On November 10, 2011, CMS published a final rule to update Medicare ESRD PPS rates and policies for CY 2012. The rule increases ESRD payment rates by 2.1% as a result of a 3% market basket increase that is reduced by 0.9% productivity adjustment (mandated by the ACA). The rule also impacts a variety of other ESRD payment policies, including outlier payments, the low-volume adjustment, drug add-on payments, and wage index values. In addition, the rule revises requirements for the ESRD quality incentive program (QIP), under which payments to dialysis facilities are tied to their performance on certain quality measures. CMS has adopted its proposal to retire one of QIP performance measures for payment year (PY) 2013 – hemoglobin level less than 10g/dL – and equally weight the two remaining measures (hemoglobin levels greater than 12g/dL and hemodialysis adequacy, as measured by Urea Reduction Ratio levels of at least 65%). According to CMS, this policy change stems from concerns regarding the safety of erythropoiesis-stimulating agents for treatment of anemia in dialysis patients; CMS notes that it is “continuing to work on ways to address the incentives for treating anemia in dialysis patients in various programs.” For the PY 2014 payment determination, CMS is retaining the two 2013 measures and adopting four new measures that expand the types of dialysis services measured under the QIP (compared to seven new measures in the proposed rule). The rule also revises the QIP scoring methodology, impacting payments in PYs 2013 and 2014.  In addition, the rule revises the ambulance fee schedule payments. CMS also has adopted revisions to the Medicare definition of DME and finalized certain DMEPOS competitive bidding rules as part of the ESRD rulemaking, as discussed in a separate posting.