The troubled U.S. kidney transplant system is about to get an overhaul. Or at least, half of it is.

On July 1, 2025, a mandatory new payment structure for kidney transplants kicks in. The idea behind the Increasing Organ Transplant Access (IOTA) Model is to determine whether financial incentives for hospitals lead to more transplants, fewer inequities, and lower Medicare expenditures.

Hospitals in about half of U.S. donation service areas — a total of 103 facilities — will be required to participate in the model, which will subject them to performance-based payment incentives and penalties.

Other transplant programs will serve as a comparison group, continuing to operate their kidney transplant programs with standard Medicare payments.

Given the prevalence of kidney disease and the extraordinary cost to treat it, this is a development that journalists should follow both nationally and on the local level.

Here are some key points to know.

Why is this needed?

Despite recent advances in pig organ transplants, demand for kidneys greatly outstrips supply. In 2023, less than one-third of the approximately 90,000 people waiting for a kidney transplant received one.

That’s a big problem for patients and taxpayers, because transplantation provides better outcomes and is more cost-effective than dialysis for treating people with end-stage renal disease.

Dialysis is expensive, with payments to dialysis centers expected to cost Medicare $6.7 billion this year. Further, patients who receive kidney transplants have fewer complications and hospitalizations compared to those on long-term dialysis.

The new model is designed to encourage hospitals to perform more kidney transplants. Critics of the system cite multiple opportunities to increase donations, improve access for patients and increase overall efficiency. For example, evidence indicates that many organs are discarded unnecessarily.

What organizations can comment on the model?

Several organizations posted detailed comments about CMS’s initial proposal in May on their websites.

The American Society of Nephrology, the Organ Procurement and Transplantation Network, and consumer advocacy group Families USA offered generally positive comments, with the latter suggesting amendments to promote health equity, data collection and shared decision-making.

The American Association of Medical Colleges offered detailed suggestions for changes.

The American Hospital Association was highly critical, saying the model would disrupt the transplant system and incentivize sub-part matches.

Based on such feedback, CMS made several adjustments in its final rule that favor hospitals, including delaying the start date, increasing the maximum upside payment for hospitals, adjusting transplant targets, and removing three quality measures.

Which facilities will participate in the new model?

CMS used a random sampling process to select 103 kidney transplant hospitals with varying geography and level of experience with value-based care.

How does the model work?

The model will operate for six years, from July 1, 2025, through July 30, 2031.

Hospitals will be evaluated annually on three metrics:

• Achievement: Number of kidney transplants performed relative to a participant-specific target (60 points).
• Efficiency:  Organ-offer acceptance rate ratio relative to a national ranking or the hospital’s past organ-offer acceptance rate ratio (20 points).
• Quality: Post-transplant composite graft survival (20 points).

Starting in the second year, scores will determine whether participating hospitals receive a payment from CMS, owe a payment to CMS or neither.

For hospitals, the upside maximum payment of $15,000 per Medicare patient is much greater than the downside maximum negative payment, which is $2,000 per Medicare patient.

Hospitals will also receive beneficiary-level data to help them assess and improve their performance.

Will the model address disparities?

According to CMS’s website, participating hospitals will be “provided flexibilities” to address barriers to care for underserved populations such as transportation and out-of-pocket drug costs.

Further, the model “will encourage participating transplant hospitals to identify their underserved populations, address gaps in care and social determinants of health (including food insecurity and out-of-pocket prescription drug costs) for donors and transplant recipients, and develop strategies and tools to create a more accessible transplant process,” CMS said in a news release.

However, the agency excluded from its final rule two specific equity measures that appeared in the initial proposal:

• A health equity performance adjustment in the achievement score to reward transplants to low-income patients.
• A requirement that hospitals submit a plan to identify and address health disparities in their patient populations.

What are the transparency requirements?

Participating hospitals will be required to publish online the criteria for adding a patient to their kidney transplant waitlist.

Meanwhile, prospective patients will be notified if their hospital is participating in the model and will be able to seek care from a different Medicare provider, if they wish.

What happens after the trial period?

CMS is expected to use performance data from the experiment to inform future incentive models for kidney transplants.