FACT SHEET

FOR IMMEDIATE RELEASE

October 29, 2015

Contact: CMS Media Relations

CMS Updates to Policies and Payment Rates for End-Stage Renal Disease Facilities for CY 2016 and Changes to the ESRD Quality Incentive Program

Finalized Payment System

OVERVIEW: On October 30, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to update payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to beneficiaries on or after January 1, 2016.

The ESRD final rule is one of several rules for calendar year 2016 that reflect a broader Administration-wide strategy to provide quality care at lower cost by improving ways to deliver care, pay providers, and use information. 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 system.

This final rule also includes changes to the ESRD Quality Incentive Program (QIP) for payment years (PYs) 2017-2019 under which payment incentives are made to dialysis facilities to improve the quality of dialysis care. Under the ESRD QIP, facilities that do not achieve a minimum total quality performance score receive a reduction in their payment rates under the ESRD PPS.

ESRD PPS BACKGROUND: Section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) amended the Social Security Act (the Act) to require CMS to implement 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 biologicals (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 additional adjustments for ESRD facilities that have low patient volume and for home dialysis training. For high-cost patients, an ESRD facility may be eligible for outlier payments. Under the ESRD PPS for CY 2016, Medicare expects to pay approximately $9.0 billion to approximately 6,000 ESRD facilities for the costs associated with furnishing chronic maintenance dialysis services.

PAYMENT CHANGES TO THE ESRD PPS FOR CY 2016:

ESRD PPS Refinement: In accordance with section 632(c) of the American Taxpayers Relief Act of 2012 (ATRA), CMS analyzed the case-mix payment adjustments under the ESRD PPS using more recent data. CMS is finalizing revisions to the adjustments by changing the adjustment payment amounts based on an updated regression analysis using CYs 2012 and 2013 ESRD claims and cost report data and removing two comorbidity payment adjustments (bacterial pneumonia and monoclonal gammopathy). While the refinement reduces the per treatment base rate, it improves payment accuracy and targets payments to those patient characteristics that increase costs for facilities. CMS is also finalizing revisions to the low-volume payment adjustment and finalizing a new payment adjustment for rural ESRD facilities based on that regression analysis.

Updated Payment Rates for the ESRD PPS: The finalized CY 2016 ESRD PPS base rate is $230.39. This amount reflects a reduced market basket increase as required by section 1881(b)(14)(F)(i)(I) of the Act, as amended by section 217(b)(2)(A)(ii) of the Protecting Access to Medicare Act of 2014 (PAMA) (0.15 percent), application of the wage index budget-neutrality adjustment factor (1.000495), and a refinement budget-neutrality adjustment factor (0.960319), so that total projected PPS payments in CY 2016 are equal to what the payments would have been in CY 2016 had the refinements not been implemented. The CY 2016 ESRD PPS base rate is a reduction of $9.04 from the CY 2015 base rate of $239.43 ($239.43 x 1.0015 x 1.000495 x 0.960319 = $230.39).

Drug Designation Process: In accordance with section 217(c) of PAMA, CMS is finalizing a drug designation process for: (1) determining when a product would no longer be considered an oral-only drug; and (2) including new injectable and intravenous products into the bundled payment under the ESRD PPS.

Annual Update to the Wage Index and Wage Index Floor: The ESRD PPS wage indices are updated on an annual basis using the most current hospital wage data and the latest Core-Based Statistical Area (CBSA) delineations to account for differing wage levels in areas in which ESRD facilities are located. For CY 2016, CMS is not making any changes to the application of the wage index floor, and we are continuing to apply the current wage index floor (0.4000) to areas with wage index values below the floor.

Update to the Outlier Policy: Consistent with the provision to annually update the outlier policy using the most current data, CMS is updating the outlier services fixed dollar loss amounts for adult and pediatric patients and Medicare Allowable Payments (MAPs) for adult patients for CY 2016 using 2014 claims data. Based on the use of more current data, the fixed-dollar loss amount for pediatric beneficiaries increases from $54.35 to $62.19 and the MAP amount decreases from $43.57 to $39.20, as compared to CY 2015 values. For adult beneficiaries, the fixed-dollar loss amount increases from $86.19 to $86.97 and the MAP amount decreases from $51.29 to $50.81. In CY 2014, outlier payments were 0.8 percent of total ESRD PPS payment, that is, slightly less than the 1 percent target for outlier payments. Using CY 2014 claims data to update the outlier MAP and fixed dollar loss amounts for CY 2016 will increase outlier payments for ESRD beneficiaries requiring higher resource utilization.

Impact Analysis: CMS projects that the updates for CY 2016 will increase the total payments to all ESRD facilities by 0.2 percent compared with CY 2015. For both hospital-based and freestanding ESRD facilities, CMS projects an increase in total payments of 0.2 percent.

Low Volume Payment Adjustment (LVPA): ESRD facilities that consistently furnish a low volume of treatments (< 4000 per year) receive a payment adjustment under the ESRD PPS. Eligibility for ESRD facilities that opened on January 1, 2011 and after are assessed by aggregating their treatments with other facilities that are within a 25 road mile radius and are under common ownership. In order to better target the LVPA to ESRD facilities to ensure access and encourage the efficient delivery of renal dialysis services, CMS is revising the LVPA eligibility criteria. Specifically, we are removing grandfathering from the criteria and revising the geographic proximity criterion from 25 road miles to 5 road miles. These changes will exclude facilities of common ownership that are located within 5 miles of one another, regardless of when these facilities opened.

Payment for Oral-Only Drugs Under the ESRD PPS: Section 632(b)(1) of ATRA, and amended by section 217(a) of PAMA, delayed inclusion of oral only ESRD drugs in the ESRD PPS until 2024. Section 204 of the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE) provides that payment for oral-only ESRD drugs cannot be made under the ESRD PPS prior to January 1, 2025. Accordingly, CMS is delaying payment for the inclusion of oral-only ESRD drugs until that date under the ESRD PPS.

End-Stage Renal Disease Quality Incentive Program

OVERVIEW: Under the ESRD QIP, dialysis facilities could be subject to a reduction of up to 2 percent from their Medicare payments under the ESRD PPS each year based on their performance on certain quality measures.

CMS has added a new measure to the program for Payment Year 2019, while removing four measures from the program. CMS also finalized changes to certain administrative requirements and other programmatic policies.

CMS is also finalizing its adoption of the Hypercalcemia clinical measure as a measure that, as required under PAMA, is specific to the conditions treated with oral-only medications.

ESRD QIP BACKGROUND: Section 153(c) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) amended the Social Security Act to require CMS to establish an ESRD QIP that selects measures, establishes performance standards, specifies a performance period for each PY, assesses the total performance of each facility, applies a payment reduction of up to 2 percent to each facility that does not meet a minimum total performance score, and publicly reports the results. The ESRD QIP is intended to promote high-quality care by dialysis facilities treating patients with ESRD by linking a portion of payment directly to facilities’ performance on quality measures.

CHANGES TO THE PY 2017 ESRD QIP: The PY 2017 ESRD QIP measure set contains 8 clinical measures and 3 reporting measures encompassing anemia management, dialysis adequacy, vascular access type, patient experience of care, infections, hospital readmissions, and mineral metabolism. CMS is also reinstating the qualifying patient attestations for the In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) measure for PY 2017 and subsequent years, using the eligibility criteria finalized in the CY 2015 ESRD PPS final rule (79 FR 66170).

CHANGES TO THE PY 2018 ESRD QIP: The PY 2018 ESRD QIP measure set contains eleven clinical measures and five reporting measures encompassing anemia management, dialysis adequacy, vascular access type, patient experience of care, infections, mineral metabolism management, safety, pain management, depression management, and hospital readmissions. This represents an evolution of the program to encompass more quality-of-life issues. CMS did not adopt any new measures for PY 2018 in the CY 2016 final rule. CMS determined that the calculation previously finalized for the Pain Assessment and Follow-Up reporting measure could unduly penalize facilities that treat no eligible patients in one of the two six-month periods evaluated under this measure. Therefore, beginning with the PY 2018 ESRD QIP, if a facility treats no eligible patients in one of the two six-month periods, then that facility’s score will be based solely on the percentage of eligible patients treated in the other six-month period for whom the facility reports one of six conditions.

FINALIZING THE PY 2019 ESRD QIP: The PY 2019 ESRD QIP measure set contains eight clinical measures and five reporting measures encompassing anemia management, dialysis adequacy, vascular access type, patient experience of care, infections, mineral metabolism management, safety, pain management, depression management, and hospital readmissions.

In an effort to ensure that the ESRD QIP maintains the most broadly applicable clinical measures and captures the quality of care provided to as many ESRD patients as possible, CMS replaced the four individual dialysis adequacy clinical measures (Hemodialysis Adequacy: Minimum delivered hemodialysis dose; Peritoneal Dialysis Adequacy: Delivered dose above minimum; Pediatric Hemodialysis Adequacy: Minimum spKt/V; and Pediatric Peritoneal Dialysis Adequacy) with a single, comprehensive clinical measure (the Dialysis Adequacy clinical measure) covering the patient populations previously captured by these four individual measures.

Additional ESRD QIP POLICIES: Beginning with the PY 2017 ESRD QIP, CMS will modify the “small-facility adjuster” calculation. Although it no longer relies upon a within-facility standard error, it preserves the intent of the adjuster to include as many facilities in the ESRD QIP as possible while ensuring that the measure scores are reliable. The rule also continues CMS’s data validation pilot program and a validation study of data used for the NHSN Bloodstream Infection in Hemodialysis Outpatients clinical measure.

The final rule will appear in the November 6, 2015, Federal Register and can be downloaded from the Federal Register at: http://www.ofr.gov/inspection.aspx?AspxAutoDetectCookieSupport=1.

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