CMS Finalizes Rules for End-Stage Renal Disease Dialysis Payment System, Incentive Program

November 4, 2014

On Friday, Oct. 31, 2014, the Centers for Medicare and Medicaid Services (CMS) published a final rule regarding the end-stage renal disease (ESRD) prospective payment system (PPS) for renal dialysis services furnished to beneficiaries on or after Jan. 1, 2015, and also regarding the ESRD quality incentive program (QIP).

The final rule continues a base reimbursement rate of $239.02 per dialysis treatment for renal dialysis services provided in calendar year (CY) 2015, as mandated by the Protecting Access to Medicare Act of 2014 (PAMA), which, in part, replaced the drug utilization adjustment finalized by CMS in the 2014 ESRD PPS final rule.

The final rule also codifies a provision of PAMA that delays the incorporation of oral-only drugs into the ESRD PPS until January 1, 2024, at the earliest.

In addition to revising the 2015 CY ESRD PPS payment policy, in the final rule CMS:

  • Rebased and revised the ESRD bundled (ESRDB) market basket using a blend of two pharmaceutical price proxies.
  • Updated the outlier policy for CY 2015 by revising the fixed-dollar loss and Medicare allowable payment amounts, which are used in calculating a case’s eligibility for outlier payments. CMS believes that the changes in the outlier policy will allow more cases to qualify for outlier payments to bring payments for outlier services closer to the target of 1 percent of total ESRD PPS payments.
  • Updated the labor-related share of the ESRD PPS from 41.737 percent to 50.673 percent, based upon the rebase and revision of the ESRDB market basket. CMS acknowledged that some ESRD facilities, such as rural facilities and those located in core-based statistical areas (CBSA) with wage indexes below 1.0, will experience reduced payments due to the increase in the labor-related share, while other facilities located in CBSAs where wage indices are above 1.0 will experience increased payments. As a result, CMS will finalize the adjustment over a period of two years.
  • Set forth requirements for the ESRD QIP in payment year (PY) 2017 and 2018. Specifically, CMS announced:
    1. For PY 2017, the removal of one clinical measure, hemoglobin greater than 12g/dL, and the adoption of the standard readmission ratio, which assesses the rate of unplanned readmissions of ESRD patients to an acute care hospital within 30 days of an index discharge from an acute care hospital.
    2. For PY 2018, the addition of two new clinical measures, the standardized transfusion ratio and pediatric peritoneal dialysis adequacy, and three new reporting measures − pain assessment and follow-up, clinical depression screening and follow-up, and the National Healthcare Safety Network’s healthcare personnel influenza vaccination measure. In addition, for PY 2018 the mineral metabolism reporting measure will allow the submission of both serum phosphorus and plasma phosphorus measures.
    3. Beginning with PY 2018, the use of a new scoring methodology for the ESRD QIP.
  • Implemented clarifications regarding eligibility for the low-volume payment adjustment (LVPA) for ESRD facilities that furnish fewer than 4,000 treatments per year. Specifically, CMS explained that a Medicare administrative contractor (MAC) may consider supporting data other than a cost report from hospital-based ESRD facilities to verify the ESRD facilities’ total treatment count. CMS acknowledged that some MACs previously had relied on aggregated treatment counts from two or more ESRD facilities based at the same hospital that were reported in a hospital cost report without allowing the disaggregation of the treatment counts by ESRD facility. In addition, CMS clarified that MACs can add or prorate treatment counts from non-standard cost reporting periods where there is a change in ownership that does not result in a new Medicare provider transaction access number for the ESRD facility. Finally, CMS extended to December 31, 2014 the LVPA attestation deadline for services that will be rendered in CY 2015. CMS announced that it will issue guidance with additional detail regarding the policy clarification, which will include details about the process ESRD facilities should follow to seek the LVPA for past years.
  • Clarified CMS’ policy regarding reporting and payment for more than three dialysis treatments per week. CMS acknowledged that some ESRD facilities offer dialysis modalities, such as peritoneal dialysis (PD) and home hemodialysis (HD), where the standard treatment regimen is more than three treatments per week. CMS clarified that, notwithstanding the offering of such treatment modalities, ESRD facilities treating patients on PD or home HD will be paid only for up to three HD-equivalent sessions for each week of dialysis unless there is medical justification for furnishing additional treatments. However, ESRD facility claims should include all dialysis treatments furnished during the month. As CMS has no national policy regarding what constitutes medical necessity, it is the responsibility of each MAC to set local policy regarding medical necessity. CMS acknowledged that some MACs had not been requiring documented patient conditions for medical justification for additional weekly HD treatments and were inappropriately authorizing payment for more than three weekly treatments when no medical justification was included in the claim. CMS believes that the policy clarification will eliminate the regional payment differences in HD.
  • In accordance with PAMA, required the continued use of ICD-9-CM through September 30, 2015, and of ICD-10-CM beginning October 1, 2015, for purposes of the comorbidity payment adjustment, and amended typographical errors contained in the previously published crosswalk from ICD-9-CM to ICD-10-CM for codes that are subject to the comorbidity payment adjustment.

The final rule will be published in the Federal Register on Nov. 6, 2014.

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