1. National Trends in Organ Acquisition Costs Brigitte Sullivan Administrative Director The Johns Hopkins Comprehensive Transplant Center

2. Today Brief History of Organ Acquisition Audit Experience Available Benchmarking Data

3. Unique Reimbursement for Transplantation Medicare reimburses hospitals for organ transplants by paying a DRG for the hospitalization Medicare also pays hospitals for transplant services based on the Organ Acquisition Costs reported on the hospital’s Medicare Cost Report Transplant is one of the few areas within a Hospital that is reimbursed on costs through the MCR Medicare is a major revenue stream for transplant hospitals and programs ($4.7M annual)

4. Medicare Organ Acquisition Organ acquisition costs include: –OPO fees –Support costs: transplant coordinators, transplant database, financial counselors –Pre-transplant evaluation services –Deceased donor and living donor hospital expenses –Share of hospital overhead Cost reimbursed: –Medicare usable organs/total usable organs x total organ acquisition costs

5. OAC Timeline 1974 – Medicare Reimbursement for OAC based on reasonable cost basis. CTC establishes 1 SAC for DD and 1 for LD, after the close of the FY, the charges are aligned with actual costs, and any necessary adjustments are made 1983 – HCFA establishes Medicare PPS, plans to include OAC in DRG; however decides to leave cost reimbursement because of the “unique characteristics of organ procurement activities and the desirability of maintaining an adequate supply of kidneys.” 1987 OIG Report “Organ Acquisition Costs: An Overview” –Estimated $52.3M spent on kidney SAC in 1985 ($20-30K per transplant) –Recommended Demonstration Project & that OAC incorporated into DRG for kidney transplant –FI’s conduct priority audits of OAC

6. OAC Timeline 1991 OIG Report “Addressing Increased Organ Acquisition Costs” - HCFA felt not enough $ to invest HCFA resources in recommendations 2002 – CA whistleblower case - $6.2M Medicare refund and 2004 OIG push to audit OAC 2006 – OIG Publishes Results of Audits done in 2005 –Recommended that “CMS consider the results of our 11 audits in prioritizing areas to be evaluated in annual audits by the fiscal intermediaries.”

7. OIG Audit Results $124M not audited: Medicare eligibility of beneficiaries, Inpatient days claimed, Indirect cost pools on B Worksheets

8. Unallowable/Unsupported Costs Lacked effort reporting for salaries & med director fees pre/post Did not use reasonable compensation equivalent limits on medical directors’ compensation Lacked a method to accumulate allocation statistics on floor space

9. Common Error: Did Not Include All Direct Costs Total Costs in OAC Total Transplanted Organs Medicare Transplants Medicare Ratio Medicare Payment Does not Include Non-Medicare Patient Costs $ 1,000,000502550% $ 500,000 Does Include non-Medicare Patient Costs $ 2,500,000502550% $ 1,250,000

10. OIG Audits Officials at the Hospitals either asserted that they lacked awareness and understanding of Medicare requirements for claiming OAC, or that they had inadvertently claimed costs that were not allowable OIG audits are instructive for both risk areas and potential cost recoveries

11. What Do Organ Acquisition Costs Look Like?

12. Milliman & Robertson *“Procurement…includes donated organ recovery services, which may include retrieval, preservation, transportation, and other acquisition costs…we based procurement charge estimates on our judgment and…data from Washington hospitals, trended to [the current year] and normalized to a national average basis using Milliman area relativity research.” – M&R 2005 report

13. Payor Practices Global/case rates $25K to $50K OA Caps Payment of Invoice from OPO No coverage

14. Organ Procurement Organization Kidney Standard Acquisition Charges Source: Medicare Fiscal Intermediaries for OPOs - Trailblazer <2009, Cahaba >2009

15. HCRIS Data Hospital Cost Report Information System All Medicare Cost Reports in the U.S. Publicly Available

16. Definitions CTC = Certified Transplant Center Hospital = The institution that performs transplants. One Hospital can have multiple CTCs Each Cost Report is for one Hospital. There are multiple CTCs defined on a given Report, through completion of the D-6 Worksheets (one D-6=one CTC)

17. Hospitals with CTC(s) in Dataset

18. CTCs in Dataset

19. 2009 Detailed Analysis UNOSHCRIS % Data in Data Unique Hospitals performing at least 1 Transplant in 2009253234 92% Total Organs Transplanted in 200928,45928,808 101%

20. Reporting Variability Total Costs Per Usable Organ OrganCTCs 2009 Total Cost Per Usable Organ Average Standard Deviation MinimumMaximum Heart107$ 79,328$ 38,382$ 23,249 $ 321,118 Intestine9$ 96,434$ 67,894$ 45,528 $ 267,297 Kidney226$ 50,694 $ 27,584$ 10,882 $ 249,371 Liver113$ 63,273$ 33,563$ 20,873 $ 285,002 Lung53$ 65,328$ 32,962$ 21,165 $ 177,878 Pancreas120$ 44,282$ 41,667$ 992 $ 423,594 Total628$ 58,539$ 40,564$ 992 $ 423,594

21. FY2009 Cost Report D-6, Part III Worksheet for All Organ Types

22. FY2009 Cost Report D-6, Part IV Worksheet for All Organ Types

23. Line 51 “Direct Organ Acquisition” = Direct Costs from Worksheet A + Indirect Costs from Worksheet B

24. Direct Costs Direct costs that are directly related to organ acquisition and are accumulated in the organ acquisition cost centers on Worksheet A

25. Guidance from Medicare: Reporting Salary The costs associated with preservation technicians, transplant coordinators, and administrators, etc. must be allocated among the types of organs procured The provider must establish a unit cost per organ by dividing the indirect cost by the total number of organs retrieved This unit cost is multiplied by each organ obtained

26. FY09 Salary Reported on Worksheet A

27. Guidance From Medicare: Reporting Other Direct Costs Fees for physician services (preadmission for transplant donor and recipient tissue-typing and all tissue-typing services performed on cadaveric donors); Cost for [organs] acquired from other providers or [organ] procurement organizations; Transportation costs of [organs]; [Organ] recipient registration fees; Surgeons' fees for excising cadaveric donor [organs]; and Tissue-typing services furnished by independent laboratories

28. Other Direct Organ Acquisition Costs from Worksheet A 2009 OPO Kidney SAC = $27,543

29. Indirect Costs Transplant center overhead costs that are accumulated in general service cost centers and allocated through the cost report “step-down” process on Worksheet B Include staff fringe benefits based on salaries, space costs (depreciation, plant operations, utilities, etc) based on SQF, equipment depreciation, social services, general administration based on accumulated cost, data processing, and other costs as appropriate and consistent with the overall allocation process.

30. Worksheet B

31. Allocation of Worksheet B Costs

33. Organ Acquisition Day An organ acquisition day is an inpatient day of care rendered to: an organ donor patient who is hospitalized for the surgical removal of an organ for transplant a cadaver in the inpatient routine service area for the purpose of surgical removal of organ(s) for transplant

34. FY09 Inpatient and Routine Ancillary Costs Per Day and Per Organ

35. Medicare Usable Organs (from Medicare Provider Reimbursement Manual) Equals total usable organs minus organs sent to military hospitals, to veterans’ hospitals, outside the United States, and organs transplanted into non-Medicare beneficiaries. Include organs that had partial payments by a primary insurance payer in addition to Medicare. Do not include organs that were totally paid by primary insurance other than Medicare, as they are non-Medicare. Do not include organs procured from a non-certified OPO.

36. FY2009 Cost Report D-6, Part IV Worksheet for All Organ Types

37. Total revenue applicable to organs furnished to other providers, to OPOs and others, and for organs transplanted into non- Medicare patients. If organs are transplanted into non-Medicare patients who are not liable for payment on a charge basis, and as such there is no revenue applicable to the related organ acquisitions, the amount entered on line 58 must also include an amount representing the acquisition cost of the organs transplanted into such patients. Determine this amount by multiplying the average cost of organ acquisition by the number of organs transplanted into non- Medicare patients who are not liable for payment on a charge basis. Revenue for Organs Sold (from Medicare Provider Reimbursement Manual)

38. FY09 Reported Organ Revenue Hospitals Reporting >=1 Excised Organ Hospitals That Reported % Hospitals in Dataset Excised Organs Reported 22194%14,226 Hospitals Reporting Revenue for Organs Transplanted Hospitals That Reported % Hospitals in Dataset Transplanted Organs Reported % Total Organs Transplanted Reported by All Hospitals Total Revenue Reported Rev Per Organ Transplanted 5323%7,08925%$467M$65,884 Hospitals Reporting Revenue for Organs Sold Hospitals That Reported % Hospitals in Dataset Sold Organs Reported % Total Organs Sold Reported by All Hospitals Total Revenue Reported Rev Per Organ Sold 11449%4,66558%$42M$8,967

39. Average FY09 Medicare Settlement by Hospital Transplant Volume

40. Common Errors: Decrease Medicare Ratio/Payment “Unusable/Discarded Organs” not subtracted from total organs to calculate “Total Usable Organs” No Days or Less Days than Excised Organs Reported for "Inpatient Routine" but did report Excised Organs Did not report Excised Organs, but had Excised per SRTR Data

41. Common Errors: Audit Risks for Medicare Overpayment No Revenue reported for Organs Sold or Transplanted “Usable Organs” and “Medicare Usable Organs” on Lines 54/55 differs from adding organ statistics schedule

42. Cost Report Costs, Transplant and Donor Volumes by Year $1.1billion

43. Average Cost Per Organ by FY

44. Fiscal Year Medicare Payment Per Organ Organ Cost If used 3% annual inflation Dialysis Medicare Payments Per Patient Year (USRDS) Total Transplants (UNOS) 1996 $ 28,635 30,91752,879 19,765 2010 $ 56,101 46,76586,608 28,661 Increase 1996 to 2010 96%51%64%45%

45. Cost Drivers Increased overhead resulting from regulatory requirements Increased costs of OPOs, HLA (also paid on Cost Reports) Education about allowable costs on Cost Report The system is not designed to incentivize cost reduction

52. Conclusions OIG audits are instructive for both risk areas and potential cost recoveries Organ Acquisition cost reporting varies greatly across transplant programs Accurate reporting is critical for obtaining maximum reimbursement from both Medicare and non-Medicare payers Organ Acquisition costs have increased more than other similar healthcare costs

53. Resources CMS – National Cost Report Dataset http://www.cms.hhs.gov/CostReports/ Milliman & Robertson U.S. Organ and Tissue Transplant Cost Estimates http://www.milliman.com/pubs/HRR20.pdf HHS Office of the Inspector General - Audit Reports http://oig.hhs.gov/oas/oas/cms.html United States Renal Data System Annual Reports http://www.usrds.org