Introduction to IOTA Model Updates
The Centers for Medicare & Medicaid Services CMS has announced a significant final rule concerning its Increasing Organ Transplant Access IOTA Model. Effective July 1 2026, this rule introduces several key modifications for the model's second performance year PY2, impacting kidney transplant hospitals nationwide. These updates aim to refine the six-year mandatory alternative payment model, which began on July 1 2025, by adjusting participant eligibility, enhancing performance assessment methodologies, and revising payment mechanisms. The IOTA Model's core objective remains to increase kidney transplant numbers, improve quality, and enhance patient experience, particularly for Medicare beneficiaries. This latest regulatory action reflects CMS's ongoing efforts to adapt the model based on initial implementation experiences and align it with evolving administrative priorities, as detailed in the Federal Register.
Background and Context of the IOTA Model
The IOTA Model, established under section 1115A of the Social Security Act, is a comprehensive initiative by the CMS Innovation Center designed to address critical challenges in organ transplantation. It focuses specifically on kidney transplant hospitals, seeking to drive improvements across the transplant continuum. The model was initially introduced through a December 4 2024 final rule, and the current adjustments stem from insights gained during its inaugural year and feedback received on a December 11 2025 proposed rule. CMS received 114 pieces of correspondence from a diverse group of stakeholders, including providers, health plans, and individuals, highlighting the broad interest and impact of this model. This final rule addresses many of these comments, while deferring others for future rulemaking.
Revised Participant Eligibility Criteria
A major aspect of the new final rule involves adjustments to which kidney transplant hospitals are eligible to participate in the IOTA Model. Originally, the 2024 Final Rule stipulated that eligible hospitals must have annually performed 11 or more kidney transplants for patients aged 18 or older in baseline years and performed over 50 percent of their transplants on adult patients. The latest rule introduces two significant changes.
First, CMS is finalizing the exclusion of Department of Veteran's Affairs VA medical facilities and Military medical treatment facilities MTFs from the IOTA Model for PYs 2 through 6. This modification aligns with sections 1835d and 1862a3 of the Social Security Act, which generally prohibit Medicare payment for services furnished by federal providers or agencies, with limited exceptions. This clarification ensures that model participation is consistent with established Medicare payment policies.
Second, CMS has raised the low volume threshold for participation. Previously set at a minimum of 11 kidney transplants performed annually during each of the three baseline years, this threshold has now been increased to 15 transplants per year. This adjustment responds to concerns from some IOTA participants regarding their ability to meet the previous threshold and reflects CMS's experience in operating the model. The agency believes this higher threshold better ensures statistical significance and protects beneficiary confidentiality while maintaining robust data standards.
Enhancing Performance Assessment: Risk Adjustment for Graft Survival
The performance of IOTA participants is a central component of the model, directly influencing incentive payments. The 2024 Final Rule established that performance in the quality domain would be assessed using the composite graft survival rate for post-transplant outcomes. Recognizing the inherent complexities in transplant outcomes due to varied patient and donor characteristics, CMS indicated that it would pursue rulemaking to incorporate a risk adjustment methodology.
This final rule implements that crucial risk adjustment. CMS will now utilize a modified risk adjustment framework based on the Scientific Registry of Transplant Recipients' SRTR's methodology for 1-year graft survival. This sophisticated adjustment will account for a minimum set of transplant recipient and donor characteristics, providing a more equitable and accurate assessment of hospital performance by controlling for the inherent risks associated with different patient populations and organ quality.
Furthermore, the rule clarifies the inclusion and exclusion criteria for this metric by excluding multi-organ transplants from the composite graft survival rate calculation. This change acknowledges the more complicated results and distinct challenges associated with multi-organ procedures compared to kidney-only transplants, ensuring that the metric accurately reflects kidney transplant outcomes. The rule also updates the allocation of points awarded for performance on this composite graft survival rate, a detailed description of which can be found in section II.B.2.b. of the final rule.
Revisions to Payment Mechanisms
The IOTA Model employs a two-sided payment structure where hospitals can receive upside risk payments or owe downside risk payments based on their final performance score. The 2024 Final Rule defined "Medicare kidney transplants" as those furnished to attributed patients with Medicare fee-for-service FFS as their primary or secondary payer.
A significant change in this final rule is the inclusion of Medicare Advantage MA beneficiaries in the calculation of both upside and downside risk payments. Previously, the model only considered Medicare FFS patients for these calculations. This expansion aligns the model's financial incentives with a broader segment of the Medicare population, encouraging participants to improve outcomes for MA beneficiaries as well. CMS had considered lowering the maximum upside payment from $15,000 to $10,000 in conjunction with this expansion, but ultimately decided against it due to stakeholder feedback, maintaining the $15,000 maximum.
Additionally, the rule modifies the timeline for remitting downside risk payments to CMS. IOTA participants must now remit the downside risk payment in a single sum within 60 days after the demand letter is issued. If full payment is not received within this 60-day period, the outstanding amount will be considered a delinquent debt, strengthening the enforcement mechanism for model accountability.
The final rule also reiterates the Extreme and Uncontrollable Circumstance EUC payment policy. This policy recognizes that unforeseen events can impact participant performance, and CMS will continue to apply determinations made by the Quality Payment Program QPP regarding EUC occurrences and their impacted areas.
Severability Clause Underscored
CMS emphasizes that if any provision of this final rule is deemed invalid or unenforceable, it shall be severable from other parts of the rule. This ensures that the remainder of the rule and existing regulations remain in effect, highlighting CMS's intent for the provisions to operate independently where possible, even if they share overarching policy goals.
