Can US Medicare Save Money By Providing Lifetime Immunosuppression Coverage to Kidney Transplant Recipients

This research estimates the changes in Medicare's net cash flow if in 2000 Medicare had extended its lifetime coverage of mainentance immunosuppression medications to all kidney transplant recipients. On 1/1/2000, Medicare did provide lifetime immunosuppression medication coverage to transplant receipient over 65 and disabled, but the immunosuppression coverage for not-disabled transplant reciepients under 65 remained at 3 years following transplantation. Providing lifetime coverage creates a cash outflow determined by the cost of the medications and the numbers of newly covered transplant recipients. It creates a cash flow savings because fewer patients lose their transplant and have to return to the more expensive dialysis. DATA: We used data from the United States Renal Data Systems (USRDS) for the years 1995 to 2003 to calculate graft survival and Medicare payments for patient cohorts defined by income, Medicare eligibility, and graft survival. Medicare cash outflows were increased daily as individuals became eligible for the lifetime benefit according to the observed average Medicare payments for immunosuppression medications. These additional outflows were offset by the projected additional graft survival and the cost savings defined by the difference between observed costs of return to dialaysis and continued immunosuppression. METHODS: To determine the difference in daily costs between patients with functioning grafts and patients who return to dialysis, we calculated average accumulated Medicare payment (AAMP) cost curves for each income quartile (defined by median income of the patient's zip code). To determine the additional daily costs associated with graft failure, we calculated the slope of these cost curves for the low income ineligibles, defined as the bottom three income quartiles. (This is the cohort that would experience improved graft survival rates from lifetime coverage before and after graft failure.) To determine the differences in graft survival rates between high income ineligibles and low income ineligibles, we constructed Kaplan-Meier survival curves for each ineligible income quartile and used them to calculate the change in the graft survival rates for low income patients that would have occurred with lifetime coverage. RESULTS: We found that if Medicare had extended lifetime coverage of immunosuppression medications to all transplant recipients as of 1/1/2000, their cash outflows would have increased significantly. Net incremental cash flows to Medicare, calculated as incremental inflows minus incremental outflows would have totaled -$9.3 million in the year 2000, -$15.3 million in 2001, and -$19.6 million in 2002. Although there are savings associated with avoiding graft failure, these incremental savings are heavily outweighed by the incremental costs of covering all transplant recipients, many of whom experience no improvement in graft survival outcomes. Extending coverage to only patients in the bottom income quartile would still increase Medicare's net cash outflows, but by $1.5 million in 2000, $1.9 million in 2001, and $1.8 million in 2002.