OPO Hospital Waiver Litigation: Trends and Takeaways

Despite facing existential challenges in several federal courts, the performance metrics established by the Centers for Medicare and Medicaid Services’ (CMS) 2020 Final Rule for organ procurement organizations (OPO) appear to be, at least for now, withstanding scrutiny in litigation proceedings.  

In early March 2026, a district court in Nevada upheld CMS’s decision to grant a waiver request filed by a regional medical center, which sought permission for the provider to switch its designated OPO. The provider’s legacy OPO partner filed a lawsuit to dispute the waiver in federal court, arguing that CMS impermissibly relied on interim outcome measures while ignoring other performance statistics and evidence, and that the agency’s reliance on its new tier system for categorizing OPO performance was improper because it does not speak to the statutory criteria, (i.e., whether it would increase donations and make the treatment of patients for a specific hospital more equitable). However, after initially denying plaintiff’s motion for preliminary injunction, the court ultimately ruled in the government’s favor, finding that CMS’s reliance on the successor OPO’s higher interim tier rating and the legacy OPO’s deteriorating relationship with the hospital was not arbitrary and capricious, but rather based on substantial evidence.

This decision was the first of its kind, but — as we’re already seeing — may not be the last. The U.S. District Court for the Eastern District of North Carolina similarly denied another plaintiff OPO’s request for a preliminary injunction in litigation challenging CMS’s grant of a hospital’s waiver request after finding that the OPO had not demonstrated a likelihood of success on the merits. In so holding, the court rejected the plaintiff’s contention that CMS had improperly relied upon its annual tier rankings in granting the hospital’s waiver, stating that OPO’s tier ranking “plausibly reflects whether a particular waiver may lead to improvements in quality” pursuant to 42 U.S.C. § 1320b-8(a)(2)(B). This case is being stayed pending the outcome of plaintiff’s challenge to CMS’s 2020 rule.

More such decisions may be incoming. In recent months, several hospitals have submitted waiver applications to CMS — and the agency’s decision to grant such waivers has prompted separate litigation by OPOs who, like the plaintiff OPO in the recently decided case, object to CMS’s use of the 2020 metrics during waiver application reviews. The existence of these cases indicates that the embattled 2020 Final Rule has already begun to redefine the relationship dynamics between hospitals and their OPOs, regardless of any formal decertification decisions that may be announced when the current certification period expires in late 2026.

Context: Understanding OPO Waiver Applications and Related Litigation

Waiver applications are necessary because hospitals are not permitted to independently choose a partner OPO. As there can only be one OPO for each donation service area (DSA), hospitals are required by statute to work with the designated OPO (see 42 U.S.C. § 1320b-8(a)(2)(A)(i)-(ii)). The Medicare statute specifies that a hospital must have an agreement only with its designated organ procurement agency and further defines “designated organ procurement agency” to refer to the organ procurement agency designated for the service area in which such hospital is located.

If a hospital submits a waiver application to CMS, CMS is required to publish public notice of the application within 30 days of receipt and, prior to making a final determination, offer interested parties 60 days to submit written comments. As directed by statute, CMS must consider the following when deciding whether to grant a waiver:

• • Whether the waiver is expected to increase organ donation.
  • Whether the waiver will assure equitable treatment of patients referred for transplants within the service area served by the hospital’s designated OPO and within the service area served by the OPO with which the hospital seeks to enter into an agreement under the waiver.
  • Any potential impact on cost-effectiveness and quality.
  • The length and continuity of a hospital’s relationship with an OPO.

As we have discussed in previous articles regarding recent changes (and challenges to) OPO regulations, new outcome measures introduced in a 2020 Final Rule have dramatically altered the way in which OPO performance is evaluated — and, as some hospitals are beginning to explore, may provide another contextual reference point during waiver reviews.

While the organ transplant community will not feel the full impact of CMS’s new metrics until the current four-year certification cycle for existing OPOs expires in late 2026, the agency has annually reported on OPO performance and made those reports publicly accessible on CMS’s website. These interim reports do not determine whether an OPO will be recertified or decertified, or whether it will opt for nonrenewal; however, they do identify how OPOs (at the time of reporting) rank within the agency’s three-tier system. As such, the reports provide some insight into which organizations may be more likely to be decertified or not renewed in the final assessment year — information which could be used to support a waiver request.

Hospitals have been tracking and reacting to these reports by submitting waiver requests to CMS, seeking approval to work with an OPO other than the one assigned to their DSAs. OPOs, in turn, have begun filing lawsuits like the dispute described above in the hopes of overturning granted waiver requests.

Looking Ahead: Regulatory Considerations for OPOs and Hospitals

The recent decision in Nevada suggests that the courts may currently be skeptical of OPOs’ efforts to overturn waivers in court; however, the tide may turn in legacy OPOs’ favor if one or more of the four ongoing challenges to the 2020 Final Rule result in a vacatur decision. OPO plaintiffs in all the pending lawsuits argue that CMS’s Final Rule violates the Administrative Procedure Act (APA) in that it is arbitrary and capricious, exceeds statutory authority, and is inadequately reasoned. 

It remains to be seen how the 2020 Final Rule will fare in these lawsuits and whether it will ultimately be vacated; however, the outcome measures it establishes have already had a significant impact. Irrespective of whether CMS effectuates a formal removal of a DSA designation from an OPO in 2026, it has become clear that the agency’s tier-based performance model has introduced more uncertainty into the working relationships between OPOs and hospitals within DSAs. Our team is ready and available to assist health care entities that are navigating this tumultuous year in organ transplantation. For further details or clarification, please contact any author of this alert or your preferred Crowell & Moring lawyer.