CMS NEWS: CMS Updates to Policies and Payment Rates for End-Stage Renal Disease Prospective Payment System (CMS 1651-F)

FACT SHEET

FOR IMMEDIATE RELEASEOctober 28, 2016 

Contact: CMS Media Relations(202) 690-6145 | CMS Media Inquiries

CMS Updates to Policies and Payment Rates for End-Stage Renal Disease Prospective Payment System (CMS 1651-F)Quality Improvement Program, Coverage and Payment for Acute Kidney Injury, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program and Fee Schedule, andComprehensive End-Stage Renal Disease Care Model

On October 28, 2016, 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 on or after January 1, 2017.  This rule also finalizes new quality measures to improve the quality of care by dialysis facilities treating patients with ESRD. 

The ESRD PPS final rule is one of several rules for calendar year (CY) 2017 that reflect a broader Administration-wide strategy to deliver better care at lower cost through improved methods 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 achieving better health outcomes, preventing disease, helping patients live successfully at home, helping manage and improve chronic diseases, and fostering a more efficient and coordinated health care system.

This rule also implements the Trade Preferences Extension Act of 2015 (TPEA) provisions regarding the coverage and payment of renal dialysis services furnished by ESRD facilities to individuals with acute kidney injury (AKI).

The ESRD PPS final rule also made changes to the ESRD Quality Incentive Program (QIP), including payment years (PYs) 2019 and 2020, under which payment incentives are applied to dialysis facilities to improve the quality of care that they provide. Under the ESRD QIP, facilities that do not achieve a minimum Total Performance Score (TPS), with respect to their performance on quality measures established by regulation, receive a reduction in their payment rates under the ESRD PPS. For PY 2019, CMS finalized substantive updates to the Hypercalcemia clinical measure to align with the measure that is National Quality Forum (NQF) endorsed and will continue to satisfy the statutory requirements under the Protecting Access to Medicare Act of 2014 (PAMA) for measures specific to conditions treated with oral-only medications.

In addition, CMS made changes to the scoring methodology for the ESRD QIP for PY 2019 and added one new measure. For PY 2020, CMS will: 1) replace the Mineral Metabolism reporting measure with an NQF-endorsed Serum Phosphorus reporting measure; and 2) add two new measures to the ESRD QIP. CMS also finalized changes to certain administrative requirements and programmatic policies to the ESRD QIP.

This final rule also addresses issues related to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) and the DMEPOS Competitive Bidding Program (CBP).

CMS is finalizing a requirement for bidding entities to obtain and provide proof of a bid surety bond for each competitive bidding area (CBA) in which the entity submits its bid(s), in accordance with Section 1847(a)(1)(G) of the Social Security Act, as added by section 522(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

The rule also finalizes revisions to the existing state licensure requirement at §414.414(b)(3) to conform with the requirements in section 522(b) of MACRA, and expands suppliers’ appeal rights in the event that CMS takes one or more of the breach of contract actions specified in §414.422(g)(2).

Finally, the final rule changes the methodologies for adjusting DMEPOS fee schedule amounts using information from the DMEPOS Competitive Bidding and for establishing single payment amounts under the Competitive Bidding Programs for certain groups of similar items (e.g., various types of walkers) with different features (e.g., walkers with wheels versus walkers without wheels).  Changes are also finalized for the methodology used to establishing bid limits for items under the DMEPOS Competitive Bidding Program. 

CHANGES TO THE ESRD PPS FOR CY 2017:

ESRD PPS Background:  Section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) amended the Social Security 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 facility-level adjustments for ESRD facilities that have a low patient volume or rural locality, and for wage index.  An ESRD facility may be eligible for outlier payments for high-cost patients.  Under the ESRD PPS for CY 2017, Medicare expects to pay approximately $9.0 billion to approximately 6,000 ESRD facilities for the costs associated with furnishing chronic maintenance dialysis services.

Update to the ESRD PPS Base Rate:  The finalized CY 2017 ESRD PPS base rate is $231.55. This amount reflects a reduced market basket increase as required by section 1881(b)(14)(F)(i)(I) of the Act (0.55 percent), application of the wage index budget-neutrality adjustment factor (0.999781), as well as the application of a home and self-dialysis training budget-neutrality adjustment factor (0.999737). The finalized CY 2017 ESRD PPS base rate is an increase of $1.16 from the CY 2016 base rate of $230.39 (230.39 x 1.0055 = $231.66; $231.66 x 0.999781 = $231.61; $231.61 x 0.999737 = $231.55).

Annual Update to the Wage Index and Wage Index Floor:  The ESRD wage indices are adjusted 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 2017, CMS is not finalizing any changes to the application of the wage index floor, and will continue to apply the current wage index floor (0.4000) to areas with wage index values below the floor.

Update to the Outlier Policy:  Using the most current data, CMS is finalizing an update to the outlier services fixed-dollar loss amounts and Medicare Allowable Payments (MAP) for adult and pediatric patients for CY 2017 using 2015 claims data. Based on the use of more current data, the fixed-dollar loss amount for pediatric beneficiaries will increase from $62.19 to $68.49 and the MAP amount will decrease from $39.20 to $38.29, compared to CY 2016 values.  For adult beneficiaries, the fixed-dollar loss amount will decrease from $86.97 to $82.92 and the MAP amount will decrease from $50.81 to $45.00. In 2015, outlier payments represented 0.9 percent of the 1.0 percent outlier target percentage. Using CY 2015 claims data to update the outlier MAPs and fixed-dollar loss amounts for CY 2017 will increase outlier payments for ESRD beneficiaries requiring higher resource utilization.

Impact Analysis:  CMS projects that the updates for CY 2017 will increase the total payments to all ESRD facilities by 0.73 percent compared with CY 2016.  For hospital-based ESRD facilities, CMS projects an increase in total payments of 0.9 percent, while for freestanding facilities, the projected increase in total payments is 0.7 percent.  Aggregate ESRD PPS expenditures are projected to increase by approximately $80 million from CY 2016 to CY 2017. 

Home and Self-Dialysis Training Add-on Payment Adjustment: CMS is finalizing an increase to the home and self-dialysis training add-on payment adjustment.  CMS calculated the increase based on the average treatment times and weights for each modality and then used those times and weights as proxies for the total time spent by nurses training beneficiaries for home or self-dialysis.  Using an updated RN hourly wage of $35.94 and an increase to the hours of nurse training time from 1.5 hours to 2.66 hours, the CY 2017 home and self-dialysis training add-on payment adjustment is $95.60, an increase of $45.44 from the current training add-on amount of $50.16.

COVERAGE AND PAYMENT FOR RENAL DIALYSIS SERVICES FURNISHED TO INDIVIDUALS WITH ACUTE KIDNEY INJURY (AKI): 

In accordance with sections 1861(s)(2)(F) and 1834(r) of the Act, as amended by sections 808(a) and 808(b), respectively, of the TPEA, CMS will provide coverage and payment for renal dialysis services furnished on or after January 1, 2017 by an ESRD facility to an individual with AKI.  Under the law, the payment will be the amount of the ESRD PPS base rate, as adjusted by the wage index.  CMS is finalizing that drugs, biologicals, laboratory services, and supplies that ESRD facilities are certified to furnish, but that are not renal dialysis services, may be paid for separately when furnished to individuals with AKI. 

CHANGES TO THE ESRD QIP

ESRD QIP Background: Section 153(c) of the MIPPA required 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 an appropriate payment reduction to each facility that does not meet a minimum TPS, and publicly reports the results. The ESRD QIP is intended to promote high-quality care by dialysis facilities treating beneficiaries with ESRD. This program changes the way CMS pays for the treatment of ESRD patients by linking a portion of payment directly to facilities’ performance on quality measures. The ESRD QIP will reduce payments by up to two percent to ESRD facilities that do not meet or exceed a minimum TPS.

The PY 2018 ESRD QIP:  There were no changes to the PY 2018 ESRD QIP.  The PY 2018 ESRD QIP measure set finalized in the CY 2016 ESRD PPS Final Rule, contains eight clinical measures and three reporting measures encompassing anemia management, dialysis adequacy, vascular access type (fistula and catheter), patient experience of care, infections, hospital readmissions, and mineral metabolism management.

Changes to the PY 2019 ESRD QIP:  CMS finalized the creation of a new Safety Measure Domain as a third category of measures for PY 2019. CMS finalized the inclusion of the National Healthcare Safety Network (NHSN) Dialysis Event reporting measure (as expanded in PY 2015) into the ESRD QIP measure set for PY 2019, and then combined this measure with the existing NHSN Bloodstream Infection (BSI) clinical measure in a new NHSN BSI Measure Topic, which will be the only measure topic in this new Safety Measure Domain.

Additionally, CMS finalized two substantive changes to the Hypercalcemia clinical measure for PY 2019 to ensure that the measure remains in alignment with the measure specifications endorsed by the National Quality Forum (NQF), which continues to satisfy PAMA requirements. These changes involve updating the measure’s technical specifications for PY 2019 and future years to include plasma as an acceptable substrate in addition to serum calcium. First, CMS added plasma as an acceptable substrate in addition to serum calcium. Second, CMS changed the calculation of the revised measure to include patient-months with missing values in order to minimize any incentive for a facility to avoid reporting serum calcium data.

Changes for the PY 2020 ESRD QIP: The PY 2020 ESRD QIP measure set contains eight clinical measures and seven 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. CMS also finalized two additional measures for PY 2020.

In June, CMS proposed to apportion 80 percent of a facility’s TPS to the Clinical Measure Domain, and 10 percent each to the Reporting Measure Domain and the Safety Measure Domain. In response to public comments received during the public comment period, however, CMS has not finalized this proposal. Instead, CMS will maintain the scoring methodology it finalized for PY 2019: which is to apportion 75 percent of a facility’s TPS to the Clinical Measure Domain, 15 percent of the TPS to the Safety Measure Domain, and 10 percent to the Reporting Measure Domain.

• Clinical Measures: CMS added the Standardized Hospitalization Ratio (SHR) clinical measure beginning in PY 2020. This addition reflects CMS’s priority to ensure that the ESRD QIP maintains the most broadly applicable clinical measures that capture the quality of care provided to as many beneficiaries with ESRD as possible.

• Reporting Measures: CMS adopted a new Ultrafiltration Rate reporting measure for PY 2020. CMS also replaced the Mineral Metabolism reporting measure (based on claims data) with a new Serum Phosphorus reporting measure that uses CROWNWeb data.

Additional ESRD QIP Components:

CMS will continue CMS’s pilot program to validate data that facilities enter into CROWNWeb. The Final Rule also increased the size of the NHSN validation study, and revised the methodology to determine whether a facility reported dialysis events for patients in accordance with the NHSN Dialysis Event Protocol.

CHANGES TO THE DMEPOS COMPETITIVE BIDDING PROGRAM:

Background: Section 1847 of the Act, as amended by section 302(b)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), requires the Secretary to establish and implement the DMEPOS Competitive Bidding Program in areas throughout the United States. Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to furnish certain items in competitive bidding areas (CBAs). Section 522(a) of MACRA amended section 1847 of the Act to require a bid surety bond and applicable state licensure for bidding entities.

Bid Surety Bond: The final rule requires bidding entities to obtain a bid surety bond, from an authorized surety on the Department of the Treasury’s Listing of Certified Companies, for each CBA associated with their bid. The bid surety bond is finalized at $50,000 and must indicate the CBA specific to that bond.

This rule also finalizes forfeiture conditions for these bid surety bonds. In the event that a bidding entity does not accept a contract offer(s) when its composite bid is at or below the median composite bid rate for suppliers used in the calculation of the single payment amount(s), the bid surety bond(s) for the applicable CBA(s) will be forfeited and CMS will collect on the bid surety bond(s). In instances where the bidding entity does not meet the bid surety bond forfeiture conditions specified in the rule, the bid surety bond liability will be returned to the bidding entity within 90 days of the public announcement of the contract suppliers for the CBA.

Bidding entities that provide a falsified bid surety bond may be prohibited from participation in the DMEPOS Competitive Bidding Program for the current round of competition in which they submitted a bid, as well as from the next round of competition. Bidding entities that provide a falsified bid surety bond will also be referred to the Office of Inspector General and the Department of Justice for further investigation. The final rule also specifies that if CMS finds that a bidding entity has accepted a contract offer and then breached the contract in order to avoid bid surety bond forfeiture, the breach will result in termination of the contract and preclusion from participation in the next round of competition in the DMEPOS Competitive Bidding Program.

State Licensure: The final rule aligns the regulation with the requirement of section 1847(b)(2)(A) of the Act, as amended by section 522(b) of MACRA, to state that a contract will not be awarded to a bidding entity unless the entity meets applicable state licensure requirements. This revision does not reflect a change in policy as CMS already has a regulation in place that requires suppliers to meet applicable State licensure requirements.

Appeals Process for a Breach of Contract Action(s): This rule extends the appeals process to all breach of contract actions that CMS may take under the DMEPOS Competitive Bidding Program, rather than just for contract termination actions. As a result, CMS will issue a notice of breach of contract, which will include any breach of contract action(s) CMS intends to take.  The final rule also removes from §414.422(g)(2) certain breach of contract actions that CMS may take.

Bid Limits: This final rule establishes that bid limits for individual items for future rounds of competitions under the DMEPOS Competitive Bidding Program will be based on the fee schedule rates for the items before they are adjusted based on competitive bidding information. This will avoid a downward trend where the new, lower bid limits apply to each subsequent round of bidding based on fee schedule rates adjusted using bidding information from the previous round.  This will help to enhance the long term viability of the program and allow suppliers to take into account both decreases and increases in costs in determining their bids, while ensuring that payments under the program do not exceed the amounts that would otherwise be paid had the DMEPOS Competitive Bidding Program not been implemented.

CHANGES TO THE DMEPOS COMPETITIVE BIDDING PROGRAM AND FEE SCHEDULE FOR SIMILAR ITEMS WITH DIFFERENT FEATURES:

CMS is finalizing a policy to address inverted prices for similar items with different features under competitive bidding prior to adjusting fee schedule amounts paid in non-competitive bidding areas. CMS will use the weighted average of the prices for the similar items in a product category as the revised price for the items that will then be used to adjust the fee schedule amounts.   CMS is also finalizing a policy to address situations where price inversions have occurred in the past under the bidding programs by finalizing an alternative “lead item” bidding methodology for certain items in future rounds of competitions.  Under this method, a supplier submits one bid for a combination of HCPCS codes for similar items with different features.  The supplier’s bid for the grouping of HCPCS codes is based on the bid for the lead item, which is the item with the most allowed services among the similar items.  The payment rate for the lead item is based on the median of the bids, while the payment rate for the other codes with different features is based on a ratio of the average of the payment amounts for each code for all areas nationwide to the average of the payment amounts for the lead item for all areas nationwide.

The final rule can be found in the October 28, 2016 Federal Register and can be downloaded from the Federal Register at: http://www.federalregister.gov/inspection.aspx.