EDITORIAL

Making Dollars and Sense out of LiverTransplantationMichael AbecassisDivision of Organ Transplantation, Feinberg School of Medicine, Northwestern University, Chicago, IL

Received May 15, 2009; accepted May 19, 2009.

See Article on Page 1270

Healthcare costs in the United States are rising at analarming rate. The cost and quality of healthcare deliv-ery are coming under increased scrutiny by both publicand private payer sectors with the clear intent of in-creasing the ability of the consumer to use value-drivendecisions in purchasing healthcare services. Achievingthis objective will require higher levels of transparencyfor both cost and quality than are currently available.The cost of transplant services is diminutive in compar-ison with the overall cost of healthcare, amounting to4% of gross healthcare expenditures. However, thereare particular peculiarities associated with both thecost accounting and reimbursement that differentiatetransplantation from other health disciplines. Theseinclude the high per-unit cost, organ-acquisition costcenters (the last bastion of cost-based reimbursement),and finally “carve-out” contractual agreements result-ing in case rates from private payers for various phasesof transplantation care.1,2

Because the Model for End-Stage Liver Disease(MELD) score reflects the severity of illness of patientsundergoing liver transplantation, it is intuitive that pa-tients with high MELD scores require a higher utiliza-tion of resources and therefore that the MELD score isa significant cost driver. Previous reports have estab-lished an association between the MELD score andlength of stay (LOS), which is also an established costdriver, and have shown a strong correlation betweenthe MELD score and costs. Axelrod et al.3 showed thatthe cost of transplant admission correlated directlywith the MELD score, and they also demonstrated thatthe increased cost was attributable almost directly to

longer LOS for the patients with the higher MELDscores. Washburn et al.4 demonstrated a correlationbetween the MELD score and hospital charges, includ-ing charges 3 months pre-transplant, charges for thetransplant admission/episode, and charges 3 monthspost-discharge. Both reports comprised single-centerstudies that correlated granular clinical outcomes withinstitutional financial outcomes.

In this issue of Liver Transplantation, Buchanan andcolleagues5 analyze the MELD score as a predictor oftotal liver transplantation cost. In an attempt to vali-date previous observations in the broader context ofmultiple institutions, the authors have used a noveldatabase link between billing claims from a large pri-vate payer and the Organ Procurement and Transplan-tation Network (OPTN) registry. In order to overcomethe flaws inherent to large registries such as the OPTNregistry, the authors have analyzed patient-specificclaims for 1 year preceding and 1 year following trans-plantation for patients identified in both data sets. Thisapproach, which adds granularity and context to OPTNdata, confirms the previously demonstrated correlationbetween the MELD score, the pre-admission cost, andthe transplant episode cost, which is driven mainly byLOS. The study fails to show a correlation between theMELD score and posttransplant and re-admissioncosts.

Despite the obvious novelty and merits of linking rel-evant data sets, the study does not fully leverage theuse of claims data to address some important issues.For instance, although the current study confirms thepreviously demonstrated correlation between theMELD score and both LOS and cost, there are varyingunderlying reasons that LOS might exceed established

Abbreviations: LOS, length of stay; MELD, Model for End-Stage Liver Disease; OPTN, Organ Procurement and TransplantationNetwork.Address reprint requests to Michael Abecassis, M.D., M.B.A., Division of Organ Transplantation, Feinberg School of Medicine, NorthwesternUniversity, Galter Pavilion, Suite 17-200, 675 North St. Clair Street, Chicago, IL 60611. Telephone: 312-695-0359; FAX: 312-695-1817; E-mail:m-abecassis@northwestern.edu

DOI 10.1002/lt.21851Published online in Wiley InterScience (www.interscience.wiley.com).

LIVER TRANSPLANTATION 15:1159-1161, 2009

© 2009 American Association for the Study of Liver Diseases.

clinical care pathways. Moreover, there are indirect costdrivers associated with the higher MELD score thatmay not be explained by LOS. Because claims data arespecific to resource utilization, it would be helpful todissect the anatomy of these costs. Also, the findingthat postdischarge costs are unrelated to the MELDscore may be related to the fact that patients withhigher MELD scores have a higher chance of beingdischarged to a chronic rehabilitation facility, and thesecosts would not be captured as an institutional chargebut would be included in the patient’s claims data un-der a different provider.

Nonetheless, the study reiterates 3 important con-cepts. First, in the setting of fixed reimbursement, un-derstanding and optimizing cost is essential in achiev-ing sustainable financial outcomes. Cost patterns forliver transplantation do not seem to follow traditionalstatistical patterns, showing instead normal distribu-tions associated with significant skews to the right.6

These patterns do not conform to standard contractualformats with fixed reimbursement complemented byoutlier stop loss protection from financial risk. Clearly,the magnitude of cost depends on the severity of illness(MELD score); therefore, clinical care pathways shouldinclude an assessment of the severity of illness in orderto justify deviations. Second, reimbursement schemesand pricing strategies should incorporate an evaluationof the severity of illness because reimbursement-to-costratios translate directly into financial outcomes. Asmentioned by the authors, the Center for Medicare andMedicaid Services has recently issued a revised classi-fication of diagnosis-related group reimbursement thatwill drastically change the assignment of resource uti-lization based on patient comorbidities and the pres-ence or absence of postoperative complications. Amongtransplant codes (72 CFR 47130), this will affect heartand liver transplantation. However, the list of comor-bidities does not include variables that reflect the se-verity of liver disease, particularly the MELD score. Theauthors allude to the possibility of a tiered approach toreimbursement based on disease severity but providelittle insight into how the claims data could be used tothis end.

Also, both the clinical and financial outcomes follow-ing liver transplantation depend on the quality of thegraft. Although no standardized measure of graft qual-ity exists, there appears to be a correlation between thedonor risk index and clinical outcomes.7 We have pre-viously observed that, regardless of the MELD score, asthe donor risk index increases, so do LOS and cost.8

Therefore, it would seem important to recognize theimpact of both recipient and donor variables on cost. Inour own analyses, outlier thresholds do little to protecttransplant center profitability, although these cansoften the financial impact of high-risk cases (unpub-lished data). It is also evident that despite risk adjust-ment, expected clinical outcomes, including utilizationof resources, may not take into account all the relevantvariables that can exacerbate the discrepancy betweenexpected and actual outcomes, not only clinically butalso financially.

Third, although the authors have analyzed the costsassociated with transplantation, the cost of not under-going transplantation is not addressed. The study pro-vides a glimpse into nontransplant costs by includingpretransplant costs. However, these cost data are in-cluded only for patients who ultimately undergo trans-plantation. A recent report9 has compared the cost of aliving donor to that of not undergoing living donor livertransplantation, which includes the cost of managingpatients on the waiting list as well as patients who areallocated a deceased donor organ while on the waitinglist. Most transplant centers must deal with patientswho undergo liver transplantation as well as patientswho are supposed to undergo liver transplantation butdo not either as a result of the organ shortage or be-cause they develop a contraindication to liver trans-plantation. The costs involved in the care of these pa-tients are an integral part of caring for this patientpopulation. In most transplant centers, the same per-sonnel, resources, and cost centers are involved forboth scenarios. Therefore, a complete analysis of livertransplant costs should include the cost of care forpatients who do not ultimately undergo transplanta-tion. These data would help address the question of thecost effectiveness of transplantation, the answer towhich has remained elusive.

The study tangentially addresses reimbursement, al-though it should be implicit that any focus on cost musttake reimbursement into consideration. Thus, thequestion remains: does the MELD score affect trans-plant center profitability? Others have shown that bili-ary complications following liver transplantation arecostly and that the burden of cost (and risk) falls pri-marily on the payer.10 Current trends point towardincreasing transparency by providers with respect toclinical outcomes and cost. Also, federal regulatoryforces dictate the use of marginal organs for transplan-tation that are known to be associated with higher costand worse clinical outcomes. As the payer communitycontinues to seek value-based purchasing of transplantservices, it will be increasingly important for transplantcenters to understand both the numerator and denom-inator of the value equation. Value equals quality di-vided by unit cost. Value-based purchasing impliesbuying more quality at a lower cost. In reality, however,reimbursement has more to do with pricing than withcost, and most transplant centers have little apprecia-tion of true costs; this makes cost-based pricing diffi-cult. As a result, reimbursement is based increasinglyon market-based strategies versus cost-based strate-gies. This commoditization of transplantation servicesthreatens to limit transplantation to good-risk recipi-ents and to the selective use of optimal grafts. In avalue-driven market, one of the unintended conse-quences might be that transplant centers are finan-cially rewarded for selecting low-risk recipients andhigh-quality donors and financially penalized for trans-planting high-risk recipients and using marginal do-nors, whereas current federal regulations mandate thelatter. The overriding transplant regulations on organallocation (42 CFR Parts 405, 482, 488, and 498) man-

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date that organs be allocated to the sickest patientsfirst, and recent regulatory efforts have also mandatedthe use of marginal donors (42 CFR Parts 413, 441,486, and 498).

Given these clinical and economic dynamics, reportssuch as the current study are needed to increaseawareness about cost drivers in transplantation. How-ever, this type of analysis should be viewed in the con-text of reimbursement and the financial implications ofregulatory mandates, including national recipient/or-gan selection and allocation policy. As this field of so-cioeconomic study evolves, it is clear that cost data willneed to be reconciled with reimbursement schemes andpricing strategies so that transplantation can remainboth financially and economically sustainable while ad-hering to the relevant regulatory mandates.

REFERENCES

1. Abecassis M. Financial outcomes in transplantation—aprovider’s perspective. Am J Transplant 2006;6:1257-1263.

2. Abecassis M. Organ acquisition and cost centers. Part I:Medicare regulations—truth or consequence. Am J Trans-plant 2006;6:2830-2835.

3. Axelrod DA, Koffron AJ, Baker T, Al-Saden P, Dixler I,

McNatt G, et al. The economic impact of MELD on livertransplant centers. Am J Transplant 2005;5:2297-2301.

4. Washburn WK, Pollock BH, Nichols L, Speeg KV, Halff G.Impact of recipient MELD score on resource utilization.Am J Transplant 2006;6:2449-2454.

5. Buchanan P, Dzebisashvili MS, Lentine KL, Axelrod DA,Schnitzler MA, Salvalaggio PR. Liver transplantation costin the MELD era: looking beyond the transplant admis-sion. Liver Transpl 2009;15:1270-1277.

6. Snyder J, McNatt G, Preczewski L, Abecassis M. Distribu-tion of transplant costs—managing financial risk. Am JTransplant 2007;7(suppl 2):395.

7. Feng S, Goodrich NP, Bragg-Gresham JL, Dykstra DM,Punch JF, DebRoy MA, et al. Characteristics associatedwith liver graft failure: the concept of a donor risk index.Am J Transplant 2006;6:783-790.

8. Axelrod DA, Schnitzler M, Salvalaggio PR, Swindle J, Abe-cassis MM. The economic impact of the utilization of liverallografts with high donor risk index. Am J Transplant2007;7:990-997.

9. Northup PG, Abecassis MM, Englesbe MJ, Emond JC, LeeVD, Stukenborg GJ, et al. Addition of adult-to-adult livingdonation to liver transplant programs improves survivalbut at an increased cost. Liver Transpl 2009;15:148-162.

10. Englesbe MJ, Dimick J, Mathur A, Ads Y, Welling TH,Pelletier SJ, et al. Who pays for biliary complications fol-lowing liver transplant? A business case for quality im-provement. Am J Transplant 2006;6:2978-2982.

EDITORIAL 1161

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