Fixed‐Rate Reimbursement Fails to Cover Costs for Patients with Delayed Graft Function

Medicare uses a fixed reimbursement schedule to pay the initial hospital costs for renal transplantation. This creates the potential to underpay for patients who develop the common complication of delayed graft function. We undertook a pilot study to determine if delayed graft function resulted in higher hospital charges and thus a loss in revenue when caring for these patients. Of 34 patients who experienced delayed graft function between October 12, 1987 and July 7, 1989, 9 (group 1) were randomly selected for study. During this same period 136 patients had immediate graft function; from them, another 9 (group 2) were selected by matching age, sex, and date of transplantation. The average (±SD) hospital stays for groups 1 and 2 were 17 ± 8 and 10 ± 2 days, respectively (p < 0.001). The average time on dialysis for group 1 was 10.3 ± 6.3 days (range 2–22 days). All dollars values were adjusted to a 1989 level, and we excluded kidney acquisition costs and professional fees. The average per patient charges for group 1 were $41,474 ± 15,211 (range $21,926–$66,311), compared with $23,774 ± 3245 (range $19,317‐$29,702) for group 2 (p< 0.001). We adjusted the charge values to estimate actual costs by using our hospital's average cost:charge ratio of 0.90 for 1987 and 1988, and 0.85 for 1989; the group 1 and group 2 average patient costs were $37,157 ± 13,836 and $21,397 ± 2921, respectively. The difference between Medicare reimbursement (1987=$24,997, 1988=$20,832, 1989=$20,879) and estimated costs for group 1 patients was an average loss of $13,544, with two patients exceeding the reimbursement amount, and for group 2 patients, a gain of $1749, with five patients exceeding the reimbursement amount. We conclude that delayed graft function prolonged initial hospital stay, creating costs that exceeded the Medicare fixed reimbursement rate for these patients, resulting in loss of revenue. 1991 Pharmacotherapy Publications Inc.