Fact Sheets

Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, and End-Stage Renal Disease Quality Incentive Program (CMS-1732-F)

OVERVIEW: 

On November 02, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to beneficiaries enrolled in Original Medicare on or after January 1, 2021.  This rule also updates the acute kidney injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities to individuals with AKI and finalizes changes to the ESRD Quality Incentive Program (QIP).

In addition to the annual technical updates for the ESRD PPS, CMS finalized the following:

• an update to the ESRD PPS wage index to adopt the 2018 Office of Management and Budget (OMB) delineations with a transition period;
• changes to the eligibility criteria and determination process for the transitional add-on payment adjustment for new and innovative equipment and supplies (TPNIES);
• the expansion of the TPNIES to include new and innovative capital-related assets that are home dialysis machines;
• an addition to the ESRD PPS base rate to include calcimimetics in the ESRD PPS bundled payment; and
• a change to the low-volume payment adjustment eligibility criteria and attestation requirement to account for the COVID-19 Public Health Emergency (PHE).

This final rule also provides the CMS determination for two products, a dialyzer and a cartridge for a home dialysis machine, being considered for TPNIES in CY 2021.  Additionally, CMS finalized the following updates to the ESRD QIP: a scoring methodology change to the Ultrafiltration Rate reporting measure and updates to the National Healthcare Safety Network (NHSN) validation study requirements.

FINAL CHANGES AND UPDATES TO THE ESRD PPS FOR CY 2021:

ESRD PPS BACKGROUND:  Under the ESRD PPS for CY 2021, Medicare expects to pay $10.3 billion to approximately 7,400 ESRD facilities for the costs associated with furnishing renal dialysis services.  Section 1881(b)(14) of the Social Security Act (the Act) requires the implementation of a bundled PPS for renal dialysis services furnished to Medicare beneficiaries for the treatment of ESRD effective January 1, 2011.  The bundled payment under the ESRD PPS includes all renal dialysis services furnished for outpatient maintenance dialysis, including drugs and biological products (with the exception of oral-only ESRD drugs until 2025) and other renal dialysis items and services that were formerly separately payable under the previous payment methodologies.  The bundled payment rate is case-mix adjusted for a number of factors relating to patient characteristics.  There are also facility-level adjustments for ESRD facilities that have a low patient volume, for facilities in rural areas, and for the wage index.  The ESRD PPS provides a training add-on payment adjustment for home and self-dialysis modalities and, for high-cost patients, an ESRD facility may be eligible for outlier payments.  The ESRD PPS also provides for a transitional drug add-on payment adjustment (TDAPA) and the TPNIES.

Update to the ESRD PPS Base Rate:  The final CY 2021 ESRD PPS base rate is $253.13, which represents an increase of $13.80 to the current base rate of $239.33.  This amount reflects the application of the updated wage index budget-neutrality adjustment factor (.999485), the addition to the base rate of $9.93 to include calcimimetics, and a productivity-adjusted market basket increase, as required by section 1881(b)(14)(F)(i)(I) of the Act (1.6 percent), equaling $253.13 (($239.33 x .999485) + $9.93 x 1.016 = $253.13).

Annual Update to the Wage Index:  The ESRD PPS uses the latest core-based statistical area (CBSA) delineations and the latest available hospital wage data collected under the IPPS that is not adjusted for geographic reclassification or occupational mix. The wage index is applied to the labor-related share of the payment rate to account for differing wage levels in areas in which ESRD facilities are located.  The CY 2021 labor-related share is 52.3 percent.  The wage index update is budget neutral.

2018 OMB Delineations and 2-year Transition Policy:  CMS is adopting the OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18-04, beginning with the CY 2021 ESRD PPS wage index.  In addition, CMS will apply a 5-percent cap on any decrease in an ESRD facility’s wage index from the ESRD facility’s wage index from the prior calendar year.  This transition will be phased in over 2 years, such that the estimated reduction in an ESRD facility’s wage index will be capped at 5 percent in CY 2021, and no cap will be applied to the reduction in the wage index for the second year, CY 2022.

Update to the Outlier Policy:  CMS annually updates the outlier policy using the most current data.  CMS is updating the outlier services fixed-dollar loss (FDL) amounts for adult and pediatric patients and Medicare Allowable Payment (MAP) amounts for adult and pediatric patients for CY 2021, using 2019 claims data.  Based on the use of the latest available data, the FDL amount for pediatric beneficiaries will increase from $41.04 to $44.78 and the MAP amount will decrease from $32.32 to $30.88, as compared to CY 2020 values.  For adult beneficiaries, the FDL amount will increase from $48.33 to $122.49 and the MAP amount will increase from $35.78 to $50.92.  The 1.0 percent target for outlier payments was not achieved in CY 2019.  Outlier payments represented approximately 0.5 percent of total payments rather than 1.0 percent.

Changes to the Eligibility Criteria and Determination Process Deadlines for the TPNIES:

CMS is revising the TPNIES eligibility criteria in light of the changes implemented in CY 2020 to provide bi-annual coding cycles for code applications for new Healthcare Common Procedure Coding System (HCPCS) Level II codes for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items and services.  CMS is finalizing that, for purposes of eligibility for the TPNIES, the HCPCS code application must be submitted by the HCPCS Level II code application deadline for biannual Coding Cycle 2 for DMEPOS items and services as specified in the HCPCS Level II coding guidance on the CMS website.  In addition, the Food and Drug Administration (FDA) marketing authorization must be submitted to CMS by the HCPCS Level II code application deadline in order for the equipment or supply to be eligible for the TPNIES the following year.  Finally, CMS has revised the definition of “new” for purposes of the TPNIES policy as 3 years beginning on the date of the FDA marketing authorization. 

Expansion of the TPNIES to Include Capital-Related Assets that are Home Dialysis Machines When Used in the Home for a Single Patient:  CMS is expanding eligibility for the TPNIES to include certain capital-related assets that are home dialysis machines when used in the home for a single patient.  As with other renal dialysis equipment and supplies potentially eligible for the TPNIES, CMS would evaluate the application to determine whether the home dialysis machine represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries, and meets the other requirements under § 413.236(b).  CMS is finalizing additional steps the Medicare Administrative Contractors (MACs) would follow to establish the payment basis of the TPNIES for these home dialysis machines.  CMS would pay 65 percent of the MAC-determined pre-adjusted per treatment amount reduced by an average per treatment offset amount of $9.32 for 2 calendar years.  CMS is finalizing that after the 2-year TPNIES period ends, the home dialysis machines would not become eligible outlier services and no change would be made to the ESRD PPS base rate. 

Final Decisions on the TPNIES Applications for 2021:  Two products, a dialyzer and a cartridge for a home dialysis machine, were considered for TPNIES in CY 2021.  Neither product met the eligibility criteria for TPNIES for CY 2021; however, we note that manufacturers are eligible to apply for the TPNIES adjustment for CY 2022 and CY 2023.

Inclusion of Calcimimetics in the ESRD PPS Base Rate:  CMS is modifying the ESRD PPS base rate to include calcimimetics in the ESRD PPS bundled payment.  Using the latest available data based on 18 months (the third and fourth quarters of CY 2018 ESRD facility claims and all quarters of CY 2019 ESRD facility claims), CMS is adding $9.93 to the ESRD PPS base rate beginning in CY 2021.

Low-Volume Eligibility Criteria and Attestation Requirement:  CMS is holding harmless ESRD facilities that would otherwise qualify for the Low Volume Payment Adjustment (LVPA) but for a temporary increase in dialysis treatments furnished in 2020 due to the PHE for the COVID-19 pandemic.  CMS is establishing that, for purposes of determining LVPA eligibility for payment years 2021, 2022, and 2023, ESRD facilities will attest that their total dialysis treatments for any 6 months (consecutive or non-consecutive) of their cost-reporting period ending in 2020 is less than 2,000 and that, although the total number of treatments furnished in the entire year otherwise exceeded the LVPA threshold, the excess treatments furnished were due to temporary patient shifting resulting from the COVID-19 PHE.  MACs will then annualize the number of treatments reported for those 6 months by multiplying the number of treatments by 2. In addition, CMS determined that the COVID-19 pandemic justifies an exception to the November 1, 2020 attestation deadline. Therefore, for payment year 2021, CMS is allowing more time for ESRD facilities to submit attestations by moving the deadline to December 31, 2020. 

Impact Analysis:  CMS projects that the updates for CY 2021 will increase the total payments to all ESRD facilities by 2.0 percent compared with CY 2020.  For hospital-based ESRD facilities, CMS projects a decrease in total payments of 0.2 percent, while for freestanding facilities the projected increase in total payments is 2.0 percent.

PAYMENT FOR RENAL DIALYSIS SERVICES FURNISHED TO INDIVIDUALS WITH AKI:

As required by section 1834(r) of the Act, CMS is updating the AKI dialysis payment rate for CY 2021 to equal the CY 2021 ESRD PPS base rate and to apply the CY 2021 wage index.  For CY 2021, the AKI dialysis payment rate is $253.13. 

CHANGES TO THE END-STAGE RENAL DISEASE QUALITY INCENTIVE PROGRAM (ESRD QIP)

ESRD QIP Background: The End-Stage Renal Disease Quality Incentive Program (ESRD QIP) is authorized by section 1881(h) of the Act.  Under the program, CMS assesses the total performance of each facility on measures specified for a payment year, applies an appropriate payment reduction to each facility that does not meet a minimum total performance score (TPS), and publicly reports the results.

Policy for Payment Years 2023 and 2024 ESRD QIP: This rule finalizes the following programmatic updates to the ESRD QIP:

• Updating the scoring methodology for the Ultrafiltration Rate Reporting Measure to score facilities based on the number of eligible patient-months as opposed to facility-months. CMS does not believe that the current methodology is flexible enough to account for situations in which a facility is unable to obtain data on 100% of all patients. Further, the methodology aligns with our policy to reevaluate our reporting measures for opportunities to more closely align them with NQF-endorsed measure specifications and focus more on outcomes-based measures.  CMS is finalizing its update to the Ultrafiltration Rate Reporting Measure, beginning with PY 2023.
   
• Updating the National Healthcare Safety Network (NHSN) validation study to reduce the number of required records from 20 records across each of the first two quarters (total of 40 records) to 20 records across any two quarters. CMS believes that this update minimizes facility burden while ensuring the integrity and reliability of our NHSN validation study.  CMS is finalizing its update to the NHSN validation study, beginning with PY 2023.

The final rule is displayed in the November 2, 2020 Federal Register and can be downloaded at: https://www.federalregister.gov/public-inspection/2020-24485/medicare-program-end-stage-renal-disease-prospective-payment-system-payment-for-renal-dialysis

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