A better understanding of high-cost kidney transplant patients would be useful for informing value-based purchasing strategies by payers. This retrospective cohort study was based on the Medicare Provider Analysis and Review (MEDPAR) files from 2003 to 2006. The focus of this analysis was high-cost kidney transplant patients (patients that qualified for Medicare outlier payments and 30-day readmission payments). Using regression techniques, we explored relationships between high-cost kidney transplant patients, center-specific case mix, and center quality. Among 43 393 kidney transplants in Medicare recipients, 35.2% were categorized as high-cost patients. These payments represented 20% of total Medicare payments for kidney transplantation and exceeded $200 million over the study period. Case mix was associated with these payments and was an important factor underlying variation in hospital payments high-cost patients. Hospital quality was also a strong determinant of future Medicare payments for high-cost patients. Compared to high-quality centers, low-quality centers cost Medicare an additional $1185 per kidney transplant. Payments for high-cost patients represent a significant proportion of the total costs of kidney transplant surgical care. Quality improvement may be an important strategy for reducing the costs of kidney transplantation.