Organ transplantation in the United States is probably the most intensely regulated of medical disciplines. Congress creates relevant law and publishes the text in the United States Code of Federal Regulations and the Federal Register. The

HHS then develops and disseminates detailed rules for implementing transplant law via three government publications: Commerce Clearinghouse Medicare and Medicaid Guide, Medicare Intermediary Manual, and Medicare Hospital Manual. The HCFA contracts with intermediaries to manage its day to day business with hospitals, physicians and other service providers. The intermediaries, usually large insurance companies, exercise considerable discretion as they interpret the Medicare Intermediary Manual. For example, specific regulations may be interpreted differently by intermediaries in various parts of the country. Successive intermediaries that contract for the same locale may also differ in their interpretation of the Medicare Intermediary Manual.

In order for a hospital to bill Medicare for transplant services it must first apply for HCFA certification for each organ it plans to transplant. If approved, the hospital then becomes a certified transplant center (CTC) for those organs. Certified transplant centers must apply for membership in the United States Organ Procurement and Transplant Network, which has been administered for the Department of Health and Human Services under contract by the United Network for Organ Sharing (UNOS) since 1986. UNOS bylaws interpret Federal Code with respect to personnel, facilities and other resources required to operate a certified transplant center. The transplant center must also establish working relationships with the HCFA certified Organ Procurement Organization (OPO) in its area.3 HCFA recognizes approximately 60 OPO's (organ banks) throughout the county; their service areas do not overlap.

Clearly the hospital "owns" and is responsible for administration and operation of transplant programs. It is the hospital that is certified by Medicare; the hospital staff and the affiliated transplant physicians and surgeons constitute the hospital's transplant team and program. As the owner of its transplant programs, the hospital incurs obligations, many of which are executed by its surgeons and physicians. Because most of the obligations are directly or indirectly related to organ acquisition, HCFA permits the hospital to compensate surgeons and physicians for their role and recover its compensation costs through charges against its acquisition cost center for each organ.4

Examples of certified centers' obligations are listed below. Surgeons and physicians who direct transplant programs play a major role in helping the hospital meet these obligations.3

• Participate in governance of UNOS and creation of organ allocation bylaws.

• Adhere to constantly evolving bylaws of UNOS, which control all aspects of cadaveric organ allocation through complex algorithms.

• Interface with UNOS national computerized waiting list via all HCFA certified OPOS.

• Participate in governance and donor organ related activities of the local OPO through organ specific committee structures to maximize organ procurement and ensure equitable sharing of organs. Provide teams of surgeons and surgical technicians to procure (harvest) cadaver organs.

• Ensure equal access to the public of organs (a scarce national resource) as required under Title VI of the Civil Rights Act of 1964 (no person shall be subjected to discrimination on the basis of race, color, or national origin under any program or activity that receives Federal financial assistance). Because organ transplant services are unique and concentrated in fewer than 300 hospitals nationwide, transplant centers must be proactive in educating the public and physicians about transplantation so that equal access to it is meaningful.

• Develop and maintain organ specific lists of potential recipients who will wait for available cadaver organs. Evaluation of potential recipients is an on-going labor intensive process that stretches from first contact through sequential reevaluation as the candidate's health and priority status change between listing and transplantation. Extensive data are maintained so that queries from UNOS, organ banks and the Inspector General's office, with respect to equal access, can be answered.

• Transplant centers must evaluate potential living donors who might provide an intact organ or part of an organ. Evaluation of living donors is at least as complex as it is for recipients. Moreover, several potential donors are usually evaluated for each candidate who actually qualifies and proceeds to donation.

• Provide complex long-term posttransplant outpatient care. Management of immunosuppression and the array of problems associated with organ transplantation require that the transplant center be the primary provider of outpatient care for the first posttransplant year and secondary provider thereafter. Visits are frequent during the first few months, interspersed with laboratory tests performed at other hospitals and faxed to the transplant center. Recipients must be able to reach outpatient nurses by telepage at anytime. UNOS requires detailed reports from the recipient's medical record and the transplant center's databases as long as either the transplanted organ or the recipient survives. The reports required by UNOS include the candidate registration report (listing), the recipient registration report at the time of transplant (which includes data about the donor, the operative procedure, and the entire inpatient stay), and posttransplant follow-up reports at 6 months, the 1st year, and yearly thereafter.

• Appoint a Medical Director to supervise each specific organ transplant program. The physician or surgeon is responsible for planning, organizing, conducting, and directing the transplant center.5

Of the six organs transplanted (heart, lung, kidney, pancreas, liver and intestine) only kidney transplantation is an entitlement under Medicare via the End Stage Renal Disease amendment of the Social Security Act in 1972.1 As successful transplantation of the other organs evolved, Congress declined to amend the Social Security Act to specifically cover services for end stage heart, lung and liver disease or for diabetes and intestinal failure. Nevertheless, potential recipients of non-renal organs may become eligible for Medicare via two separate provisions of the Social Security Act for the aged and disabled. To qualify under these provi sions the candidate must be at least 65 years of age or fully disabled for at least 24 months. In addition, insulin dependent diabetes qualifies potential recipients for Medicare coverage of pancreas transplantation if it occurs at the same time as or after kidney transplantation in a recipient who was eligible for Medicare at the time of kidney transplantation.

When Medicare introduced prospective global reimbursement of hospitals for inpatient care by diagnosis related grouping (DRG), each DRG with its own dollar value, it instructed transplant centers to separate acquisition costs for both cadaveric and living donor organs from the cost of inpatient care. Organ acquisition cost centers (OACC's) were created outside the transplant DRG in each hospital for each transplanted organ. The organ cost centers were set up so as to compensate the hospital for reasonable expenses of organ acquisition as well as evaluation, selection, maintenance and reevaluation of recipient candidates on waiting lists until transplantation occurred.6 Examples of appropriate charges against acquisition cost centers included in the Code of Federal Regulations are:

• donor and recipient evaluation;

• other costs associated with excising organs such as general routine and special care services for the donor;

• operating room and other inpatient ancillary services applicable to the donor;

• preservation and perfusion costs;

• charges for registration of recipient with a transplant registry;

• surgeon's fees for excising cadaver organs;

• transportation;

• costs of organs acquired from other providers or organ procurement organizations;

• hospital costs normally classified as outpatient cost applicable to organ excisions (services include donor and donee tissue typing, work-up and related services furnished prior to admission);

• costs of services applicable to organ excisions which are rendered by residents and interns not in approved teaching programs;

• all pre-admission physician services, such as laboratory, electro-encepha-lography, and surgeon fees for cadaver excisions, applicable to organ excisions including the costs of physician's services.

For kidney transplantation, the full cost of organ acquisition is approximately twice the full cost of the inpatient transplant stay. When Medicare is the payor, the hospital is compensated for the inpatient stay through the Part A DRG case rate. Organ acquisition is treated as a full cost "pass through". If a commercial payor is primary, both the inpatient charge and the standard acquisition charge are submitted to the carrier. Depending on the wording of the contract between the transplant center and the commercial payor, Medicare might become the secondary payor for any portion of the inpatient care or standard acquisition charge denied by the commercial payor (this assumes that the recipient is eligible for Medicare benefits). Through a process referred to as "coordination of benefits" HCFA intends that its allowable charges and allowable reimbursement will determine its payment to hospitals and physicians when Medicare is the secondary payor.

For pancreas and liver transplantation, the inpatient costs represent a larger fraction of total cost than is true for kidney transplantation; the inpatient liver transplant costs usually exceed the standard acquisition cost for a liver. Coordination of benefits with Medicare as a secondary payor is possible for the pancreas and liver as it is for kidney transplantation.

Many commercial health insurers "exclude" organ transplantation from their general policies; the employer client must then contract separately with a reinsurance company that specializes in transplant insurance. Unfortunately for transplant centers most transplant reinsurance networks sell global managed care contracts that fail to identify inpatient care and organ acquisition coverage as separate components of the benefit package in the same way that Medicare and HCFA accounting practices do. By disregarding HCFA accounting practices transplant insurers compromise the transplant center's option to turn to Medicare for reimbursement via coordination of benefits for the full cost of organ acquisition.

Surgeons and physicians bill through part B Medicare for their services to transplant recipients during the inpatient stay and are paid 80 percent of the fee allowed by Medicare. When Medicare is the secondary payor to commercial insurance that pays less than 80% of Medicare allowable, Medicare may be billed for the difference if that possibility is not precluded by terms of the contract between the physician and the commercial payor.

When the organ is removed from a living donor, surgeons and physicians bill the recipient's part B Medicare for their services to the donor and are paid at 100% of Medicare allowable fees. If a commercial payor is primary it should be contacted prior to transplantation to determine whether it will accept separate charges from physicians and surgeons for care of the living donor. Some commercial insurers require that physician's bills be submitted with the hospital's standard acquisition charge. If the recipients' commercial payor refuses altogether to pay for physician's services to the living donor, the transplant hospital becomes payor of last resort by charging those services to its organ acquisition cost center.

In most transplant centers those physicians and surgeons most directly involved in evaluating potential donors and recipients, maintaining ready tests, organ procurement and overall direction of transplant centers are largely unaware that compensation for many of their daily activities is appropriately charged to the hospital's organ acquisition cost centers. Transplant hospitals rarely solicit charges from transplant surgeons and physicians; it is incumbent on physicians to understand Medicare rules concerning charges against organ acquisition cost centers and to initiate the process of billing the hospital appropriately for their services to organ acquisitions.

Physicians and surgeons should be aware that organ acquisition cost centers have four distinct components:

1. Normal operating costs associated with program operations;

a. space, phone, supplies, pagers, answering services, utilities, computers, maintenance, computers, pre-transplant patient records, storage;

b. personnel costs of clerical and professional staff, financial and insurance counselors, social service, nurse coordinators. (salary and benefits such as travel reimbursement for relevant meetings, continuing education, seminars, memberships, dues and subscriptions);

c. program direction and administration;

d. UNOS recipient registration charges;

e. medical center overhead;

f. educational materials, presentations.

2. Medical consultation/evaluation and testing service costs associated with pre-transplant evaluation of both potential recipients and potential living donors:

a. dental evaluation;

b. psychological evaluation;

c. multidisciplinary assessment conferences;

d. tissue typing and other assessment of immunological activity, cross-matches;

e. outpatient services related to living donor after donation.

3. Costs associated with maintaining the evaluated patient/potential recipient on the waiting list such as monitoring to determine whether he remains suitable for transplant:

a. exchange of information with potential recipient's physicians;

b. laboratory tests and x-rays;

c. interval history and physical examination;

d. specialty consultations.

4. Costs associated with acquiring organs for transplant (cadaver donor and living donor):

a. charges by OPOs;

b. educational materials concerning transplantation for use with potential recipients and living donors;

c. preservation, perfusion and organ preparation laboratory.

The Federal Code permits compensating transplant centers for all reasonable expenses of organ acquisition.6 Aggregate acquisition expenses are fully reimbursed as a pass through outside the DRG prospective payment system. Hospital administrators should be receptive to compensating well-articulated, reasonable costs of physicians and surgeons as allowed by law. In return, transplant physicians should work closely with the hospital's Chief Financial Officer and staff to keep the overall transplant program's full cost and reimbursement in balance.

Complex transplant centers cannot remain fiscally sound without rigorous participation by the physicians as listed below:

• Practice efficient exemplary care based on sound medical decisions.

• Develop critical care pathways for patients and efficient protocols and systems for pre-and post-transplant care.

• Determine full cost of critical care pathways and reassess their cost-effectiveness regularly.

• Maintain extensive outcome data and assist hospital in negotiating payor contracts that will cover full costs of care.

Analysis of full costs and expected reimbursement on a quarterly basis should track pre-transplant care, the inpatient transplant hospitalization, and post-operative outpatient care for each type of organ transplanted; data should also be analyzed by payor to identify those commercial insurers that reimburse an unreasonably low fraction of full costs.

Transplant centers in which the hospital and its physicians/surgeons are equally concerned about the other's fiscal integrity will thrive and maintain the privilege of providing high quality organ transplant services to the American public.


This article is reprinted from Graft 2001; Vol. 4, No. 6:398-402, with permission from the authors.

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