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Institute of Medicine (US) Committee on Medicare Coverage Extensions; Field MJ, Lawrence RL, Zwanziger L, editors. Extending Medicare Coverage for Preventive and Other Services. Washington (DC): National Academies Press (US); 2000.

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Extending Medicare Coverage for Preventive and Other Services.

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APPENDIX D, PART 2Transplantation and Immunosuppressive Medications: Evolution of Medicare Policy Involving Transplantation and Immunosuppressive Medications—Past Developments and Future Directions

Robert S.Gaston, M.D.*

Medicare's policies for covering immunosuppressive drugs for recipients of renal and other solid organ transplants are unusual and often misinterpreted. They are unusual because they constitute one of the very few exceptions to Medicare's basic policy of excluding coverage of prescription drugs. This appendix reviews the history of Medicare coverage of both organ transplants and immunosuppressive drugs for transplant recipients. This review emphasizes the evolving relationship between technological advances and Medicare financing of transplantation. It also includes a section documenting the impact of Medicare policy on current beneficiaries, and, looking ahead, summarizes some possible future modifications.


Medicare Policy and the Science of Transplantation: 1972

The 92nd Congress passed H.R. 1 as section 299I of the Social Security Amendments of 1972 (PL 92–603).1 This legislation created a new entitlement for those (regardless of age) suffering from irreversible chronic kidney failure. Virtually all Americans, after a brief waiting period, would be eligible for Medicare benefits that included the costs of dialysis and/or renal transplantation. Senator Vance Hartke of Indiana, responding to the plight of those afflicted with the previously fatal disease of kidney failure, said, “How do we explain that the difference between life and death in this country is a matter of dollars?”2 The legislation passed after 30 minutes discussion, part of a frenzy of legislative activity immediately preceding the 1972 election, and was signed by President Nixon on October 30. Proponents of the program were optimistic regarding costs, projected to be approximately $500 million annually to treat about 40,000 beneficiaries. This ultimately monumental miscalculation was but the first of many. Hartke also stated that, “Sixty percent of those on dialysis can return to work but require retraining and most of the remaining 40 percent need no retraining whatsoever.”2

Subsection (f) of the bill authorized indefinite benefits for those remaining on dialysis, but terminated coverage for transplant recipients at 1 year following successful engraftment. At the time, it was generally accepted that for most end stage renal disease (ESRD) patients, chronic hemodialysis was the treatment of choice.2,3 Only those patients fortunate enough to have a well-matched living donor might expect to derive greater benefit from transplantation than dialysis, a total of fewer than 500 patients nationally in 1972.4 Receiving a cadaver kidney was associated with substantially greater mortality than remaining on dialysis, and only 40% of those transplanted maintained function 1 year later.3,5

In the early days of transplantation, a common assumption was that successfully engrafted patients were “cured,” no longer subject to the unaffordable costs of maintenance dialysis therapy that had precipitated passage of the Social Security amendments in the first place. Some hoped that long-term allograft survival might be achieved without long-term immunosuppression.68 However, seminal work in animals and early observations in humans during the 1960s established the necessity of ongoing immunosuppression to maintain stable allograft function.913 Without chronic pharmacological immunosuppression, most grafts were lost to acute rejection, chronic rejection, or recurrent kidney disease.14 The most commonly used immunosuppressants at the time were azathioprine and corticosteroids. Because these drugs were inexpensive, the cost of maintaining long-term allograft function was not an issue.2,3,5,15 In 1974, transplantation accounted for 18% ($51 million) of total Medicare ESRD expenditures ($283 million).1

Medicare Policy and the Science of Transplantation: 1978

By 1978, 5 years after implementation of the Medicare ESRD program, the landscape had changed. The overall costs of the program had proved much greater than anticipated, having risen to an annual expenditure of $1 billion dollars to treat 47,000 ESRD patients (increased from 19,000 in 1974).1 Projections that outlays might increase to $2.5 billion by 1985 and $4.5 billion by 1995 reflected fears that the program was “out of control.”2,16 The increased costs reflected substantial broadening of eligibility criteria for ESRD therapy.2,17 It had become generally accepted that the Medicare ESRD program was essentially a dialysis entitlement, with transplant expenditures accounting for only nine percent of outlays.1,18 Emerging experience indicated that the original hopes of rehabilitation were unlikely to be realized for chronic dialysis patients; over half of beneficiaries remained disabled.2,15

In response to these trends, the 95th Congress in 1978 modified the original ESRD legislation by passing PL 95–292, an act intended to control program costs, in part by allowing a more favorable reimbursement policy for the less expensive modalities of home dialysis and transplantation.5 This legislation, among other provisions, extended time limits on Medicare benefits after kidney transplantation from 1 to 3 years but did not address the need for outpatient drugs.1,19 Implicit in these modifications was the changing clinical perception that transplant recipients did indeed require ongoing care to ensure allograft function; transplant as “cure” was a fading notion.

Between 1974 and 1978, there had been only minor changes in the clinical practice of transplantation. The number of transplants performed annually grew slowly, from 3,000 to about 4,000, with the majority (80%) originating in cadaver donors and imparting 1- and 3-year graft survival of 54% and 42%, respectively.20,21 However, the most notable change was an increase in patient survival for recipients of cadaver kidneys. Graft failure no longer equated with death.4 Nonetheless, absent a living-related donor, an ESRD patient remained statistically better off on chronic dialysis.2,1517

Medicare Policy and the Science of Transplantation: 1984–1986

By the mid 1980s, the Medicare ESRD program was again changing dramatically, particularly as regards transplantation. Medicare ESRD expenditures had increased to $2.1 billion (less than had been predicted 6 years earlier, and in constant 1974 dollars to $1 billion). There was a 300% increase in outlay for a 600% increase in patients covered, as per patient costs of therapy actually declined, even in the face of an ever older population of ESRD beneficiaries.17,19 Transplant expenditures remained relatively small, accounting for only 6% of total Medicare ESRD outlays.

In previous years, there had been slow but steady improvement in graft survival for transplant recipients, but changes in immunosuppressive therapy in the mid-1980s revolutionized the field. Cyclosporine, first tested in humans in 1976, was approved for general use by the United States Food and Drug Administration in late 1983.22,23 Graft survival improved: 75 percent of recipients of cadaver kidneys could now expect to have functioning allografts after 1 year.20 In addition, cyclosporine use was accompanied by a dramatic decline in the morbidity associated with transplantation. This fact, in conjunction with improved clinical management of coexisting conditions, resulted in a corresponding increase in patient survival at 1 year, which rose significantly above the 90% level.2426

These advances led to at least two dramatic changes regarding perceptions of transplantation. First, both cadaver- and live-donor transplantation could now be performed with sufficient hopes of success that, in terms of both patient outcome and cost, renal transplantation was now the optimal therapy for end stage renal disease.21 The interests of both patient and government would be best served by promoting transplantation as much as possible vis-a-vis dialysis. For the first time, it became obvious that the availability of cadaver organs would become the key factor limiting access to transplantation.19 Second, the relationship between adequate maintenance immunosuppression and a successful transplant was now well-enough established, and the cost of cyclosporine sufficiently high, to make access to immunosuppressants an issue.19,27 Both were addressed by legislation passed in the mid-1980s. The National Organ Transplant Act of 1984 (PL 98–507) authorized:

  • creation of a National Task Force on Organ Transplantation,
  • assistance to organ procurement organizations,
  • establishment of the Organ Procurement and Transplantation Network (OPTN), and
  • creation of a scientific registry for organ transplantation.

In addition, provisions in the Omnibus Budget Reconciliation Act of 1986 (PL 99–509) authorized payment for immunosuppressive medications for 1 year after a Medicare-covered renal transplant, at least partially in response to the high cost of cyclosporine.

The final important change of the mid-1980s regarding Medicare and transplantation resulted from the increasing success noted in extrarenal transplantation after the advent of cyclosporine-based immunosuppression. In a series of policy changes occurring between 1986 and 1991, Medicare authorized coverage of cardiac and hepatic transplantation in beneficiaries, with immunosuppressant coverage subject to the same 1-year limitations as in the ESRD program.28 However, unlike coverage for ESRD patients, these benefits were available only to patients who qualified for Medicare by reason of age or disability.

Medicare Policy and the Science of Transplantation: 1994

In the early 1990s, with broadening clinical experience and the introduction of new technologies, transplantation became even more successful. For recipients of cadaveric renal transplants, 80–85% graft survival at 1 year became the norm, and patient survival continued to rise well in excess of 95%, even as the procedure was offered to older and more complicated patients.27 Outcomes for recipients of live-donor kidneys were also incrementally better.29 These short-term improvements made long-term graft survival an increasingly important issue. Three-year cadaver graft survival for transplants performed in the early 1990s now approached 75% (in excess of what had been expected at 1 year only a decade earlier).27 Even cadaveric transplantation was now clearly associated with improved longevity relative to dialysis.30

During this time, the cost-effectiveness of transplantation relative to dialysis became better defined. Transplantation accounted for 12% of Medicare ESRD outlays between 1991 and 1993, but annual costs per patient were roughly 40% of those associated with maintenance dialysis.31 In an insightful analysis of transplants performed between 1987 and 1990, Paul Eggers of the Health Care Financing Administration (HCFA) noted that the high first-year costs of transplantation were recovered by Medicare within 4.9 years for recipients of cadaver kidneys, and even sooner (4 years) if the organ originated in a live donor.32

In the Omnibus Budget Reconciliation Act (OBRA) of 1987, Congress asked the Institute of Medicine (IOM) to evaluate the entire Medicare ESRD program. Subsequently, in a comprehensive analysis of ESRD in the United States, the IOM committee reaffirmed the benefits of renal transplantation, while acknowledging the financial burden even a successful transplant imposed on recipients in terms of need for lifelong medical supervision and pharmacologicaltherapy.19 In its final report, published in 1991, the committee recommended that:

…Congress eliminate the three-year Medicare eligibility limit for successful transplant patients and thereby authorize a lifetime entitlement comparable to that of dialysis patients….

and that

…coverage for payment of immunosuppressive medications for kidney transplant patients be made coterminous with the period of entitlement.19

Contemporaneously, the Senate Finance Committee asked the Office of Technology Assessment to address Medicare coverage of immunosuppressants.33 The resulting document focused more closely on the issue of immunosuppressant coverage for all transplanted Medicare beneficiaries, without specifically endorsing any of several possible options for expansion. Despite strong support from the transplant community and patient advocacy groups for the IOM recommendations, the 102nd Congress in 1992 chose an intermediate approach. They authorized a phased-in extension of the time limit for immunosuppressive drug coverage from 1 to 3 years posttransplant. They did not address extension of overall Medicare eligibility for kidney transplant recipients beyond the 3-year limit.

Thus, over a 27-year period, Medicare reimbursement policies and clinical transplantation evolved in tandem, with the government adjusting policy to address both the evolving clinical practice of transplantation and the changing needs of Medicare beneficiaries. Through these efforts, renal transplantation became available to virtually every American with ESRD via access to Medicare entitlements that continue for 3 years after the procedure. Renal transplants account for the majority of transplants and the majority of Medicare transplant spending. Extrarenal transplantation is also now covered, but only for those who were otherwise Medicare eligible. For all these beneficiaries, provision of immunosuppressive therapy is guaranteed for 3 years after transplant. As they were adopted, these policies represented a reasonable response to the realities of clinical transplantation. Even well into the 1990s, the focus was on the early posttransplant period, attempting to ensure successful engraftment of the transplanted organ.

Recent clinical and scientific advances (as described in Appendix D, Part 1) have made the inpatient components of care amazingly routine and highly successful. In pursuing the new goal of long-term graft survival (see Box D-1), the ultimate fate of the allograft is increasingly dependent on what happens beyond the early posttransplant period.

Box Icon


Impact of Long-Term Transplant Survival. What does long-term graft survival mean to patients? For recipients of hearts and livers, it means life itself.


As the committee considers the expected effectiveness and cost of expanding Medicare coverage, it seems helpful to review current payment options and their impact on transplant recipients. As previously noted (see Appendix D Part 1), maintaining an allograft requires ongoing access to medical care and pharmacological immunosuppression beyond the 3 years covered by Medicare. For some impoverished patients, Medicaid assistance may provide the necessary coverage for both services and drugs, although income eligibility requirements and payment restrictions vary by state.47 For other transplant recipients, financial coverage for posttransplant care is a responsibility shared among private insurers, specifically developed state and pharmaceutical company programs, and individual patients and their families. Because the ongoing expenses of transplantation far exceed what most individuals can afford (with maintenance drug charges in excess of federal poverty guidelines for a family of two persons), financing has evolved into a creative dance among interested parties.

Current Medicare policies impose a substantial burden on a group of beneficiaries already heavily afflicted. For many recipients, these circumstances lead to what Lesley Sharp has called the “survival paradox”: devoting the entirety of one's energies to a desperate battle for medical survival against enormous financial obstacles.48,49

For patients with cardiac or hepatic failure, transplantation is financed on the framework of preexisting coverage. For a Medicare beneficiary, cost of the procedure and 80 percent of immunosuppressant costs are covered expenses, subject to the usual deductible and copay requirements. However, fewer than 5% of heart and liver recipients are over 65 years of age.50 Thus, many solid organ recipients establish Medicare coverage by qualifying for disability benefits during the illness preceding transplantation.47 At times, the transplant occurs before a patient has established Medicare eligibility; the care is often provided gratis by the transplant center or paid by state Medicaid funds, with Medicare eligibility established during the posttransplant phase (personal communication, L.Lockett, University of Alabama at Birmingham). Benefits continue as long as the patient retains eligibility, except that coverage for immunosuppressive drugs ends 3 years after hospital discharge following the transplant.

Under current policies, Medicare reimburses approximately 24% of expenditures for extrarenal transplantation. Medicaid reimburses approximately 18%, and 58% comes from other sources.51

For patients with kidney failure, the system is more complex. First, ESRD is a disease most common in patients of lower socioeconomic status, often evolving on a background of inadequate care for glomerular disease, chronic infection, and hypertension. Thus, a large proportion of ESRD patients come to renal transplantation without any private insurance coverage. When patients begin ESRD therapy, regardless of age and including consideration of employment history, they become eligible for Medicare. For home dialysis or transplantation, coverage begins immediately, rewarding those choosing these less expensive therapies. For in-center dialysis, there is a 90-day waiting period before coverage is effective. If there is preexisting group health insurance, it remains primary for 30 months, with Medicare as secondary payer (paying for some expenses not paid by the group health plan). Medicare remains in force for the duration of dialysis therapy. Since dialysis confers almost certain eligibility for disability, most Medicare ESRD patients also receive Social Security disability benefits. If an ESRD Medicare beneficiary receives a transplant, coverage for medical care and immunosuppressive drugs continues for 3 years after transplantation, then ceases until the beneficiary establishes eligibility by reason of age or disability other than by ESRD status alone. In 1997, private insurance absorbed 29%, Medicaid 13%, and Medicare fully 58% of the overall costs of renal transplantation in the United States.51

As a transplant recipient progresses from short-term to long-term survivorship, the social worker, through whom comes knowledge and access to other resources, often becomes the key facilitator of Medicare, Medicaid, or other payment for services. Some centers have even hired “transplant financial coordinators” with the explicit task of helping patients navigate coverage complexities.47,52 For ESRD beneficiaries of Medicare, the first challenge after coverage expires is dealing with the cost of physician visits, laboratory tests, and hospitalizations when necessary. One recipient noted,

We're told, “Return to work to pay back your debt to society,” and “Productivity is important.”… You see, the doctors think we're cured. But we're not cured…we're seen as unreliable employees, and health insurance companies redline transplant patients. If they hire you they may refuse to let you join the health plan.49

An approach frequently chosen is to maintain or establish disabled status by whatever means necessary, although the specific number doing so solely to maintain Medicare coverage is unknown. As of December 31, 1995, there were 72,785 persons with a functioning kidney transplant, 38 percent of whom were disabled and continued to receive Medicare entitlements on that basis.53 Many also receive Supplemental Security Income (SSI) and maintain Medicaid eligibility as well. In the current system, working enough to generate minimal income threatens all these benefits, a strong factor discouraging return to the workforce. The experience of many transplant social workers is that, due primarily to the high cost of health insurance, most small businesses and even many large corporations are reluctant to hire a transplant recipient, further discouraging return to work.

Eggers noted that, at the end of 1995, 26 percent of renal allograft recipients with functioning transplants had lost Medicare benefits due to time limitations on coverage.53 Although the exact number is uncertain, as many as half of these patients face the daunting costs of posttransplant care beyond 3 years with no Medicaid or private insurance resources.

Having effectively negotiated some continued access to a medical provider, the next challenge for a recipient is ensuring an adequate supply of the immunosuppressive drugs essential to sustaining long-term allograft function. Average retail costs for these drugs for most patients are between $7,000 and $14,000 annually, an amount greater than an average homeowner spends on mortgage payments.48 In addition, many recipients are faced with the continued expenses for other drugs (which Medicare had not covered in the first place). Eighty percent require antihypertensive therapy, and many require care for hyperlipidemia and other comorbid conditions.54,55

Coping with these challenges requires efforts on the part of patients and providers to find alternatives to Medicare coverage. Even though Medicaid usually covers immunosuppressive drug expenses, income limits for eligibility vary widely from state to state, and some states impose prescription limits. Twenty-eight states have high-risk insurance pools, again with varying eligibility, premium, and coverage provisions. Twenty-eight also have financed State Kidney Programs, although only 19 of these programs assist with anti-rejection medication costs.47 For the recipient who does not have access to any of these programs (estimated by the Congressional Budget Office to represent 10% of all transplant recipients in 1996), payment options are limited.56 These include paying out-of-pocket or seeking free medications by filing applications for indigent care from each individual pharmaceutical company. Applying directly to pharmaceutical companies for assistance is an onerous task made more complicated by the varying requirements imposed by each firm. Patient support groups, assisted at times by medical professionals, often become forums for illegal bartering of medications as the only way to acquire necessary drugs.49

For those patients who are unable to successfully negotiate these burdensome options and are unable to obtain needed drugs, the consequence at some point will be rejection and graft loss due to noncompliance. A recent survey found that 35% of Medicare-HMO patients, when faced with loss of drug coverage, either reduced or discontinued their medications.57 Most studies of noncompliance among renal transplant recipients find rates approximating 20%, with graft loss in perhaps 30–40% of those.5860 With recent dramatic reductions in acute rejection, and more transplanted organs surviving for longer periods of time, graft losses to noncompliance have become more visible. Given the increasing dependence of successful outcomes on advances in immunosuppressive therapy (see Appendix D Part 1), such losses have the potential to become more frequent as well.

Multicenter registries have not reliably collected data regarding noncompliance.61 In some single center reports, noncompliance may be the most common cause of graft loss beyond the first posttransplant year.60,6264 Unfortunately, factors leading to noncompliance and the degree of noncompliance necessary to result in graft loss are highly variable, and the relative impact of financial limitations on outcome is uncertain.65,66 Nonetheless, limited evidence and experience indicate that at least some portion of noncompliant behavior is attributable to recipients' inability to procure appropriate medication when Medicare coverage ends and no alternative resources are secured. Based on limited studies reviewed below and documented renal graft losses of 6% per year after the first year with somewhat higher loss rates for other organs, it is reasonable to estimate that perhaps a third to half of graft losses might reflect lack of financial access to immunosuppressive drugs.46,60,70 Thus, ongoing provision of immunosuppressive drugs might save 2–3% of all grafts at risk each year.

Several investigators found low socioeconomic status to predict poorer long-term outcomes in renal transplantation.64,6769 At least two groups of investigators have found significant benefit to ongoing provision of immunosuppressant drugs for such patients. In the previously noted studies of Sanders and colleagues, a cohort of recipients whose Medicare benefits expired a year after transplantation was at significant risk of late rejection and graft loss after stopping cyclosporine.69 When similar patients were furnished with maintenance cyclosporine via an indigent drug program, graft survival differences compared to a fully insured group of recipients disappeared.71 In a recently completed study, Woodward and coworkers compared renal allograft survival at 1 and 3 years after transplant in two time periods, stratified by median family income for each patient's ZIP code.70 For those transplanted in 1992–1993, when Medicare covered immunosuppressants for 1 year after transplantation, the researchers found no difference in graft survival at 1 year among recipients in different quartiles of income. By 3 years, however, transplant recipients in lower income groups had significantly lower graft survival (77 vs. 72%, p<0.001). In contrast, since 1995, after 3 years of coverage had been completely phased in, differences in graft survival at 3 years by income grouping had disappeared (80% vs. 78%, p=n.s.), implying that ongoing access to medications made a significant impact on outcome for lower- and middle-income recipients.


In 1972, Congress addressed the issue of ESRD care with the intention “to provide access to life-saving therapy for all who needed it where the costs of treatment were beyond the means of practically all individuals.”1 In the 1991 IOM report, it was noted that the Congress, via PL 95–292 in 1978, the National Organ Transplant Act of 1984, OBRA 1986, and the Transplant Amendments Act of 1990, had consistently encouraged organ transplantation.19 In the face of increasingly successful outcomes, and given that Medicare had made the commitment to fund the transplant procedure itself (with its substantial outlays during the first year), the previous committee saw no scientific basis supporting termination of access to care and immunosuppressant drugs at an arbitrarily defined time. They recognized that renal transplant recipients were not “cured,” and that ongoing care was as essential to survival as the thrice-weekly dialysis treatments for non-transplanted ESRD patients. Now, almost a decade later, rapid advances in the science of transplantation have made current policy even less consistent with the original congressional intentions. As the issue of long-term care for Medicare-covered transplant recipients is revisited, what changes might restore equilibrium between policy and practice?

Option A: Indefinite Benefits for ESRD Recipients with Coterminous Immunosuppressant Coverage for All Other Medicare Beneficiaries

In 1991, the Institute of Medicine committee recommended:

“that Congress eliminate the three-year limit on Medicare eligibility for ESRD patients who are successful transplant recipients and authorize an entitlement equal to that of ESRD patients who are treated by dialysis,” and “that coverage of immunosuppressive medications for kidney transplant patients be made coterminous with the period of a patient's entitlement.”19

This option would place renal transplant recipients on the same footing as ESRD patients receiving dialysis. Such a policy (especially if it came with no Medicare secondary payer requirements) would facilitate those able to return to the workforce doing so and would relieve potential employers of the burden of providing health insurance for this high-cost group. In the 1991 report, potential costs for such an approach, to include those recipients who had already lost benefits, was estimated to be $415 million–$500 million annually for 55,000 renal transplant beneficiaries by 1995.19 Costs for indefinite immunosuppressant coverage alone were projected to have reached approximately $300 million annually by 1995. These cost estimates did not address any potential offsets, which might include the cost of graft failure and retransplantation due to noncompliance, reduced disability benefits, and reduction of Medicaid spending for those eligible for both Medicare and Medicaid.

The IOM recommendation also did not address coverage for extrarenal allograft recipients. In 1989–1991, Medicare covered such a small percentage of extrarenal transplants that these costs were not an issue. Since then, the number of such beneficiaries has grown.

The response of the Congress to the IOM report (as well as the concurrently prepared OTA report) was to extend coverage gradually for immunosuppressants from 1 year to 3 years, making immunosuppressive drug coverage and other Medicare benefits coterminous for renal transplant recipients.19,33 Extrarenal transplant recipients saw their immunosuppressant coverage extended to 3 years as well.

In 1999, due to scientific and clinical advances, more recipients and allografts are surviving beyond 3 years. Even though the great majority of Medicare beneficiaries with transplants are renal recipients, needs of those with extrarenal grafts must be addressed as well.

Option B: Removing Limits on Immunosuppressant Coverage for Medicare Beneficiaries—H.R. 1115

H.R. 1115 was introduced in the 106th Congress on March 16, 1999, by Representatives Charles Canady and Karen Thurman of Florida, with 73 cosponsors. In essence, this bill would remove the 3-year limit on immunosuppressant coverage for all Medicare beneficiaries, without addressing the issue of loss of benefits at 3 years for ESRD recipients who do not qualify for Medicare by reason of age or disability. In 1996, the Congressional Budget Office projected Medicare costs for a similar proposal, which also did not address extension of other Medicare benefits for this group. The CBO projected savings of $166 million annually by reducing late graft loss; by 2002, these savings would mostly offset the additional $210 million to be spent on drugs, resulting in a projected net Medicare outlay of $44 million annually.56 Total Medicare ESRD expenditures were projected to rise by less than 1% annually as a result of such a change.46,56 Still, the quarter of renal allograft recipients who do not qualify for Medicare by reason of age or disability would continue to lose all benefits at 3 years and would have an even greater incentive to qualify for disability benefits and, thus, for Medicare. Given the original intent of the 1972 Social Security amendments to facilitate return of beneficiaries to productive life, the consequences of this legislation would appear to be counterproductive.

Option C: Creating a New Class of Medicare Beneficiary—S. 631

This legislation (the Immunosuppressive Drug Coverage Act of 1999) was introduced in the Senate by Senator Mike DeWine of Ohio, also on March 16, with six cosponsors. Like its House counterpart, it would remove the 3-year cap on immunosuppressant coverage for Medicare beneficiaries, while extending Medicare secondary payer requirements to shift some costs of long-term benefits to private insurers. Under the provisions of this legislative effort, all recipients whose transplant was financed by Medicare would receive immunosuppressant drug coverage for the life of the allograft, even after other Medicare entitlements were terminated.

The expected benefits of this proposal would be indefinite drug coverage for Medicare-eligible transplant recipients, ensuring access to necessary immunosuppressive support for the life of the allograft and reducing graft losses to financially related noncompliance. Incentives to remain disabled would be less than with H.R. 1115, although the effect of this bill's secondary payer requirements is uncertain. Costs, as estimated by the Lewin Group, would be significantly greater than the House version but still less than 2% of the Medicare ESRD budget, and less than 20% of the annual costs of erythropoietin for dialysis beneficiaries.72 A potential negative would be the vagaries of servicing a new class of beneficiaries not entitled to other Medicare benefits. These beneficiaries would thus not have Medicare coverage of visits to physicians/transplant centers for monitoring and other posttransplant care. Participating physicians would be placed in the unusual circumstance of supervising toxic immunosuppressive drugs without Medicare payment for blood monitoring or other care.

Option D: Other Potential Solutions and Modifiers

Several other initiatives and/or proposals might help transplant recipients pay for ongoing immunosuppressive therapy. Proposals to cover prescription drugs for all Medicare beneficiaries could help. However, circulating drafts of current proposals indicate an annual cap on benefits ($1,500–$2,000 per patient), which is far below the average cost of immunosuppressive drug regimens for transplant recipients (see Appendix D, Part 1).

At least two other options might be considered, both of which would offer Medicare benefits to all extrarenal transplant recipients, even if the transplant was not covered by Medicare. A first option would make virtually all solid organ transplant recipients eligible (with a suitable work history, regardless of age or disability status) for full Medicare benefits to include uninterrupted immunosuppressant drug costs. The second option would extend coverage only for immunosuppressive drugs for transplant recipients whose transplant was not covered by Medicare, as described in the OTA Report of 1991.33 The potential drawback to either approach, apart from cost, is the absence of precedent for extending Medicare benefits to patients not otherwise eligible by reason of age, disability, or ESRD status.

In order to attenuate the financial costs of adopting one (or more) of the above options, several modifying provisions might be considered. First, the new benefit might be phased in gradually for new transplant recipients only. Second, a Medicare immunosuppressive benefit might remain secondary to group health coverage available to a recipient. Third, a financial “cap” on immunosuppressive drug coverage beyond 3 years might limit costs while ensuring access to medications for transplanted beneficiaries. For example, a limit of $8,000 per year (plus a 20% copay) would easily cover a year of therapy with a combination of tacrolimus, mycophenolate mofetil, and steroids for an averaged-sized person. Given current knowledge, the least expensive maintenance protocol acceptable to most transplant physicians would include generic cyclosporine, azathioprine, and steroids, at a cost to Medicare of less than $5,000 per annum. The absolute amount of such a cap might be reevaluated on a year-to-year basis.


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Associate Professor, Department of Medicine, Associate Professor, Department of Surgery, University of Alabama at Birmingham, Birmingham, Alabama.

As the report of the IOM Committee on Extending Medicare Coverage was nearing completion and approaching public release, Congress was nearing action on a proposal to provide a limited extension of Medicare coverage of immunosuppressive drugs. The committee report provides a brief description but no additional analysis was possible.

The assistance of Cheryl Jacobs, Fairview University Transplant Services, Minneapolis, in preparing this discussion is gratefully acknowledged.

Copyright 2000 by the National Academy of Sciences. All rights reserved.
Bookshelf ID: NBK225248


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