National Trends in Organ Acquisition Costs Analysis
Analyzing the national trends in organ acquisition costs including Medicare reimbursement, unique reimbursement for transplantation, and the history of organ acquisition audit experience. Explore the impact on hospitals and transplant programs.
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National Trends in Organ Acquisition Costs Brigitte Sullivan Administrative Director The Johns Hopkins Comprehensive Transplant Center
Today Brief History of Organ Acquisition Audit Experience Available Benchmarking Data
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)
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
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
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.
OIG Audit Results Estimated Medicare Overpayment Years Audited Claimed Costs Medicare Reimbursement Total Average Per Hospital 21 1.9 $203,281,448 $18,480,132 $105,094,038 $9,554,003 $28,430,118 $2,584,556 $124M not audited: Medicare eligibility of beneficiaries, Inpatient days claimed, Indirect cost pools on B Worksheets Medicare Share of Unallowable & Unsupported Cost Category Unallowable Unsupported Salaries Medical director fees Laboratory costs Floor space Other costs Total $ 1,177,528 $ 24,506,226 $ 14,818,705 $ 1,512,210 $ 1,803,027 $ 2,084,638 $ 1,589,176 $ - $ 1,273,992 $ 2,050,939 $ 5,618,406 $ 5,027,405 $ 4,878,419 $ 3,669,597 $ 5,225,378 $ 11,208,272 $ 35,597,256 $ 28,430,118
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
Common Error: Did Not Include All Direct Costs Total Total Costs in OAC Medicare Transplants Medicare Ratio Medicare Payment Transplanted Organs Does not Include Non-Medicare Patient Costs $ 1,000,000 Does Include non-Medicare Patient Costs $ 2,500,000 50 25 50% $ 500,000 50 25 50% $ 1,250,000
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
What Do Organ Acquisition Costs Look Like?
Milliman & Robertson 2011 Estimated U.S. Billed Charges Per Transplant for Procurement (in 1,000's) 2002 2005 $ 57 $ 74 $ 94 $ 80 $ 23 $ 46 $ 51 $ 68 $ 67 $ 22 $ 54 $ 57 $ 74 $ 71 $ 17 $ 42 $ 54 $ 73 $ 15 $ 83 $ 97 $ 90 $ 24 $ 44 $ 67 $ 68 $ 65 $ 21 % Increase 2002- 2011 Organ Type 2008 2011 Heart Kidney Liver Lung - Single Lung - Double Pancreas 41% 47% 31% 26% 40% 48% $ 58 * 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
Payor Practices Global/case rates $25K to $50K OA Caps Payment of Invoice from OPO No coverage
Organ Procurement Organization Kidney Standard Acquisition Charges Source: Medicare Fiscal Intermediaries for OPOs - Trailblazer <2009, Cahaba >2009
HCRIS Data Hospital Cost Report Information System All Medicare Cost Reports in the U.S. Publicly Available
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)
Hospitals with CTC(s) in Dataset Status of Cost Reports as of September 2012 250 200 150 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Amended As Submitted Reopened Settled Settled With Audit
2009 Detailed Analysis % Total Usable Organs Total % Living Donor Transplants Medicare Usable Organs ORGAN CTCs Transplanted Organs Heart Intestine Kidney Liver Lung Pancreas Total 107 2,655 166 22,101 7,512 2,457 1,654 36,545 41% 20% 68% 37% 42% 63% 57% 2,127 150 17,245 6,055 2,067 1,164 28,808 9 226 113 53 120 628 36% 4% 22% UNOS HCRIS % Data Unique Hospitals performing at least 1 Transplant in 2009 in Data 253 234 92% Total Organs Transplanted in 2009 28,459 28,808 101%
Reporting Variability Total Costs Per Usable Organ 2009 Total Cost Per Usable Organ Standard Deviation Organ CTCs Average Minimum Maximum Heart 107 $ 79,328 $ 38,382 $ 23,249 $ 321,118 Intestine 9 $ 96,434 $ 67,894 $ 45,528 $ 267,297 Kidney 226 $ 50,694 $ 27,584 $ 10,882 $ 249,371 Liver 113 $ 63,273 $ 33,563 $ 20,873 $ 285,002 Lung 53 $ 65,328 $ 32,962 $ 21,165 $ 177,878 Pancreas 120 $ 44,282 $ 41,667 $ 992 $ 423,594 Total 628 $ 58,539 $ 40,564 $ 992 $ 423,594
FY2009 Cost Report D-6, Part III Worksheet for All Organ Types 3690 (Cont.) COMP UTATION OF ORGAN ACQUISITION FORM CMS-2552-96 09-01 P ROVIDER NO.: P ERIOD: WORKSHEET D-6, COSTS AND CHARGES _____________ FROM ________ P ARTS III & IV OP O NO.: TO __________ Check [ ] HEART [ ] LIVER [ ] P ANCREAS [ ] OTHER (specify) Applicable Box [ ] KIDNEY [ ] LUNG [ ] INTESTINE P ART III - S UMMARY OF COS TS AND CHARGES Charges Cost Part A Part B Part A Part B 1 2 3 4 X X X X X 48 Routine and Ancillary from Part I 49 Interns and Residents (inpatient) 50 Interns and Residents (outpatient) 51 Direct Organ Acquisition (see instructions) 52 Cost of Services of Teaching Physicians (Wkst. D-9) 53 Total (sum of lines 48 thru 52) 54 Total Usable Organs (see instructions) 55 Medicare Usable Organs (see instructions) 56 Ratio of Medicare Usable Organs to Total Usable Organs (line 55 line 54) 57 Medicare Cost/Charges (see instructions) 58 Revenue for Organs Sold 59 Subtotal (line 57 minus line 58) 60 Organs Furnished Part B 61 Net Organ Acquisition Cost and Charges 300,651,040 $ 48 49 50 1,846,727,313 $ 51 52 2,147,417,252 $ 53 36,545 21,004 54 55 56 57% X X X X X 57 467,053,241 $ 58 59 X X 60 1,099,332,078 $ 61
FY2009 Cost Report D-6, Part IV Worksheet for All Organ Types PART IV - STATISTICS Living Related Cadaveric Revenue 1 2 3 62 Organs Excised in Provider (1) 63 Organs Purchased from Other Transplant Hospitals (2) 64 Organs Purchased from Non-Transplant Hospitals 65 Organs Purchased from OPOs 66 Total (sum of lines 62 thru 65) 67 Organs Transplanted 68 Organs Sold to Other Hospitals 69 Organs Sold to OPOs 70 Organs Sold to Transplant Hospitals 71 Organs Sold to Military or VA Hospitals 72 Organs Sold Outside the U.S. 73 Organs Sent Outside the U.S. (no revenue received) 74 Organs Used for Research 75 Unusable/Discarded Organs 76 Total (sum of lines 67 thru 75 should equal line 66) 6,208 8,018 1,486 417 21,115 31,036 22,414 289 6,543 957 $ $ $ $ $ 467,053,241 $ $ 32,592,678 $ 7,465,139 $ 1,116,000 $ $ $ $ $ $ - - - - - 62 67 63 - 359 6,634 6,401 64 65 66 67 45 128 22 - - - - 658,502 68 69 70 - - - 174 663 71 - - - - - 72 73 74 1 75 6,597 31,077 76 (1) Organs procured outside your center by a procurement team from your center are not to be included in the count. (2) Organs procured outside your center by a procurement team are included in the count.
Line 51 Direct Organ Acquisition = Direct Costs from Worksheet A + Indirect Costs from Worksheet B
Direct Costs Direct costs that are directly related to organ acquisition and are accumulated in the organ acquisition cost centers on Worksheet A Rev. 1 10-96 RECLASSIFICATION AND ADJUSTMENT OF TRIAL BALANCE OF EXPENSES 36-513 3690 (Cont.) WORKSHEET A FORM CMS-2552-96 PROVIDER NO.: PERIOD: FROM ____________ TO ___________ ___________ NET EXPENSES RECLASSIFIED RECLAS SIFI- CATION S 4 TRIAL BALANCE (col. 3 col. 4) 5 FOR ALLOCATION COST CENTER DESCRIPTIONS TOTAL (col. 1 + col. 2) 3 SALARI ES 1 X X X X X X X ADJUSTM ENTS 6 X X X X X X X X OTHER (omit cents) (col. 5 col. 6) 7 2 X X 70 7000Intern-Resident Service (not appvd. tchng. prgm.) 71 7100Home Health Agency SPECIAL PURPOSE COST CENTERS 82 8200Lung Acquisition 83 8300Kidney Acquisition 84 8400Liver Acquisition 85 8500Heart Acquisition 86 Other Organ Acquisition (specify) 88 8800Interest Expense 70 71 X X X X X X 82 83 84 85 86 88 - 0 -
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
FY09 Salary Reported on Worksheet A % Hospitals Reporting $0 All Organs Cost Per Usable Organ 20% $ 9,164 % Total Cost Per Usable Organ Heart Cost Per Organ Kidney Cost Per Organ Liver Cost Per Organ Lung Cost Per Organ 15.4% $ 20,634 $ 8,536 $ 8,123 $ 5,593
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
Other Direct Organ Acquisition Costs from Worksheet A % Hospitals Reporting $0 8% Overall Cost Per Usable Organ % Total Cost Per Usable Organ Heart Cost Per Organ Kidney Cost Per Organ Liver Cost Per Organ Lung Cost Per Organ $ 33,129 55.7% $ 44,996 $ 30,713 $ 36,336 $ 32,229 2009 OPO Kidney SAC = $27,543
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.
Worksheet B Rev. 3 08-97 FORM CMS-2552-96 COST ALLOCATION - STATISTICAL BASIS P ERIOD: FROM ____________ TO _______________ WORKSHEET B-1 P ROVIDER NO: P ERIOD: FROM ____________ TO _______________ _______________ LAUNDR Y ADMINIS- MAIN- MAIN- NURSING CENTRAL MEDICAL TRATIVE & TENANCE & OPERATIO N OF PLANT SERVICE KEEPING DIETARYCAFETER TENANCE OF PERSONNE L (NUMBER SERVICES & RECORDS & & LINEN HOUSE- ADMINIS- PHARMA CY (COSTED GENERAL REPAIRS TRATION SUPPLY LIBRARY IA (POUND S OF LAUNDR Y) 9 (HOURS OF COST CENTER DESCRIPTIONS (ACCUM. (SQUARE (SQUARE (MEALS (MEALS (DIRECT (COSTED (TIME NURS. HRS) 14 COST) FEET) FEET) SERVICE) SERVED) SERVED) HOUSED) REQUIS.) REQUIS.) SPENT) 6 7 8 10 11 12 13 15 16 17 71 Home Health Agency SP ECIAL P URP OSE COST CENTERS 82 Lung Acquisition 83 Kidney Acquisition 84 Liver Acquisition 85 Heart Acquisition 86 Other Organ Acquisition (specify) 92 Ambulatory Surgical Center (Distinct P art) 93 Hospice 94 Other Special P urpose (specify) 95 SUBTOTALS (sum of lines 1-94) NONREIMBURSABLE COST CENTERS 96 Gift, Flower, Coffee Shop, & Canteen 97 Research 98 P hysicians' P rivate Offices 99 Nonpaid Workers 100 Other Nonreimbursable (specify) 101 Cross foot adjustments 102 Negative cost centers 103 Cost to be allocated (per Wkst. B, P art I) 104 Unit cost multiplier (Wkst. B, P art I) 105 Cost to be allocated (per Wkst. B, P art II) 106 Unit cost multiplier (Wkst. B, P art II) 107 Cost to be allocated (per Wkst. B, P art III) 108 Unit cost multiplier (Wkst. B, P art III) X X X X X X X X X X X X X X X X X X X X X X X X
Allocation of Worksheet B Costs % Total Cost Per Usable Organ 12.0% 0.2% 0.1% 0.2% 2.0% % Hospitals Reporting $0 Reported Cost Per Usable Organ Cost Category Administrative & General Cafeteria Central Services & Supply Dietary Employee Benefits Interns & Residents Program Costs Interns & Residents Salary & Fringes Laundry & Linen Service Maintenance & Repairs Maintenance of Personnel Medical Records & Library Nursing Administration Nursing School 0% 15% 58% 93% 12% $ 7,140 $ 129 $ 68 $ 96 $ 1,219 90% $ 105 0.2% 92% 86% 55% 99% 41% 49% 99% $ 92 $ 9 $ 260 $ 2 $ 213 $ 270 $ 0 0.2% 0.0% 0.4% 0.0% 0.4% 0.5% 0.0%
Allocation of Worksheet B Costs % % Total Cost Per Usable Organ 0.8% 0.9% 0.0% 0.0% 0.6% Reported Cost Per Usable Organ Hospitals Reporting $0 36% 83% 89% 77% 73% Cost Category Operation of Plant Other General Service Paramedical Education Pharmacy Social Service Old Capital Related Costs - Bldgs & Fixtures Old Capital Related Costs - Movable Equipment New Capital Related Costs - Bldgs & Fixtures New Capital Related Costs - Movable Equipment $ 480 $ 517 $ 12 $ 28 $ 385 91% $ 27 0.0% 96% $ 3 0.0% 27% $ 361 0.6% 42% $ 197 0.3%
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
FY09 Inpatient and Routine Ancillary Costs Per Day and Per Organ Routine & Ancillary Days Reported >0 218 23,431 0 Total Hospitals Inpatient OA Days Reported Deceased Donor Organs Excised at Hospital Living Donor Organs Excised at Hospital % Living Donors Days Per Donor Reported Per Diem Cost Reported Routine & Ancillary Costs Per Organ Excised Reported Revenue Per Organ Excised 16 234 - 23,431 7,964 54 8,018 6,069 43% 1.67 $12,761 139 72% N/A N/A 6,208 44% 1.65 $12,831 $21,307 $8,583 $21,134 $2,964 $1,268 $2,941
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.
FY2009 Cost Report D-6, Part IV Worksheet for All Organ Types PART IV - STATISTICS Living Related Cadaveric Revenue 1 2 3 62 Organs Excised in Provider (1) 63 Organs Purchased from Other Transplant Hospitals (2) 64 Organs Purchased from Non-Transplant Hospitals 65 Organs Purchased from OPOs 66 Total (sum of lines 62 thru 65) 67 Organs Transplanted 68 Organs Sold to Other Hospitals 69 Organs Sold to OPOs 70 Organs Sold to Transplant Hospitals 71 Organs Sold to Military or VA Hospitals 72 Organs Sold Outside the U.S. 73 Organs Sent Outside the U.S. (no revenue received) 74 Organs Used for Research 75 Unusable/Discarded Organs 76 Total (sum of lines 67 thru 75 should equal line 66) 6,208 8,018 1,486 417 21,115 31,036 22,414 289 6,543 957 $ $ $ $ $ 467,053,241 $ $ 32,592,678 $ 7,465,139 $ 1,116,000 $ $ $ $ $ $ - - - - - 62 67 63 - 359 6,634 6,401 64 65 66 67 45 128 22 - - - - 658,502 68 69 70 - - - 174 663 71 - - - - - 72 73 74 1 75 6,597 31,077 76 (1) Organs procured outside your center by a procurement team from your center are not to be included in the count. (2) Organs procured outside your center by a procurement team are included in the count.
Revenue for Organs Sold (from Medicare Provider Reimbursement Manual) 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.
FY09 Reported Organ Revenue Hospitals Reporting >=1 Excised Organ Hospitals That Reported % Hospitals in Dataset Excised Organs Reported 221 94% 14,226 Hospitals Reporting Revenue for Organs Transplanted % Total Organs Transplanted Reported by All Hospitals Hospitals That Reported % Hospitals in Dataset Transplanted Organs Reported Total Revenue Reported Rev Per Organ Transplanted 53 23% Hospitals Reporting Revenue for Organs Sold 7,089 25% $467M $65,884 % Total Organs Sold Reported by All Hospitals Hospitals That Reported % Hospitals in Dataset Sold Organs Reported Total Revenue Reported Rev Per Organ Sold 114 49% 4,665 58% $42M $8,967
Average FY09 Medicare Settlement by Hospital Transplant Volume Total Usable Organ Volume 1-20 21-50 51-100 101-200 201-300 301-400 401+ All Avg Medicare Cost Per Organ % Medicare Settlement Amount $ 546,985 $ 1,501,100 $ 2,920,823 $ 4,602,623 $ 7,320,823 $ 9,926,582 54% $14,313,291 57% $ 4,718,163 Hospitals Medicare 26 40 54 52 26 16 19 234 61% 64% 70% 62% 54% 52% $ 81,733 $ 63,606 $ 55,871 $ 51,782 $ 54,790 $ 55,436 $ 45,303 $ 52,564
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
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
Cost Report Costs, Transplant and Donor Volumes by Year $1.1billion 2,500.0 35,000 30,000 Transplants and Donors Total Costs (in millions) 2,000.0 25,000 1,500.0 20,000 15,000 1,000.0 10,000 500.0 5,000 - - Medicare Payments Total Costs Transplants Donors
Average Cost Per Organ by FY $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- Medicare Payment Per Organ Total Cost Per Organ
Average Cost Per Organ by FY Dialysis Medicare Payments Per Patient Year (USRDS) Organ Cost If used 3% annual inflation Medicare Payment Per Organ Total Fiscal Year Transplants (UNOS) 1996 2010 $ 28,635 $ 56,101 96% 30,917 46,765 51% 52,879 86,608 64% 19,765 28,661 45% Increase 1996 to 2010
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
FY09 Total Cost Per Usable Organ by Hospitals Total Volume of Organs $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- 1-20 21-50 Range of Usable Organs for Hospital in FY2009 51-100 101-200 201-300 301-400 401+
FY09 Total Organ Acquisition Costs Per Usable Organ by Type of Cost $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- Heart Kidney Liver Lung Indirect Costs Salaries & Other Direct Costs Routine & Ancillary
FY09 Organ Acquisition Costs Per Total Usable Organs and Per Transplanted Organs $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- HR IN KI Direct OAC per Transplanted Organ LI LU PA Direct OAC Per Usable Organ
Heart: Avg Total Cost Per Organ by UNOS Region $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $- 1 2 3 4 5 6 7 8 9 10 11 Lung: Avg Total Cost Per Organ by UNOS Region $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- 1 2 3 4 5 6 7 8 9 10 11
Kidney: Avg Total Cost Per Organ by UNOS Region $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- 1 2 3 4 5 6 7 8 9 10 11 Pancreas: Avg Total Cost Per Organ by UNOS Region $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- 1 2 3 4 5 6 7 8 9 10 11
