Medicare Paid an Estimated $380 Million for Organs Its Patients Never Received. Its Own Guidance Allowed It.

Say a man in his fifties gets the call on a Tuesday. Hypothetical man, hypothetical Tuesday, but the sequence is real.

He has carried commercial insurance throughout his working life. He is not on Medicare. He is too young, and he has been working the whole time. The organ he is about to receive was recovered at a hospital in another state, by a surgical team he will never meet, and put on a plane because his body was the one that matched.

That is how it should work. Organ allocation runs on blood type, tissue match, distance, and time. It does not run on what insurance card is in your wallet, and no one involved would want it to. His surgery goes to his insurer. All of it. Medicare is not billed for his operation, does not review it, and plays no part in his recovery.

But back at the hospital where the organ was recovered, it had already been classified as “Medicare usable” when it was transferred. The sending center did not have to determine who ultimately received it or which insurer covered that recipient. That classification increased Medicare’s share of the center’s organ-acquisition costs, even though Medicare never covered this patient’s transplant.

No Medicare beneficiary lost an organ because of that classification. The audit is about who paid, not who received a transplant. Federal law limits Medicare reimbursement to costs associated with Medicare-covered care. Over six years, the HHS Office of Inspector General (OIG) estimates that Medicare paid nearly $380 million toward organs that were not used in Medicare-covered transplants.

What the Audit Found

OIG examined transplant-center cost reports covering 2017 through 2022 and pulled a random sample of 180 organs reported as Medicare usable. Forty-three went into transplants Medicare did not cover. Twelve were never transplanted at all. Medicare had reimbursed the centers $2.8 million in acquisition costs tied to those 55 organs. Projected across the six-year period, OIG estimated the figure at $379,895,793.

Linger on those 12. Counted as Medicare usable, reimbursed on that basis, and never transplanted into anyone. No recipient, no insurer, no second patient on the far end of the transfer. The classification happened at the moment of recovery, and nothing that followed changed what the cost report said.

For scale, Medicare reimbursed transplant centers more than $3 billion for roughly 39,000 organs in 2023 alone. Organ acquisition is a real and substantial expense. The audit asks a narrower question: when an organ ends up outside Medicare-covered care, which insurer should carry the cost of acquiring it?

Two Way Street

The Social Security Act limits Medicare to paying for care furnished to Medicare beneficiaries. CMS guidance tells transplant centers something else. It attaches to the act of recovery and transfer, and says nothing about where the organ eventually lands.

Nobody broke a rule. The centers did what CMS told them to do, and OIG found that what CMS told them to do conflicted with federal statute. Two rules disagreed, and the one closer to the billing desk is the one that governed day to day.

That is why OIG identified the estimated $379.9 million and then did not recommend recovering it. There is no clean way to claw back money from providers who followed the agency’s own instructions. It makes this a policy failure rather than a recovery problem.

The Only Money Anyone Is Chasing

CMS did agree to pursue $154,210. Two transplant centers could not produce any documentation for five organs they had reported as Medicare usable. No paperwork, no instruction to point to, nothing authorizing it. That makes it recoverable.

Set the two numbers side by side and the logic inverts. Roughly $380 million in fully documented, compliant payments stands untouched. A little over $154,000 in undocumented payments is the only amount anyone has committed to getting back. Compliance is what put the larger sum out of reach.

What CMS Actually Said

OIG made two recommendations. CMS agreed to the first, the $154,210 recovery. The second asked CMS to revise its guidance so centers count only organs actually transplanted into Medicare enrollees, a change OIG said could have saved $379,895,793 over the audit period.

On that one, CMS neither concurred nor non-concurred. It did not accept the recommendation and did not reject it, which leaves the guidance standing by default. Both recommendations are logged as open and unimplemented, with a status update due February 28, 2027.

Until then the sequence remains entirely available. An organ is recovered, transferred, counted, and reimbursed, and the recipient’s coverage never enters the calculation. The rulemaking that would change it runs through hospital organ-acquisition reimbursement policy, not the physician fee schedule that draws annual attention. It is a quieter docket with a much smaller audience.

None of this reaches beneficiaries. The spending shows up in transplant-center cost reports, not on anyone’s Medicare statement, which is part of why a finding this size has drawn so little notice.

The uncomfortable part isn’t that money went out the door. It’s that it left under an instruction the government wrote, and the only number anyone has committed to recovering is the one that got away from the paperwork.

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