On Friday, Nov. 22, 2013, the Centers for Medicare and Medicaid Services (CMS) issued a final rule (“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, 2014, and also regarding the ESRD Quality Incentive Program (QIP).

The Final Rule sets a base reimbursement rate of $239.02 per dialysis treatment for renal dialysis services provided in calendar year (CY) 2014. The current per-treatment base rate is $240.36. The revision to the CY 2014 base rate reflects (a) a bundled market basket increase of 3.2 percent, reduced by an estimated multifactor productivity adjustment of 0.4 percent; (b) the application of a wage index budget neutrality factor and a home dialysis training add-on budget neutrality factor; and (c) the application of a portion of a mandated reduction in reimbursement under the ESRD PPS to account for a decrease in the utilization of ESRD-related drugs and biologicals.

Section 632(a) of the American Taxpayer Relief Act of 2012 (ATRA) requires the Secretary of the U.S. Department of Health and Human Services to make reductions to the ESRD PPS base rate to reflect the Secretary’s estimate of the change in the utilization of ESRD-related drugs and biologicals, by comparing per-patient utilization data from 2007 with such data from 2012. CMS determined that the total adjustment will result in an overall 12 percent reduction in Medicare payments over a period of three to four years. In the Final Rule, CMS explains that it adopted an approach to apportioning the drug utilization adjustment in CY 2014 and CY 2015 in a manner that results in an “offset to payment rate updates and other impacts that would otherwise cause a change in average payments to ESRD facilities, thereby creating an overall impact of zero percent for ESRD facilities from the previous year’s payments.” For CY 2016, CMS will evaluate whether to apply the balance of the adjustment over one or two years, after it conducts an analysis of case-mix adjustments required by Section 632(c) of ATRA and the inclusion of oral-only ESRD-related drugs and biologicals required by Section 632(b) of ATRA.

In addition to revising the CY 2014 ESRD PPS base rate, CMS’s Final Rule also:

  • Updated the outlier policy for CY 2014 by revising the fixed-dollar loss and Medicare Allowable Payment (MAP) amounts, which are used in calculating a case’s eligibility for outlier payments. For pediatric patients, the fixed-dollar loss amount will increase to $54.01 and the MAP amount will decrease to $40.49. For adult patients, the fixed-dollar loss amount will decrease to $98.67 and the MAP will decrease to $50.25. CMS believes that the changes in the outlier policy will allow more cases to qualify for outlier payments.
  • Confirmed CMS’s intentions to implement the 10th revision of the ICD coding scheme, and provided a crosswalk from ICD-9-CM to ICD-10-CM for codes that are subject to the comorbidity payment adjustment.
  • Finalized an increase in the amount of self-dialysis and home dialysis training add-on adjustment of 50 percent for both peritoneal dialysis and home hemodialysis training treatments furnished on or after Jan 1, 2014. CMS increased the nursing time for each training treatment from 1 hour to 1.5 hours per training treatment, resulting in an increase of $16.72 for each training treatment and a total training treatment add-on of $50.16.
  • Set forth requirements for the ESRD QIP in payment year (PY) 2016 by continuing, and in some cases revising or expanding, a number of the PY 2015 ESRD QIP measures and by adding two of the five proposed new measures. Specifically, for PY 2016, CMS will require reporting regarding the following two new clinical measures: (1) the proportion of patients with hypercalcemia; and (2) dialysis-related infections reported to the Centers for Disease Control and Prevention’s National Healthcare Safety Network by ESRD facilities treating patients on an in-center basis. The Final Rule establishes CY 2014 as the performance period for the PY 2016 QIP.

The Final Rule will be published in the Federal Register on Dec. 2, 2013. A display copy of the Final Rule is available here.