On September 29, 2009, CMS is publishing its proposed rule to implement a prospective payment system (PPS) for Medicare end-stage renal disease (ESRD) services, as mandated by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The proposed ESRD PPS would provide a single bundled payment to dialysis facilities covering services now included in the ESRD composite rate in addition to items and services that are now separately billable, including training and home dialysis costs, laboratory services and all ESRD-related Part B and former Part D drugs. The rule would establish a per-treatment base rate of $198.64 for all of the services related to a dialysis session, which would be subject to patient-specific and facility-specific adjustments, including adjustments for case mix and comorbidities, geographic cost differences, low-volume facilities, and certain outlier cases. As required by MIPPA, the rate is estimated to result in payments that equal 98% of the estimated payments that would have been made absent the statutory changes. The new payment system would apply to dialysis services furnished to Medicare beneficiaries on or after January 1, 2011, although the rule establishes a four-year phase in-period (note that facilities may elect to be paid entirely under the new system beginning January 1, 2011). CMS also is proposing to apply a “transition budget neutrality adjustment factor” of -3.0% to all payments during the phase-in, plus a $14 per treatment adjustment to the composite rate portion of the blended payment amount to reflect ESRD-related Part D drug costs. The proposed rule also describes three quality measures pertaining to hemodialysis adequacy and anemia management that CMS plans to use for its quality incentive program (QIP), and it lays out a conceptual model for tying payment to quality performance (CMS plans to adopt the QIP through a separate rulemaking process). CMS will accept comments on the proposed rule through November 16, 2009. CMS is hosting a town hall meeting on October 23, 2009 to discuss its proposed Medicare ESRD PPS rule; the registration deadline is October 2, 2009.