November 24, 2008
The Centers for Medicare and Medicaid Services (“CMS”) promulgated the CY 2009 Physician Fee Schedule (“PFS”) on October 30, 2008. The PFS was published in the Federal Register on November 19, 2008. In the PFS, CMS sets forth provisions related to the payment for renal dialysis services furnished by end-stage renal disease (“ESRD”) facilities, including several modifications to the method of reimbursement for such services. The significant modifications in reimbursement for renal dialysis services include: (i) the completion of the four year transition from the previous Metropolitan Statistical Area (“MSA”) wage adjusted composite rate to the core based statistical area (“CBSA”) wage adjusted rate wherein payment will be based one hundred percent (100%) upon the revised geographical adjustments; (ii) the reduction of the wage index floor; (iii) the increase in the composite rate component of the payment system by one percent (1%) pursuant to the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”); and (iv) the establishment of a site-neutral composite rate for hospital-based and independent dialysis facility pursuant to MIPPA.
1. Completion of the transition to the CBSA wage-adjusted rates
CMS uses a wage index to adjust the composite rate for different wage levels covering the area in which dialysis facilities are located. In the CY 2006 Physician Fee Schedule Final Rule, CMS adopted the CBSA based geographic area designation to develop new definitions for urban and rural areas and implemented a four year transition period to reduce the impact of the introduction of CBSA based geographic designations on providers. The transition period allowed for a blend of the old MSA based rule adjustment payment rate and the CBSA based wage adjustment rate to reduce the impact of transition of providers. In CY 2009, the transition period will end and the composite rate will be based entirely on the CBSA based wage index.
2. Reduction of the wage index floor
CMS uses a wage index floor to ensure that patients in certain areas that have low wage index values have access to quality dialysis care. However, CMS is reducing the wage index floor and is reconsidering the need for the floor in coming years. CMS stated that its eventual goal is to eliminate the wage index floor. For CY 2009, CMS is reducing the wage index floor from .75 to .70.
3. Increase in composite rate by one percent
CMS noted that under MIPPA, the payment system for renal dialysis services is amended to include an increase of one percent (1%) to the composite rate component of the payment system for services furnished after January 1, 2009 and before January 1, 2010. MIPPA also includes an increase of one percent (1%) to the composite rate component of the payment system for services furnished on or after January 1, 2010.
4. Adoption of a site-neutral composite rate
Prior to the adoption of MIPPA, hospital-based dialysis facilities were paid at a higher base composite rate than independent dialysis facilities. Under MIPPA, Congress instituted a site-neutral composite rate to apply to both hospital-based and independent dialysis facilities. The PFS recognizes this change and states that the new composite rate will be based upon the independent dialysis facilities rate. As a result, the CY 2009 base composite rate for both hospital-based and independent dialysis facilities will be $133.81.
Please contact one of our attorneys if you have any questions about these reimbursement modifications.