Organ Procurement Under Federal Fire: How Cost-Plus Reimbursement, a 2020 Metric Rewrite, and the DCD Boom Turned Death Determination and Organ Allocation Into Healthcare’s Next Compliance Fight
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Table of Contents
The horror story that got everyone’s attention, and the boring machinery underneath it
DCD went from 2 percent to half the donor pool in 25 years, and almost nobody outside transplant noticed
What the Kentucky review actually found: 351 files, 103 flags, 73 patients, 28 maybes
Authorization is not consent, and the gap between them is where NRP lives
Follow the money: cost-plus reimbursement, standard acquisition charges, and the missing P and L
The 2020 metric rewrite worked exactly as designed, which is the problem
Out of sequence allocation, or how the pressure valve became the second scandal
What the January 2026 proposed rule does versus what the press release says it does
Second order effects for anyone building, investing, or contracting anywhere near this
Abstract
On August 5, 2026, HHS began decertifying Network for Hope, the OPO serving Kentucky plus parts of Indiana, Ohio, and West Virginia. It is the second OPO ever decertified, after Miami’s Life Alliance in September 2025. Before 2025, the number was zero, ever, despite decades of authority to do it.
The proximate trigger was a HRSA review of 351 Network for Hope cases from 2021 to 2024 where donation was authorized but not completed. 103 cases (29.3 percent) showed concerning features, 73 patients had neurological signs incompatible with donation, and at least 28 may not have been dead when procurement started.
The structural context: donation after circulatory death grew from roughly 2 percent of deceased donors in 2000 to 36.1 percent in 2023, 42.9 percent in 2024, and 49.2 percent in 2025, roughly 8,000 donors.
OPOs are cost-reimbursed regional monopolies with no margin pressure, evaluated since 2020 on two outcome measures that only count upside. The first four year recertification cycle under that rule ends in 2026, with tier actions expected January 2027.
Kidney allocation out of sequence went from about 2 percent to over 20 percent between 2019 and 2023 while kidney nonuse climbed from 19 percent to nearly 30 percent. Published work suggests clamping down on it could cost roughly 1,500 kidney transplants a year.
Watch three dockets, not one: the OPO Conditions for Coverage final rule expected late 2026, the FY2027 IPPS organ acquisition cost changes, and whatever HRSA’s allocation out of sequence workgroup finally puts out for comment.
The horror story that got everyone’s attention, and the boring machinery underneath it
The version of this story that traveled had a man named T.J. Hoover in it. Kentucky, 2021, overdose, declared brain dead, wheeled toward organ recovery while, by multiple staff accounts, thrashing, crying, and shaking his head. Staff who raised concerns say they were overruled. A congressman called it a horror movie during a July 2025 hearing, which is the kind of line that gets clipped and posted, and it did. The Kentucky AG has been looking at it. That single case has done more to move federal transplant policy than fifteen years of GAO reports and academic complaints combined, which says something a little grim about how health policy actually gets made in this country.
Underneath the viral part is a system that is genuinely strange if you sit with it for a minute. There are roughly 55 organ procurement organizations in the United States. Each one is a nonprofit with a federally assigned geographic monopoly, called a donor service area. They are paid on a reasonable cost basis by Medicare, meaning they file a cost report and get reimbursed for what they spent, not for what they produced and not at a negotiated rate. They have no competitors in their territory. Until September 2025 not one had ever been removed, despite CMS having the authority for decades and despite performance spreads between the best and worst that would get a normal vendor fired in a quarter. Public reporting based on 2021 data suggested roughly 42 percent of them were performing at a level that, under the new rules, would eventually put them out.
So the interesting question is not whether something bad happened in Kentucky. Something bad clearly happened in Kentucky. The interesting question is what kind of system produces that outcome and then takes four years to do anything about it, and whether the fixes being rolled out now address the machinery or just the headline. For an audience that thinks in incentives, denominators, and reimbursement mechanics, this one is unusually rich, because you can trace a fairly clean causal line from a well intentioned 2020 metric change straight to a patient on a table who was still moving.
DCD went from 2 percent to half the donor pool in 25 years, and almost nobody outside transplant noticed
Two ways to become a deceased donor. Donation after brain death, where the whole brain including the brain stem has irreversibly stopped and the patient is legally dead while a ventilator keeps the organs perfused. And donation after circulatory death, where the patient has a devastating injury, is not going to recover, is not brain dead, and the family agrees to withdraw life support. The team waits for the heart to stop, observes a no touch period, usually five minutes, declares death by circulatory criteria, and then moves fast because warm ischemia is eating the organs in real time.
DBD is clean, or at least conceptually clean. DCD is where the ethics get textured, because the patient is alive right up until the withdrawal, and the entire timeline is scheduled by humans. In 2000, DCD was about 2 percent of deceased donors. By 2023 it was 36.1 percent. By 2024, 42.9 percent. In 2025, roughly 8,000 DCD donors with at least one recovered organ, which is 49.2 percent of all deceased donors with recovered organs. Half. In 25 years an edge case became the modal case, and it happened without anything resembling a public conversation.
The technology drove a lot of it. Normothermic regional perfusion, which restores circulation in situ after death is declared, and ex vivo machine perfusion, which keeps organs alive on a pump after recovery, both took hold from roughly 2019 onward. NRP made DCD hearts possible starting in 2019. Machine perfusion approval for livers in 2021 made marginal DCD livers viable. Something like 15 percent of lung transplants in 2024 came from DCD donors. Contemporary DCD donors are older, heavier, more diabetic, more hypertensive, and more likely to have died of anoxia than their predecessors, which is exactly what you would expect from a pool being pushed outward under pressure.
Here is a detail that should make any data person twitch. The national registry does not have a field for whether NRP was used. Researchers infer it from the interval between circulatory arrest and aortic cross clamp, because that interval has a bimodal distribution: direct procurement runs short, NRP runs long, so people use cutoffs of 30 or 40 minutes as a proxy. An entire clinical technique, one that involves clamping the vessels to the brain after death is declared, is being studied nationally via timestamp arithmetic. That is not a footnote. That is the state of the evidence base for the fastest growing practice in procurement.
What the Kentucky review actually found: 351 files, 103 flags, 73 patients, 28 maybes
The numbers are worth stating precisely because the rhetoric around them has been loose in both directions. HRSA examined 351 Network for Hope cases between 2021 and 2024 in which organ donation was authorized but the donation was ultimately not completed. That denominator matters: these are the cases that got called off, which is already a selected sample and arguably the right place to look for near misses. Of those 351, 103 cases (29.3 percent) showed concerning features. 73 patients had neurological signs incompatible with organ donation, meaning levels of consciousness that were high or improving and should have prompted someone to stop much earlier. At least 28 patients may not have been deceased at the time procurement was initiated.
The review pointed at poor neurologic assessment, weak coordination between the OPO and the treating clinical team, questionable consent practices, and misclassification of cause of death, particularly in overdose cases. That last one is quietly important. Overdose deaths produce young donors with good organs and neurologic presentations that can look catastrophic and then improve. The pool that expanded the donor supply during the opioid era is the same pool where the death determination is hardest to get right. Multiple patients showed signs of pain or distress while being prepped. Most eventually died hours or days later. Some recovered enough to walk out of the hospital.
The federal response ran in stages. July 2025: HHS announces a reform initiative, HRSA directs the OPTN to reopen the case and impose a corrective action plan plus monitoring. Through late 2025 and into 2026: HRSA assesses whether deficiencies were corrected, CMS separately assesses whether the organization still meets Medicare conditions for coverage. May 2026: CMS does a comprehensive review and finds the same categories of problem still surfacing, specifically donor evaluation, adverse event review, and organizational administration. August 5, 2026: decertification begins.
Note the shape of that. A year of corrective action, monitoring, and technical assistance, and the follow up survey found the same three buckets. That is either evidence that the organization was unfixable or evidence that corrective action plans are a genre of paperwork rather than an intervention. Both readings have support, and if you have ever watched a nursing home or a hospital work through a CMS plan of correction, you already know which way to bet.
The dissent is real and should not be waved off. Network for Hope serves a service area with more than 3,000 people waiting for a lifesaving transplant, and the OPO trade association pointed out that in 2025 more than 46,000 deceased donor organs were transplanted nationally. Decertification is not a scalpel. It is closing a regional utility and hoping the replacement stands up cleanly, in a system where the transition mechanics for handing a DSA to a successor OPO have essentially never been tested at scale.
Authorization is not consent, and the gap between them is where NRP lives
This is the part that most people outside transplant get wrong, including a fair number of clinicians. When you check the box at the DMV, you are not consenting to a medical procedure. You are making an anatomical gift under your state’s version of the Uniform Anatomical Gift Act. That gift takes effect at death and, absent contrary indication from you, cannot be revoked by anyone else, including your family. In 2012 the OPTN formally switched its vocabulary from consent to authorization to reflect exactly this: gift law after death, informed consent before death, two different legal regimes stapled together at the moment of dying.
Which creates a seam. DCD requires interventions before death. Lines get placed. Heparin and other medications get administered. These are premortem interventions on a living patient, and they require actual informed consent from the patient’s surrogate, not gift law authorization. Meanwhile the anatomical gift itself is governed by a statute that, notably, does not specify how death is to be declared. It just says the gift takes effect on death and leaves the determination to whatever the applicable clinical and legal standards are. Those standards live in the Uniform Determination of Death Act, which is state law, and which the Uniform Law Commission tried to revise a few years back and then shelved when the drafting committee could not get consensus on how to handle brain death criteria. So the country has a rapidly growing procurement pathway sitting on top of a death statute that everyone agrees is imprecise and that nobody can agree how to fix.
Now layer NRP on that. Thoracoabdominal NRP involves restarting circulation after death has been declared by circulatory criteria, with the vessels to the head clamped so that brain perfusion does not resume. Proponents argue, with a coherent case, that the cardiac function was irreversible in the sense that mattered, that death already occurred, and that clamping does not cause death because the patient was already dead. Critics point out that if your working definition of death is the permanent cessation of circulation, and you then restore circulation, you have a definitional problem that no amount of committee language resolves. The professional societies have landed roughly on: NRP is ethically defensible, and also families should be told about it explicitly, in plain terms, as part of the DCD conversation.
Whether that disclosure actually happens, consistently, in the middle of the worst night of a family’s life, at 55 different organizations with 55 different scripts, is an empirical question that nobody has answered nationally. There is no field for it. There is no audit for it. Community engagement work on this keeps circling the same uncomfortable question: is a general DCD authorization sufficient to cover a procedure that some people, for reasons that are cultural and religious and not irrational, would experience as fundamentally different from what they agreed to. The honest answer is that the system has been running the experiment first and asking afterward.
Follow the money: cost-plus reimbursement, standard acquisition charges, and the missing P and L
Anyone who has done payer contracting will find the OPO economics genuinely disorienting. There is no negotiated rate. There is no price. There is a standard acquisition charge, which is an average cost per usable organ by organ type, calculated by taking the prior year’s actual organ acquisition costs from the Medicare cost report and dividing by the actual number of usable organs procured. That charge is what one entity bills another when an organ moves between an OPO and a transplant hospital. It is then reconciled against actual cost at settlement.
Chase that arithmetic and you find something interesting. The denominator is usable organs. Fixed costs are enormous: staffed coordinators on call around the clock, hospital development teams, transport, labs. If the organ count goes down, the per organ charge goes up, and Medicare true up covers the gap. If reimbursement exceeds actual cost, the OPO writes a check back. Kidney standard acquisition charges totaled roughly 4.7 billion dollars from 2015 to 2021, averaging about 31,381 dollars per kidney. Medicare is the dominant payer for organ acquisition but only pays its share, roughly half of total claimed acquisition costs in the years where the comparison has been published.
The upshot: an OPO does not really have a margin in the way a normal business does. It has a budget and a settlement. There is no financial penalty for a case that gets called off, because the cost of an unusable organ still flows into the pool that Medicare shares in. There is also no financial reward for restraint. What there is, and this is the part that matters, is a strong institutional and reputational reward for volume, plus a workforce whose entire professional identity is built around not letting a gift go to waste. Take away price signals and you do not remove incentives, you just relocate them into metrics and culture. Which is precisely where they went.
CMS has started poking at this. The FY2027 IPPS proposed rule published in April 2026 goes after organ acquisition reimbursement in several ways: how standard acquisition charges get reconciled, what counts as an allowable cost, and how overhead gets allocated. CMS’s stated view is that providers have been misallocating administrative and general costs using accumulated cost statistics in a way that inflates reimbursement, particularly around organs purchased from OPOs and services purchased under arrangement. There is also a proposal limiting public education costs, which lands directly on the OPOs that have spent real money on stadium sponsorships and awareness campaigns. Those campaigns have historically been booked as allowable cost. Congress has separately been circling the tax exempt status question from the Ways and Means side. Anyone who assumed prior cost report acceptance was protective is going to have a rough 2027.
The 2020 metric rewrite worked exactly as designed, which is the problem
For decades OPO performance was self reported against denominators the OPOs largely controlled. Everyone knew it was broken. The 2020 Conditions for Coverage final rule fixed it by moving to two objective outcome measures built on external death data: a donation rate and a transplantation rate, both denominated in inpatient deaths among patients 75 or younger with a primary cause of death consistent with organ donation. Benchmarks were set at the lowest rate among the top quartile, reviewed every 12 months, and published. At the end of a four year cycle, OPOs get tiered. Tier 1, the top quartile, auto recertifies. Tier 2 has to compete to keep its service area. Tier 3 gets decertified and cannot compete for anyone else’s territory.
It worked. Between 2021 and 2023, the number of Tier 1 OPOs doubled from 15 to 30 and Tier 3 dropped from 24 to 10. Over four years, donors rose 31 percent and transplants rose 25 percent. If the goal was to shake loose a system that had been leaving organs on the table, mission accomplished, and the people who fought for that rule against considerable resistance were right.
Now read the measures again as an incentive designer would. Numerator: donors recovered, organs transplanted. Denominator: eligible deaths, computed from external data, entirely outside the OPO’s control. Nothing in either measure penalizes an aggressive posture on a marginal case. Nothing captures a near miss, a family that felt steamrolled, or a patient who was prepped and then woke up. Those events were not in the scorecard at all until CMS started proposing, in 2026, to codify a definition of unsound medical practices and expand the list of reportable adverse events. Which is a tacit admission that the 2020 scorecard measured production and nothing else, for five years, during the exact period when DCD went from a third of the pool to half.
Add the cliff. The first recertification cycle under that rule ends in 2026. CMS is running recertification surveys through late 2026, expects a final rule around then, and plans to commence recertification and decertification proceedings for Tier 2 and Tier 3 OPOs in January 2027. For an organization sitting in Tier 3, the four year run up to that date was an existential sprint to raise a numerator, inside a cost reimbursed structure with no financial brake, using the only elastic supply available, which is DCD, in a donor population heavy on overdose deaths where neurologic prognosis is hardest. Nobody designed that. It is emergent. It is also entirely predictable in retrospect, which is the least useful kind of predictable.
Out of sequence allocation, or how the pressure valve became the second scandal
Recovery is only half the job. The organ still has to be placed, and placement runs off a ranked match run generated by the allocation algorithm. Sequential offers take time, cold ischemia accumulates, and for a marginal kidney the difference between the eighth call and the eightieth is the difference between a transplant and a discard. So OPOs developed a workaround: bypass the sequence and call a center known to say yes. Formally this is allocation out of sequence, tracked by bypass codes for operational OPO reasons, donor medical urgency, or expedited placement attempts.
Then it exploded. Kidney out of sequence allocation went from roughly 2 percent in 2019 to over 20 percent of kidney transplants by the end of 2023. Kidney nonuse over the same window went from 19 percent to nearly 30 percent, which is the tell: the workaround grew alongside the problem it was supposed to solve, not instead of it. By 2023, 15 percent of livers, 8 percent of lungs, and 3 percent of hearts were going out of sequence. Variation across organizations was enormous, from 0 to 43 percent at the OPO level and a nearly identical spread at the transplant center level. On the liver side, a bypass code was used on 3,483 livers over a two and a half year window, of which 2,216, about 69 percent, were transplanted, with donor characteristics similar to standard allocation livers but distinctly different recipients. Same organs, different people, decided by relationship rather than algorithm.
There is a defensible version of this. A kidney at high risk of nonuse, called out sequentially for six hours, frequently becomes a kidney that nobody gets. And there is an indefensible version, where a national queue built to be equitable quietly develops a side door and the people with the best relationships walk through it. Published analysis suggests that suppressing out of sequence allocation without building a replacement pathway could mean roughly 1,500 fewer kidneys transplanted, and, more damning, that a regulatory focus on nonuse rates would not even detect that loss.
The regulatory response has been fast and a bit blunt. In August 2025 the OPTN sent a memo telling members to follow the match run and stop using unapproved expedited placement variances. Starting November 2025, HRSA began producing monthly allocation compliance reports for every OPO, which is a meaningful shift from annual review to something closer to continuous audit. HHS now cites line skipping safeguards as having protected nearly 300 patients. Meanwhile continuous distribution for kidneys, the long planned successor to the current framework, got paused specifically so the board could work out how the new design would handle nonuse, out of sequence allocation, and expedited placement. In January 2026 a workgroup delivered three draft proposals: an administrative definition of what an offer even is, an expedited protocol for hard to place kidneys, and approaches to compliance. As of that month they were sitting with HRSA’s transplant division, HRSA general counsel, and the OPTN board, awaiting public comment.
Pause on that first one. In 2026, four decades into the national allocation system, the fix list starts with defining the word offer. Not because anyone is incompetent, but because the practice drifted so far from the policy that the vocabulary stopped mapping to reality. There is also published work showing out of sequence allocation was being underrecognized because of increasing use of free text bypass coding, meaning the measurement of the workaround was itself being routed around. Anyone who has ever tried to run analytics on top of a free text field in a clinical system is nodding right now.
What the January 2026 proposed rule does versus what the press release says it does
The press release is heavy on sanctity and stewardship. The rule text is narrower and, in a few places, more consequential than the framing suggests. Five things are actually in it. First, the transplantation rate measure excludes pancreata used for islet cell research, plus new recordkeeping to prove that the research is real. That sounds like housekeeping and is not: it closes a numerator loophole where organs routed to research counted toward a production metric. Second, CMS codifies a definition of unsound medical practices, expands the examples of reportable adverse events, and strengthens quality improvement expectations, so that governance and safety failures become independently actionable rather than only visible through the two outcome measures. Third, OPOs must assess and improve their placement performance for medically complex donors, older or sicker, which is a pointed response to the discard problem. Fourth, CMS keeps the tier architecture intact and removes barriers that discouraged high performing OPOs from competing for failing territories. Fifth, and most structurally interesting, it strikes an outdated provision that effectively limited certification eligibility to organizations recertified between 2002 and 2005, with CMS explicitly asking for comment on how to certify genuinely new OPOs.
That last one is the sleeper. For a generation the OPO map has been a closed set of incumbents with permanent territories and no entry path. Removing the eligibility limitation plus reducing competition friction plus actually decertifying two organizations plus a January 2027 tier action date adds up to something the sector has never had: contestable geography. Not a market exactly, since the reimbursement is still cost based and the entities are still nonprofits, but a system where a service area can change hands based on performance. Comments closed March 31, 2026, with a final rule expected late in the year and enforcement action 60 days after.
What the rule does not do is touch the death determination question. Nothing in it revises how death gets declared, nothing addresses NRP disclosure, nothing creates a registry field for whether NRP was used, and nothing standardizes what a family is told before authorizing DCD. CMS did issue quality and safety guidance in March 2026 that reinforces donor process safeguards and signals tougher surveys, and the expanded adverse event reporting will surface more of these events after the fact. But the actual clinical and legal core, when is a person dead and who decides, remains where it has been: in state statutes, professional guidelines, and 55 sets of local protocols. The federal government is regulating the OPO’s homework, not the underlying question the homework is about.
Second order effects for anyone building, investing, or contracting anywhere near this
A few things follow that are worth pricing in.
Compliance and audit tooling around allocation is now a real category. Monthly per OPO allocation compliance reports, a coming administrative definition of an offer, free text bypass coding that defeats analysis, and match run data that cannot even distinguish an offer that was neither accepted nor transplanted: that is a data quality problem with federal enforcement attached to it, which is the classic setup for infrastructure spend. Any organization whose regulatory standing depends on being able to reconstruct why a specific organ went to a specific center at 3 a.m. is about to discover its documentation is worse than it thought.
Perfusion is riding two horses. Machine perfusion and NRP are what made the DCD boom possible and are genuinely responsible for thousands of additional transplants, which is the strongest pro growth story in the space. They are also the technologies most exposed if the ethics conversation turns, particularly TA NRP, which depends on a definitional argument about death that has not been settled in law and is being litigated in bioethics journals rather than courts. So far. Anyone modeling that category should carry a real scenario for mandated disclosure requirements, a registry field, or state level restrictions, none of which are far fetched.
The medically complex donor mandate in the proposed rule is an underrated demand signal. Requiring OPOs to measure and improve placement of older and sicker donor organs, in a world where nearly 30 percent of recovered kidneys go unused, points straight at viability assessment, predictive acceptance modeling, and anything that shortens the decision loop at a transplant center. The bottleneck is not recovery anymore. It is a surgeon at 2 a.m. deciding whether to take a 78 KDPI kidney with imperfect information and a program level outcome metric hanging over them.
The trust variable is the tail risk nobody underwrites. This entire system runs on voluntary registration, and registration is a behavior, not a fixed asset. A steady drumbeat of national coverage about patients waking up on tables is exactly the kind of thing that moves DMV opt in rates, and unlike almost every other variable here, it is not something a rule can fix. The trade association’s response to the decertification made this point in a slightly panicked register, arguing that the action should not diminish public confidence in the broader system. That is a legitimate concern and also not how public confidence works.
Finally, a note on how the numbers get used, because this audience will notice. HRSA materials say 13 people die each day waiting for a transplant. The CMS proposed rule announcement says 17, and adds that someone joins the list every eight minutes. Both are federal, both are recent, and nobody reconciles them. The waitlist is over 100,000, the deceased donor organ count for 2025 was over 46,000, and the ratio between those two numbers has been the entire policy argument for 40 years. The reforms of the last six years were designed to move it and did, by 25 to 31 percent depending on which measure you pick, which is a genuinely large improvement by the standards of American health policy. The bill for how it was moved is now arriving, in Lexington first, and the interesting part is that the fix and the failure have the same author
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