. . 

Department of Health and Human Servces 

OFFICE OF 

INSPECTOR GENERAL 

ADDRESSING INCREASED ORGAN 

ACQUISITION COSTS 

A MANAGEMENT ADVISORY REPORT 

.. SERVICl 

/. ,. 

t E 

Irdla 

Richard P. Kusserow 

INSPECfOR GENERA 

OEI-Ol-81331 
EXECUTIVE SUMMAR 

PUROSE 

To identif opportunities for improving the effciency of organ acquisition systems 

without adversely affecting the quality or quantity of organ transplantations. 

BACKGROUN 

This brief report is a follow up to two prior Offce of Inspector General report urging 

that the Health Care Financing Administration (HCF A) address the increasing costs 

for organ acquisition. It presents the sae basic recommendations presented in a 

November 1988 report. Those recommendations were supported by the Public Health 

Servce and members of the professional community, but were opposed by HCF 

We reintroduce the recommendations, cited below, because (1) the ineffciencies we 

descn"bed in the prior report continue to exist, (2) fiscal oversight of organ 

procurement organiztions is stil liited and uneven, and (3) kidney acquisition 

expenditures per transplant appear to be much higher than previously assumed. 

RECOMMATIONS 

Support Denstin Prjects Incrpratig Ki Trlan an Acqn un Dign Relte Group. 

Condt Pr Aud of Ki Acq Ex of Re Tr Ce. 

Eslih Uniorm Fisca Overgh of th Oran Acqn Co of al Medare- Ce Oran Prem Orantins 

Esblih, for Reiurem Sta Nomlle of Pretrlt 

Laboratory Tes 

Alw for On On Med-Ce Laborary for Prel Tesg in Eah 

Oran Pr Orantin Se Ar 
......................... , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . 

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . .

TABLE OF CONTENTS 

.ECU S'UY 

INODUCfON 

Pu .. 1€

Backgound ... 8 

RECO:MATIONS .................................. 3 

Support Demonstrtion Projec Incorpratig Kidney€

Traplantation and Acquisition under a DRG ............... 3€

Conduct Prority Audits of Kidney Acquiition Exnditues


of Renal Traplant Centers .. 3€

Establih Uniorm Fis OVersight of the Orga Acquiition


Cots of al Medcae-Certed Orga Procement Organi7.ations . 3€

Establih, for Reimburement Purp, Stadadi 

Nomenclatue of Pretrplant Laboratory Tests 

Alow for Only One Medicae-Certed Laboratory for


Pretrplant Testig in Each OPO Servce Area . . . . . . . . . . . . .. 4€

CONCLUSION 

APPENIX A 

Comments on November 1988 OIG Management

Adviry Report Entitled "Kdney Acquiition Cots" ......... AAPPENIX B 

Endnotes . . . . . . . B-
INTRODUCTION


PUROSE 

To identify opportunities for improving the effciency of organ acquisition systems 

without adversely affecting the quality or quantity of organ transplantations. 

BACKGROUN 

Prr DIG Reprt


In September 1987, we issued a final inspection report entitled "Organ Acquisition 

Costs: An Overvew " (OAI-01-86-oo108). That report indicated that organ 

acquisition systems were operating without sufficient attention to costs. It called upon 

the Health Care Financing Administration (HCF A) to amend the Diagnosis Related 

Group (DR G) for kidney transplantation to include all costs associated with 

acquisition as well as transplantation. 

In November 1988 we issued a follow-up management advisory report entitled Kidney 

Acquisition Costs " (OAI-01-88-01330). Taking account of widespread comments on 

the DRG recommendation, this brief report urged RCF A to conduct demonstration 

projects incorporating kidney transplantation and acquisition und r a DRG. It also 

directed four other recommendations to HCF A, each intended to improve the effciency of organ acquisition systems without adversely affecting the quality or 

quantity of organ transplantation. 

The Public Health Servce reacted positively to our recommendations as did members 

of the professional community. The RCF A, however, disagreed with the 

recommendations (see appendix A). We then initiated the conflct resolution process by holding a meeting with HCF A officials to discuss the recommendations. As 

stipulated in Departmental procedures concerning that process, it was incumbent upon 

RCFA to follow up that meeting by presenting a plan on how it intended to proceed. 

It did not do so. 

Ratina for Repeg Prr Recommtins 

In this report, we present the same basic recommendations to RCFA We repeat these recommendations for three major reasons. One is that the ineffciencies 

documented in our 1987 report continue to exist, with Medicare providing 100 percent 

reimbursement of covered costs. Fiscal oversight is stil limted, most especially with 

respect to pre transplant laboratory costs, and uneven, with 50 independent organ 

procurement organiztions (OPOs) being subjected to guidelines and procedures 

different from those of the 19 hospital OPOs. Also, there is stil widespread variation 
in pretransplant testing procedures, termnology, and costs and unnecessary duplication 

of pretransplant testing in various OPO servceeas. 

A second major reason for reintroducing the prior recommendations is that Medicae 

organ acquisition costs continue to escalate. Although recent cost inormation is 

incomplete, we do know that total kidney acquisition expenditures of independent 

OPOs rose by about 30 percent from the end of 1988 to the end of 199from $60. 

millon to $78.7 milon.3 These total do not include the substantial kidney acquisition 

expenditures of hospital OPOs, pretrnplant laboratories, or Medicae-certifed renal 

transplant hospitals, of which there were 224 on July 15, 1991. It is also relevant to 

note that from December 31, 1988 to July 15, 1991, the kidney waiting list maintaied 

by the United Network for Organ Sharg (UNOS) rose from 13,947 to 18,830. 

Nearly all of these individuals are incurrg ongoing Medicare reimbursable costs for 

tests, whether or not they ever receive a transplant. 

Finally, a third reason is that kidney acquisition expenditures per transplant appear to 

be much higher than pervously assumed. On the basis of information obtained from 

HCF A biIg records as well as from cost report, those expenditures appear to be 

closer to $20 00 to $30,000 than the $10 000 estimated earlier. 
RECOMMENDATIONS


Support Densn Prjec Incrprag Ki Trltn an Acqn un a DRG. 

In response to our 1987 report, HCFA noted that it agreed in priciple with the idea 

of a prospective payment approach to kidney acquisition, but expressed concerns 

about the operational details and the adequacy of the cost data avaable. 

recogned the signifcance of those concerns and for that reason urged in our 1988 

report that HCFA support demonstration projects. We reiterate that recommendation 

here and call for HCF A both to announce its readiness to fund such demonstrations 

and to state the specifc questions it expects the demonstrations to address. 

In the interim, as the demonstrations are underway, we believe it is essential for 

HCF A to introduce a much greater sense of cost-consciousness in organ acquisition 

systems. Through the initiatives identifed below it ca make important progress in 

that direction. In the process, it can also contribute to the development of cost data 

that provide a much more appropriate basis for caculating a DRG than do existing 

data, which reflect the inefficiencies of the current system. 

Condt Prri Aud of Ki Acqn Exes of Ren Trlant Ce. 

The Medicare intermediaries servg these centers tend to give relatively little 

attention to organ acquisition costs. Ths is priarily. because these costs tend to 

represent a small portion of the overall Medicae costs in the hospitals of which the 

transplant centers are a part. By specifg in an annual audit instruction that the 

intermediaries should give special attention to organ acquisition costs, HCF A could 

add an important measure of fisca oversight and gain valuable inormation about 

current practices. 

, In carrng out this recommendation, HCF A should give priority attention to the 19 

transplant centers that also serve as Medicare-certifed organ procurement 

organiztions (OPOs), since they account for a large share of overal Medicare 

expenditures for organ acquisition. However, because of escalating costs, we believe it 

is important to improve fiscal oversight of all transplant centers' expenditures for 

kidneyacquisition. 

Eslih Uniorm Fisca Overgh of th Oran Acqn Co of al Medar- Ce Oran Prem Oranns 

It is vital that all 69 OPOs function under the same set of fiscal guidelies and the 

same degree of oversight. This is not now the cae, as the 50 independent OPOs, 

which are servced by a single intermediary, tend to be subject to different guidelies and greater scrutiny of their costs than the 19 hospital OPOs, which are servced by 

whatever intermediary servces their hospital. 
We urge HCFA to introduce more consistent and rigorous oversight by using the 

servces of a single intermediary for al OPOs.-Ihould ca out this 

recommendation in the way if fids to be technically most feasible. For the 19 

hospital OPOs, this could involve the single intermediar servg in an overseer 

capacity, makg recommendations to the Medicare intermediary servcing the 

individual hospitals. 

Establi for Reiur Sta Nome of Pr1a Laorary Tes 

Pretransplant laboratory tests accunt for a signcat proportion of organ acquisition 

costs.7 And, they almost certly accunt for a growig proportion, as the number of 

individuals on organ transplant waiting lits has soared-from 13, 197 at the end of 1987 

to 23,711 on July 15, 1991. Individual on these lits, whether or not they ever receive 

a transplant, generate substantial ongoing costs for various tests as long as they remain 

on the list. 

Because of widely varyng terminology concernng these tests, HCF A' s Medicare 

intermediaries essentially are unable to determe the reasonableness of the costs 

reported for these tests.8 To address the situation, we urge HCFA to authorize the 

Medicare intermediary servcing the 50 independent OPOs to convene a group of 

experts to develop a standardized nomenclature for pretransplant laboratory tests that 

all laboratories would then have to use in reporting their costs for. Medicare 

reimbursement. 

AHow for On On Medar-Ce Laoratory for Pr Tesg in Each 

OPO Sere 

Enactment of this recommendation would avoid much unecessar duplication of 

pretransplant laboratory work that now occurs in many metropolitan areas. This 

duplication, as we described previously, can add not only to the cost of organ 

, acquisition, but to the time elapsed from the point of organ retrieval to 

, transplantation.1o 

This recommendation, which may call for legislation, rests on much. the same rationale 

that Congress relied upon to allow only one OPO in each servce area. It would 

eliinate competition which serves to increase rather than reduce costs and would 

provide a central point of accountabilty for intial work-ups, on-going antibody 

screens, crossmatching tests involvig sera from donated organ and potential 

recipients, and other appropriate tests. 
CONCLUSION 

Organ acquisition providers have remained by and large free from the cost pressures 

facing the rest of the health care industry. They continue to be reimbursed for all 

Medicare covered "reasonable costs " with little incentie to introduce effciencies. 

The recommendations set forth in this report offer a way of improvig thi situation 

gradually and carefully, without adverse effects on organ transplantation. They have 

been refied over a number of years and have received considerable examination by 

and support from the professional community. We strongly urge that they be enacted. 
APPENDIX A 

COMM ON NOVEER 198 

OIG MAAGEMNf ADVIORY REORT 

'KNEY ACQUlSmON COST" 

(OAI-OI-81330) 
. 

IU!, 

I/ 

lite 

rom 

;ub)ItCI 

Htalth C.,g 

DEPAlITMENf'OP HE.ALTH &L HtJMANSERVICIS FlnlnOino Admlnlltrltlcn 

1 0 19t5e Memorandum 

Terry Coleman

Actfn9 Administrator 

, O G Management Advisory Report, "Kidney Acquisition COltS 

OAI-Ol-8B-D1330 

The Inspector General 

Office of the Secretary 

We have reviewed the management report on kidney acCtu1 sition costs" The resuHs of this management adv1 sory report wl1l be useful to ' us as we 

continue" to refine the MediC4re program in the aria 01 organ acquisition costs. 

Our comments on the &pecff1c recommendations are attached for your 

consideration, Thank you for the opportunity to comment on this report. 

Attachment 
-- 6 OIG Recomend tion

support demonstration project incorporating kidney transp1ontat1on) and 

acquisition under I diagnosis related group (bRG). 

HCFA Comments 

At the currtnt .,time, we do not have p' ans to do & demonstration project on 

incorporating transplantation and ac uisition costs into I DRG. 

OIG Recommendation 

Conduct priority audits of the kidney ac uis1tion expenditures of those


renal transp1 ant centers that HCFA has desi gnated as organ procurement


organizations (OPOs). 

HCFA Comments 

HCFA instructions advise 1n termediaries ' to c'osely review pass..through 

costs. Kidney acquisit10n costs are rehthe'y small in rel t1on to other 

pass-through costs. Given the finite , funding for udit activities, we 

believe it more prudent to focus an areas which Ir more susceptible to 

abuse involving s1gn1f1cant1y larger dollar- amounts at 1S U8. 

T' OIG Recommendation

Establish more consistent and rigorous oversight of the HCFA .certified 

OPOs. 

.t HCFA ,Comments

HCFA is current1y developing the recertifying standards package for OPOs. 

Inc1uded in the package are standards for accounting and fiscal 

pro edures. , We have no current p1 ans for desi gnating I s1n;1e 

1ntermedi ary to oversee OPOs. 

OIG Recommendation 

Move toward the estab'1snment of on1y one Medicare certified laboratory 

for pretransp1ant testing in each OPO service area. 
Page 2


HCFA Comments


1ni-t1at1ve. There is no
 It appears that this is not the time for such an'
 ot participation€ current regu1 atb Y authority in the 
 ed1 care Conditions €

for providers or suppliers tO des1gnate a sing1. pretransp1ant laboratory


for. each OPO. C rrentlY, h1$ toeompat1bil1ty testing i s treated as I


specialty 1n an independent hborator,y with requirements,

. quality cont"'ol mainten nce Of , records and articipat1on in a cell 

for per..sonne1,€

exchange progr.m., Hi stocompat1bi11 ty , aboratories in hospi s J whethe 

hosp1ta1 based or freestanding, must meet the Sime requirements. The 

cond1.t1ons do not specify the methodo'ogy a histocom!)at1b111ty laboratory 

must use in testing and surveyors have no means of identifying


dup1icative pretransp1ant testing.


OIG Recommendation


EstabliSh tor reimbursement pur ose$, a standardized nomeclature of 

pretransp ant 1abor to.,y tests. 

HCFA Comments€

This recommendation could be implemented if HCFA decides it wishes to take


he resources necess ry to force the industry to
 the 1ead and devote 


accept standardization. Preparation Of such a list would roqu1r. staff


wi!h scientific knowledge of llbor tory testing IS we11 as reimburseMent


specialists. We wi" consider seeking the assistance of the Public Health


Service in establishing the standardized nomenc'atu e , of pretransplant 

boratory tests. 
.. ..... ......... . 

Date 

From 

SubjeCt 

,,,,:_ , .._ e-"",J._ 

DEPARTMENT OF HEATH &. HUMA SER pUblic tte"ith Service 

Memorandum 

. FES I:JV 

Deputy Assi stant Secretary for Hesl th Operat ions and 

Di rector Office of nagement 

Comments on the OIG Management Advisory Report "Kidney Acquisition Costs, 

I-OI-88-01330, November 1988 

Inspector General, OS 

At tached are the PHS comments on the subject report. Since the 

findings and recommendations contained in the report are directed to the 

Health care Financing Aeministration; we have confined our response to 

general and technical c mments. 

Attachment 
a:1f , OF 'I PULIC HF1H SERVICE at 'T OFICE 

INSt'tI:JlM GF (OIG) 1\'I(i.1 ADVISUY P.tRJHT, 

lnl NXISI OO OOTS It 

01330 NOVH 

Even though there were no recomendations to PH in this management 

advisory report, we support all of the OIG' s recomendations on the organ 

acquisition costs issue. The following are our general coments on four of 

the recomendations directed to HCA. 

Support Deonstrat ion Projects Incorporat ing Kidney Transplantat ion 

and Acquisition under a 

PHS supports, in principle, the idea of including standard kidney 

acquisition charges in a Diagnosis Related Group (DR). We believe that 

the demonst rat ion projects, as descr ibed, would be essent ial for 

implementing this policy in a way that would limit the potential for 

inadvertently creating disincentives for organ procurement. 

Establ ish More Consistent and Rigorous CWersight of the HCA rtified gan Procurement ganizations 

PHS supports the establ ishment of a report ing and monitoring system for 

renal transplant centers which parallels the oversight currently being 

performed on the independent organ procurement organizations (CPs). CPs


are now reviewed on an annual basis by their Medicare intermediary, and


acquisition fees are adjusted to reflect actual costs.


Move Towards the Establishment of Only One Medicare Certified 

Laboratory for Pretransplant Testing in Each OPO Service Area 

PH agrees that there appears to be overlap and duplication of testing in 

the hi stocompat ibi 1 i ty laborator ies. However, the laborator ies might 

resist consolidation because it may require closure of some facilities. 

OIG could consider recomending that a demonstration project be conducted 

to determi ne the extent of the problem and the feasibi 11 ty 

con so I i da t i on . 

Establ ish for Reimbursement Purposes, a Standardized Nomenclature of


Pretransplant Laboratory Tests


PHS agrees that the lack of standardized vocabulary presents a problem 

determining comparability and con istency of costs among histocompatibility laboratories. PHS, therefore, supports establishment of a standardized

nomenclature. 
. . . . . . 

Page 2€

Techn i CA 1 Commen t 5 

Page 3 , last paragraph€

OIG should clarify its statement that " . it is especially important to

take into account the fact that nat ionally procured kidneys tend to be more 

expensive than locally procured ones. 

\Ye suggest that the sentence be changed to read: 

"Kidneys thAt are obtained through the national sharing system, i. e., 

the National Organ Procurement and Transplantation Network, tend to 

cost more than kidneys that are ' obtained and used locally. 

Page 4 , first full paragraph€

The wording and intent of the third sentence are unclear. OIG states "tk 

are less certain, however, about whether living related and cadaver

acquisition costs should be included in the mG. The thrust of the 

ommenda t ion is t ha t cadaver acqu i sit ion cos t s shou I d be i nc I uded in the 

DR, but the wording of the sentence contradicts this premise. 

Page 6, fourth paragraph€

The second sentence should be changed to read . those on transplant 

Ylaiting lists " instead of "waiting tests. 
: . 

?:. : . 

 

pretig

I'f :i' 

i':f:' 

i.: n Seteber 198, th Ofce 

the Inspector General (OIG)

... publied a re on organ pro cut, which "IS ex and 

anyz in Nephrlo News tI Is- il In Its Novembe an Debe 

198 bses. 

In Ocbe or 198, I spt abot two bours with Inpeor Geera RI Kusrow, pointi out erru in th report, and "bat I believed WIS the trlat county' s viw. 

I mus emphaiz that dur th diion, I WIS impre with two th: 

. The Inper Geer, afr lokIng at the transplant data, said 

"obviusy we wer wr, "e con- , fu prevalenc with inden. 

. He tok the ti to red pen- 8Iy to the other crti and sugpsns made by the tranplant county In Nephrlo News & 

lulUs. 

Tbis was encouraging, but not 

much el "IS hea rrom the OIG, 

and l bad presumed It was an rorti I reed a coy or an updte on "Kidney Acquiition Co" over Ri P. Kau 1W, but edte by Ma Yes, Pb, Regln Ge ror th Nort Regn. I woud lie to us th rert as a 

me or coti on whe I be 

lieve the kidney transplant field

stds In mi-I98. REKALE REPORT 

The OIG' upd rert is reable for two rens: (1) Th obviouly lined to al the crtici an sugges16 Nephrlogy News & Issueslay 1989 

: , ;., , ;: , (

)  

. . , , , , ., ; :;), 

:1';' ;:l' (;!IJ U,!:.111 l'JDJt!ll1:j-.i-Jr::rJ -

New Inspector General stUdy is remarkable 

They actualy litened to our criticisms & suggestions 

.i; an (2) Thy dr in- pr an moed ot. 

Th n:t is . sh an rele repo tht cbge Hcr A an th trplt field to re to five pots. At11 coider th pr, I beeve 

di trsplant community is rey move ahd on th chalenges 

in th new doment. 

Since th fi re wa is 

1987, may signcat chage have occu: (I) UNOS is now eslis; Routi Inui" is in effec in . 

majoty of st; an (3) sin 

Prurment Ortion (OPO) for St Metlita Statica 

(SMSAs) ar now in pla naonwi. 

Yet. depite th stbilizg move, tb has ben no rese frm HCFA 

or anyone else on th issue rase by th 

OJG two yea ago. 

Let me review the fi ve points Dr. 

Yesian now prpo. an tr to se 

wht wil be involved. 

SUPORT DEMONSTRATION 

PROJECTS INCORPORATING 

KINEY TRASPLANATION" 

"CQUlmON UNDER 

EXANDED DRG 302 

There wer may commnts an suggeons made in 1987 , an wht th 

OI now pr is no ony 

1I, but it nee to be te, in or 

11 OIG 

- wha ar ma th th mets of th 

foOowig pr.€cot€

pots:€ . Alt two ye have pa, an€ no plan ha ben forcomig 

HCFA. 

. The expe dierenc beeen 10-

, cay pro an naony sha 

kidnys must be as, in 

to dee if th aleged imved suival reults in shag ar wor the cost. 

I believe we shuld al cncourge 

BCFA to esli IU ltes. If 

kidn ICsition co is to be inlude 

in an expe DRG 30, it mus alow 

for th foll:€

. Paymt for wo an evuaon


of th repien at th trla ce 

pr to tnlant. It do no mae se to expe th repiet s ne- ro to do ths, wh he or Ih is 

no diy as with th trplt pr. . Unus kiys ar inlud in th 

co, . pot th OIG ha now 

to. . Lo prlem wi be coide. Th ca be prlemc with a nati DRG 30. . Inon wi be alow for in th fU in so ma (b th

prnt DRG upd), which ConJrs is always tr to cut. 1b ar no ea co to en- co, but thy ar nesary to develop . pry worg reimbWment 

sym.€

CONDucr PRIORI AUDITS€

OF THE KIDNEY ACQUISITION EXENIT OF THOSE 

RTCs THT HCFA HAS 

DESIGNATED AS OPO 

I am no sur wha a prorty audt is, 

but IIS it me an aut with . ce ti fr, ah OC audts. Th is th on Il in th re th cotiue to dend on anee- do cl (you may rembe, th 

wa a majoprlcm in th 1987 rert). 

Thus, aptly may pee feel' , thlcy acti co ar: (1) not 8C (re high); an (2) may not be fuy elble for Medca reme. 

It is fu alege th th may

apy tre in re U8Jat cente 

(RTC) th ar thir own OPO. HowC\, on ca dc if th is 

or DO, be th "may pele" ar 

not identied, and no infonation is 

given. It woud ap, thgh, th ki of quetion ar going to 

unti a sty is colet, an quaty da ar ge. Th re doe ma a goo pot, in 

that hoita cot repo we moifed 
   ..  . 

in 1985, an HCFA's excu in 1987 

, was tht thy ony had one yea s data. 

Tim ha now pa, and at leat 

yea of cost report should now be 

available for review. 

Since ths inonntion is apntly now avaiable, th DIG edtor, Dr. Yessian, suggests a priority study to see 

whar th figure show. Ths would appe to be a sensible suggestion and 

shld be done. In addition, when all 

RTC ar studied, cots ca be com beee th witht thir own OPO, 

an the 19 RTC with them. 

ESTABLISH MORE€

CONSISTENT" RIGOROUS 

OVERSIGHT OF THE€

HCF A.CERTIFIED OPOs 

The ai her is to have all OPOs, 

independent an hospita-ba, operate 

under the same fisca guidelines and overight. Ths is a point tht has ben ra before by the trplant community, an Dr. Yesia quotes Dr. Chrs 

Blagg on this point.€

This would prably, as the DIG suggests, reuir the hospita-ba OPO 

keep a separte set of boks, but it 

would seem the information obtained 

would be well wor this extr effort, 

The DIG' s suggestion that HCFA€

conduct a pilot study with a number of 

RTCs, and individual intermediares, is 

a very goo way to tr and work out 

.these difficulties. We would agr with 

the DIG, that more rigorous and sta- da oversight is neeed, and the proposa sems reonable. In points 4 and 5, the DIG moves to ar where thre will be much more 

contrversy and even reistace. In re- viewing thse two items, I wil add some 

commnts beyond those made by Dr. 

Yessian. 

MOVE TOWARD THE 

ESTABLISHMNT OF ONLY 

ONE MEDICARE-CERTIFIED 

LAB FOR PRETRANSPLANT 

TESTING IN EACH OPO 

SERVICE AREA€

Quotg the DIG's report, "th time 

is right for movement in this dirion. 

In its original 1987 report, the DIG 

claimed: (1) Wide varation in testing proures and cost; (2) A shar in- cr in lab cost for those on trplant waiting lists; and (3) Some unnecssa 

duplication of pre-trsplant teting. 

Naturaly, thes accustions raise an 

outc from a number of tissue tying 

grups, One can understad this, since 

unforly, so ti €

may depe on J5 DO ony€ exist, but also to Uo reh. 

(My stament, no th OIG' 

Th one cot quo by Dr. Yes- sian tht I believe must be su,

bilty an Immunenetics (ASHI 

th Amrica Soty of Hi-com- . ment that th reiving cete mus repe th crh an th HLA 

ing. I do no believe ths is th ty of duplication th DIG was refeng to, an it was cey not wh I disc 

in  Neplogy News luu in 1987. Th ot c: th we ma, esy Ch ab th OIG'sstamets afecg kidny sh an per- ha ditig HL tying, I do believe ar vad. 

If ti ty WlDt to va tyg to th disblieve, thy mus prnt S. da. At th ti, thy have an unpuled opty with th Ihing of "zero mismatched" kidneys. 

However, tb ar tw prle in my 

COlltinu ' 011 ptlg 

Free your patients 

frm medication worries. For their 

A natiowide prram il no 8Vilae that prs all meication servics-fr fillng 

prnriptions to delivry and dire biling inlurance copanies-abslutely fre. 

Your eligible patients wil ner He a 

meication bil again. 

Th Uftime Medication Hrvice from 

Stadtlander. Pharmacy is remar1bly limple 

to apply fo an us to use Jus give us a call; 

ll be happy to answr an of yor quesions. And yo" be able to ofer yor patients 

exra lpeial helping hand. With the lifetime 

servic fr Stadtlander. Pharmacy, 

Call toll-free: 

800.238.7828 

In Pennsylvania, 

800-231-7828 

3600 Laketon Road 

Pittsburgh. Pennlylvania 15235 

CIRCLE READER SERVICE CAR NO. 49 

May 1989/Nephrlogy News & Issues 
. , 

(, ::: :. , ... . . .. . .. . 

Continued from page /9


mid. 

. There is confusion abor wb the da show ro dare. Paul Ter, Pb, says ir is goo, 8D UNOS says ir is no goo. I say a "pox " 01 

of my fren' hos. Th lranr 

communiry is made up of 8dults; sh us th da an let us deide. 

Any deICieny is going to co for so anyway. ir ba pr, 80 be ir, let s ger them our in th opn. An exle of rh prlem is rb we mi do DO even 1cw how may ze kiys have be ba­ plte in th 1a 18 mothWHY 

NOT? 

. Th senc prblem is tht eVeD if the da sh matcing is ber, th surge m going to clai thr loy us kidnys do just as well. Wht 

ha to be don is ro also collec data 

. , .,,. ;.. _, .,, , . , . ., ,,..

fbiiYfCl)hli 

mus be cosidere as we tr to be tiscay reponsible. To solve th OIG' s lasr two pr­ aJs, j. , one tissue typing lab for eah 

SMSA, an couctg a sra grup of tets, I would sugges th followig:

. Th Amca Soiety of Tralar 

Physici (AST) an th 


Sociery of Transplanr Surgeons 

(ASTS) each appoint rwo reta­ tives who undrsta wha is reuir in tissue tying, but ar 00 neily immunologists by trnmg. In addition th repretatives must not 

be bia in favor of eithr acerma, or th privat ser. 

on th pa lcdnys tht m us 

loy, prumably in a much li. over ti (five ye mi­ mum), th lcdnys do as well as 

zero mismarched shippe kidneys th mag is nor wor th effort or th cot Whe we must be pant, it would pemaps be eaier if we 

at lea tn with th eay inontion as it emerges.

Befor I suggest a posible solution, 

let"s look at the OIG' s Jast prposa. 

ESTABLISH, FOR 

REIMUREMENT PURPOSES, 

A STANDARDIZED 

NOMENCLATUR OF 

PRETRNSPLANT 

LAORATORY TESTS 

The OIG again, prents compeDing,

albeit bref data that suggests ther is 

wide varaton in chaes for tiue 

ing tets. Before one accpt ths, we

must be cen thr we ar compng the sa tets, i. e., apples ro apples. 

In addition , the OIG points oul th Medca inteares ar rey a por poition ro derennne whar is re­ sonale. 

Havig ben as to help adjudi in th ar by our loc caer, I ca cey ag thr ir is diculr to be ce how pertnr some tets ar, an . why thre is not a commn banry of 

tets. Appntly, ASm ha 

rh prblem, and is trg ro genc li with st nomnc1a. 

If thes re comp 20% of kidny 

acquisition costs, as is state by the OIG' s report, then these issues rely 

26 Nephrlogy News & Issues/May 1989 

. UNOS would appinr four resen­ tatives, peps two horn HCFA irself, an two scientist or ecnomsts 

who could help in this review. 

. ASHl would select a group thar 

would presenl ro the advisory comminc, as suggesred in I and 2 above, 

a prposa that would ental the following: 

. A plan for combining rissue ryping 

las in major cities in much th sam 

way OPOs were combine; i.e., either work il OUI yourlf, or HCFA or 

UNOS wil solve il for you. 

. A battery of tissue typing lesrs rbal 

reuired ro produce a sarisfactory trlant 

. Relative cots for such rets. 

I believe this approach is renable 

and would be advantageous , since ir co frm th trlar county it­ se. we do Dor move in a rensible way to solve thse issues (tissue tying), thy will be solved for us by the gover­ menr. 

CONCLUSION 

In sum, the OIG' s updat on kidney acuisition cost pro tive ways 

ro reuce costs and give more responsiin re to th OIG's chenge. 

EiID" Ntlr:Dr. HII iI aJ /r ES 6w_Md iu; pm., .nt '., fI 7X: Md Ed NA Ne ot Iu, 1M op or ptri uplM Mr 1f 1t1)' dtr fI tJ -u. 

1I, 'T do rwranu tI. ,. or Ne otlu. 

Continued from page 23 

whe it concived th OPI in th 1984 

NationaJ Oran Traplanr Acr, an re­ afmn the OPr' ta in th 1988 Amendments to the National Organ

Tralant Act. 

Chlenges wil obviously contue in 

1989, an fondale ta do lie ahead. 

Thes inlude stgtnmg region development ro provide in inpur inro OPT activities, brodening the

sc of commnc inr to th bo, and contiuing to fulfll and imprve sece regarg OPr corr respibilties. 0 

Edor , Not: Bt E# nc 


mI Col. Vir.. MEd Jr Vir. 

. U fr MMi.
 aJ /r CII. ... Ed. U.. iI fH. -- dI 

II MI SE,.: 

. SI 4/.. 8/, . "It,
 f/ --.. 
 Gntw 

UNOS' MW.--pt-.
 1M op or pD Gt Iwil tu ItIy 

..., dw tI. 'T do rq tI 

or Ne ot 18,CP, 

mOltS! Advam' 1OfiI 

es. CaI 

(215)489-2357. 

ble ovight Th fi th de with ar where HCFA cod now move to 

pruce cor dara and imprve oversjght 1b th pr ar DOW in HCFA's co, an we woud 

HCFA to move as raidly as possible imlemt tb VC rale su­ geon. Susg, 1 mighr ad, lbt have en fr no jus 010, but have be moJe by inreon 

with th trlar coty. Th 1a tw ons 

wirh chage tht ar ovauc in th tisu ryg ar. wod li to enage th pele involved to mo for in a resible maer. Th woud shw th govcmnr thar we ar wig to do ou pa in th ti of rcrrl in an ar thar nee mog. I am almost ce thr some of 

crticism wil be chenged. Howeve, 

le me clos by sayig tht th OIG has 

done a rus-ra jo in list to ou 

crticisms an suggestions, an 

rating thm in its late report. Le us ac 
... ,,, 

ansplant Cont oY!r sEi' 

Inspector General' reprt encouraging 

n D. 

Hai, CPTC 

EuUlI\lC Dior SOh-- Oron 


Dolla-"TX 

e Sept. 1987 repon from the 

Ofce of the Inspector General (OIG), 

Organ Acquisition Costs: An Overview " generated considerable attention 

and commentary, much of which 

appeared in Nephrology News Issues 

(Nov. & Dec. 1987). 

In response to the significant 

feedback on the final inspection repon.

the OIG has produced a new 

management advisory repon. "Kidney Acquisition Costs:' which was 

addressed in Dr. Alan Hull' Transplant 

Contrm' ers;es column (NN&I, May 

1989 issue). 

I applaud Richard Kusserow and his 

staff for the content of this document. It 

is refreshing to know that there is a 

system in place where members of the 

pri vate sector can spek and be head by 

the federal government. 

The focus of the Sept. 1987 report

and the new management advisory 

report (Nov. (988), is on prmotig cost consciousness in kidney acquisition 

systems. The significant 'differ 

the two documents is that the new report 

recognizes that some of the measures 

previously outlined might cause a 

reuction in kidney availabilty. 

After taking that into consideration, 

the OIG developed five reommendations: 

. Suppon demonstration projects

which incorporate kidney transplantation and acquisition into one DRG. 

If. in fact. a DRG for acquisition is 

imminent, this seems like the most


sesible way to develop one. It would 

be ba on sond data reover over 

a period of time. 111 ce that this aph would be much mor paatable 

to organ prourement organizations (OPO) th would be th immeate 

establishment of a DRO for kidney 

lCuisition. 

. Cocurrntly, I would remend 

initiation of a systematic study to detein th effca of a DRO for 

kidny lCuisition. While a DRG may we out ineffcient OPO an reuce 

Medica cots, it may also caus a de in organ availabilty in some 1r. In otr wor, th meical impact 

must also be coidere along with the 

cot savings. 

. Conduct priority audits of kidney 

acquisition expenditures of renal


transplant centers (RTCs) that are 

designted IS OPO. Th trsplant 

center-baed OPO have tyicaly ben subjet to only minimal overight, and 

(conl;nu d on pagt 46) 

CIRCLE READER SERVICE CARD NO.


Octoberl989/Nephrology News & Issues 43 
__. ,. ...... .... ....................................... ...... .... ........ ...... ................ .....,. .. ....... ....... ........ .... .... ..............................,........  ................ ........... ......... ............................... ..... 

,.................... ............. ..

Renal Nutrition 

Teaching about nutrition in anemia 

(continu dfrm pag 20)

Exercis Program 

Much reseah is being conducted on 

ways to improve the dilemma of anemia. 

Drs. Andrew Goldberg and Jierschel 

Hanr, both fonnerly of Bames Hospital in SI. Louis, MO, showed in 1978 that 

regularly scheduled exercise progrs may improve anemia. 

For patients who tend to be a "couch 

Comonly Use. 14th Ed" J.B. Lipplll Co.. Philadelphia, 1985. 

3. Pn. C.: Ealon. J.; KjeJ/stra, C., -Vilain C Intoxication and Hyproxalemia in Clroic 

Hemodialysis Patients," Nephro. 39: 112.116,

1985. 

4. Thompso. C. : Weinman. EJ.. Seal) Oxalosis of Renal Failure," $em. in Dial., 1:2, 94-99. Apr. 1988. 

5. Haner, H. : Klahr, S.: 51atopalsky, E.,

Prvention of Renal OsleoySlrohy," ASAIO J.. 

II. MPrnlion an Mangement of Metal Overtoa in Dialysis Pllients." symp. sps. by Univ. of Miami Sch. of Med.. Miami, FL Jams Wincheer, MD; Allen Alfrey, MD: Jack Cobrn, 

MD; Do Shenard. MD; " Isidro Sausky. MD; June 3. 1988. 

12. Wante. J. F" MMagemel of Iron Overoa in Dialysis Patienls." Se. in Neph., 4 (Suppl. I), pp. 22.26, 1986. 

13. Slaopsky. E.; Wens. C.; Finch. J.; Le, W., et ai, Use of Micrapsulated Can in the Remal of Aluminum in Dialysis Pa- tielS," ASN Abstrats, 771., 1985, 14. Hakim. R. ; Sculma, G.: Larus. M.. "Hemrfusion in the Tretmnl of Alumi. num-nd Iro. Induced Bone Disease." ASN r Ab5lrat5, 6SA. 1985. 

15. U.S. DHHS. PHS. FDA. Center for Devices at Raiological Heallh, Rockvile, MD. FDA 

Safet)' Alen. Chloramine Contaminalion of 

Hemodialysis Waler Supplies. Lener 10 Hemodi. 

potato," even walking 20 minutes a day 

could represent a noticeable improvemenl. Patients should ask their physicians to make sure they are a candidate for 

an exercise program. 

Editor s NOI : Ms. Harum is th M' nalional 

manag r for nutritional s n'ic s aT Hom 

/nT nsi\' Car , /nC' Sh has puhlish d 20

a,.ic/ s on ,'arious asp C'TS ofrrnal nUTriTion, 

and sh is a mtmhtr oftht Editorial Ad\'isory 

Board of Nephrology News and Issues. 

REFERENCES 

I. MassI). S.: Kopple. J .P., "Dielal) Therapy in Renal Failure. " in Quick Reference 10 Clinical NUlrilion. 223. 231. L.H. Seymour (Ed. 

Philadelphia. ), B, Lippincoll Co.. 1979, 

2. Bowe &. Church. Foo Values of Ponions 

2. 136. 1979,€

6, Slataplsky. E.: Cobrn, J.. M80n and€

Mineral Disturbances in Renal Insuffciency," 

Handbook of Renal Therapeutics. Plenum 

Publishin Co.. M. Maninez-Maldonado. ed.. p. 397. 1983,€

7. Slivellln. J.: Hakim. R. : Schulman. G., et 

al. "Iron and Aluminum Chelalion Kinetics During 

EXlended Dderoxamine Therapy in Fe Loded 

Hemodialysis Palienls,"ASN Abslrals. 1985. 

8, "Innovalions in Sorbenl Technology, 

Houston., TX. Oct. 29. 1985. reprinted from New 

Dimensions in Dialysis. Vol. 3. No. I. published by 

Erika. Lifechem &. Nalional Medical Care. July

1986, . 

9, Chan . T. : Barre. P.. "EffecI of 

DesfelTioxamine on Removal of Aluminum and 

Iron by Coaled Charcoal Haemoperfusion and 

Haemodial)'sis,''Lncel. lI: 1051. 1983, 

10, Parisol1o. M. : Scherini, E.: Nardacchione. 

: el al. "Is Desfemoxamine Thrapy Safe?, Aspecis of Renal Care. I.pp. 12- /6. 1986,€

alysis Persnel. Feb, 19. 1988. 

16. Goldberg. ; Halberg. M., "Benefits

of Exercise in Hemodialysis Palients." Clinical Reseh, 27, 4ISA. 1979. 

Index of€

Advertisers 

Amgen._..,.......,.............."....center sprd Brodley.Jams Corp. (RSC I1S) 

...... ..page 39 Bunoughs- Welcome............. ..pgs. 16-17

Chugai-Upjohn (RSC 14)........................ 

inside front cover 

Dialysis Assoc. of Palm Beaches 

(RSCII).......................................page 41

Dialysis Management, Inc (RSC '36) 

..... .................. page 3 

Enviromental Water Tech (RSC'29) 

page 39 Euromed Pructs (RSC '84)......page 43

Heallhcare Suppliers, Inc. (RSC , 18) 

................. .......... ................ page 45 Home Intensive Car. Inc. (RSC '3) 

inside back cover 

Hospal Medical Corp. (RSC'I) 

back cover 

Interconlinential Medical Services 

(RSC '7 ).....................................page 42 

Millpore Corp. (RSC 1f8)...........page 40€

Nephrology Managemenl, lnc.€

(RSC 'S9)................ page ) 8
 NMC-Medical Pructs Division 

HCFA: consider DIG proposal€

(conTinutd from pagt 43)

I believe the proposed audits are 

reasonable. in order to fully assess kidney 

acquisition expenditures. 

. Establish more consistent and€

rigorous oversight of HCFA-cenified 

OPOs. The OIG recommends a pilot test. 

using a single intermediary for 

independent and trnsplant center-based 

OPOs, I believe this is a goo first step toward fiscal consistency, and I agree that 

prelaboratory tests. The currnt system 

extraordinarily costly and complex. with 

many different laboratories using varied

tests and combinations of tests. Undoubledly. Medicare and its 

intennediaries must find this process€

perplexing. I believe, therefore, that€

implementing this recommendation 

would be a reasonable and significant 

step to take in promoting cost 

consciousness. 

Ihopethenew OIG recommendations€

wil be seriously considered by the Health 

Care Financing Administration (HCFA). 

I would also encourage HCFA to carefully 

it should be implemented. 

. The least contrversial (but probably 

the hardest to implement) recommendation is to move toward the 

establishment of only one Medicarecenified laboratory for pre-transplant testing in each OPO service area. 

The problem of uMecessar dupli-€

cation of services and associated costs €

have been long recognized by 

l" prolesslonals 10 the field. as well as by €

Medicare. yet no substan lve steps have 

been t ken to reduce this unnecessary 

expenditure. 

. Establish, for reimbursement €

evaluate the impact on organ procurement 

of a DRG for kidney acquisition. 

Edi s NOT , ST phtll D'l!a.id ha.s stn' ar/ous Ttchmc'al and admlnlsu'aTl' t pOSTS In

throrganprocur mrnTandimmunolog)'fitlds 

sinct /974, Hr r ai"td a BA in hi% \'fronr 111' OJ ISSO/l'I, T, ..,UIS. an as t 

anunrh rofposfSinproftssionalassodaTions, 

including prn ofTIr AnrC"r. Trallspl, Coord. A.!o(', (NATCO) in /986-87. and Tht hoard of 

(RSC'19).................................. page II NMC-Medical Pructs Division 

(RSC '20)................................ page 

Pentech Infusions (RSC Il9).........page 6€

Renal Syslems. Inc. (RSC '38).... page 15€

Sandoz Phannaceuticals Corp.


(RSC 146)..............................pgs. 47.€ Stadt landers (RSC 1t83)...............page 14€

th.-Amel: COllncilOil Transpl, (ACT)in /986- purpses. a standardized nomenclature of 88 

T__L__ 
. ...,.... .... 

Employee Benefis Division Chidghan J. Dave 151 Farngton Avenue Mage 

Harord. CT 06156
 Merv Admtrali


(20) 56' IMedicarel€

March 1, 1989
 qE:IVED 

- OIGIQ4


Af 

Richard P. Kusserow


Inspector General


Department of Health & Human Servi
 HHS North Building .

330 Independence Avenue, S. ...-., h "

Washington, D. C. 20201 

Dear Mr. Kusserow:


We are in receipt of a management advisory report 

enti tled, "Kidney Acquisition Costs. Attached, please find our comments in response to the recommendations made 

this report.


If you have any questions relative to our comments or 

if we can be of any assistance, please contact us. 

Sincerely, 

ve' . Manager.

Medicare Administration, M323 

Aetna Life Insurance Company 

/jc 

Attachment 

B. Schumaker, Director, HCFA


R. F. Weingartner, Director€ M. Yessian, Regional Inspector, OIG


J
tna Life Insurance Company 

One of the ..NA LIFE & CASUALTY companies 
. .

REPLY TO OIG REPORT€

Rccommenda ti on: 

Support demonstration projects incorporating kidney 

transplantation and acquisition under a DRG. 

Commentary 

A demonstration project to determine the feasibility 

and impact both on procurement activity and on cost 

savings thorough implementation of a DRG for 

transplantation issue. and acquisition, is a very supportable 

In this manner, both acquisi tion cost and procurement acti vi ties can be studied separately, yet combined th the transplant center activities to determine an overall DRG. 

This project could avoid the confusion and sometime 

disastrous effects when large numers of facilities are impacted before adequate information is available. 

As the control numers within the universe sample can be maintained at a reasonable level, and as the area, size, and complexity of the facilities would be known 

up front, this project would appear to offer the 

greatest possibility of success. 

It would appear from first blush that the independent 

OPO' s would be the most complex towards determination

of a fixed cap for costs. All the variables previously encountered in establishing DRG' s in hospitals, plus several new ones, would have to be thoroughly 

researched and studied before effectuating a DRG. It may even be found that the establishment of a DRG in 

the RTC setting is appropriate, but not so, for an independent OPO. 

2. Recommendation: 

Conduct priority audits of kidney acquisition expenditures of those renal transplant centers that HCFA has 

designated as organ procurement organizations. 
. . 

Commentary€

We are in basic agreement wi h this recommendation and€ have been working with the Division of Transplantation,€

HCFA (Baltimore), to establish various aspects for€ potential review. We intend to continue this endeavor€

during the year, providing whatever information we€

can. It should be pointed out that this point could also€

be a beginning or climax to the recommendation, noted as€ numer one (1) above, serving to eliminate unnecessary€

items, of cost and weed out or at least, identify€ inefficient operations.€

3. Recommendation: €

Establish more consistent and rigorous oversight of€

the HCFA certified organ procurement organizations.€

Commentary€

As brought out in the elaboration of the comment€ wi thin your repor , the complexities of the€ Administration, necessary cooperation and ultimate€

rUling authority for making determinations and adjust-€

ments, needs to be explored more fUlly before this€

recommendation can be evaluated further.€

4. Recommenda tion:€

Move towards the establishment 

certified laboratory for pre-transplant testing in€ .of only one (1) Medicare€

each OPO service area ' 

Commentary€

The recommendation certainly would provide for cost€

efficiencies € in pre-tranplant testing and eliminate€ much of the duplicate testing and reimbursement that€

accompanies such acti € vi ties. However, issues such as€ speed of test availability, ease of access to testing€

facilities upon donor identification, and 

as well as, facility reliance on physician,€

hodologies and test results complicate the another, entities€ It is not known whether or not legislating a single lab€ situation.€ in each area would solve the issues or would €

o extend the time frames involved in donor only serve€

impacting the acquisition levels adversely. procurement,€
5. Recommendation:€

Establish for reimbursement purposes, a standardized 

nomenclature of pre-transplant laboratory tests. 

Commentary 

We have supported the establishment of common€

nomenclature for laboratory tests in the past, and will€ continue , to do so. However, the complexity of the testing and the methodologies used in developing the 

various tests and results € is expertise of the intermediary beyond the technical 

It is our understanding that ASHI is moving towards this end now, and that UNOS 

may have an impact also. Any effcrts on the part of€ HCFA to assist this process could help to achieve the€ ul timate goal quicker. There is little doubt that 

standard nomemclature would be of a benefit to the 

Program, the intermediary, and probably to beneficiaries 

who are covered under the renal program. 

/jc 
APPENQJ 

ENNOT€

It focused on kidney transplantation because at the time the study was 

conducted Medicare reimbursement was not yet available for other kids of 

transplantation. 

See OIG, "Organ Acquisition Costs: An Overvew " OAI-01-8600108, pp. 

Information obtained from Aetna, the Medicae intermediary responsible for 

oversight of independent OPOs. 

Offce of Research, Health Care Financing Administration. 

It would probably be advisable to limit the demonstrations to kidney 

acquisition, since there is a larger historical base of data and a larger number 

transplants to rely upon. However, HCF A might consider the feasibilty of a 

separate demonstration involving acquisition costs for hearts used for 

transplantation. Heart transplants have been covered under Medicae for the 

past 3 years, with acquisition ' costs payable on a reasonable cost basis as they 

are for kidneys.


Here, agai, we focus on kidney expenditures because they represent the great 

majority of Medicare reimbursed organ acquisition expenditures. The HCF A . 

might consider whether or not it would be feasible to include expenditures for 

the acquisitions of hearts in some or even all of the priority audits. 

In our 1987 report at a time when kidney waiting lists were much shorter, we 

estimated that these laboratory costs accounted for about 20 percent of kidney 

acquisition costs. 

For example, they are unable to compare how much diferent laboratories are 

reporting for the same test. 

In response to our 1987 report, the American Society for Histocompatibilty 

and Imunogenetics (ASHI) indicated that it was workig on the development

of a standardized nomenclature and would be wiling to work with HCF A and 

the intermediary in this regard. 

10. We cited the example of one metropolitan area where each of five renal 

transplant centers conducts the same basic tests involving a donor organ each 

time such an organ becomes available. The process, we were told, could add 

up to eight extra hours to the organ procurement process. 
While other reviewers expressed suppQUr this recommendation, Aetna 

manager of Medicare Administration (who is responsible for fiscal oversight for

the independent OPOs) expressed some reservtion, especially with respect 

the possible impact on time frames. On the basis of the areas we have visited 

with single pretransplant laboratories, the process seems to work rather 

effciently, certinl more so than in the cae cited above with five such 

laboratories.