On July 2, 2014, CMS released the CY 2015 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) and Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) Proposed Rule. CMS estimates that the proposed changes would result in a 0.3 percent increase in total payments to all ESRD facilities in CY 2015 as compared with CY 2014, but that total payments to rural facilities would be expected to decrease by 0.5 percent under the proposals. The expected decrease in payments to rural ESRD facilities is the result of proposed changes to revise and rebase the ESRD bundled market basket. The Proposed Rule also includes proposed changes to the ESRD Quality Incentive Program for Payment Years (PYs) 2017 and 2018 and proposed changes to the DMEPOS competitive bidding payment methodology. Comments on the Proposed Rule must be received by 5:00 p.m. on Tuesday, September 2, 2014.

According to CMS estimates, freestanding ESRD facilities would see a roughly 0.3 percent payment increase, while payments to hospital-based ESRD facilities would increase approximately 0.5 percent overall. Urban ESRD facilities should expect a payment increase of roughly 0.4 percent under the Proposed Rule. Payments to rural facilities, on the other hand, would be expected to decrease by 0.5 percent, and ESRD facilities in Puerto Rico and the U.S. Virgin Islands would expect to see a decrease of 3.6 percent in total payments.

The estimated decrease in payments to rural ESRD facilities appears to be driven largely by an increase in the labor-related share value, which CMS proposes to increase from 41.737 percent to 50.673 percent. Because of the negative effect this proposed change would have on payments to rural facilities, CMS proposes to phase in its implementation, with 50 percent of payments in CY 2015 being based on the old labor-related share, and 50 percent on the new labor-related share. By CY 2016, 100 percent of payments would be based on the new labor-related share.

The proposed increase in the labor-related share, in turn, is a result of CMS's proposal to rebase and revise the ESRD bundled market basket. CMS proposes to rebase the market basket using CY 2012 data to more accurately track the input costs of ESRD providers under the recently fully-implemented ESRD bundled payment system. (The existing market basket is based on data from CY 2008.) Due to the decline in drug utilization during the 2008 to 2012 period, concurrently with implementation of the bundled payment system, the CY 2012 data reflects a higher compensation cost share (and lower pharmaceutical cost share) than was previously the case. In addition to this rebasing proposal, CMS also proposes to revise the market basket by (1) changing the price measures for pharmaceuticals and supplies to more specific measures, and (2) updating the price measure for compensation costs to better reflect the occupational mix in the ESRD setting. Table 8 of the Proposed Rule (on page 67 of the display copy), displays the comparison between the CY 2008-based market basket and the proposed rebased CY 2012-based market basket.

CMS proposes to raise the ESRD outlier fixed-dollar loss amount for pediatric patients from $54.01 to $56.30, and increase the Medicare Allowable Payment (MAP) amount from $37.29 to $40.05. For adult patients, CMS proposes to lower the fixed-dollar loss amount from $98.67 to $85.24, and increase the MAP amount from $51.97 to $52.61.

The Proposed Rule also includes a number of revisions to the PY 2017 and PY 2018 ESRD Quality Incentive Program. For PY 2017, CMS proposes eight clinical measures and three reporting measures. With respect to the proposed clinical measures, one is new (the proposed Standardized Readmission Ratio measure), one has been revised (the National Healthcare Safety Network (NHSN) Bloodstream Infection in Hemodialysis Outpatients measure), and CMS proposes to remove one "topped out" measure (the Hemoglobin Greater than 12 measure). As for the reporting measures, CMS proposes that facilities will no longer be able to attest that they only had a single qualifying case to avoid being scored on the measure.

For PY 2018, CMS proposes eleven clinical measures and five reporting measures. CMS proposes to group the clinical measures for PY 2018 into three subdomains: (i) Safety, (ii) Patient and Family Engagement/Care Coordination, and (iii) Clinical Care. Each subdomain will comprise 20 percent, 30 percent, and 50 percent, respectively, of the total Clinical Measure Domain score. Among the proposed revisions to the reporting measures in PY 2018 are three new measures: (i) Pain Assessment and Follow-Up, (ii) Clinical Depression Screening and Follow-Up, and (iii) NHSN Healthcare Personnel Influenza Vaccination.

The Proposed Rule also includes a number of proposed changes to the DMEPOS payment methodology for CY 2015. Notably, CMS has proposed a methodology for using data gathered from the DMEPOS Competitive Bidding Program (CBP) to adjust the fee schedule prices for DME in regions of the country with no CBPs. For certain areas under the CBP, CMS proposes to phase in a system of monthly bundled payments (in replace of capped rental policies) to cover equipment costs, supplies, accessories, maintenance, and repair of certain equipment and devices furnished under the CBP, including enteral nutrition, oxygen, standard manual and power wheelchairs, hospital beds, continuous positive airway pressure devices, and respiratory assist devices. CMS also proposes an exception to the change of ownership rules that would permit a competitive bidding contract supplier to sell a distinct company that furnishes a specific product category or competitive bidding area.

The Proposed Rule is scheduled for publication in the July 11, 2014 Federal Register. The Proposed Rule is available here. The CMS Fact Sheet on the proposed payment update provisions included in the CY 2015 ESRD PPS Proposed Rule is available here. The Fact Sheet on the proposed quality measure updates is available here.