Are Kidney Transplant Centers Financially Viable Anymore?

In the March issue of Kidney News, a study by Axelrod et al. (1) was featured that analyzed the costs of kidney transplantation. The study found that costs are increasing substantially, mostly because of the increased complexity of transplant recipients and a lack of changes in the reimbursement model by payers.

This article will highlight several other points that contribute to the increasing costs and will focus on the unintended effects of the current regulatory environment, as well as review some of the historical aspects of kidney transplantation regulation. Specifically, the combination of increasing regulation by the Centers for Medicare & Medicaid Services (CMS), stagnant payments for kidney transplantation, declining living kidney donor participation, and the increased role of multidisciplinary teams in the management of transplant recipients have all contributed to higher costs of kidney transplantation. Although individual centers’ data are not published in the literature, it is likely that these rising costs may make kidney transplantation nonviable financially.


In 1972 the US Congress passed legislation authorizing the ESRD Program under Medicare. Since then, the number of patients with ESRD has skyrocketed, from 10,000 patients in 1972 to 469,950 in 2013. Although ESRD represents <1% of all Medicare patients, it has become the single most expensive disease paid by Medicare, accounting for $30.9 billion in 2013, or 7.1% of the overall Medicare-paid claims costs. Kidney transplantation (included under the ESRD definition) accounted for about $3.5 billion.

Over the years, several attempts have been made to contain costs, improve quality of care, and bring forward best practices. The National Organ Transplantation Act of 1984 (to ensure best use of organs and fairness to those awaiting transplantation) created the Scientific Registry of Transplant Recipients, which is obligated to publicly report data on performance of transplant programs and organ procurement organizations in the United States. Other efforts included the Organ Donation Breakthrough Collaborative in 2003, with the goal of increasing the number of organ donors in the United States, and in 2007, the Transplant Growth and Management Collaborative designed specifically for transplant centers to share best practices from high-performing centers. The goals of these efforts were intended to 1) increase the number of donors, 2) increase the number of organs transplanted per donor, 3) reduce deaths on the waiting list, and 4) improve outcomes.

Current paradigm

In March 2007, CMS issued final regulations regarding conditions of participation (CoPs) for hospital-based kidney transplant programs. The regulations became effective on June 28, 2007.

Key among many of the new requirements is adequate 1- and 3-year graft and patient survival as reported in the preceding 30-month cohorts in the 6-month program-specific reports. This information is derived from a comprehensive survival model on the basis of national donor, recipient, and transplant data, and is adjusted for the composite risk. A lower observed versus expected survival rate for an individual transplant center would lead to various levels of censure, including termination of the center’s transplant license. At the time of its announcement, CMS believed that transplant programs would likely have little difficulty complying with these guidelines and that the cost to each transplant center would be less than $56,000 in the first full year after implementation of the new guidelines and less than $21,000 for each subsequent year.

This new initiative by CMS with its emphasis on outcomes was consistent with a trend in recent years of efforts by various groups—including government, insurance companies, and business groups—to improve the quality of medical care. Because health care in the United States consumes 17% of the gross domestic product, the perception was that the health care industry had performed an insufficient job of improving outcomes and reducing costs.

Consequences of the new Conditions of Participation

Within the first 12 months of implementation of the new CMS rule, several large transplant programs were flagged for lower observed versus expected outcomes. Studies have found that programs serving a high-risk patient population were more likely to be flagged by the Scientific Registry of Transplant Recipients for poor outcomes. Such publicly available data were reported in the mainstream media (e.g., LA Times) in harsh terms.

The CMS policy was the center of much controversy and debate, mainly having to do with the statistical models that were used. It was felt that large, urban transplant centers were the target of flagging, because they had a higher-risk population and therefore, more aggressive management protocols. These reports led to an exaggerated perception of the programs’ struggle and failure in the public eye. They also eroded the public’s confidence, as well as community and industry partnerships.

Programs reported a loss of referrals, because private insurance payers were using the program-specific reports to identify centers of excellence and directing patients away from programs with poor posttransplant outcomes. Programs that entered into systems improvement agreements with the CMS reported significant expenses related to the process, disruption of their program activities, and a decline in transplant volumes.

Being under the threat of termination made the noncompliant programs more conservative in their patient selection, and they removed many patients from the waitlist. There is some evidence that the patients affected by this approach are from disadvantaged backgrounds: living in low-income areas farther away from the centers, and lacking high school education.

As a result of these negative trends, several new amendments to the current system are being designed and discussed.

Other costs to transplant programs

In its CoP, Medicare also recommended use of dedicated professionals such as social workers and clinical coordinators to evaluate and manage transplant patients. To meet the demands of data acquisition, monitoring, analysis, and reporting, additional personnel are hired by the programs. Similarly, there is increased reliance on transplant-trained physicians from nephrology, infectious diseases, endocrinology, etc., to help manage transplant recipients. Hiring these multidisciplinary teams adds costs to the programmatic infrastructure.

Since 2005, there has been a steady decline in living donor transplants. The causes for this decline remain elusive. Even the novel paired donor exchange program, which gained popularity after 2009 and contributes to as much as 25% of all living donor transplants at some centers, is not able to match the peak achieved in 2005. Successful donor exchange programs are resource intensive and have complex logistics. Medicare reimbursement has not changed over the past 10 years, regardless of the increase in complexity of the patients. The logistics and staffing to maintain such programs require substantial costs to transplant centers and most likely result in net loss over time. The only major incentive for programs to perform these transplants is to provide a life-saving service to an otherwise disadvantaged population and avoid having to utilize deceased donor kidneys for these patients.

Many experts in the field believe innovative treatments such as “desensitization treatments” have been relatively stagnant because of the new regulations. These treatments can potentially provide more access to high-risk individuals but carry the risk of worse than expected outcomes and are therefore not favored.

In summary, the current regulatory environment has affected the function of kidney transplant programs in some adverse ways. Because it is widely acknowledged that transplantation is superior to dialysis both in terms of quality of life and cost savings to the community, revision in the regulations is highly desired. A reimbursement system on the basis of a risk-adjusted payment model is likely to benefit the various stakeholders in the transplantation field (2, 3).

August 2017 (Vol. 9, Number 8)


1. Axelrod, DA et al. The changing financial landscape of renal transplant practice: a national cohort analysis. Am J Transpl 2017; 17:377–389.

2. White SL, et al. Patient selection and volume in the era surrounding implementation of Medicare conditions of participation for transplant programs. Health Serv Res 2015; 50:330–350.

3. Woodside KJ, Sung RS. Do federal regulations have an impact on kidney transplant outcomes? Adv Chronic Kidney Dis 2016; 23:332–339.