Golden Hammer: Medicare overpaid by $8.9M for lung transplants

This Valentine’s Day, it might not just be your date that takes your breath away, but also the fiscal waste in the government’s lung-transplant program.

In addition to being the holiday for lovers, Feb. 14 also happens to be National Donor Day, sponsored by the Health and Human Services Department to promote organ donation. And while HHS might be trying to raise awareness of life-saving organ donations, it can’t seem to keep financial controls on the actual procedures.

The agency’s internal watchdog, the Inspector General, found that Medicare overpaid for double lung-transplant procedures by almost $8.9 million in 2011.

The problem is how the medical benefits program is recording the paperwork for the procedures. A full set is actually two organs — a left and a right lung. But the majority of medical centers were counting it as a single unit, not a pair, because the Centers for Medicare and Medicaid Services, which oversees the payments, didn’t have a clear way to report lungs as two separate entities.

Medicare pays more for single-lung transplants, which, counterintuively, are costlier than the double-organ procedure. Many doctors were left to record their double transplants as a single organ procedure. That meant that 3,382 actual lungs were recorded as 1,691 of the costlier procedures, according to a report released last month.

If a hospital “overstates or understates the number of usable lungs procured, the complex calculations that include the ratio of Medicare usable lungs to total usable lungs will be affected, and Medicare’s share of organ procurement costs will be overstated or understated,” the IG said.

For transplanting the $8.9 million cost of bad paperwork onto taxpayers, CMS wins this week’s Golden Hammer, a distinction awarded by The Washington Times to examples of fiscal waste, abuse and mismanagement.

No patients were harmed as a result of the mishaps, and everyone got the organs they needed. It was only the paperwork afterwards where mistakes were made.

CMS’ “Provider Reimbursement Manual” does have guidelines on reporting other organ pairs as two separate units — mainly kidneys. But the IG said no such guidance applied to lungs.

The IG said that the rules on reporting need to be clearer, and that HHS officials need to better instruct medical centers on how to fill out the paperwork. CMS agreed with the recommendations.

“CMS will educate the Medicare contractors on any changes to the PRM and cost reporting instructions and the proper counting methodology for double lungs to ensure accurate payments in the future for Medicare’s share of organ procurement costs,” a response from the agency said.

The 51 Organ Procurement Organizations (OPO) that the IG reviewed reported about $1.34 billion was spent on organ procurement costs in 2011, of which $88.6 million of that was for lungs. Medicare, which pays for medical care for to people over 65, often reimburses doctors for performing organ transplants to treat things like kidney failure or diseased lungs from years of smoking.

HHS says that an average of 79 people receive organ transplants per day, but another 18 people die each day waiting for viable organs. Lung transplants are one of the more difficult operations, and HHS estimates that only 54.4 percent of patients live for five years after their transplant. That’s in comparison to a 74.9 percent five-year survival rate for heart transplant patients and 73.8 percent for liver transplants.

Michael Cannon, a health policy analyst at the Cato Institute, a libertarian think tank, said that sometimes government officials aren’t as motivated to fix fiscal problems in programs like Medicare because it’s the taxpayers who are footing the bill.

“There’s no effective way to stop these improper payments, because no one really has any incentive,” Mr. Cannon told The Washington Times this week. “It’s all someone else’s money, so nobody cares to prevent fraud as much as they should.”