The Economic Aspects of Pancreas Transplant: Why Is the Organ Acquisition Charge So High?

Abstract

Pancreas transplantation in the USA has declined steadily over the past 10 years. Fewer patients are being listed as candidates, and fewer pancreata are being recovered from deceased donors. Of the donors where there is an intent to recover a pancreas for an identified recipient, some are ruled out intraoperatively, and >25 % of pancreas are discarded after recovery. Based on the current Centers for Medicare and Medicaid Services (CMS) cost-finding and reimbursement policies for organ procurement organizations (OPOs), this high level of intended for transplant but untransplanted pancreas has had the effect of substantially raising OPO pancreas organ acquisition charges (OAC). While numerous reasons for the decline in pancreas transplant volume have been posited, some have suggested that high OACs have been a significant factor. In this article, the manner in which OPO OACs are developed is reviewed in the context of CMS requirements and OPO and transplant center practices.

Full text

PANCREAS TRANSPLANTATION (DA AXELROD, SECTION EDITOR)
The Economic Aspects of Pancreas Transplant: Why Is the Organ
Acquisition Charge So High?
Richard S. Luskin
1
&Dara L. Washburn
1
&Susan Gunderson
2
Published online: 2 April 2015
#Springer International Publishing AG 2015
Abstract Pancreas transplantation in the USA has declined
steadily over the past 10 years. Fewer patients are being listed
as candidates, and fewer pancreata are being recovered from
deceased donors. Of the donors where there is an intent to
recover a pancreas for an identified recipient, some are ruled
out intraoperatively, and >25 % of pancreas are discarded after
recovery. Based on the current Centers for Medicare and
Medicaid Services (CMS) cost-finding and reimburse-
ment policies for organ procurement organizations
(OPOs), this high level of intended for transplant but
untransplanted pancreas has had the effect of substan-
tially raising OPO pancreas organ acquisition charges
(OAC). While numerous reasons for the decline in pan-
creas transplant volume have been posited, some have
suggested that high OACs have been a significant fac-
tor. In this article, the manner in which OPO OACs are
developed is reviewed in the context of CMS require-
ments and OPO and transplant center practices.
Keywords Pancreas .Transp lant .Organ .Cost
Introduction
Despite reasonable outcomes, pancreas transplantation from
deceased donors has declined 31.5 % over the past decade.
This trend has been steady for both simultaneous pancreas-
kidney (SPK) and pancreas transplant alone (PTA) [Table 1].
Living pancreas donation, although never more than an occa-
sional procedure, has essentially ceased with only one living
SPK reported in the past 5 years.
The reasons for this decline are most likely multifactorial
and include the following: better control of patient insulin
levels with improved delivery systems, concerns about out-
comes with PTA, increased interest in islet transplantation,
and the economics of pancreas transplants [2].
Pancreas are recovered with the intent to transplant from a
relatively small percentage of deceased donors, and, of those
recovered, a significant percentage is discarded or sent to re-
search. In the USA in 2012, there were 8144 deceased donors.
Pancreata were recovered for transplantation from 1418
(17.4 %). Of the pancreas recovered, 1046 were transplanted
and 372 (26.2 %) were discarded or sent for research. The
most commonly reported reasons for discard were as follows:
other (120), anatomical abnormalities (78), no recipient
located/list exhausted (52), and poor organ function (27).
Pancreata have the highest rate of discard among all organs
when compared to liver (10.4 %), heart (1.1 %), lung (4.3 %),
and kidney (18.6 %) [3].
Not accounted for in this analysis is the number of de-
ceased organ donors where the pancreas was evaluated prior
to recovery and deemed to be potentially transplantable, a
potential recipient was identified, a surgical team was brought
to the organ recovery site, and the pancreas was ruled out
intraoperatively and not recovered. Specific data on organs
where there was intent to recover for transplant but not actu-
ally recovered is required to be reported by organ procurement
This article is part of the Topical Collection on Pancreas Transplantation
*Richard S. Luskin
rlusk@neob.org
Susan Gunderson
sgunderson@life-source.org
1
New England Organ Bank, 60 First Avenue, Waltham, MA 02451,
USA
2
LifeSource, Organ Procurement Organization, 2225 West River
Road North, Minneapolis, MN 55411, USA
Curr Transpl Rep (2015) 2:164–168
DOI 10.1007/s40472-015-0060-y

organizations (OPOs) to the Centers for Medicare and Med-
icaid Services (CMS) but is not available publically. Data
from a single OPO [New England Organ Bank, unpublished
data Table 2] is illustrative.
The large number of pancreas with intent to recover but not
recovered, and pancreas recovered and discarded, is key to
understanding why OPO organ acquisition charges (OACs)
are relatively high for pancreas. The pancreas transplant rate
from intended recoveries for this OPO ranged from 39–49 %
during the four-year period. In contrast, the rate of transplant
from intended recoveries for the other extrarenal organs was
much higher for the same time period. For example, the liver
transplant rate ranged from 83.3 to 91.7 %.
The Economics of Pancreas Transplantation
Comprehensive reviews of the literature on the economics of
pancreas transplantation suggest there are few rigorous studies
of the cost-effectiveness of pancreas transplantation [4,5]
Those studies that are available suggest that transplant center
reimbursement for pancreas transplantation has been an issue
since the procedure began to increase in numbers and gain
traction clinically. In the early years, it was sometimes consid-
ered an investigational procedure, and insurance coverage pol-
icies were not uniform, often decided on a case-by-case basis.
A comprehensive study in 1993 [6] found that private insurers
were the primary source of patient coverage. For SPK, Medi-
care was paying for the kidney transplant portion of the hos-
pital charges, but the pancreas transplant costs were either
covered separately or simply not reimbursed. Beginning in
July 1999, Medicare provided coverage for SPK for all pa-
tients with type 1 diabetes and end-stage renal disease. Not
surprisingly, this change in coverage increased access to SPK
for Medicare beneficiaries [7,8].
Despite improved insurance coverage, the cost of the pan-
creas transplant procedure remains an issue today. Any anal-
ysis of transplant procedure cost must include the following:
hospital charges (pre-, peri-, and posttransplant), professional
fees for the surgeon(s) and others, and OPO pancreas organ
acquisition charges. This paper is focused on OPO OACs.
HowDoOPOsEstablishOrganAcquisition
Charges?
Each OPO in the USA establishes an acquisition charge for
each type of organ. This fee is paid to the OPO by the
transplanting hospital for each organ it receives. Although
often referred to as a Bstandard acquisition charge^(SAC), it
is better named an OAC as its components vary from organ to
organ and from OPO to OPO. There is very little standard
about it. OPOs may use somewhat different methodologies
in establishing their OACs, but there are many common
aspects.
OPOs are designated every 4 years by the Secretary of the
Department of Health and Human Services to provide all ser-
vices related to deceased organ donation for a defined geo-
graphic region of the USA, commonly known as the donation
service area (DSA). Oversight of payments to OPOs is
Tabl e 1 US pancreas transplants—deceased donors [1]
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Simultaneous pancreas kidney 603 542 466 468 434 375 349 287 242 256
Pancreas transplant alone 881 902 923 864 837 854 828 795 801 761
Total pancreas transplants 1484 1445 1390 1332 1271 1229 1177 1082 1043 1017
Source: US Organ Procurement and Transplantation Network. Available at: http://optn.transplant.hrsa.gov/converge/latestData/viewDataReports.
asp,accessed Nov 2014
Tabl e 2 Single OPO pancreas recovery experience
2010 2011 2012 2013
Organ donors 226 229 217 248
Donors to OR with intent to recover pancreas for transplant 47 64 52 54
Pancreas ruled out in OR 6 14 12 14
Pancreas recovered with intent to transplant 41 50 40 40
Recovered pancreas discarded 18 25 18 18
Pancreas transplanted(#/% of intent to recover for tx) 23/48.9% 25/39.0% 22/42.3% 22/40.7%
Curr Transpl Rep (2015) 2:164–168 165

regulated by CMS as part of the End-Stage Renal Disease
(ESRD) program. Although Medicare ESRD payments only
cover renal transplants, the methodology proscribed by CMS
in determining those payments impacts how the OPO charges
transplant centers for all other organs in addition to kidneys.
Medicare reimburses OPOs the reasonable cost of allowable
services, with the definition of Breasonable^and Ballowable^
determined by CMS regulations and applied by private con-
tractors (fiscal intermediaries) working under contract to
CMS. Each year, OPOs are required to file a Medicare cost
report that, using Medicare’s cost-finding methodology, as-
signs costs associated with renal procurement and distribution,
extrarenal procurement and distribution, and tissue recovery
(This assumes the OPO also recovers tissue for transplantation
which most OPOs do.).
Costs associated with a specific organ are assigned to that
organ. For example, a cardiac catheterization to assess heart
function pre recovery would be assigned to the heart, and a
bronchoscopy would be assigned to the lungs. Costs that re-
late to all organs such as donor serology and NAT testing or
hospital operating room charges are assigned proportionately
to all organs considered for recovery on a particular donor. For
many donors, costs associated with assessing a particular or-
gan’s suitability for transplant will be incurred, but the deci-
sion will be made not to recover that organ based on the
clinical findings. Or an organ will be thought to be suitable
for transplant, and an intraoperative finding will rule it out.
However, the costs associated with assessing the organ still
must be assigned to that organ’scostcenter.
Prior to the start of each OPO’s fiscal year, an estimate is
made of the number of donors that will be recovered, the
number of each organ type that will be recovered, and the
number that will be transplanted. As OPOs only generate pay-
ment of an extrarenal organ OAC if the organ is actually
transplanted, the costs associated with organs evaluated but
not recovered, and/or organs recovered and discarded also
must be covered by the OAC. In addition to the direct costs
associated with each organ, general costs and OPO overhead
costs are assigned proportionately. This total cost for each
organ is then divided by the number of that type of organ
expected to be transplanted to determine the OAC for each
extrarenal organ. The procedure for kidneys is the same except
that the kidney OAC must be submitted to CMS for its
approval.
OPO CMS Cost Reports
At the end of the OPO’s fiscal year, actual costs are tallied and
assigned to the appropriate organ. Indirect (overhead) costs
are then assigned proportionately to each organ according to
CMS rules. OPOs are then required to file a cost report with
CMS which reflects the cost centers for each organ and tissue.
If the OAC established for kidneys at the beginning of the
fiscal year has generated less revenue than the actual calculat-
ed cost per kidney, CMS reimburses the OPO for the differ-
ence. If the revenue exceeds the calculated cost per kidney,
then the OPO must refund the difference to CMS, and typi-
cally is required to lower its kidney OAC for the subsequent
fiscal year. For extrarenal organs, the OPO is responsible for
any differential between the revenue generated by the OAC
and actual costs.
Critical to determining the amount paid by CMS is the
proportion of recovered or intended to be recovered kidneys,
to total organs. This is used to determine the amount of indi-
rect cost that will be covered by Medicare and how much must
be covered by extrarenal organ OACs (Note: All costs asso-
ciated with tissue recovery are excluded from calculation of
renal and extrarenal OACs.). Prior to 2007, Medicare only
required the OPO to count extrarenal organs that actually were
recovered in determining cost-sharing allocation. For exam-
ple, a donor may have been evaluated for kidney, liver, heart,
and lung recovery, but only the two kidneys and liver actually
were recovered. In that case, two thirds of the non-organ spe-
cific costs as well as shared direct and overhead costs would
be assigned to renal because only the three organs actually
recovered would be counted.
Medicare recognized that the ESRD program was uninten-
tionally subsidizing extrarenal costs and issued a ruling [9••]
on December 21, 2006 that changed the cost-finding method-
ology to avoid Bcross-subsidization^of Bnon-renal organs into
non-Medicare patients.^The key change was that BBecause . .
. CMS presumes an OPO intends to procure all transplantable
organs, CMS will allocate the general costs across all organs
(whether or not actually recovered), unless an OPO can dem-
onstrate that it did not intend to procure a particular organ^
(emphasis added). The CMS ruling then goes on to list the
ways an OPO can demonstrate a lack of intent to recover an
organ, including as follows:
&Organ ruled out based on donor history
&Organ ruled out by laboratory data and/or no recipient
having been identified prior to entering the operating room
for the organ recovery.
In effect, OPOs now need to declare in the donor record
which organs are intended to be recovered for transplant prior
to the start of the donor recovery operation.
Impact of the Change in CMS Cost Finding
The CMS Ruling shifted costs to any organ that was ruled out
intraoperatively. Previously, only organs actually recovered
were included in the cost-finding process. The change in
CMS policy helped reduce, or at least moderate increases in,
166 Curr Transpl Rep (2015) 2:164–168

the OAC for kidneys, especially as kidneys are only occasion-
ally ruled out intraoperatively. However, OACs for all other
organs increased. Pancreas cost was impacted the most due to
the large number of pancreas that are ruled out during the
recovery procedure, especially when added to the high pan-
creas discard rate after recovery. As cited in the single OPO
example above, a pancreas was actually recovered and
transplanted in less than 50 % of the cases where the OPO
went to the operating room with the intent to transplant the
pancreas. Thus, each pancreas transplanted, as required by
CMS rules, had to be assigned more than double the overhead
and indirect costs. Some OPOs with large pancreas transplant
programs chose to moderate the impact of the change by not
increasing the pancreas OAC to cover the entire cost, or made
the transition over several years. However, the result of doing
this is that the OACs for other extrarenal organs had to be
raised above actual costs, or the OPO had to make up the
difference from a margin on tissue recovery. The latter solu-
tion, while possible for many OPOs in 2007, is less feasible
today as the supply of available tissue has grown and proces-
sors have reduced reimbursement and/or capped tissue donor
volumes.
The impact of the change was particularly severe on islet
cell transplantation where there is a Bneed to complete the
manufacturing process for islets before suitability and trans-
plant intent of the pancreata involved can be determined,^and
a patient may require islet infusions from multiple donors
[10••].SuggestionshavebeenmadeastohowCMSmight
modify its cost-finding and reimbursement policies, but for
now, pancreas recovered for whole-organ transplant are treat-
ed the same as pancreas recovered for islet cell isolation.
The Bintent to recover^rule also applies to pancreas for
research. If the pancreas was intended to be recovered for
transplant when the recovery began, and subsequently was
recovered only for research, or was recovered for transplant
but ultimately discarded, the intent rule applies. If the pancreas
was recovered specifically with the intent to use it in a re-
search protocol, then it is excluded from the CMS calculation
used to determine the allocation of costs to each organ.
Conflicting Incentives
Exacerbating the effect of the CMS cost-finding methodology
for OPOs is the effect of conflicting incentives that CMS
provides to OPOs and transplant centers in the application of
performance regulations. OPOs are encouraged to recover, or
at least consider for recovery, every organ where there is some
potential for transplant. Transplant centers’performance is
measured on the outcomes of the transplants they actually
perform. While there is some adjustment for donor character-
istics, most transplant centers believe the adjustment is inade-
quate and thus are reluctant to transplant organs where there is
a higher perceived potential for graft failure. This is particu-
larly true for pancreas where most programs have relatively
low transplant volumes, and a single graft failure is more
likely to put them into non-compliance.
The Advisory Committee on Organ Transplantation of the
US Secretary of DHHS formally recognized this conflict in
their Recommendation 55 of August, 2012:
BDue to misalignment and inconsistencies between CMS
certification regulations and outcomerequirements for TC and
OPOS, the ACOT recommends that the Secretary direct CMS
and HRSA to confer with the OPTN, SRTR, the OPO com-
munity, and transplant centers representatives, to conduct a
comprehensive review of regulatory requirements, and to pro-
mulgate regulatory and policy changes to requirements for
OPOs and TCs that unify mutual goals of increasing organ
donation, improving recipient outcomes, and reducing organ
wastage and administrative burden on transplant centers and
OPOs. These revisions will include, but not be limited to,
improved risk adjustment methodologies for transplant cen-
ters and a statistically sound method for yield measures for
OPOs. The ACOT recommends that this review be completed
within one year and action taken within two years [11].^
To date, no adjustment has been made in the OPO or trans-
plant center performance metrics.
Conclusion
OPO pancreas OACs are high due to the following:
&The disparity between the number of organ donors where
there is an intent to recover a pancreas for transplant at the
start of the recovery operation, and the number of pancreas
actually transplanted
&CMS cost-finding methodologies for OPOs that require
the assignment of full overhead and indirect costs to all
extrarenal organs where there was an intent to recover the
organ for transplant, even if the organ was not actually
recovered
&CMS performance metrics for OPOs and transplant cen-
ters that encourage OPOs to recover every organ possible
for transplant, but also encourage transplant centers to be
cautious in the organs they actually transplant to avoid
being penalized for poor patient outcomes
Compliance with Ethics Guidelines
Conflict of Interest Richard S. Luskin, Dara L. Washburn, and Susan
Gunderson declare that they have no conflict of interest.
Human and Animal Rights and Informed Consent This article does
not contain any studies with human or animal subjects performed by any
of the authors.
Curr Transpl Rep (2015) 2:164–168 167

References
Papers of particular interest, published recently, have been
highlighted as:
•• Of major importance
1. US Organ Procurement and Transplantation Network. Available at
http://optn.transplant.hrsa.gov/converge/latestData/
viewDataReports.asp Accessed Nov 2014.
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9.•• US Department of Health & Human Services/Centers for Medicare
and Medicaid Services/CMS Rulings Allocation of Donor
Acquisition Costs Incurred by Organ Procurement Organizations
Ruling #: CMS-1543-R, December 21, 2006 Available at https://
www.cms.gov/Regulations and https://www.cms.gov/Regulations-
and-guidance/Guidance/Rulings/downloads/CMS1543R.pdf
Accessed October 2014. This document describes the CMS
policy change that significantly impacted OPO pancreas
organ acquisition charges.
10.•• Markmann JF, Kaufman DB, Ricordi C, et al. Financial issues
constraining the use of pancreata recovered for islet transplantation:
a white paper. Am J Transplant. 2008;8:1588–92
Although focused on islet transplantation, this paper nicely de-
scribes the impact of CMS reimbursement policies on the organ
acquisition charges for all pancreas.
11. Secretary of US Department of Health & Human Services Advisory
Committee on Transplantation August, 2012 Available at http://
organdonor.gov/legislation/acotaugust2012notes.html Accessed
Nov 2014
168 Curr Transpl Rep (2015) 2:164–168