CMS Updates End-Stage Renal Disease Prospective Payment System

November 20, 2017

On Nov. 1, 2017, the Centers for Medicare & Medicaid Services (CMS) published a final rule that updates payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to beneficiaries on or after Jan. 1, 2018.

Ultimately, CMS expects that its new updates and revisions will increase the total payments for calendar year (CY) 2018 by 0.5 percent to freestanding ESRD facilities, and by 0.7 percent for hospital-based ESRD facilities. The final rule also demonstrates an increased emphasis on furnishing high-quality service and patient-centered care. Specifically, in the final rule, CMS did the following:

  • Increased the ESRD PPS base rate by $0.82 — from $231.55 to $232.37.
  • Updated the payment rate for providing renal dialysis services to individuals with acute kidney injury (AKI). For CY 2018, CMS updated the AKI payment rate to $232.37. Despite CMS’ original prediction in the ESRD PPS proposed rule that payments to ESRD facilities in 2018 for AKI patients would be $2 million, CMS estimates in the final rule that ESRD facilities will receive $20 million in CY 2018 as a result of AKI patients receiving renal dialysis services at ESRD facilities (rather than at hospital outpatient centers).
  • Updated its CY 2018 outlier policy and decreased the fixed-dollar loss (FDL) amount and Medicare allowable payment (MAP) amount for pediatric and adult beneficiaries. ESRD facilities that are required to expend an unusually high amount of resources while providing services to certain high-cost pediatric and adult beneficiaries might be entitled to an outlier payment. In CY 2016, outlier payments represented only 0.78 percent of total ESRD PPS payments, less than CMS’ target of 1 percent. Pursuant to that data, CMS reduced the outlier payment for pediatric beneficiaries from $68.49 to $47.79 and decreased MAP amounts for pediatric patients from $38.29 to $37.31. CMS reduced the FDL amount for adult beneficiaries from $82.92 to $77.54 and decreased the MAP amounts for adult beneficiaries from $45.00 to $42.41. To qualify for outlier payments, an ESRD facility’s per-treatment imputed MAP amount for an ESRD outlier service must exceed CMS’ predicted MAP amount plus the applicable FDL threshold amount. Therefore, by reducing the FDL and MAP, CMS believes that the updated outlier policy for CY 2018 will allow more cases to qualify for outlier payments, bringing payments for outlier services closer to the target of 1 percent of total ESRD PPS payments.
  • Expanded the pricing options for drugs and biologics. In the final rule, CMS permits the use of any pricing methodology delineated in Section 1847A of the Social Security Act to determine the cost of certain ESRD-related outlier drugs and biologicals when an average sales price (ASP) is unavailable.
  • Changed the ESRD Quality Incentive Program (QIP) for payment years (PYs) 2019, 2020 and 2021. CMS believes that the updated ESRD QIP will incentivize providers to produce patient-centered care and to ultimately improve outcomes. The updated ESRD QIP will condition a portion of the ESRD PPS reimbursement on the applicable ESRD facility’s achievement of quality measure standards. If an ESRD facility fails to meet CMS’ expected quality measure score, that facility could see up to a 2 percent decrease in reimbursement.
  • Updated the extraordinary circumstances exception (ECE). CMS explains that the ESRD ECE policy for CY 2018 will better align with the extraordinary exceptions under other provider reimbursement programs. The updated ESRD ECE permits more individuals (not just the CEO) from a given ESRD facility to submit and sign the request form, adds additional reasons under which an ESRD facility can request an ECE, and clarifies that a facility need not be closed to submit and receive an ECE so long as the facility’s normal operations “have been significantly affected by an extraordinary circumstance outside of its control.” The ECE for CY 2018 requires facilities to submit the ECE request form within 90 days following an extraordinary event.
  • Shortened and simplified CMS’ Performance Score Certificate (PSC) beginning in PY 2019. CMS announced that it will require a facility’s PSC, beginning in PY 2019, to contain only the facility’s total performance score (TPS), sufficient information to identify the facility, and information that demonstrates a comparison between the facility’s TPS and the national average TPS.

For more information on this topic, please contact one of the authors.