End-stage renal disease (ESRD) is the final phase of chronic kidney disease — a gradual loss in kidney function over time. In the final phase of chronic kidney disease, the loss in kidney function appears irreversible and a regular course of dialysis treatments (approximately three times a week) is needed to survive. A kidney transplant procedure, whereby an individual receives a healthy donor kidney to replace a non-functioning kidney, is an alternative form of treatment. After undergoing a kidney transplant, patients are usually required to take immunosuppressive drugs for the rest of their life to minimize the risk of their immune system rejecting the donor kidney. Medicare is a federal program that pays for covered health care services, which include kidney transplantation for eligible beneficiaries. Generally, individuals are eligible for Medicare if they are at least 65 years old, a citizen or permanent resident of the United States, and have met the prior work requirements. Individuals may also be eligible to enroll in Medicare under the age of 65 if they are permanently disabled and receive disability benefits from Social Security (or the Railroad Retirement Board). With the passage of the Social Security Amendments of 1972 (P.L. 92-603), Medicare provides coverage for certain individuals who are diagnosed with ESRD. Specifically, an individual medically determined to have ESRD can be eligible to enroll in Medicare if he or she, or his or her spouse, parent, or guardian, has earned at least six Social Security credits over the past three years. Originally, for ESRD beneficiaries, Medicare eligibility was limited to 12 months following a successful kidney transplant (if the individual no longer required dialysis). The 12 months of post-transplant Medicare eligibility was extended to 36 months with the passage of P.L. 95-292 in 1978. For beneficiaries who are eligible for Medicare due to ESRD, Medicare may provide coverage on the first month of eligibility if the beneficiary is admitted to a Medicare-approved hospital to undergo a kidney transplant procedure or elects to receive dialysis treatment at home. For beneficiaries who do not elect to receive dialysis at home, Medicare coverage begins on the fourth month of receiving dialysis treatment. With few exceptions, Medicare is a secondary payer for the first 30 months of eligibility for beneficiaries who become entitled to Medicare due to ESRD and are insured under a union or employer-sponsored health plan. Medicare consists of four distinct parts: Part A (Hospital Insurance, or HI), Part B (Supplementary Medical Insurance, or SMI), Part C (Medicare Advantage), and Part D (outpatient prescription drugs). Individuals who are entitled to Medicare Part A are able to receive coverage primarily for inpatient hospital services, post-hospital services, and hospice services. Beneficiaries entitled to Part A have the option of enrolling in Medicare Part B, which provides coverage for physicians and nonphysician practitioner services, durable medical equipment, certain specified outpatient prescription drugs and biologics (e.g., immunosuppressive drugs for covered-transplant beneficiaries), and hospital outpatient services, in addition to other services. Together, Medicare Parts A and B represent "original" Medicare or Medicare fee-for-service (FFS). Part C, Medicare Advantage (MA), is an alternative way for beneficiaries to receive covered services. Under MA, private health plans are paid a per-person amount to provide all covered services under Parts A and B (except hospice). Beneficiaries entitled to Part A and/or enrolled in Part B may also enroll in Medicare Part D to receive coverage of outpatient prescription drugs. Under Part D, prescription drug coverage is provided through private stand-alone prescription drug plans or through MA drug plans (MA health plans, which also include prescription drug coverage). Upon Medicare eligibility due to ESRD, a beneficiary is enrolled in Medicare Parts A and B; however, a beneficiary may decline Part B coverage. For ESRD-related services, Medicare Part A includes coverage for inpatient services in an approved hospital for covered kidney transplants and cost of care for the kidney donor. Medicare Part B provides coverage for doctors' services during a kidney transplant, outpatient dialysis treatments, and related services in a Medicare-certified dialysis facility or in a beneficiary's home. Part B also provides coverage of immunosuppressive drugs for individuals who had a Medicare-covered transplant to minimize the risk of kidney rejection, in addition to specified drugs/biologics (e.g., erythropoietin stimulating agents used to treat anemia). According to the United States Renal Data System (USRDS), in 2010, total Medicare expenditures for beneficiaries with ESRD were estimated to be $32.9 billion, or roughly 6.3% of total Medicare expenditures. Part B immunosuppressive drug expenditures consisted of $345 million in 2010. Further, the USRDS estimated annual per beneficiary Medicare expenditures in 2010 to be $87,561 for a beneficiary receiving hemodialysis (the most common form of dialysis treatment) and $32,914 for a beneficiary with a functioning kidney transplant. As of December 31, 2010, according to USRDS, roughly 489,000 individuals were estimated to be diagnosed with ESRD and were eligible for some form of Medicare coverage. For beneficiaries who qualify for Medicare due to ESRD, Medicare eligibility is limited to 36 months following a successful kidney transplant. Of the individuals under the age of 65 that have received a successful kidney transplant at a prior date and no longer required dialysis treatment in 2010 (142,923 patients), roughly 41% were not eligible for Medicare coverage (58,728 patients); see Figure 1 . Roughly 25% of patients under the age of 65 were covered under original Medicare, and an additional 15% were covered under both Medicare and Medicaid. An additional 15% of individuals under the age of 65 who received a kidney transplant had Medicare as a secondary payer and 4% were enrolled in an MA plan. Individuals with a functioning kidney transplant usually require immunosuppressive drugs for life to minimize the risk of their immune system rejecting the "foreign" donor kidney. For the most part, the standard of care for immunosuppressant therapy in kidney transplant recipients is a combination of a calcineurin inhibitor and an antimetabolite (with or without a corticosteroid). The most commonly prescribed calcineurin inhibitor is a daily dose of tacrolimus, and the more commonly prescribed antimetabolite is a daily dose of mycophenolate mofetil (MMF). The first generic of tacrolimus was approved in 2009, and generics for MMF were approved in 2008. In addition to tacrolimus and MMF, other prescribed immunosuppressants may include azathioprine, cyclosporine, mycophenolic sodium, prednisone, and sirolimus. Currently, Medicare provides coverage for immunosuppressive drugs under Part B if the transplant was covered by Medicare and in an approved facility. Medicare Part B does not provide coverage for immunosuppressive drugs if the beneficiary was not eligible for Medicare at the time of the transplant or the transplant was not in a Medicare-covered facility. Medicare first allowed coverage of immunosuppressive drugs under Part B to beneficiaries following a Medicare-covered organ transplant in a Medicare-approved facility in 1987, with the passage of the Omnibus Budget Reconciliation Act of 1986 (OBRA 86; P.L. 99-509 ). OBRA 86 limited Medicare immunosuppressive drug coverage for all beneficiaries to 12 months following an organ transplant. The 12-month time limitation may have been included because, according to a committee report referenced in the House's FY1986 budget resolution report, there was already "a significant amount of insurance coverage for immunosuppressive drugs available" for individuals with ESRD. Under the Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ), immunosuppressive drug coverage for beneficiaries who received an organ transplant was gradually extended from 12 months following a covered transplant to 36 months beginning on January 1, 1998, and subsequent years. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 ( P.L. 106-554 ) eliminated the 36-month time limitation of immunosuppressive drug coverage after covered kidney transplants. While Medicare coverage of immunosuppressive drugs is no longer time-limited, for beneficiaries who qualified for Medicare due to ESRD, Medicare eligibility (and therefore Medicare immunosuppressive drug coverage) is still limited to 36 months following a successful kidney transplant if they do not qualify for Medicare due to age (65 years or older) or disability (generally, a Social Security Disability Insurance recipient). After 36 months, the individual is no longer eligible for Medicare, and must find some other form of payment for the immunosuppressive drugs (e.g., private insurance, out-of-pocket). Individuals who are unable to adhere to their medication regimen, possibly due to the costs of immunosuppressive drugs, may cause their donor kidney to fail. In 2007, the Government Accountability Office (GAO) found that the percentage of beneficiaries whose kidney transplants failed roughly doubled when increasing the timeframe from 36 months following the transplant to seven years. While continuity of insurance coverage may affect a beneficiary's access to immunosuppressive drugs, insurance coverage alone may not be the sole contributing factor to failed kidney transplants. In addition, GAO notes in its report, "(w)hile a lack of health insurance is one reason transplant recipients may stop taking their medication, studies have reported that there are numerous other reasons for medication noncompliance, including avoidance of adverse side effects associated with immunosuppressive medications and difficulty following complex treatment regimens." Beginning January 1, 2014, beneficiaries with a functioning kidney transplant who are no longer entitled to Medicare may have greater access to health insurance in the private market (and therefore potential coverage of immunosuppressive drugs), due to provisions in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended) that prohibit excluding coverage for preexisting conditions and pricing health insurance premiums based on health factors.