Kelly: Okay, and what types of expenses are considered allowable for cost-based reimbursement?

Cody: Broadly speaking, any costs that are incurred which can be attributed to preparing either the potential donor or the transplant recipient for the transplant are considered allowable for organ acquisition costs. More specifically, this would include costs associated with determining the match between the donor and the recipient, so tissue typing, cross-match services that are performed in labs, evaluations of the donor and the potential recipient, fees to register the patient for waitlisting, etc., and also costs incurred to excise and preserve organs. And then, of course, the cost of purchased organs when they’re acquired from an OPO. That would be includible. The cost of transporting organs to and from the facility. And then, on top of these items, you also have the actual transplant department, or maybe more than one department within the organization where you have those dedicated transplant personnel and then the salaries and office expenses and all of that sort of thing. So, the portion of that group which can be attributed to acquisition or maybe pre-transplant functions are considered allowable costs.

Kelly: That makes sense. Thank you. And when should hospitals be reviewing and completing Worksheet D-4?

Cody: It’s important to have a handle on, I’d say, the patient populations and the types of days and charges that need to be reported on Worksheet D-4 to really calculate the proper cost for reimbursement. There are basically three groups to keep in mind for reporting for D-4. The first group is the services provided for the evaluation and management phase of the transplant process. Essentially, all of the services that are provided in the pre-transplant timeframe leading up to, basically, the admission of the patient to the hospital for transplant. So these services should be reported on the appropriate lines on Worksheet D-4 and should include services for, again, both the donor and the recipient. Since we’re talking pre-transplant for these types of services, this is all considered acquisition. And the second group, then, is more specifically for the donor and includes all of the hospital services necessary to obtain the organ from the patient. So, this would, of course, include the operating room charges, but also charges for the hospital bed and the room, drugs, and supplies, essentially, everything the hospital provides for that organ donor and their stay at the hospital.

The third group is to capture the days and charges associated with excising an organ from a deceased donor, including the services that would be performed to keep the organs viable and usable for an eventual transplant, and these organs are then generally sent to the OPO. And then, in addition to the reporting of days and charges for these three groups of services, Worksheet D-4 will add in the direct, as it’s called, organ acquisition cost, which would include the transplant department that I discussed and the major cost of purchasing of the organs and that kind of thing. And then, finally, you have the Medicare ratio which the facility must calculate and report.

Kelly: Those are some great tips, Cody. Thank you. How is the Medicare ratio calculated?

Cody: The idea behind the Medicare ratio is to determine Medicare’s share of the total acquisition cost that will be due to or reimbursable to the hospital from Medicare, so that requires a Medicare to total calculation. Total organs would include organs purchased for transplant as well as organs excised at the facility, excluding any organs that are deemed not usable for transplant. Medicare organs would include organs which are sent either outside the facility to providers or to the OPO as well as organs transplanted at the facility for Medicare beneficiaries. And as of January 1st, 2021, hospitals can also include in the count organs that are transplanted from Medicare Advantage patients and that is specifically for kidneys only. Additionally, there are certain circumstances where you would count the organ as a Medicare organ for the ratio when the patient has Medicare as a secondary insurance. These situations involve specific calculations that have to be done and certain criteria that have to be met, basically involving Medicare’s potential payment liability for these patients.

Kelly: Thank you for that information, Cody. Are there any recent updates for organ acquisition that hospitals should be aware of?

Cody: There have been proposed changes which would significantly affect how Medicare organs are counted for the purpose of the Medicare ratio, but otherwise, nothing too significant recently, as of today anyway. There have, however, been some important recent developments for stem cell transplants. So the acquisition costs for these types of transplants are now going to be eligible for cost-based reimbursement, much in the same way as solid organs have been for years. And hospitals that are performing stem cell transplants, then, should definitely be going through the proper steps to get this new cost reimbursement. Much of this, again, is very similar to what is required for the process for solid organs as far as properly accounting for acquisition costs, basically identifying the pre-transplant functions that are being performed by those dedicated transplant departments. And there are, of course, some differences in the way hospitals calculate and report the cost for the non-solid organs, which will be on the new Worksheet D-6 of the Medicare cost report. But the concept of the cost-based reimbursement and the allocation and coming up with the acquisition piece should be very familiar for organizations that are already out there doing the solid organ transplants.

Kelly: Again, some great information on this topic. Thank you, and thank you so much for joining us today, Cody. We really appreciate it.

Cody: Sure, absolutely.

Kelly: Thank you so much for joining us today, Cody.

Cody: Yeah, Kelly, of course. Thanks for having me.

Kelly: And we appreciate you all joining us for this episode of the Hospital Finance Podcast. Until next time.

[music] This concludes today’s episode of the Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit The Hospital Finance Podcast is a production of BESLER, SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.


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