backDepartment of Justice Civil Division Announces Accelerated Review Process for Benefits Fraud Whistleblower Cases
On May 27, 2026, the Department of Justice's (DOJ) Civil Division announced reforms to accelerate its review of False Claims Act whistleblower complaints alleging fraud against federally funded state-administered benefits programs. Under the new procedures, the Civil Division will prioritize these qui tam complaints by completing its initial review of the case within 60 to 120 days. At the conclusion of that review, the DOJ will decide to take one of three paths: (1) permit the relator to proceed with the action and assume primary responsibility for litigation; (2) continue with further government investigation; or (3) seek dismissal of the complaint under 31 U.S.C. § 3730(c)(2)(A) for lack of adequate specificity or for legal deficiency.
Assistant Attorney General Brett A. Shumate stated that the reforms are intended to help the Department “more rapidly identify and disrupt emerging schemes, strategically deploy enforcement resources to recover taxpayer money, and strengthen the government's broader fight against fraud.” The announcement noted that the initiative supports the Administration's broader anti-fraud efforts, including the Task Force to Eliminate Fraud and the National Fraud Enforcement Division, both launched earlier this year.
In addition to the accelerated timeline, the DOJ stated it will adopt a whole-of-government approach by referring new benefits fraud matters to the Criminal Division and the National Fraud Enforcement Division for evaluation of potential criminal violations. New matters will also be shared with the affected agency to evaluate potential administrative action, including payment suspension. The Department indicated it will continue to assess ways to improve its processes for the prompt resolution of benefits fraud qui tam actions.
The DOJ’s press release is available here.
Reporter: Marcia Foti, Washington, D.C., +1 202 626 9543, mfoti@kslaw.com; Rob Deconti, Washington, D.C. +1 202 626 9624, rdeconti@kslaw.com
CMS Finalizes Updates to the Increasing Organ Transplant Access Model Ahead of Its Second Year in Operation
On May 28, 2026, CMS published a final rule (Final Rule) updating and revising the Increasing Organ Transplant Access Model (the IOTA Model) for Performance Year (PY) 2 (and future performance years). The Final Rule, which follows a proposed rule published on December 11, 2025, and is set to be published in the Federal Register on June 1, 2026, makes several significant changes to the mandatory kidney transplant model—including raising the low-volume threshold for participant eligibility and incorporating Medicare Advantage (MA) beneficiaries into the payment calculation.
Background on the IOTA Model
Kidney transplantation represents the primary treatment method for most patients with end-stage renal disease (ESRD), yet sub-optimal kidney acceptance rates result in poorer outcomes for patients and increase the financial expenditures on Medicare in terms of payments for dialysis and dialysis-based enrollment. The National Kidney Foundation has highlighted that approximately 14 people die each day on the kidney transplant waitlist, and nearly 30% of kidneys procured for transplantation are never transplanted.
CMS designed the IOTA Model to incentivize transplant hospitals to overcome system-level barriers to kidney transplantation and drive increased utilization of available organs. The IOTA Model is a mandatory, six-year alternative payment model operated by the CMS Innovation Center and launched on July 1, 2025. Its stated objective is to test whether performance-based incentive payments to kidney transplant hospitals can increase access to kidney transplants for waitlist patients while maintaining (or improving) quality of care and reducing Medicare expenditures.
Participation in the IOTA Model is mandatory, with participation determined by a random sample of approximately 50% of all eligible kidney transplant hospitals. For its first year in operation, CMS selected 103 kidney transplant hospitals to participate in the IOTA Model. The model assesses IOTA Model participant performance during each PY across three performance domains: (1) achievement (measuring the number of kidney transplants performed relative to a participant-specific target); (2) efficiency (assessing the organ offer acceptance rate ratio relative to national ranking); and (3) quality (focusing on composite graft survival rate relative to national ranking).
The transplant hospital’s performance across these performance domains determines the transplant hospital’s payment outcome. CMS will either pay an upside risk payment to the transplant hospital, make no additional payment to the transplant hospital, or the transplant hospital will be required to pay back funds to CMS.
What Is Changing in the New Model?
The Final Rule makes several significant changes to the IOTA Model for the upcoming PY. CMS estimates that the finalized changes will yield mean net federal savings of approximately $88 million over the six-year model period and result in an estimated 4,766 additional kidney transplants.
Modifying the Risk-Adjustment Methodology for Quality Domain
Without risk adjustment, commenters argued that the original measure could cause IOTA Model participants to become more risk-averse with the types of organs they accept or disincentivize them from transplanting candidates who have a higher likelihood of graft failure, such as older candidates or those with comorbid conditions. In response, CMS is finalizing a modified risk-adjustment framework based on adult kidney graft survival first-year post-transplant risk-adjustment models for both deceased donor and living donor kidney transplants. The methodology also excludes multi-organ transplants (other than kidney/pancreas) from the composite graft survival rate, incorporates a Bayesian adjustment to stabilize performance scores for lower-volume participants, and updates the points allocation to eight scoring tiers (from the original five) to reduce sharp “cliff effects” between performance thresholds.
Increasing The Low-Volume Threshold and Exclusion of VA Facilities
Some IOTA participants close to the original low volume threshold (11 kidney transplants performed annually) expressed concern about the structural difficulties smaller hospitals face in meeting model goals and urged CMS to increase the threshold. To address these concerns, CMS is raising the minimum number of kidney transplants a hospital must have performed annually during each of the three baseline years from 11 to 15 in order to be eligible for selection as an IOTA Model participant. Moreover, CMS will exclude Department of Veterans Affairs (VA) medical facilities and military medical treatment facilities from IOTA Model participation for the remainder of the program given that Medicare does not pay for services furnished by these federal facilities and that their distinct operational contexts would introduce confounding variables.
Inclusion of Medicare Advantage Beneficiaries in Payment Calculation
Perhaps the most financially significant change, CMS is revising the definition of “Medicare kidney transplant” to include kidney transplants furnished to patients with MA coverage. Under the original 2024 Final Rule, upside and downside risk payments were calculated exclusively on transplants furnished to patients with traditional fee-for-service Medicare as their primary or secondary payer (excluding MA entirely). Commenters observed that due to increasing MA enrollment among Medicare beneficiaries, excluding these MA enrollees would reduce overall incentive payments under the model by more than 10%, with IOTA Model participants in areas of higher MA penetration facing disproportionately weaker incentives.
CMS determined this change was necessary to keep the model’s financial incentives competitive with MA plans (as otherwise, the incentives would erode by more than 10% over the performance period as the ESRD population migrates from traditional fee-for-service Medicare to MA). In addition, the original traditional fee-for-service Medicare-only calculation promoted geographic inequity (since transplant hospitals in areas of high MA penetration faced weaker incentives than those in areas of low-penetration) and also created a potential incentive for transplant hospitals to prioritize traditional fee-for-service Medicare patients over MA patients when allocating transplant resources. The revised definition eliminates this distortion by treating all Medicare transplants equivalently.
Impact on Participating Hospitals
The changes finalized in the Final Rule carry substantial practical implications for the approximately 95 kidney transplant hospitals that will be selected as IOTA Model participants going forward (reduced from 103 due to the higher volume threshold and exclusion of VA medical facilities and military medical treatment centers).
Financial Impacts
Financially, the inclusion of MA beneficiaries in the payment calculation reshapes the financial stakes of the model. Because the upside risk payment formula multiplies the per-transplant payment amount ($15,000 maximum) by the total number of “Medicare kidney transplants,” expanding the denominator base to include MA transplants materially increases the dollar magnitude of both potential rewards and potential penalties for participating transplant hospitals. For a transplant hospital where more than half of transplant recipients have MA coverage, this change more than doubles the transplant volume that will count towards its payment calculation compared to the prior traditional fee-for-service Medicare-only formula.
Operational and Regulatory Impacts
Participating transplant hospitals also face several new operational requirements, including a semiannual review of individualized organ offer acceptance criteria and a waitlist status change notification requirement. These transplant hospitals must also ensure that their publicly posted waitlist selection criteria and living donor selection criteria are reviewed and up to date by the end of each PY, with CMS monitoring compliance through documentation requests, surveys, questionnaires, audits, and site visits.
Though the financial costs associated with implementing these new operational and regulatory requirements are likely to be small, the requirements nonetheless demand new documentation workflows that providers will need to comply with. Participating transplant hospitals should consider taking steps to operationalize the new requirements, including updating acceptance criteria documentation, establishing electronic notification protocols for waitlist status changes, publicly posting living donor selection criteria, and recalibrating their organ acceptance strategies in light of the new risk-adjustment framework.
The Final Rule becomes effective 30 days after publication in the Federal Register, with substantive changes taking effect at the start of PY 2 on July 1, 2026.
Reporter, K. Tyler Dysart, Atlanta, GA, +1 404 572 3532, tdysart@kslaw.com
Department of Justice Announces FCA Settlement with Psychiatric Hospital Operator
On May 27, 2026, the Department of Justice (DOJ) announced a False Claims Act settlement with psychiatric hospital operator Oglethorpe Inc. (Oglethorpe) and three executives resolving allegations that they violated the False Claims Act by knowingly failing to return overpayments received from the Medicare program for the admission of beneficiaries to three of Oglethorpe’s Ohio facilities when those patients did not qualify for inpatient psychiatric care. The DOJ alleged that, from 2021 through the present, Oglethorpe and its executives knowingly failed to return overpayments it received to Medicare that Oglethorpe’s own consultants identified as part of claims reviews completed in connection with a Corporate Integrity Agreement (CIA), which Oglethorpe entered into after a prior 2021 False Claims Act settlement. As part of the settlement, Oglethorpe and the executives agreed to pay $32,000,000, and also agreed to be voluntarily excluded from Medicare and all federal healthcare programs for 10 years due to violations of the CIA. The settlement resolved an underlying qui tam filed by four relators who were former Oglethorpe employees, including a registered nurse, chief fiscal officer, regional director of operations, and director of financial operations.
The DOJ’s press release also noted the launch of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division, which it describes as intended “to enhance the administration’s war on fraud, waste, and abuse in federal programs.” The press release notes that while the Civil Division Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida were responsible for the resolution in this matter, “FCA matters will continue to be on the forefront of the battle against fraud, and the Civil Division’s FCA work will support and advance the mission of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division.”
The facts described in the settlement are only allegations. The DOJ’s press release, which contains a link to the settlement document, can be found here. The DOJ’s press release for the prior 2021 FCA settlement can be found here.
Reporter: Hamilton Craig, Washington, D.C., +1 202 626 8976, hcraig@kslaw.com
Editors: Chris Kenney and Ahsin Azim
Issue Editors: Morgan Cronin and Gregory Fantin