On July 13, 2010, the Centers for Medicare & Medicaid Services (CMS)
published a proposed rule that would make several changes to the current
composite rate system of reimbursement for end-stage renal disease (ESRD)
facilities. Some changes were also made to the Monthly Capitation Payment for
physician services to ESRD patients. The changes were contained in the annual
update proposed rule for “Payment Policies Under the Physician Fee Schedule and
Other Revisions to Part B for CY 2011.” Following is a brief analysis of those
I. New ESRD Blended Payment Rate
Beginning on Jan. 1, 2011, providers will see the first signs of
implementation of the ESRD bundled prospective payment system (PPS). The ESRD
PPS will replace the familiar composite payment system that has been in place
since 1983 and the basic case-mix adjusted composite payment system that has
been in place since 2005. It also marks the beginning of a four-year transition
period during which Medicare will pay a blended rate for ESRD services. If they
so choose, providers may opt out of the transition period and immediately begin
receiving payments under the ESRD PPS.
During the first year of the transition period, the blended rate will be
based on 75 percent of the old basic case-mix adjusted composite payment system
rate and 25 percent of the new ESRD PPS rate. Since the blended rate will
include a portion of the ESRD basic case-mix adjusted composite payment system
rate, CMS is proposing to update those rates accordingly. The overall net effect
on the composite payment system rate will be an average increase of 2.2 percent
for all providers. Independent ESRD facilities will see an average increase of
approximately 2.2 percent, while hospital-based facilities will see an average
increase of approximately 2.1 percent. Although the market basket component will
receive a 2.5 percent increase, the drug add-on component will not be increased.
As a result, the overall increase for all providers will be slightly lower than
Following is a brief summary of the key rate changes for the composite
payment system portion of the new blended rate:
- The composite rate portion of the blended payment
amount will be increased by 2.5 percent to a national average of $138.53.
- An update to wage index adjustment.
- The drug add-on rate will not be updated and will remain at $20.33 per
- The ESRD wage index floor will be reduced from .6500 to .600.
II. One Percent Incentive Payment for Quality Reporting
In 2007, CMS implemented the Physician Quality Reporting Initiative (PQRI),
which provides an incentive payment to eligible providers who furnish certain
quality data to CMS. In 2011, providers will continue to be eligible for a 1
percent incentive payment for participating in the PQRI. Incentive payments were
previously only authorized through 2010. This proposed rule would extend
eligibility for those payments through 2014. For years 2012 through 2014,
providers will be eligible for a .5 percent incentive payment. Beginning in
2015, providers will be penalized for not submitting quality data.
III. One Visit Per Month Required for Home Dialysis
For home dialysis monthly capitation payment (MCP) services, CMS is proposing
to require at least one in-person, face-to-face encounter with the physician or
practitioner per month. This requirement, if made final, would be effective Jan.
1, 2011. In its commentary, CMS states that this is generally consistent with
the current standards of medical practice and will help ensure appropriate, high
quality medical care for home dialysis patients.
proposed rule includes a detailed breakdown of how each component of the
updated payment rates was determined by CMS. The proposed rule also includes a
brief overview and history of the various payment system changes for ESRD
providers over the last 10 years. This can be a useful resource to understand
the evolution of the ESRD payment system over the last decade.
CMS expects the final rule to be published later this summer.