On Oct. 31, the Centers for Medicare & Medicaid Services issued a final rule that will update payment policies and rates under the End-Stage Renal Disease Prospective Payment System (PPS) for renal dialysis services furnished to beneficiaries on or after Jan. 1, 2015.  This rule also introduces new quality and performance measures to improve the quality of care by outpatient dialysis facilities treating patients with ESRD and implements the Affordable Care Act mandate to use competitive bidding rates for durable medical equipment.

"Provisions in these rules are helping to move our health care system to one that values quality over quantity and focuses on reforms such as measuring for better health outcomes, focusing on disease prevention, helping patients live successfully at home, helping manage and improve chronic diseases and fostering a more efficient and coordinated health care systems, CMS said in a release.

The ESRD and DME rule also finalizes changes to the ESRD Quality Incentive Program (QIP) for payment year (PY) 2017 and PY 2018 under which payment incentives are applied to dialysis facilities to improve the quality of dialysis care. 

Payment changes to the ESRD bundle for calendar 2015

Updated Payment Rates for the ESRD PPS: CMS projects that the ESRD bundled (market basket adjusted for multifactor productivity (MFP) update would have been 1.6% (2.1%ESRDB market basket update less 0.5% MFP adjustment).  However, section 217(b) of PAMA requires the CY 2015 ESRD payment update to be 0.0%.  In addition, CMS will apply a wage index budget-neutrality adjustment factor of 1.001729, resulting in a CY 2015 ESRD PPS base rate of $239.43.

Updated ESRD Bundled Market Basket Adjusted for MFP: CMS finalized rebasing and revising the ESRD bundled market basket for 2015.  Rebasing involves using the most recent year of available data, 2012, to reflect the input costs of ESRD facilities under the bundled system compared to 2008 data used for the current market basket.  The major revisions to the market basket include changing the price measure for pharmaceuticals from a more general index (PPI Pharmaceuticals for Human Use, Prescription) to a blend of two indices, (78% PPI Biological Products, Human Use and 22% PPI Vitamin, Nutrient, & Hematinic Preparations).   The revision also refines the price measure used for compensation costs to better reflect the occupational mix in the ESRD setting.  As a result of the update to the cost weights from 2008 to 2012, the labor-related share is about 9 percent higher, driven mainly by a drop in the drug cost share due to declines in drug utilization and a subsequent rise in the compensation cost share.

Labor-Related Share: In CY 2015, based on updated data to the cost weights, CMS will revise the labor-related share from 41.737 to 50.673%. To mitigate any negative payment impact on rural or other ESRD facilities in low wage areas, CMS is implementing a 2-year transition of the labor-related share.  Under the transition, payments will be based on 50% of the old labor-related share and 50% of the new labor-related share in CY 2015, and 100% on the new labor-related share in CY 2016.  Thus, the labor-related share for CY 2015 is 46.205 percent and for CY 2016 is 50.673 percent.  The labor-related share will remain 50.673 percent until such time in the future the labor-related share is again updated.   

Outlier Policy: Under the ESRD PPS, ESRD facilities may qualify for outlier payments for high cost patients.  For CY 2015, CMS will use CY 2013 claims data to update the outlier services’ fixed-dollar loss and Medicare Allowable Payment (MAP) amounts.  As a result, CMS will update the fixed-dollar loss amount for pediatric patients from $54.01 to $54.35, and the MAP amount will increase from $40.49 to $43.57.  For adult patients, CMS will update the fixed-dollar loss amount from $98.67 to $86.19 and increase the MAP amount from $50.25 to $51.29.  CMS believes this update to the outlier MAP and fixed dollar loss amounts for CY 2015 will increase payments to ESRD facilities for ESRD beneficiaries requiring higher resource utilization in accordance with a 1 percent outlier policy.

Wage Index: In CY 2015, there are no changes with the application of the wage index and CMS will continue to apply the wage index adjustment to the labor-related share portion of the base rate when making payments under the ESRD PPS.   However, CMS will update the Core Based Statistical Areas (CBSA) with the Office of Management and Budget (OMB) issued Bulletin No. 13-01 and 2010 US Census Data.  CMS will implement the new CBSA delineations with a transition to mitigate any negative impact on ESRD facilities that have low wage areas, specifically rural ESRD facilities.  Under the transition, payments will be based on 50% of the CY 2014 CBSA delineations and 50% of the CY 2015 CBSA delineations in CY 2015 and 100% of the CY 2015 CBSA delineations in CY 2016.

Impact Analysis:  CMS projects that the updates for CY 2015 will increase the total payments to all ESRD facilities by 0.3 percent compared with CY 2014.  For hospital-based ESRD facilities, CMS projects an increase in total payments of 0.5 percent, while for freestanding facilities; the projected increase in total payments will be 0.3 percent.  CMS also projects that urban ESRD facilities will receive an estimated increase in payments of 0.4 percent while rural facilities will receive a decrease of 0.5 percent.  CMS projects that ESRD facilities in Puerto Rico and the Virgin Islands will receive a 3.6 percent decrease in estimated payments.

Timing of the Application of ICD-10Section 212 of PAMA provides that the Secretary may not adopt ICD-10-CM prior to Oc. 1, 2015.  Consistent with this provision, an August 4, 2014 HHS final rule delayed the transition from ICD-9-CM to ICD-10-CM until Oct. 1, 2015 and required the continued use of ICD-9 through September 30, 2015.  Therefore, the ESRD PPS will continue to use ICD-9-CM through Sept. 30, 2015, and will require the use of ICD-10-CM beginning Oct., 2015 for purposes of the co-morbidity payment adjustment.  For CY 2015, we are correcting several typographical errors and omissions in the ICD-9-CM to ICD-10-CM crosswalk tables that appeared in the CY 2014 ESRD PPS final rule.

Low Volume Payment Adjustment (LVPA):  In this rule, CMS is clarifying the eligibility criteria for the LVPA and amending the supporting regulations in the Code of Federal Regulations. 

Payment for Oral-only Drugs under the ESRD PPSSection 217(a)(1) of PAMA amended section 632(b)(1) of the American Taxpayer Relief Act of 2012, which now provides that the secretary “may not implement the policy under section 413.174(f)(6) of title 42, Code of Federal Regulations (relating to oral-only ESRD-related drugs in the ESRD prospective payment system), prior to January 1, 2024.”  Accordingly, CMS finalized that payment for ESRD-related oral-only drugs will not be made under the ESRD PPS prior to Jan. 1, 2024.