OIG says CMS organ-counting guidance cost Medicare an estimated $380 million for organs not transplanted into enrollees

“Medicare likely paid for more than its share.” That was the Centers for Medicare & Medicaid Services (CMS) describing its own organ acquisition rules in December 2021, in the same final rule where it declined to change them [2]. On September 1, 2026, the HHS Office of Inspector General (OIG) put a number on it.

What changed

OIG estimated that Medicare paid certified transplant centers about $379.9 million to acquire organs that were not used in Medicare-covered transplants, across cost reports with periods ending from 2017 through 2022 (report OAS-25-07-124) [1]. The finding rests on a sample of 180 organs that 12 transplant centers reported as “Medicare usable.” Of those, 43 went into transplants Medicare did not cover and 12 were never transplanted at all, which accounted for $2,847,855 in Medicare reimbursement [1].

The cause, in OIG’s words: “CMS guidance conflicts with Federal statutory requirements” [1]. OIG recommended that CMS revise the guidance so hospitals count as Medicare usable only organs transplanted into Medicare enrollees, and that it recover $154,210 from two centers that could not document five organs [1]. CMS agreed to the recovery. On the guidance, it “did not specifically concur or nonconcur,” OIG reported [1].

No payment rule has changed. OIG is not asking CMS to claw back the $380 million, because the centers were following CMS instructions when they counted the organs [1].

Who it affects

About 250 transplant centers are certified by CMS [1]. Medicare reimburses them for organ acquisition on a reasonable-cost basis through the annual hospital cost report, and paid more than $3 billion for about 39,000 organs in 2023 [1]. That spending rose from $1.27 billion in 2011, a 160 percent increase, while the organ count grew 77 percent [1].

Allowable acquisition costs include what a center pays an organ procurement organization (OPO), transportation, tissue typing, operating room costs, transplant coordinators and the physician costs of surgically removing the organ [1]. So transplant surgeons and procurement teams sit inside this cost center even though the dollars flow to the hospital.

Children’s hospitals have the most at stake if the rule changes. When CMS proposed a fix in 2021, it acknowledged commenters’ point that pediatric programs, with very low Medicare use, would lose revenue because pediatric organs are rarely transplanted into adult Medicare patients [2]. OPOs are in the same debate: both the 2021 proposal and the 2022 request for information also covered how OPOs count kidneys and other organs [2, 3].

Why does Medicare pay for organs that go to non-Medicare patients?

Because of a presumption that dates to 1972. The Social Security Amendments of 1972 extended Medicare to people under 65 who are “medically determined to have chronic renal disease” and need dialysis or a kidney transplant, starting with services on and after July 1, 1973 [5]. Medicare assumed at the time that most kidney recipients would be its own enrollees, and guidance written for non-renal organs later kept that assumption [1].

Medicare’s share of a center’s costs for each organ type is its total acquisition cost multiplied by the ratio of Medicare usable organs to total usable organs, minus revenue from organs the center furnishes to others [1]. The Provider Reimbursement Manual tells centers to count any organ sent to another transplant center or OPO as a Medicare usable organ [1]. Whether a commercial or Medicaid patient receives it does not matter. CMS itself wrote in 2022 that counting organs not transplanted into Medicare beneficiaries “inflates Medicare’s share of organ acquisition costs” [3].

The same 1972 law wrote the “necessary costs of efficiently delivering covered services” language into section 1861(v)(1)(A) of the Social Security Act [5]. That provision, which OIG calls the anti-cross-subsidization principle, says costs for people not covered by Medicare “will not be borne by such insurance programs” [1]. OIG’s case is that the manual cannot override it.

In the sample, all 12 centers had at least one organ that went into a transplant Medicare did not pay for [1]. In one case an OPO never removed an organ because it determined the donor was not deceased, yet the center still reported it as a Medicare usable organ [1].

What it means for your practice

Nothing moves today, but the counting rule is back on the table. CMS told OIG it requested “information on alternative methodologies for counting organs” in its CY 2023 outpatient proposed rule, is reviewing comments and would continue to explore options for future rulemaking [1]. CMS also said it would update the Provider Reimbursement Manual as needed “to ensure alignment with any newly established regulations” [1].

If your center sends out a lot of organs, your Medicare share would fall. Under the 2021 proposal, centers would have counted only organs transplanted into Medicare beneficiaries, organs where Medicare is a secondary payer, and certain islet cell pancreata [2]. Under the 2022 alternative, organs your center sends elsewhere would drop out of both the numerator and the denominator, with revenue offsets, and you would not have to track who received them [3]. CMS said that approach “will not require THs and OPOs to track exported organs” [3].

Documentation is the immediate exposure. Federal rules require providers to keep records adequate to support the costs Medicare pays [1]. One of the two centers flagged for repayment said it may have reported three research kidneys as Medicare usable; the other could not explain two extra pancreases [1]. Cost reports can generally be reopened within three years of final settlement, and OIG chose reports settled in 2022 or 2023 so its findings could still be applied [1].

A separate OPO change is already final. The FY 2027 inpatient rule, effective October 1, 2026, has Medicare contractors approve and publish independent OPOs’ non-renal standard acquisition charges and histocompatibility lab testing rates, starting with cost reporting periods beginning on or after October 1, 2028 [4]. CMS said those charges are “not a calculation based on Medicare costs and Medicare usable organs” and that a procurement charge “should not vary based on payor” [4]. Those charges are what your transplant center pays per organ. Earlier coverage of the FY 2027 inpatient final rule focused on its joint replacement model.

What to do now

1. Pull your last cost report’s organ counts. Separate organs transplanted in-house into Medicare patients from organs furnished to OPOs and other centers, by organ type [1].
2. Run the 2022 alternative on your numbers. Recompute Medicare’s share with exported organs removed from both sides of the ratio, so you know the exposure before any proposal [3].
3. Close documentation gaps. Make sure each organ you report as Medicare usable has records behind it, including research organs, which current guidance already excludes [1].
4. Check secondary-payer transplants. OIG disallowed one organ where Medicare was secondary but the center billed only the primary insurer [1].
5. Independent OPOs and labs: plan budgets and procurement-volume estimates for contractor approval of non-renal charges from October 1, 2028 [4].

The policy fight

The arguments are already on the record from 2021. Many commenters, “including children’s hospitals,” said they would lose revenue; some said costs would shift elsewhere in the transplant system, and many objected to the work of tracking each organ’s recipient [2]. Commenters asked CMS to withdraw the proposal or delay it so hospitals could renegotiate contracts with other payers [2]. Some argued Medicare’s policy was meant decades ago to encourage hospitals to take part in transplantation [2]. CMS answered: “This was not the intention” [2].

CMS rejected the cost-shift argument, saying commenters “did not provide substantive information or data” to show how acquisition costs would rise [2]. It still stepped back, saying the concerns “warrant further review,” and promised added analysis of effects on transplant hospitals, children’s hospitals and OPOs [2]. One supporter, as CMS summarized it, noted the counting policy was adopted when most donors were trauma patients at a transplant center, while “today less than a third of donors are trauma patients” [2].

In 2022, CMS reported that every children’s transplant hospital sits in a state whose legislature meets every year, except four in Texas, where it meets every other year [3]. CMS offered that finding after commenters said they would need time to renegotiate payments, including Medicaid payments from states [3].

OIG’s view is that the statute settles the question regardless of revenue effects [1]. CMS has framed it as stewardship: Medicare’s policies should ensure “that Medicare pays for costs incurred for the care of Medicare beneficiaries” [2]. Whether CMS writes a new counting rule, and on what timeline, it has not said.