CMS Releases ESRD Prospective Payment System Final Rule

July 28, 2010

On Tuesday, July 27, 2010, the Centers for Medicare & Medicaid Services (CMS) issued a release regarding the much anticipated final rule laying out the new bundled prospective payment system (PPS) for renal dialysis facilities. Under the new PPS, CMS will make a single bundled payment to the dialysis facility for each dialysis treatment that will cover all renal dialysis services and home dialysis commencing on Jan. 1, 2011. There is a four-year phase-in of the PPS system, although facilities can opt in 100 percent as of Jan. 1, 2011. The PPS eventually will replace the current system, which pays facilities a composite rate for a defined set of items and services, while paying separately for drugs, laboratory tests, or other services that are not included in the composite rate. At the same time, CMS issued a proposed rule that would create a new Quality Incentive Program (QIP) for dialysis services that will link a facility’s payment to how well it meets the QIP performance standards.

The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) required CMS to develop a new, fully bundled prospective payment system for renal dialysis services to replace the existing composite rate payment methodology.

According to CMS, it received nearly 1,500 public comments in response to the ESRD PPS proposed rule that appeared in the Sept. 29, 2009 Federal Register. Among the major concerns raised by the comments were the proposals surrounding payment for home dialysis training; inclusion of additional payment adjustments for patient characteristics in the payment methodology; and inclusion of former Part D prescription drugs related to ESRD treatment in the payment bundle. In the final rule CMS:

  1. Establishes the base payment rate is $229.63 per treatment. This is an increase over the rate in the proposed regulation of approximately 16 percent.
  2. Specifically identifies the laboratory services included in the bundled payment as opposed to the much broader definition contained in the proposed regulation.
  3. Includes a budget neutrality adjustment of 3.1 percent during the first year of the phase-in, although adjustment may be made in later years.
  4. Creates a home or self-care dialysis training payment adjustment specifically directed to patients trained by facilities certified to provide home dialysis training.
  5. Finalizes payment adjustments for dialysis treatments furnished to adults for patient age, body surface area, and body mass index, onset of dialysis, and certain co-morbidities, but does not finalize adjustments for the patient’s sex or the patient’s race or ethnicity.
  6. Finalizes a payment adjustment for dialysis treatments furnished to pediatric patients, based on patient age and dialysis modality, but not co-morbidities.
  7. Finalizes a definition for renal dialysis services that includes ESRD-related oral-only drugs, but postpones payment for such drugs under the ESRD PPS until Jan. 1, 2014.

Dialysis providers of all sizes, modality focus and patient population will now be assessing more fully the potential impact on their businesses and strategies for keeping costs low and quality high.

For more information about these changes, or guidance to help ensure compliance, please contact us.