Medicare reimbursed transplant centers $380 million between 2017 and 2022 for organs that were never used in procedures covered by the program, according to a recent audit by the Department of Health and Human Services Office of Inspector General. The overpayments resulted from a conflict between federal regulations and CMS guidelines regarding which organs qualify for reimbursement.
Federal law limits Medicare payments to the cost of organs actually implanted in beneficiaries. Yet CMS instructions permit transplant centers to classify nearly all organs sent to procurement organizations or other facilities as eligible for Medicare reimbursement, on the assumption they will eventually be used in covered transplants. In reality, some organs went to patients without Medicare coverage, while others were never transplanted.
The OIG reviewed 180 organs reported by 12 centers, tied to $12.3 million in payments. Of these, $2.8 million covered 55 organs either transplanted into non-Medicare patients or never implanted. Extrapolating these results nationally, the OIG estimated Medicare paid $379.9 million for ineligible organ costs over the six-year period, with a possible range between $220.4 million and $539.4 million.
Five organs—three kidneys possibly allocated for research and two pancreases with incomplete documentation—generated $154,210 in improper payments. While CMS agreed to recover that amount, it did not commit to revising broader payment policies. The agency stated it was still evaluating feedback on alternative counting methods and would update its reimbursement manual accordingly.
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Transplant centers submit yearly cost reports to Medicare, and payments are based on the share of organs classified as Medicare-eligible. The OIG’s analysis included 215 reports from 122 centers, which collectively claimed 20,135 Medicare-usable organs and received $1.4 billion in reimbursements for organ-acquisition costs. In 2023, Medicare paid centers over $3 billion for roughly 39,000 organs, the most recent available data.
Medicare’s repeated failures to recover overpayments
This is not the first time Medicare’s organ payment policies have drawn criticism. CMS has been promoting reforms, including the Increasing Organ Transplant Access Model, to increase kidney transplants and improve accountability. The American Hospital Association has cautioned that mandatory volume requirements could harm patient care. Additionally, HHS announced a 2025 overhaul of the transplant system following an investigation that uncovered preventable harm and ethical violations.
The audit reinforces a trend of Medicare overpayments going unrecovered. A prior review found CMS recouped less than half of certain previously identified overpayments. The latest report intensifies calls for stricter oversight of organ-acquisition payments, though CMS has not signaled major policy shifts.
The gap between legal requirements and CMS’s reimbursement approach reveals a deeper problem. The system assumes organs will be used in Medicare-covered procedures, but transfers often do not meet that expectation. Transplant centers may have little reason to monitor organ destinations, while Medicare’s payment structure incentivizes quantity over accuracy. Without clearer standards, the risk of overpayments could continue even as CMS explores reforms.
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CMS delays reforms despite $380M in questionable payments
CMS has not proposed specific changes to its organ-counting rules, though it acknowledged the audit’s findings. The agency’s response, assessing feedback and considering rulemaking, suggests adjustments may take time. Meanwhile, the $380 million figure represents only a portion of Medicare’s total spending on organ acquisition, raising concerns about whether existing controls are adequate to prevent future overpayments.
Transplant centers rely on annual cost reports to determine reimbursements, and the OIG’s sample highlighted discrepancies in how centers classified organs. The audit found that some facilities reported organs as Medicare-eligible even when documentation was incomplete or transfers did not align with program rules. These inconsistencies contribute to the broader issue of unchecked payments.
The 2025 transplant system overhaul ordered by HHS aims to address long-standing concerns about fairness and efficiency. If implemented, the changes could reshape how organs are allocated and reimbursed, potentially reducing overpayments. However, without immediate action, the current system continues to funnel public funds toward organs that may never benefit Medicare patients.
CMS’s delay in addressing the audit’s recommendations contrasts with the urgency suggested by the $380 million figure. While the agency reviews feedback, the financial strain on Medicare persists, and the lack of verification processes leaves room for further misuse. The upcoming rulemaking process will determine whether CMS takes meaningful steps to align payments with actual transplant outcomes.