[Federal Register Volume 85, Number 134 (Monday, July 13, 2020)]
[Proposed Rules]
[Pages 42132-42208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14671]



[[Page 42131]]

Vol. 85

Monday,

No. 134

July 13, 2020

Part III





Department of Health and Human Services





-----------------------------------------------------------------------





Centers for Medicare & Medicaid Services





-----------------------------------------------------------------------





42 CFR Part 413





 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; 
Proposed Rule

  Federal Register / Vol. 85 , No. 134 / Monday, July 13, 2020 / 
Proposed Rules  

[[Page 42132]]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 413

[CMS-1732-P]
RIN 0938-AU08


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

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would update and make revisions to the End-
Stage Renal Disease (ESRD) Prospective Payment System (PPS) for 
calendar year (CY) 2021. This rule also proposes to update the payment 
rate for renal dialysis services furnished by an ESRD facility to 
individuals with acute kidney injury (AKI). In addition, this rule 
proposes to update requirements for the ESRD Quality Incentive Program 
(QIP).

DATES: To be assured consideration, comments must be submitted at one 
of the addresses provided below, no later than September 4, 2020.

ADDRESSES: In commenting, please refer to file code CMS-1732-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1732-P, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1732-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: [email protected], for issues 
related to the ESRD PPS and coverage and payment for renal dialysis 
services furnished to individuals with AKI.
    Delia Houseal, (410) 786-2724, for issues related to the ESRD QIP.

SUPPLEMENTARY INFORMATION:  Inspection of Public Comments: All comments 
received before the close of the comment period are available for 
viewing by the public, including any personally identifiable or 
confidential business information that is included in a comment. We 
post all comments received before the close of the comment period on 
the following website as soon as possible after they have been 
received: http://www.regulations.gov. Follow the search instructions on 
that website to view public comments.

Table of Contents

    To assist readers in referencing sections contained in this 
preamble, we are providing a Table of Contents.

I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Cost and Benefits
II. Calendar Year (CY) 2021 End-Stage Renal Disease (ESRD) 
Prospective Payment System (PPS)
    A. Background
    B. Provisions of the Proposed Rule
    C. Proposed Transitional Add-On Payment Adjustment for New and 
Innovative Equipment and Supplies (TPNIES) for CY 2021 Payment
III. Calendar Year (CY) 2021 Payment for Renal Dialysis Services 
Furnished to Individuals With Acute Kidney Injury (AKI)
    A. Background
    B. Proposed Annual Payment Rate Update for CY 2021
IV. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    A. Background
    B. Proposed Updates to Requirements Beginning With the PY 2023 
ESRD QIP
    C. Proposals for the PY 2023 ESRD QIP
V. Collection of Information Requirements
    A. Legislative Requirement for Solicitation of Comments
    B. Requirements in Regulation Text
    C. Additional Information Collection Requirements
VI. Response to Comments
VII. Economic Analyses
    A. Regulatory Impact Analysis
    B. Detailed Economic Analysis
    C. Accounting Statement
    D. Regulatory Flexibility Act Analysis
    E. Unfunded Mandates Reform Act Analysis
    F. Federalism Analysis
    G. Reducing Regulation and Controlling Regulatory Costs
    H. Congressional Review Act
VIII. Files Available to the Public via the internet
Regulations Text

I. Executive Summary

A. Purpose

    This rule contains proposals related to the End-Stage Renal Disease 
(ESRD) Prospective Payment System (PPS), payment for renal dialysis 
services furnished to individuals with acute kidney injury (AKI), and 
the ESRD Quality Incentive Program (QIP).
1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
    On January 1, 2011, we implemented the ESRD PPS, a case-mix 
adjusted, bundled PPS for renal dialysis services furnished by ESRD 
facilities as required by section 1881(b)(14) of the Social Security 
Act (the Act), as added by section 153(b) of the Medicare Improvements 
for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275). 
Section 1881(b)(14) (F) of the Act, as added by section 153(b) of 
MIPPA, and amended by section 3401(h) of the Patient Protection and 
Affordable Care Act (the Affordable Care Act) (Pub. L. 111-148), 
established that beginning calendar year (CY) 2012, and each subsequent 
year, the Secretary of the Department of Health and Human Services (the 
Secretary) shall annually increase payment amounts by an ESRD market 
basket increase factor, reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. This rule 
proposes updates and revisions to the ESRD PPS for CY 2021.
2. Coverage and Payment for Renal Dialysis Services Furnished to 
Individuals With Acute Kidney Injury (AKI)
    On June 29, 2015, the President signed the Trade Preferences 
Extension Act of 2015 (TPEA) (Pub. L. 114-27). Section 808(a) of the 
TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for 
renal dialysis services furnished on or after January 1, 2017, by a 
renal dialysis facility or a provider of services paid under section 
1881(b)(14) of the Act to an individual with acute kidney injury (AKI). 
Section 808(b) of the TPEA amended section 1834 of the Act by adding a 
new subsection (r) that provides for payment for renal dialysis 
services furnished by renal dialysis facilities or providers of 
services paid under section 1881(b)(14) of the Act to individuals with 
AKI at the ESRD PPS base rate beginning January 1, 2017. This rule 
proposes to update the AKI payment rate for CY 2021.

[[Page 42133]]

3. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    The End-Stage Renal Disease Quality Incentive Program (ESRD QIP) is 
authorized by section 1881(h) of the Act. The Program fosters improved 
patient outcomes by establishing incentives for dialysis facilities to 
meet or exceed performance standards established by the Centers for 
Medicare & Medicaid Services (CMS). This proposed rule proposes several 
updates for the payment years (PY) 2023 and 2024 ESRD QIP.

B. Summary of the Major Provisions

1. ESRD PPS
     Update to the ESRD PPS base rate for CY 2021: The proposed 
CY 2021 ESRD PPS base rate is $255.59. This proposed amount reflects 
the application of the wage index budget-neutrality adjustment factor 
(.998652), the proposed addition to the base rate of $12.06 to include 
calcimimetics, and a productivity-adjusted market basket increase as 
required by section 1881(b)(14)(F)(i)(I) of the Act (1.8 percent), 
equaling $255.59 (($239.33 x .998652) + $12.06) x 1.018 = $255.59).
     Annual update to the wage index: We adjust wage indices 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 2021, we are proposing to update the wage index values based on 
the latest available data.
     New Office of Management and Budget (OMB) delineations and 
2-year transition policy: We are proposing to adopt the Office of 
Management and Budget (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, we are proposing to 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 would be 
phased in over 2 years, such that the estimated reduction in an ESRD 
facility's wage index would be capped at 5 percent in CY 2021, and no 
cap would be applied to the reduction in the wage index for the second 
year, CY 2022.
     Update to the outlier policy: We are proposing to update 
the outlier policy using the most current data, as well as update 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 CY 2019 claims data. 
Based on the use of the latest available data, the proposed FDL amount 
for pediatric beneficiaries would increase from $41.04 to $47.73, and 
the MAP amount would increase from $32.32 to $33.08, as compared to CY 
2020 values. For adult beneficiaries, the proposed FDL amount would 
increase from $48.33 to $133.52, and the MAP amount would increase from 
$35.78 to $54.26. 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.
     Inclusion of calcimimetics in the ESRD PPS base rate: We 
are proposing the methodology for modifying the ESRD PPS base rate to 
include calcimimetics in the ESRD PPS bundled payment. Using the 
proposed methodology based on the latest available data, we are 
proposing to add $12.06 to the ESRD PPS base rate beginning in CY 2021.
     Changes to the eligibility criteria for the transitional 
add-on payment adjustment for new and innovative equipment and supplies 
(TPNIES): We are proposing changes to the transitional add-on payment 
for new and innovative equipment and supplies (TPNIES) eligibility 
criteria in light of the changes implemented in CY 2020 to provide 
biannual coding cycles for code applications for new Healthcare Common 
Procedure Coding System (HCPCS) codes for durable medical equipment, 
orthotics, prosthetics and supplies (DMEPOS) items and services. We are 
proposing that for purposes of eligibility for the TPNIES, a complete 
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 for biannual Coding Cycle 2 for DMEPOS items and 
services as specified in the HCPCS Level II coding guidance on the CMS 
website in order for the equipment or supply to be eligible for the 
TPNIES the following year. We are also proposing to define ``new'' for 
purposes of the TPNIES policy as within 3 years beginning on the date 
of the FDA marketing authorization.
     Expansion of the TPNIES to include new and innovative 
capital-related assets that are home dialysis machines when used in the 
home for a single patient: We are proposing to expand 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 Sec.  413.236(b). We are proposing additional steps 
the Medicare Administrative Contractors (MACs) would follow to 
establish the basis payment of the TPNIES for these capital-related 
assets that are home dialysis machines when used in the home. We would 
pay 65 percent of the MAC-determined pre-adjusted per treatment amount 
for 2-calendar years. We are proposing 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.
     Low-Volume Payment Adjustment (LVPA): We are proposing to 
hold harmless ESRD facilities that would otherwise qualify for the LVPA 
but for a temporary increase in dialysis treatments furnished in 2020 
due to the Public Health Emergency (PHE) for the coronavirus disease 
2019 (COVID-19) pandemic. For purposes of determining LVPA eligibility 
for payment years 2021, 2022, and 2023, we are proposing to only 
consider total dialysis treatments furnished for any 6 months of a 
facility's cost-reporting period ending in 2020; ESRD facilities would 
select those 6 months (consecutive or non-consecutive) during which 
treatments would be counted for purposes of the LVPA determination. We 
are proposing that ESRD facilities would attest that their total 
dialysis treatments for those 6 months of their cost-reporting period 
ending in 2020 are 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 would annualize 
the total dialysis treatments for the total treatments reported in 
those 6 months by multiplying by 2. ESRD facilities would be expected 
to provide supporting documentation to the MACs upon request.
2. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
    We are proposing to update the AKI payment rate for CY 2021. The 
proposed CY 2021 payment rate is $255.59, which

[[Page 42134]]

is the same as the base rate proposed under the ESRD PPS for CY 2021.
3. ESRD QIP
    We propose to update the scoring methodology used to calculate the 
Ultrafiltration Rate reporting measure so that facilities are scored 
based on the number of eligible patient-months, instead of facility-
months, and to reduce the number of records that facilities selected 
for National Health Safety Network (NHSN) validation are required to 
submit. This rule also clarifies the timeline for facilities to make 
changes to their NHSN Bloodstream Infection (BSI) clinical measure and 
NHSN Dialysis Event reporting measure data for purposes of the ESRD 
QIP. This rule also provides estimates for the performance standards 
and payment reductions that would apply for PY 2023.
    This rule does not propose any new requirements beginning with the 
PY 2024 ESRD QIP.

C. Summary of Costs and Benefits

    In section VII of this proposed rule, we set forth a detailed 
analysis of the impacts that the proposed changes would have on 
affected entities and beneficiaries. The impacts include the following:
1. Impacts of the Proposed ESRD PPS
    The impact chart in section VII.B of this proposed rule displays 
the estimated change in payments to ESRD facilities in CY 2021 compared 
to estimated payments in CY 2020. The overall impact of the proposed CY 
2021 changes is projected to be a 1.6 percent increase in payments. 
Hospital-based ESRD facilities have an estimated 0.4 percent decrease 
in payments compared with freestanding facilities with an estimated 1.6 
percent increase.
    We estimate that the aggregate ESRD PPS expenditures would increase 
by approximately $190 million in CY 2021 compared to CY 2020. This 
reflects a $230 million increase from the payment rate update, a $40 
million increase due to the updates to the outlier threshold amounts, 
and an $80 million decrease from the proposed addition to the ESRD PPS 
base rate to include calcimimetics and no longer provide the 
transitional drug add-on payment adjustment (TDAPA) for calcimimetics. 
As a result of the projected 1.6 percent overall payment increase, we 
estimate there would be an increase in beneficiary co-insurance 
payments of 1.6 percent in CY 2021, which translates to approximately 
$40 million.
    These figures do not reflect estimated increases or decreases in 
expenditures based on our proposal to expand the TPNIES to include 
certain capital-related assets that are home dialysis machines when 
used in the home. The fiscal impact of this proposal cannot be 
determined because these new and innovative home dialysis machines are 
not yet identified and would vary in uniqueness and costs.
2. Impacts of the Proposed Payment for Renal Dialysis Services 
Furnished to Individuals With AKI
    The impact chart in section VII.B of this proposed rule displays 
the estimated change in proposed payments to ESRD facilities in CY 2021 
compared to estimated payments in CY 2020. The overall impact of the 
proposed CY 2021 changes is projected to be a 6.9 percent increase in 
payments for individuals with AKI. Hospital-based and freestanding ESRD 
facilities both have an estimated 6.9 percent increase in payments for 
individuals with AKI. The overall impact reflects the effects of the 
updated wage index, the proposed addition to the ESRD PPS base rate of 
$12.06 to include calcimimetics in the ESRD PPS bundled payment, and 
the payment rate update.
    We estimate that the aggregate payments made to ESRD facilities for 
renal dialysis services furnished to AKI patients at the proposed CY 
2021 ESRD PPS base rate would increase by $5 million in CY 2021 
compared to CY 2020.
3. Impacts of the Proposed ESRD QIP
    We estimate that the overall economic impact of the PY 2023 ESRD 
QIP would be approximately $221 million as a result of the policies we 
have previously finalized and the proposals in this proposed rule. The 
$221 million figure for PY 2023 includes costs associated with the 
collection of information requirements, which we estimate would be 
approximately $205 million, and $16 million in estimated payment 
reductions across all facilities. We also estimate that the overall 
economic impact of the PY 2024 ESRD QIP would be approximately $221 
million as a result of the policies we have previously finalized. The 
$221 million figure for PY 2024 includes costs associated with the 
collection of information requirements, which we estimate would be 
approximately $205 million.

II. Calendar Year (CY) 2021 End-Stage Renal Disease (ESRD) Prospective 
Payment System (PPS)

A. Background

1. Statutory Background
    On January 1, 2011, we implemented the End-Stage Renal Disease 
(ESRD) Prospective Payment System (PPS), a case-mix adjusted bundled 
PPS for renal dialysis services furnished by ESRD facilities, as 
required by section 1881(b)(14) of the Social Security Act (the Act), 
as added by section 153(b) of the Medicare Improvements for Patients 
and Providers Act of 2008 (MIPPA). Section 1881(b)(14)(F) of the Act, 
as added by section 153(b) of MIPPA and amended by section 3401(h) of 
the Patient Protection and Affordable Care Act (the Affordable Care 
Act), established that beginning with CY 2012, and each subsequent 
year, the Secretary of the Department of Health and Human Services (the 
Secretary) shall annually increase payment amounts by an ESRD market 
basket increase factor, reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act.
    Section 632 of the American Taxpayer Relief Act of 2012 (ATRA) 
(Pub. L. 112-240) included several provisions that apply to the ESRD 
PPS. Section 632(a) of ATRA added section 1881(b)(14)(I) to the Act, 
which required the Secretary, by comparing per patient utilization data 
from 2007 with such data from 2012, to reduce the single payment for 
renal dialysis services furnished on or after January 1, 2014 to 
reflect the Secretary's estimate of the change in the utilization of 
ESRD-related drugs and biologicals (excluding oral-only ESRD-related 
drugs). Consistent with this requirement, in the CY 2014 ESRD PPS final 
rule we finalized $29.93 as the total drug utilization reduction and 
finalized a policy to implement the amount over a 3- to 4-year 
transition period (78 FR 72161 through 72170).
    Section 632(b) of ATRA prohibited the Secretary from paying for 
oral-only ESRD-related drugs and biologicals under the ESRD PPS prior 
to January 1, 2016. And section 632(c) of ATRA required the Secretary, 
by no later than January 1, 2016, to analyze the case-mix payment 
adjustments under section 1881(b)(14)(D)(i) of the Act and make 
appropriate revisions to those adjustments.
    On April 1, 2014, the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93) was enacted. Section 217 of PAMA included 
several provisions that apply to the ESRD PPS. Specifically, sections 
217(b)(1) and (2)

[[Page 42135]]

of PAMA amended sections 1881(b)(14)(F) and (I) of the Act and replaced 
the drug utilization adjustment that was finalized in the CY 2014 ESRD 
PPS final rule (78 FR 72161 through 72170) with specific provisions 
that dictated the market basket update for CY 2015 (0.0 percent) and 
how the market basket should be reduced in CY 2016 through CY 2018.
    Section 217(a)(1) of PAMA amended section 632(b)(1) of ATRA to 
provide that the Secretary may not pay for oral-only ESRD-related drugs 
under the ESRD PPS prior to January 1, 2024. Section 217(a)(2) of PAMA 
further amended section 632(b)(1) of ATRA by requiring that in 
establishing payment for oral-only drugs under the ESRD PPS, the 
Secretary must use data from the most recent year available. Section 
217(c) of PAMA provided that as part of the CY 2016 ESRD PPS 
rulemaking, the Secretary shall establish a process for (1) determining 
when a product is no longer an oral-only drug; and (2) including new 
injectable and intravenous products into the ESRD PPS bundled payment.
    Finally, on December 19, 2014, the President signed the Stephen 
Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE) (Pub. 
L. 113-295). Section 204 of ABLE amended section 632(b)(1) of ATRA, as 
amended by section 217(a)(1) of PAMA, to provide that payment for oral-
only renal dialysis services cannot be made under the ESRD PPS bundled 
payment prior to January 1, 2025.
2. System for Payment of Renal Dialysis Services
    Under the ESRD PPS, a single, per-treatment payment is made to an 
ESRD facility for all of the renal dialysis services defined in section 
1881(b)(14)(B) of the Act and furnished to individuals for the 
treatment of ESRD in the ESRD facility or in a patient's home. We have 
codified our definitions of renal dialysis services at Sec.  413.171, 
which is in 42 CFR part 413, subpart H, along with other ESRD PPS 
payment policies. The ESRD PPS base rate is adjusted for 
characteristics of both adult and pediatric patients and accounts for 
patient case-mix variability. The adult case-mix adjusters include five 
categories of age, body surface area, low body mass index, onset of 
dialysis, four comorbidity categories, and pediatric patient-level 
adjusters consisting of two age categories and two dialysis modalities 
(Sec.  413.235(a) and (b)).
    The ESRD PPS provides for three facility-level adjustments. The 
first payment adjustment accounts for ESRD facilities furnishing a low 
volume of dialysis treatments (Sec.  413.232). The second adjustment 
reflects differences in area wage levels developed from core based 
statistical areas (CBSAs) (Sec.  413.231). The third payment adjustment 
accounts for ESRD facilities furnishing renal dialysis services in a 
rural area (Sec.  413.233).
    The ESRD PPS provides a training add-on for home and self-dialysis 
modalities (Sec.  413.235(c)) and an additional payment for high cost 
outliers due to unusual variations in the type or amount of medically 
necessary care when applicable (Sec.  413.237).
    The ESRD PPS provides for a transitional drug add-on payment 
adjustment (TDAPA) for certain new renal dialysis drugs and biological 
products (Sec.  413.234(c)).
    The ESRD PPS also provides for a transitional add-on payment 
adjustment for new and innovative equipment and supplies (TPNIES) for 
certain qualifying, new and innovative renal dialysis equipment and 
supplies (Sec.  413.236(d)).
3. Updates to the ESRD PPS
    Policy changes to the ESRD PPS are proposed and finalized annually 
in the Federal Register. The CY 2011 ESRD PPS final rule was published 
on August 12, 2010 in the Federal Register (75 FR 49030 through 49214). 
That rule implemented the ESRD PPS beginning on January 1, 2011 in 
accordance with section 1881(b)(14) of the Act, as added by section 
153(b) of MIPPA, over a 4-year transition period. Since the 
implementation of the ESRD PPS, we have published annual rules to make 
routine updates, policy changes, and clarifications.
    On November 8, 2019, we published a final rule in the Federal 
Register titled, ``Medicare Program; End-Stage Renal Disease 
Prospective Payment System, Payment for Renal Dialysis Services 
Furnished to Individuals with Acute Kidney Injury, End-Stage Renal 
Disease Quality Incentive Program, Durable Medical Equipment, 
Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, 
DMEPOS Competitive Bidding Program (CBP) Amendments, Standard Elements 
for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject 
to a Face-to-Face Encounter and Written Order Prior to Delivery and/or 
Prior Authorization Requirements,'' referred to as the CY 2020 ESRD PPS 
final rule. In that rule, we updated the ESRD PPS base rate, wage 
index, and outlier policy, for CY 2020. We also finalized revisions to 
the eligibility criteria for the TDAPA for certain new renal dialysis 
drugs and biological products that fall within an existing ESRD PPS 
functional category, modified the basis of payment for the TDAPA for 
calcimimetics, established a new policy to condition the TDAPA payment 
on our receipt of average sales price (ASP) data, established the 
TPNIES to support ESRD facilities in their uptake of certain new and 
innovative renal dialysis equipment and supplies, and discontinued the 
erythropoiesis-stimulating agent (ESA) monitoring policy under the ESRD 
PPS. For further detailed information regarding these updates, see 84 
FR 60648.

B. Provisions of the Proposed Rule

1. Inclusion of Calcimimetics Into the ESRD PPS Bundled Payment
a. Background on Oral-Only Renal Dialysis Drugs
    Section 1881(b)(14)(A)(i) of the Act requires the Secretary to 
implement a payment system under which a single payment is made to a 
provider of services or a renal dialysis facility for renal dialysis 
services in lieu of any other payment. Section 1881(b)(14)(B) of the 
Act defines renal dialysis services, and clause (iii) of such section 
states that these services include other drugs and biologicals that are 
furnished to individuals for the treatment of ESRD and for which 
payment was made separately under this title, and any oral equivalent 
form of such drug or biological.
    We interpreted this provision as including not only injectable 
drugs and biological products used for the treatment of ESRD (other 
than erythropoiesis-stimulating agents (ESAs) and any oral form of 
ESAs, which are included under clause (ii) of section 1881(b)(14)(B) of 
the Act), but also all oral drugs and biological products used for the 
treatment of ESRD and furnished under title XVIII of the Act. We also 
concluded that, to the extent oral-only drugs or biological products 
used for the treatment of ESRD do not fall within clause (iii) of 
section 1881(b)(14)(B), such drugs or biological products would fall 
under clause (iv) of such section, and constitute other items and 
services used for the treatment of ESRD that are not described in 
clause (i) of section 1881(b)(14)(B) of the Act.
    We finalized and promulgated the payment policies for oral-only 
renal dialysis service drugs and biological products in the CY 2011 
ESRD PPS final rule (75 FR 49038 through 49053), where we defined renal 
dialysis services at Sec.  413.171 as including other drugs and 
biological products that are furnished to individuals for the treatment 
of ESRD and for which payment was made separately prior to

[[Page 42136]]

January 1, 2011 under Title XVIII of the Act, including drugs and 
biological products with only an oral form. We further described oral-
only drugs as those that have no injectable equivalent or other form of 
administration (75 FR 49038 through 49039). Although we included oral-
only renal dialysis service drugs and biological products in the 
definition of renal dialysis services in the CY 2011 ESRD PPS final 
rule (75 FR 49044), we also finalized a policy to delay payment for 
these drugs under the PPS until January 1, 2014. In the CY 2011 ESRD 
PPS proposed and final rules (74 FR 49929 and 75 FR 49038, 
respectively), we noted that the only oral-only drugs and biological 
products that we identified were phosphate binders and calcimimetics, 
which fall into the bone and mineral metabolism ESRD PPS functional 
category. We stated that there were certain advantages to delaying the 
implementation of payment for oral-only drugs and biological products, 
including allowing ESRD facilities additional time to make operational 
changes and logistical arrangements in order to furnish oral-only renal 
dialysis service drugs and biological products to their patients. 
Accordingly, we codified the delay in payment for oral-only renal 
dialysis service drugs and biological products at Sec.  413.174(f)(6), 
and provided that payment to an ESRD facility for renal dialysis 
service drugs and biological products with only an oral form is 
incorporated into the PPS payment rates effective January 1, 2014. 
Since oral-only drugs are generally not a covered service under 
Medicare Part B, this delay of payment under the ESRD PPS also allowed 
the coverage under Medicare to continue under Part D.
    On January 3, 2013, ATRA was enacted. Section 632(b) of ATRA 
precluded the Secretary from implementing the policy under Sec.  
413.176(f)(6) relating to oral-only renal dialysis service drugs and 
biological products prior to January 1, 2016. Accordingly, in the CY 
2014 ESRD PPS final rule (78 FR 72185 through 72186), we delayed 
payment for oral-only renal dialysis service drugs and biological 
products under the ESRD PPS until January 1, 2016. We implemented this 
delay by revising the effective date at Sec.  413.174(f)(6) from 
January 1, 2014 to January 1, 2016. In addition, we changed the date 
when oral-only renal dialysis service drugs and biological products 
would be eligible for outlier services under the outlier policy 
described in Sec.  413.237(a)(1)(iv) from January 1, 2014 to January 1, 
2016.
    On April 1, 2014, PAMA was enacted. Section 217(a)(1) of PAMA 
amended section 632(b)(1) of ATRA and precluded the Secretary from 
implementing the policy under Sec.  413.174(f)(6) relating to oral-only 
renal dialysis service drugs and biological products prior to January 
1, 2024. We implemented this delay in the CY 2015 ESRD PPS final rule 
(79 FR 66262) by modifying the effective date for providing payment for 
oral-only renal dialysis service drugs and biological products under 
the ESRD PPS at Sec.  413.174(f)(6) from January 1, 2016 to January 1, 
2024. We also changed the date in Sec.  413.237(a)(1)(iv) regarding 
outlier payments for oral-only renal dialysis service drugs made under 
the ESRD PPS from January 1, 2016 to January 1, 2024. Section 217(a)(2) 
of PAMA further amended section 632(b)(1) of ATRA by requiring that in 
establishing payment for oral-only drugs under the ESRD PPS, the 
Secretary must use data from the most recent year available.
    On December 19, 2014, ABLE was enacted. Section 204 of ABLE amended 
section 632(b)(1) of ATRA, as amended by section 217(a)(1) of PAMA, and 
precluded the Secretary from implementing the policy under Sec.  
413.174(f)(6) relating to oral-only renal dialysis service drugs and 
biological products prior to January 1, 2025. We implemented this delay 
in the CY 2016 ESRD PPS final rule (80 FR 69027 through 69028) by 
modifying the effective date for providing payment for oral-only renal 
dialysis service drugs and biological products under the ESRD PPS at 
Sec.  413.174(f)(6) from January 1, 2024 to January 1, 2025. We also 
changed the date in Sec.  413.237(a)(1)(iv) regarding outlier payments 
for oral-only renal dialysis service drugs made under the ESRD PPS from 
January 1, 2024 to January 1, 2025.
b. ESRD PPS Drug Designation Process and Calcimimetics
    In addition to delaying implementation of the policy for oral-only 
renal dialysis service drugs and biological products under the ESRD 
PPS, discussed previously in this proposed rule, PAMA included section 
217(c), which provided that as part of the CY 2016 ESRD PPS rulemaking, 
the Secretary shall establish a process for (1) determining when a 
product is no longer an oral-only drug; and (2) including new 
injectable and intravenous products into the ESRD PPS bundled payment. 
Therefore, in the CY 2016 ESRD PPS final rule (80 FR 69013 through 
69027), we finalized a process that allows us to recognize when an 
oral-only renal dialysis service drug or biological product is no 
longer oral-only, and a process to include new injectable and 
intravenous (IV) products into the ESRD PPS bundled payment, and when 
appropriate, modify the ESRD PPS payment amount to reflect the costs of 
furnishing that product.
    In accordance with section 217(c)(1) of PAMA, we established Sec.  
413.234(d), which provides that an oral-only drug is no longer 
considered oral-only if an injectable or other form of administration 
of the oral-only drug is approved by FDA. We defined an oral-only drug 
at Sec.  413.234(a) to mean a drug or biological with no injectable 
equivalent or other form of administration other than an oral form.
    Additionally, in accordance with section 217(c)(2) of PAMA, we 
codified the drug designation process at Sec.  413.234(b). In the CY 
2016 ESRD PPS final rule (80 FR 69024), we finalized that the drug 
designation process is dependent upon the ESRD PPS functional 
categories, consistent with our policy since the implementation of the 
PPS in 2011. We provided a detailed discussion on how we accounted for 
renal dialysis drugs and biological products in the ESRD PPS base rate 
since its implementation on January 1, 2011 (80 FR 69013 through 
69015). We explained that, in the CY 2011 ESRD PPS final rule (75 FR 
49044 through 49053), in order to identify drugs and biological 
products that are used for the treatment of ESRD and therefore meet the 
definition of renal dialysis services (defined at Sec.  413.171) that 
would be included in the ESRD PPS base rate, we performed an extensive 
analysis of Medicare payments for Part B drugs and biological products 
billed on ESRD claims and evaluated each drug and biological product to 
identify its category by indication or mode of action. We stated in the 
CY 2011 ESRD PPS final rule that categorizing drugs and biological 
products on the basis of drug action allows us to determine which 
categories (and therefore, the drugs and biological products within the 
categories) would be considered used for the treatment of ESRD (75 FR 
49047).
    In the CY 2016 ESRD PPS final rule, we also explained that, in CY 
2011 ESRD PPS rulemaking, we grouped the injectable and IV drugs and 
biological products into ESRD PPS functional categories based on their 
action (80 FR 69014). This was done for the purpose of adding new drugs 
or biological products with the same functions to the ESRD PPS bundled 
payment as expeditiously as possible after the drugs become 
commercially available so that beneficiaries have access to them. In 
the CY 2016 ESRD PPS final rule, we

[[Page 42137]]

finalized the definition of an ESRD PPS functional category in Sec.  
413.234(a) as a distinct grouping of drugs or biologicals, as 
determined by CMS, whose end action effect is the treatment or 
management of a condition or conditions associated with ESRD (80 FR 
69077).
    We finalized a policy in the CY 2016 ESRD PPS final rule (80 FR 
69017 through 69022) that, effective January 1, 2016, if a new 
injectable or IV product is used to treat or manage a condition for 
which there is an ESRD PPS functional category, the new injectable or 
IV product is considered included in the ESRD PPS bundled payment and 
no separate payment is available. The new injectable or IV product 
qualifies as an outlier service. The ESRD bundled market basket updates 
the PPS base rate annually and accounts for price changes of the drugs 
and biological products reflected in the base rate.
    We established in Sec.  413.234(b)(2) that, if the new injectable 
or IV product is used to treat or manage a condition for which there is 
not an ESRD PPS functional category, the new injectable or IV product 
is not considered included in the ESRD PPS bundled payment and the 
following steps occur. First, an existing ESRD PPS functional category 
is revised or a new ESRD PPS functional category is added for the 
condition that the new injectable or IV product is used to treat or 
manage. Next, the new injectable or IV product is paid for using the 
TDAPA described in Sec.  413.234(c). Finally, the new injectable or IV 
product is added to the ESRD PPS bundled payment following payment of 
the TDAPA.
    In the CY 2016 ESRD PPS final rule, we finalized a policy in Sec.  
413.234(c) to base the TDAPA on pricing methodologies under section 
1847A of the Act and pay the TDAPA until sufficient claims data for 
rate setting analysis for the new injectable or IV product are 
available, but not for less than 2 years. During the time a new 
injectable or IV product is eligible for the TDAPA, it is not eligible 
as an outlier service. We established that, following payment of the 
TDAPA, the ESRD PPS base rate will be modified, if appropriate, to 
account for the new injectable or IV product in the ESRD PPS bundled 
payment.
    We also established, in the CY 2016 ESRD PPS final rule (80 FR 
69024 through 69027), an exception to the drug designation process for 
calcimimetics. We noted that in the CY 2011 ESRD PPS proposed and final 
rules (74 FR 49929 and 75 FR 49038, respectively), the only oral-only 
drugs and biological products we identified were phosphate binders and 
calcimimetics, which fall into the bone and mineral metabolism ESRD PPS 
functional category. We stated that we defined these oral-only drugs as 
renal dialysis services in our regulations at Sec.  413.171 (75 FR 
49044), delayed the Medicare Part B payment for these oral-only drugs 
until CY 2014 at Sec.  413.174(f)(6), and continued to pay for them 
under Medicare Part D. We explained in the CY 2016 ESRD PPS final rule 
that, under Sec.  413.234(b)(1), if injectable or IV forms of phosphate 
binders or calcimimetics are approved by FDA, these drugs would be 
considered reflected in the ESRD PPS bundled payment because these 
drugs are included in an existing functional category, so no additional 
payment would be available for inclusion of these drugs.
    However, we recognized the uniqueness of these drugs and stated 
that we will not apply this process to injectable or IV forms of 
phosphate binders and calcimimetics when they are approved because 
payment for the oral forms of these drugs was delayed and dollars were 
never included in the ESRD PPS base rate to account for these drugs. 
Instead, we finalized a policy that once the injectable or IV phosphate 
binder or calcimimetic is FDA approved and has a Healthcare Common 
Procedure Coding System (HCPCS) code, we will issue a change request to 
pay for all forms of the phosphate binder or calcimimetic using the 
TDAPA based on the payment methodologies under section 1847A of the 
Act, which could include ASP + 6 percent, for a period of at least 2 
years. We explained in the CY 2016 ESRD PPS final rule that this will 
allow us to collect data reflecting current utilization of both the 
oral and injectable or IV forms of the drugs, as well as payment 
patterns and beneficiary co-pays, before we add these drugs to the ESRD 
PPS bundled payment. We stated that during this period we will not pay 
outlier payments for these drugs. We further stated that at the end of 
the 2 or more years, we will adopt the methodology for including the 
phosphate binders and calcimimetics into the ESRD PPS bundled payment 
through notice-and-comment rulemaking.
    In 2017, FDA approved an injectable calcimimetic. In accordance 
with the policy finalized in the CY 2016 ESRD PPS final rule, we issued 
a change request to implement payment under the ESRD PPS for both the 
oral and injectable forms of calcimimetics using the TDAPA. Change 
Request 10065, Transmittal 1889, issued August 4, 2017, replaced by 
Transmittal 1999, issued January 10, 2018, implemented the TDAPA for 
calcimimetics effective January 1, 2018.
    In CYs 2019 and 2020 ESRD PPS final rules (83 FR 56927 through 
56949 and 84 FR 60653 through 60677, respectively), we made several 
revisions to the drug designation process regulations at Sec.  413.234. 
In the CY 2019 ESRD PPS final rule, for example, we revised regulations 
at Sec.  413.234(a), (b), and (c) to reflect that the process applies 
for all new renal dialysis drugs and biological products that are FDA 
approved regardless of the form or route of administration, that is, 
new injectable, IV, oral, or other form or route of administration (83 
FR 56932). In addition, we revised Sec.  413.234(b) and (c) to expand 
the TDAPA to all new renal dialysis drugs and biological products, not 
just those in new ESRD PPS functional categories (83 FR 56942 through 
56943). We also revised Sec.  413.234(c) to reflect that we base the 
TDAPA on 100 percent of ASP (ASP + 0) instead of the pricing 
methodologies available under section 1847A of the Act (which includes 
ASP + 6). We explained that the 6 percent add-on to ASP has been used 
to cover administrative and overhead costs, however, the ESRD PPS base 
rate includes dollars for administrative complexities and overhead 
costs for drugs and biological products, so we believe ASP + 0 is a 
reasonable basis for the TDAPA under the ESRD PPS (83 FR 56943 through 
56944). For circumstances when ASP data is not available, we finalized 
that the TDAPA is based on wholesale acquisition cost (WAC) + 0 and, 
when WAC is not available, the TDAPA is based on the drug 
manufacturer's invoice (83 FR 56948). We also finalized a revision to 
Sec.  413.234(c) to reflect that the basis of payment for the TDAPA for 
calcimimetics would continue to be based on the pricing methodologies 
available under section 1847A of the Act, which includes ASP + 6 (83 FR 
56948). These provisions all had an effective date of January 1, 2020.
    In the CY 2020 ESRD PPS final rule, we made several additional 
revisions to the ESRD PPS drug designation process regulations at Sec.  
413.234. For example, we revised Sec.  413.234(b) and added paragraph 
(e) to codify certain eligibility criteria changes for new renal 
dialysis drugs and biological products that fall within an existing 
ESRD PPS functional category. That is, we excluded certain drugs from 
being eligible for the TDAPA, effective January 1, 2020 (84 FR 60672). 
Specifically, as detailed in the CY 2020 ESRD PPS final rule (85 FR 
60565 through 60673), we excluded

[[Page 42138]]

generic drugs approved by FDA under section 505(j) of the Federal Food, 
Drug, and Cosmetic Act (FD&C Act) and drugs for which the new drug 
application (NDA) is classified by FDA as Type 3, 5, 7 or 8, Type 3 in 
combination with Type 2 or Type 4, or Type 5 in combination with Type 
2, or Type 9 when the ``parent NDA'' is a Type 3, 5, 7 or 8--from being 
eligible for the TDAPA. We also established at Sec.  413.234(c) a 
policy to condition application of the TDAPA on our receipt of ASP data 
(84 FR 60681).
    In the CY 2020 ESRD PPS final rule (84 FR 60673), we also discussed 
the duration of payment of the TDAPA for calcimimetics and changed the 
basis of the TDAPA for such products. We stated that in accordance with 
our policy for calcimimetics under the drug designation process, we 
would pay for calcimimetics using the TDAPA for a minimum of 2 years 
until sufficient claims data for rate setting analysis is available for 
these products. We noted that at the time of the CY 2020 ESRD PPS 
proposed rule we were still in the process of collecting utilization 
claims data for both the oral and injectable form of calcimimetics. 
Therefore, in the CY 2020 ESRD PPS proposed rule, we stated that we 
would continue to pay for calcimimetics using the TDAPA in CY 2020 (84 
FR 38347).
    However, we also noted in the CY 2020 ESRD PPS proposed rule that 
we had provided the TDAPA for calcimimetics at ASP + 6 percent for 2-
full years (that is, January 1, 2018 through December 31, 2019), and we 
believed that was sufficient time for ESRD facilities to address any 
administrative complexities and overhead costs that may have arisen 
with regard to furnishing the calcimimetics. We noted that it was clear 
that ESRD facilities were furnishing calcimimetics because payment for 
them using the TDAPA had increased Medicare expenditures by $1.2 
billion in CY 2018 (84 FR 60673). We explained that one of the 
rationales for the 6 percent add-on to ASP was to cover administrative 
and overhead costs, however, the ESRD PPS base rate has dollars 
included for administrative complexities and overhead costs for drugs 
and biological products. Therefore, in the CY 2020 ESRD PPS final rule, 
we finalized a revision to Sec.  413.234(c) to reflect that the basis 
of payment for the TDAPA for calcimimetics, beginning in CY 2020, would 
be 100 percent of ASP (84 FR 60676). We explained this policy change 
provided a balance between supporting ESRD facilities in their uptake 
of these products and limiting the financial burden that increased 
payments place on beneficiaries and Medicare expenditures. We also 
noted that this policy is consistent with the policy finalized for all 
other new renal dialysis drugs and biological products in the CY 2019 
ESRD PPS final rule (83 FR 56948).
c. Proposed Methodology for Modifying the ESRD PPS Base Rate to Account 
for Calcimimetics in the ESRD PPS Bundled Payment
    As we discussed previously in section II.B.1.b of this proposed 
rule, under Sec.  413.234(d), calcimimetics were no longer considered 
to be an oral-only drug once FDA approved an injectable calcimimetic in 
2017. We have paid for calcimimetics under the ESRD PPS using the TDAPA 
since January 1, 2018. We stated in the CY 2016 ESRD PPS final rule 
that for calcimimetics--for which there is an ESRD PPS functional 
category, but no money is in the base rate--we will utilize the TDAPA 
to collect utilization data before adding this drug to the ESRD PPS 
base rate. This will allow us to collect data reflecting current 
utilization of both the oral and injectable or IV forms of the drug, as 
well as payment patterns and beneficiary co-pays, and at the end of the 
2 or more years, we will adopt the methodology for including this drug 
in the ESRD PPS bundled payment through notice-and-comment rulemaking.
    We believe we have collected sufficient claims data for a rate 
setting analysis for calcimimetics. Specifically, we have collected 
robust claims data for 2-full years and analyzed the utilization of 
every generic and brand name oral calcimimetic, along with the 
utilization of the injectable calcimimetic. We monitored the ASP data 
available during the specific utilization periods. Our overall analysis 
of ESRD claims data for CYs 2018 and 2019 indicated an increase in the 
utilization of the oral generic calcimimetic drugs with a steep decline 
in the brand-name oral calcimimetic. This resulted in an overall 
decrease in ASP as the generic calcimimetic drugs entered the market in 
late 2018 and the beginning of 2019, since the generic version is less 
expensive than the brand-name version. Since beneficiaries have a 20 
percent co-pay under the ESRD PPS, a decrease in the payment for 
calcimimetics results in a decrease in the beneficiary co-pay.
    Therefore, we believe that we are at the step of the ESRD PPS drug 
designation process where we propose to adopt the methodology for 
modifying the ESRD PPS base rate to account for calcimimetics in the 
ESRD PPS bundled payment through CY 2021 notice-and-comment rulemaking. 
That is, in this proposed rule, we are proposing to add a per treatment 
amount to the ESRD PPS base rate to include the calcimimetics in the 
ESRD PPS bundled payment amount.
    In developing the proposed methodology for including calcimimetics 
into the ESRD PPS base rate, we considered the methodology that we used 
when we included Part B drugs and biological products in the ESRD PPS 
base rate as part of our implementation of the ESRD PPS. In the CY 2011 
ESRD PPS final rule (75 FR 49074 through 49079), we discussed how we 
established which renal dialysis drugs and biological products would be 
reflected in the ESRD PPS base rate. We used the utilization of those 
drugs and biological products from Medicare claims data and applied ASP 
+ 6 percent to establish the price for each drug. Then we inflated each 
drug's price to 2011 using the Producer Price Index (PPI) for 
prescription drugs.
    In addition, as discussed in the CY 2011 ESRD PPS final rule (75 FR 
49064), we established a dialysis treatment as the unit of payment. 
Consistent with the approach we used initially to include drugs and 
biological products into the ESRD PPS base rate and the ESRD PPS unit 
of payment, we are proposing a similar methodology in this rule to 
calculate a one-time modification to the ESRD PPS base rate on a per-
treatment basis to account for calcimimetics. We believe the proposed 
methodology is similar to the CY 2011 approach because we would 
determine utilization of the drug, in this case, calcimimetics, along 
with the payment amounts associated with each oral and injectable form 
based on the ASP + 0 instead of ASP + 6, as discussed in the CY 2020 
ESRD PPS final rule.
    The following sections discuss each element of our proposed 
methodology in detail. As an overview, we are proposing to calculate a 
per-treatment amount for calcimimetics that would be added to the ESRD 
PPS base rate. We would apply the value from the most recent calendar 
quarter ASP calculations at 100 percent of ASP (that is, ASP + 0) 
available to the public for calcimimetics to the utilization data for 
calcimimetics from CYs 2018 and 2019 Medicare ESRD claims data. This 
would provide the calcimimetic expenditure amount. We would divide the 
calcimimetic expenditure amount by the total number of hemodialysis-
equivalent dialysis treatments paid in CYs 2018 and 2019 under the ESRD 
PPS. We would reduce this average per treatment amount by 1 percent to 
account for the outlier policy, since calcimimetics

[[Page 42139]]

would be ESRD outlier services eligible for outlier payments beginning 
January 1, 2021. We propose to add the resulting amount to the ESRD PPS 
base rate. We note that this amount will stay in the base rate and be 
subject to the annual updates (productivity adjusted market basket 
increase and application of wage index budget neutrality adjustment 
factor). Under this proposal, CMS would stop paying for these drugs 
using the TDAPA for dates of service on or after January 1, 2021.
    We are proposing to revise our drug designation regulation at Sec.  
413.234, by adding paragraph (f), to describe the methodology for 
modifying the ESRD PPS base rate to account for the costs of 
calcimimetics, including the data sources and the steps we would take 
to calculate a per treatment amount. We propose, for dates of service 
on or after January 1, 2021, calcimimetics would no longer be paid for 
under the ESRD PPS using the TDAPA (Sec.  413.234(c)) and would be paid 
for through the ESRD PPS base rate and eligible for outlier payments as 
ESRD outlier services under Sec.  413.237.
    We note that the methodology proposed in this rule is only for 
modifying the ESRD PPS base rate to include calcimimetic drugs. We 
stated in the CY 2016 ESRD PPS final rule (80 FR 69022) that the TDAPA 
will be paid for a minimum of 2 years, during which time we will gather 
utilization data. At the end of that time, the drug will be included 
within its new functional category and the base rate may or may not be 
modified to account for the cost of the drug, depending upon what the 
utilization data show. Accordingly, our policy is to propose and adopt 
the methodology for including any future eligible new renal dialysis 
drugs and biological products into the ESRD PPS base rate through 
notice-and-comment rulemaking.
(1) Determining Utilization of Calcimimetics
    For use in the proposed calculation, we analyzed the utilization of 
both the oral and injectable forms of calcimimetics reported on the 
ESRD facility claims for CYs 2018 and 2019. ESRD facilities report this 
information to CMS on Medicare ESRD facility claims, that is, the 837-
institutional form with bill type 072X. The oral calcimimetic is 
reported as HCPCS J0604 (Cinacalcet, oral, 1 mg, (for ESRD on 
dialysis)) and the injectable calcimimetic is reported as HCPCS J0606 
(Injection, etelcalcetide, 0.1 mg), that is, one unit of J0604 is 1 mg, 
and one unit of J0606 is 0.1 mg. For purposes of this rate setting 
analysis, we consider utilization of calcimimetics as the units of the 
product furnished to an ESRD beneficiary.
    For the CY 2018 utilization data for calcimimetics, we propose to 
use the latest available claims data based on the CY 2018 ESRD facility 
claims updated through June 30, 2019 (that is, claims with dates of 
service from January 1 through December 31, 2018, that were received, 
processed, paid, and passed to the National Claims History (NCH) File 
as of June 30, 2019) to calculate 2018 utilization. Claims that are 
received, processed, paid, and passed to the NCH file are considered to 
be ``complete'' because they have been adjudicated.
    For the CY 2019 utilization data for calcimimetics, we propose to 
use the latest available claims data based on the CY 2019 ESRD facility 
claims to calculate 2019 utilization. For this proposed rule, the 
latest available CY 2019 ESRD facility claims used were updated through 
January 31, 2020 (that is, claims with dates of service from January 1 
through December 31, 2019, that were received, processed, paid, and 
passed to the NCH File as of January 31, 2020). For the CY 2021 ESRD 
PPS final rule, the latest available CY 2019 ESRD facility claims we 
would use for purposes of our final calculation would be updated 
through June 30, 2020 (that is, claims with dates of service from 
January 1 through December 31, 2019, that were received, processed, 
paid, and passed to the NCH File as of June 30, 2020).
    While we have continued to pay the TDAPA for calcimimetics for 
dates of service in CY 2020, we are not proposing to use utilization 
data from this period because practice patterns in CY 2020 have been 
altered due to the COVID-19 pandemic and the resulting impact on data 
is unknown at this time. However, our policy to continue paying for 
calcimimetics using the TDAPA in CY 2020 has allowed us to analyze 2 
full years of adjudicated Medicare claims since CY 2019 claims include 
those claims from January 1, 2019 through December 31, 2019.
    We solicit comments on the proposed use of CYs 2018 and 2019 claims 
data to determine the utilization of calcimimetics for purposes of 
calculating the proposed addition to the ESRD PPS base rate to account 
for calcimimetics at proposed Sec.  413.234(f). While we believe using 
claims data from CYs 2018 and 2019 is appropriate because those years 
provide us with not only the most complete data set, but also the most 
accurate data set reflecting paid claims, we are also soliciting 
comments as to whether we should instead use a single year (CY 2018 or 
CY 2019) rather than both CYs 2018 and 2019 in our methodology.
(2) Pricing of Calcimimetics--Methodology
    For use in the proposed calculation, we would set the price for 
calcimimetics using values from the most recent calendar quarter of ASP 
calculations available to the public, at 100 percent of ASP (ASP + 0). 
The ASP-based value is a CMS-derived weighted average of all of the 
National Drug Code (NDC) sales prices submitted by drug manufacturers 
and assigned by CMS to the two existing HCPCS codes for calcimimetics. 
For each billing code, CMS calculates a weighted average sales price 
using data submitted by manufacturers, which includes the following: 
ASP data at the 11-digit NDC level, the number of units of the 11-digit 
NDC sold and the ASP for those units. Next, the number of billing units 
in an NDC is determined by the amount of drug in the package. CMS uses 
the following weighting methodology to determine the payment limit: (1) 
Sums the product of the manufacturer's ASP and the number of units of 
the 11-digit NDC sold for each NDC assigned to the billing and payment 
code; (2) Divides this total by the sum of the product of the number of 
units of the 11-digit NDC sold and the number of billing units in that 
NDC for each NDC assigned to the billing and payment code, and (3) 
Weights the ASP for an NDC by the number of billing units sold for that 
NDC. This calculation methodology is discussed in the CY 2009 Physician 
Fee Schedule (PFS) final rule (73 FR 69752). The general methodology 
for determining ASP-based payments for the PFS is authorized in section 
1847A of the Act.
    ASP-based payment limits published in the quarterly ASP Drug 
Pricing files include a 6 percent add-on as required in section 1847A 
of the Act. However, consistent with the TDAPA basis of payment for CY 
2020, we use 100 percent of the weighted ASP value, in other words, ASP 
+ 0. In the CY 2020 ESRD PPS final rule, we noted that the ESRD PPS 
accounts for storage and administration costs and that ESRD facilities 
do not have acquisition price variation issues when compared to 
physicians. We explained that we believed ASP + 0 is reasonable for new 
renal dialysis drugs and biological products that fall within an 
existing functional category because there are already dollars in the 
per treatment base rate for a new drug's respective category. We also 
explained that we believed ASP + 0 is a reasonable basis for payment 
for the TDAPA for new renal dialysis drugs and biological

[[Page 42140]]

products that do not fall within the existing functional category 
because the ESRD PPS base rate has dollars built in for administrative 
complexities and overhead costs for drugs and biological products (83 
FR 56946).
    We believe using a value based on the most recent calendar quarter 
ASP calculations available to the public for both oral and injectable 
versions of the calcimimetics would provide an accurate representation 
of the price of calcimimetics for ESRD facilities because it uses 
manufacturer sales information that includes discounts (that is, 
rebates, volume discounts, prompt payment, cash payment specified in 
section 1847A of the Act). Every calendar quarter, CMS publishes ASP-
based payment limits for certain Part B drugs and biological products 
that are used for payment of such Part B covered drugs and biological 
products for a specific quarter. The amount that we propose to use for 
the base rate modifications associated with the oral and injectable 
versions of the calcimimetics is based on the most recent information 
on average sales prices net of discounts specified in section 1847A 
submitted by the manufacturers of each of the drugs.
    For this proposed rule, using values from the most recent calendar 
quarter of ASP calculations available to the public at the time that 
this rule is being written is the second quarter of 2020,\1\ and as a 
result of two-quarter data lag this reflects manufacturer sales data 
submitted into CMS for the fourth quarter of 2019. For the CY 2021 ESRD 
PPS final rule, the most recent calendar quarter of ASP calculations 
available to the public would be the fourth quarter of 2020, which 
reflects manufacturer sales data submitted into CMS for the second 
quarter of 2020, and we would use that value for purposes of our final 
calculation.
---------------------------------------------------------------------------

    \1\ https://www.cms.gov/medicare/medicare-part-b-drug-average-sales-price/2020-asp-drug-pricing-files, April 2020 ASP Pricing 
File.
---------------------------------------------------------------------------

    We would update these prices by the proposed CY 2021 ESRD PPS base 
rate update to reflect the estimated costs in CY 2021. That is, we 
would first add the calculated per treatment payment amount to the ESRD 
PPS base rate to include calcimimetics, and then we would apply the 
annual payment rate update. The proposed calculation for the addition 
to the ESRD PPS base rate is discussed in the following section.
    Therefore, we propose to add Sec.  413.234(f) that CMS would use 
100 percent of the values from the most recent calendar quarter ASP 
calculations available to the public for the oral and injectable 
calcimimetic to calculate a price for each form of the drug. We solicit 
comments on the proposed use of the values from the most recent 
calendar quarter ASP + 0 calculations available to the public for 
calcimimetics for setting the price and the proposed language at Sec.  
413.234(f).
(3) Calculation of the Addition to the ESRD PPS Base Rate To Include 
Calcimimetics
    To calculate the proposed amount for calcimimetics that would be 
added to the ESRD PPS base rate, we applied the values from the most 
recent calendar quarter 2020 ASP + 0 calculations available to the 
public for calcimimetics to CYs 2018 and 2019 calcimimetic utilization 
data to calculate the calcimimetic expenditure amount for both years. 
As stated in section II.B.1.c.(1) of this proposed rule, one unit of 
J0604 (oral calcimimetic, cinacalcet) is 1 mg and one unit of J0606 
(injectable calcimimetic etelcalcetide) is 0.1 mg. That is, we 
determined that 1,824,370,957 total units (mg) of oral calcimimetics 
were used in CYs 2018 and 2019. With regard to injectable 
calcimimetics, we determined that 306,714,207 total units (0.1 mg) were 
used in CYs 2018 and 2019. This use indicates that 33.9 percent of ESRD 
beneficiaries received calcimimetics in CYs 2018 and 2019. For this 
proposed rule, we used the values from the most recent calendar quarter 
ASP + 0 calculations available to the public, which is the second 
quarter of 2020. This information can be found on the ESRD Payment 
website: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/ESRD-Transitional-Drug. We used $0.231 per mg for the oral 
calcimimetic and $2.20 per 0.1 mg for the injectable calcimimetic. The 
prices per unit correspond to 1 mg and 0.1 mg for cinacalcet and 
etelcalcetide respectively. (We note that, for the CY 2021 ESRD PPS 
final rule, we would update the ASP + 0 based value on the most recent 
calendar quarter calculations available to the public.) Multiplying the 
utilization of the oral and injectable calcimimetics by their 
respective ASP and then adding the expenditure amount for both forms of 
calcimimetics together would be the total 2-year (CYs 2018 and 2019) 
calculated calcimimetic expenditure amount. That is, for this proposed 
rule, we calculated the total calcimimetic expenditure amount of 
$1,096,200,947. The total number of paid hemodialysis-equivalent 
dialysis treatments furnished to Medicare ESRD beneficiaries in CYs 
2018 and 2019 was 90,014,098. This total number of paid treatments 
reflects all paid dialysis treatments regardless of whether a 
calcimimetic was furnished. Dividing the calcimimetic expenditure 
amount by the total number of paid hemodialysis-equivalent dialysis 
treatments provides an average per treatment payment amount of $12.18.
    We then reduced this amount by 1 percent to account for the outlier 
policy under Sec.  413.237 to get a total of $12.06 ($12.18 x .99 = 
$12.06). Under our proposal, we would apply this 1 percent reduction 
before increasing the base rate to account for outlier payments that 
would be paid beginning January 1, 2021 for calcimimetics since they 
would become ESRD outlier services eligible for outlier payments under 
Sec.  413.237. As we discussed in section II.B.1.c of this proposed 
rule, in developing the proposed methodology for including 
calcimimetics in the ESRD PPS base rate, we considered the methodology 
applied when we developed the ESRD PPS base rate. In the CY 2011 ESRD 
PPS final rule (75 FR 49074 through 49075), we explained the budget 
neutrality adjustments applied to the unadjusted ESRD PPS base rate to 
account for statutorily mandated reductions. Because we are proposing 
to modify the ESRD PPS base rate to include calcimimetics, which 
beginning January 1, 2021 would become ESRD outlier services, we 
focused on the outlier adjustment. That is, in CY 2011 we applied a 1 
percent reduction to the unadjusted ESRD PPS base rate to account for 
outlier payments. In order for the application of the 1 percent outlier 
to be maintained, we believe the 1 percent must be excluded from the 
addition to the ESRD PPS base rate for calcimimetics.
    Then, to determine the estimated costs in CY 2021 we would inflate 
the average per treatment payment amount for calcimimetics ($12.06) to 
2021 using the CY 2021 ESRD PPS base rate update. As discussed in 
section II.B.4.d of this proposed rule, the proposed CY 2021 ESRD PPS 
base rate is $255.59. This amount reflects a proposed CY 2021 wage 
index budget-neutrality adjustment factor of .998652, a proposed base 
rate addition of $12.06 to include calcimimetics, and the proposed CY 
2021 ESRD PPS payment rate update of 1.8 percent. We believe that using 
the annual payment rate update effectively updates the prices set for 
calcimimetics from CY 2020 to CY 2021 because this is consistent with 
how the other components of the base rate are updated for inflation 
each year, which includes drugs. We note, that the inflation factor 
used for drugs and biological products for the ESRD bundled market 
basket is

[[Page 42141]]

the Producer Price Index as discussed in the CY 2019 ESRD PPS final 
rule (83 FR 56958 through 56959).
    Therefore, we propose to add Sec.  413.234(f) that CMS would 
multiply the utilization of the oral and injectable calcimimetics by 
their respective prices and add the expenditure amount for both forms 
together to calculate the total calcimimetic expenditure amount. Then, 
CMS would divide the total calcimimetic expenditure amount by the total 
number of paid hemodialysis-equivalent dialysis treatments in CYs 2018 
and 2019, to calculate the average per-treatment payment amount. CMS 
would reduce the average per-treatment payment amount by 1 percent to 
account for the outlier policy under Sec.  413.237 in order to 
determine the amount added to the ESRD PPS base rate.
    In keeping with the principles of a PPS, which include motivating 
healthcare providers to structure cost-effective, efficient patient 
care that avoids unnecessary services, thereby reining in costs, we 
believe the cost of the calcimimetics should be spread across all the 
dialysis treatments, rather than be directed only to the patients 
receiving the calcimimetics.
    We solicit comments on the proposed revisions to Sec.  413.234 to 
add paragraph (f) to Sec.  413.234 to establish the methodology for 
modifying the ESRD PPS base rate to account for calcimimetics in the 
ESRD PPS bundled payment.
    As an alternative methodology, we considered dividing the total 
Medicare expenditures for all calcimimetics in CYs 2018 and 2019 
(approximately $2.3 billion) by the total number of paid hemodialysis-
equivalent dialysis treatments furnished during that same time period. 
However, this approach would not factor in the impact of oral generic 
calcimimetics, which entered the market from late December 2018 through 
early January 2019. For example, under the proposed methodology, the 
ASP calculations incorporate the more recent pricing of the oral 
generic calcimimetics into the weighting which has resulted in a 
significant decline in the ASP-based value. In addition, this 
alternative methodology would not reflect our current policy to base 
the TDAPA on ASP + 0, since in CYs 2018 and 2019 we paid for 
calcimimetics using the TDAPA at ASP + 6. We believe it is more 
appropriate for the ESRD PPS base rate to reflect the values from the 
most recent calendar quarter of ASP calculations available since that 
aligns with how ESRD facilities would be purchasing and furnishing the 
oral calcimimetics rather than using expenditure data from previous 
periods. We believe that ESRD facilities would want to support CMS's 
goal of lower drug and biological products prices for its 
beneficiaries. In addition, this alternative methodology would have a 
more significant impact on beneficiary cost sharing in terms of a 
higher 20 percent co-pay than the proposed methodology in this proposed 
rule. We solicit comment on this alternative methodology, which would 
entail dividing the total Medicare expenditures (that is, actual spend) 
for all calcimimetics in CYs 2018 and 2019 by the total number of paid 
hemodialysis-equivalent dialysis treatments furnished during that same 
time period.
2. Proposed Changes to the TPNIES Eligibility Criteria
a. Background
    In the CY 2020 ESRD PPS final rule (84 FR 60681 through 60698), CMS 
established a transitional add-on payment adjustment for certain new 
and innovative renal dialysis equipment and supplies under the ESRD 
PPS, under the authority of section 1881(b)(14)(D)(iv) of the Act, in 
order to support ESRD facility use and beneficiary access to these new 
technologies. We established this payment adjustment to help address 
the unique circumstances experienced by ESRD facilities when 
incorporating new and innovative equipment and supplies into their 
businesses and to support ESRD facilities transitioning or testing 
these products during the period when they are new to market. We added 
Sec.  413.236 to establish the eligibility criteria and payment 
policies for the transitional add-on payment adjustment for new and 
innovative renal dialysis equipment and supplies, which we call the 
TPNIES.
    We established in Sec.  413.236(b) that for dates of service 
occurring on or after January 1, 2020, CMS will provide the TPNIES to 
an ESRD facility for furnishing a covered equipment or supply only if 
the item: (1) Has been designated by CMS as a renal dialysis service 
under Sec.  413.171, (2) is new, meaning it is granted marketing 
authorization by FDA on or after January 1, 2020, (3) is commercially 
available by January 1 of the particular calendar year, meaning the 
year in which the payment adjustment would take effect, (4) has a HCPCS 
application submitted in accordance with the official Level II HCPCS 
coding procedures by September 1 of the particular calendar year, (5) 
is innovative, meaning it meets the criteria specified in Sec.  
412.87(b)(1) and related guidance, and (6) is not a capital-related 
asset that an ESRD facility has an economic interest in through 
ownership (regardless of the manner in which it was acquired).
    Regarding the innovation requirement in Sec.  413.236(b)(5), in the 
CY 2020 ESRD PPS final rule (84 FR 60690), we stated that CMS will use 
the following criteria to evaluate substantial clinical improvement 
(SCI) for purposes of the TPNIES under the ESRD PPS, based on the 
inpatient hospital prospective payment system (IPPS) SCI criteria in 
Sec.  412.87(b)(1) and related guidance: Section 412.87(b)(1) includes 
the criteria used under the IPPS new technology add-on payment (NTAP) 
to determine whether a new technology represents an advance that 
substantially improves, relative to renal dialysis services previously 
available, the diagnosis or treatment of Medicare beneficiaries. First, 
and most importantly, the totality of the circumstances is considered 
when making a determination that a new renal dialysis equipment or 
supply represents an advance that substantially improves, relative to 
renal dialysis services previously available, the diagnosis or 
treatment of Medicare beneficiaries. Second, a determination that a new 
renal dialysis equipment or supply represents an advance that 
substantially improves, relative to renal dialysis services previously 
available, the diagnosis or treatment of Medicare beneficiaries means 
one of the following:
     The new renal dialysis equipment or supply offers a 
treatment option for a patient population unresponsive to, or 
ineligible for, currently available treatments; or
     The new renal dialysis equipment or supply offers the 
ability to diagnose a medical condition in a patient population where 
that medical condition is currently undetectable, or offers the ability 
to diagnose a medical condition earlier in a patient population than 
allowed by currently available methods, and there must also be evidence 
that use of the new renal dialysis service to make a diagnosis affects 
the management of the patient; or
     The use of the new renal dialysis equipment or supply 
significantly improves clinical outcomes relative to renal dialysis 
services previously available as demonstrated by one or more of the 
following: (1) A reduction in at least one clinically significant 
adverse event, including a reduction in mortality or a clinically 
significant complication; (2) a decreased rate of at least one 
subsequent diagnostic or

[[Page 42142]]

therapeutic intervention; (3) a decreased number of future 
hospitalizations or physician visits; (4) a more rapid beneficial 
resolution of the disease process treatment including, but not limited 
to, a reduced length of stay or recovery time; (5) an improvement in 
one or more activities of daily living; (6) an improved quality of 
life; or (7) a demonstrated greater medication adherence or compliance; 
or,
     The totality of the circumstances otherwise demonstrates 
that the new renal dialysis equipment or supply substantially improves, 
relative to renal dialysis services previously available, the diagnosis 
or treatment of Medicare beneficiaries.
    Third, evidence from the following published or unpublished 
information sources from within the United States (U.S.) or elsewhere 
may be sufficient to establish that a new renal dialysis equipment or 
supply represents an advance that substantially improves, relative to 
renal dialysis services previously available, the diagnosis or 
treatment of Medicare beneficiaries: Clinical trials, peer reviewed 
journal articles; study results; meta-analyses; consensus statements; 
white papers; patient surveys; case studies; reports; systematic 
literature reviews; letters from major healthcare associations; 
editorials and letters to the editor; and public comments. Other 
appropriate information sources may be considered.
    Fourth, the medical condition diagnosed or treated by the new renal 
dialysis equipment or supply may have a low prevalence among Medicare 
beneficiaries. Fifth, the new renal dialysis equipment or supply may 
represent an advance that substantially improves, relative to renal 
dialysis services previously available, the diagnosis or treatment of a 
subpopulation of patients with the medical condition diagnosed or 
treated by the new renal dialysis equipment or supply.
    We also established a process modeled after IPPS's process of 
determining if a new medical service or technology meets the SCI 
criteria specified in Sec.  412.87(b)(1). Specifically, similar to the 
IPPS NTAP, we wanted to align our goals with the agency's efforts to 
transform the healthcare delivery system for the ESRD beneficiary 
through competition and innovation to provide patients with better 
value and results. We believe it is appropriate to facilitate access to 
new and innovative equipment and supplies through add-on payments 
similar to the IPPS NTAP program and to provide innovators with 
standard criteria for both inpatient and outpatient settings. In Sec.  
413.236(c), we established a process for our announcement of TPNIES 
determinations and a deadline for consideration of new renal dialysis 
equipment or supply applications under the ESRD PPS. CMS will consider 
whether a new renal dialysis equipment or supply meets the eligibility 
criteria specified in Sec.  413.236(b) and summarize the applications 
received in the annual ESRD PPS proposed rules. Then, after 
consideration of public comments, we will announce the results in the 
Federal Register as part of our annual updates and changes to the ESRD 
PPS in the ESRD PPS final rule. The TPNIES applications for CY 2021 are 
discussed in section II.C. of this proposed rule. CMS will only 
consider a complete application received by CMS by February 1 prior to 
the particular calendar year, meaning the year in which the payment 
adjustment would take effect, and FDA marketing authorization for the 
equipment or supply must occur by September 1 prior to the particular 
calendar year. We stated in the CY 2020 ESRD PPS final rule (80 FR 
60690) that we would establish a workgroup of CMS medical and other 
staff to review the studies and papers submitted as part of the TPNIES 
application, the public comments we receive, and the FDA marketing 
authorization and HCPCS application information and assess the extent 
to which the product provides SCI over current technologies.
    We established Sec.  413.236(d) to provide a payment adjustment for 
a new and innovative renal dialysis equipment or supply. Section 
413.236(d)(1) states that the TPNIES is paid for 2-calendar years. 
Section 413.236(d)(2) provides that, following payment of the TPNIES, 
the ESRD PPS base rate will not be modified and the new and innovative 
renal dialysis equipment or supply will become an eligible outlier 
service as provided in Sec.  413.237.
    Under Sec.  413.236(e)(1), the Medicare Administrative Contractors 
(MACs) on behalf of CMS will establish prices for the new and 
innovative renal dialysis equipment and supplies that meet the 
eligibility criteria specified in Sec.  413.236(b) using verifiable 
information from the following sources of information, if available: 
(1) The invoice amount, facility charges for the item, discounts, 
allowances, and rebates; (2) the price established for the item by 
other MACs and the sources of information used to establish that price; 
(3) payment amounts determined by other payers and the information used 
to establish those payment amounts; and (4) charges and payment amounts 
required for other equipment and supplies that may be comparable or 
otherwise relevant.
b. Proposed Changes to Eligibility for the TPNIES
    Currently, in Sec.  413.236(b)(2), one eligibility requirement for 
the TPNIES is that an equipment or supply must be new, meaning it is 
granted marketing authorization by FDA on or after January 1, 2020. In 
establishing this requirement, we tied what is considered new to 
January 1, 2020, the effective date of the TPNIES policy. We explained 
in the CY 2020 ESRD PPS final rule (84 FR 60685) that by including FDA 
marketing authorizations on or after January 1, 2020, we intended to 
support ESRD facility use and beneficiary access to the latest 
technological improvements to renal dialysis equipment and supplies. 
While we continue to believe it is appropriate to tie the newness 
requirement to the date of the FDA marketing authorization for the 
reasons discussed in the CY 2020 ESRD PPS final rule, we do not believe 
newness should be tied to the effective date of the TPNIES policy going 
forward, for the reasons discussed below. In addition, we believe this 
eligibility criterion should address when an equipment or supply is no 
longer considered new. Under the current requirement at Sec.  
413.236(b)(2), we could receive an application for the TPNIES for 
equipment and supplies many years after FDA marketing authorization, 
when the equipment is no longer new.
    In the CY 2020 ESRD PPS proposed rule (84 FR 38353), while we 
proposed to define new renal dialysis equipment and supplies as those 
that are granted marketing authorization by FDA on or after January 1, 
2020, we also solicited comment on whether a different FDA marketing 
authorization date, for example, on or after January 1, 2019, might be 
appropriate. We explained in the CY 2020 ESRD PPS final rule (84 FR 
60688 through 60689) that while some commenters expressed support for 
the proposed definition, most of the comments were focused on the 
merits of establishing a date for newness that precedes the effective 
date of the TPNIES policy and whether all renal dialysis equipment and 
supplies must seek FDA marketing authorization. None of the comments 
addressed whether tying TPNIES eligibility to the TPNIES policy 
effective date or any fixed date would limit the TPNIES to new and 
innovative equipment and supplies.
    After careful consideration of these comments, we decided to 
finalize the proposed definition of new to mean the

[[Page 42143]]

renal dialysis equipment or supply was granted marketing authorization 
by FDA on or after January 1, 2020. We stated that while we appreciated 
that manufacturers of renal dialysis equipment and supplies that were 
granted FDA marketing authorization in prior years would want these 
products to be eligible for the TPNIES, our goal is not to provide a 
payment adjustment for all the products that have received FDA 
marketing authorization or for products that have had limited market 
uptake, but rather to establish an add-on payment adjustment for 
certain new and innovative products in order to support uptake by ESRD 
facilities of new and innovative renal dialysis equipment and supplies. 
In addition, we stated that we appreciated the complex issues the 
commenters raised if we were to select an earlier FDA marketing 
authorization date, and believed our approach will avoid the need to 
address those issues. We noted that the ESRD PPS is a prospective 
payment system, in which changes are generally made prospectively, 
including eligibility requirements for add-on payment adjustments. In 
addition, we noted that this FDA marketing authorization date of 
January 1, 2020 or later is consistent with the TDAPA's definition of a 
new renal dialysis drug or biological product.
    After further consideration, we no longer believe an item should be 
considered new based on the TPNIES policy effective date of January 1, 
2020. Rather, we believe that it is important for the TPNIES policy to 
provide a window of time when a new renal dialysis equipment or supply 
is considered new to provide transparency to potential applicants. We 
note that, under this proposal, the TPNIES policy would still be 
effective as of January 1, 2020 and therefore no equipment or supply 
receiving FDA marketing authorization before January 1, 2020 would be 
eligible for the TPNIES. However, we are proposing to revise Sec.  
413.236(b)(2) to remove ``on or after January 1, 2020'' and to reflect 
the definition of new to mean, within 3 years beginning on the date of 
FDA marketing authorization. By defining new in this manner, we would 
be giving entities wishing to apply for the TPNIES for their equipment 
or supply 3 years beginning on the date of FDA marketing authorization 
in which to submit their applications, while still limiting eligibility 
for the TPNIES to new technologies. We are proposing a 3-year newness 
window to be consistent with the timeframes under the IPPS NTAP 
requirements in Sec.  412.87(b)(2). Under the NTAP, new technologies 
are considered to be new for 2 or 3 years after the point at which data 
begin to become available reflecting the inpatient hospital code 
assigned to the new service or technology. We note, under the hospital 
outpatient PPS, the pass-through payment application for a medical 
device must also be submitted within 3 years from the date of the 
initial FDA approval or clearance, if required, unless there is a 
documented, verifiable delay in U.S. market availability after FDA 
approval or clearance is granted, in which case CMS will consider the 
pass-through payment application if it is submitted within 3 years from 
the date of market availability.
    In addition, we propose to revise Sec.  413.236(b) to remove ``For 
dates of service occurring on or after January 1, 2020'' and to revise 
Sec.  413.236(a) to reflect the January 1, 2020 effective date of the 
TPNIES policy finalized in the CY 2020 ESRD PPS final rule. We also are 
proposing other revisions to this paragraph, which are discussed in 
section II.B.3.b.(1) of this proposed rule.
    We are seeking comment on our proposal to define new for purposes 
of the TPNIES eligibility as within 3 years beginning on the date of 
FDA marketing authorization. In addition, it is our understanding that 
there may be situations in which a manufacturer has FDA marketing 
authorization for an item, but the process of manufacturing the item 
has been delayed, for example, by a Public Health Emergency (PHE), such 
as the current COVID-19 pandemic. Therefore, we are also seeking 
comment on the number of years for an item to be considered new, or if 
newness should be based on different criteria such as the later of 
marketing availability or the date of FDA marketing authorization.
    Currently, Sec.  413.236(b)(4) requires applicants for the TPNIES 
to have a HCPCS application submitted in accordance with the official 
Level II HCPCS coding procedures by September 1 of the particular 
calendar year. Section 413.236(c) currently requires applicants for 
TPNIES to have the FDA marketing authorization for the equipment or 
supply by September 1 prior to the particular calendar year.
    After publication of the CY 2020 ESRD PPS final rule, CMS updated 
its HCPCS Level II coding procedures to enable shorter and more 
frequent HCPCS code application cycles. Beginning in January 2020, CMS 
implemented quarterly HCPCS code application opportunities for drugs 
and biological products, and biannual application opportunities for 
DMEPOS and other non-drug, non-biological items and services.
    As the Administrator of CMS announced \2\ in May 2019, this change 
is part of CMS' broader, comprehensive initiative to foster innovation 
and expedite adoption of and patient access to new medical 
technologies. CMS' delivery on this important goal necessitated 
procedural changes that balance the need to code more frequently with 
the amount of time necessary to accurately process applications. CMS 
has released two documents with detailed information on the updated 
HCPCS Level II coding procedures, application instructions, and 
deadlines for 2020. Both documents, Healthcare Common Procedure Coding 
System (HCPCS) Level II Coding Procedures,\3\ and Healthcare Common 
Procedure Coding System (HCPCS) Level II Code Modification Application 
Instructions for the 2020 Coding Cycle \4\ are available on the CMS 
website. Under the new guidance, coding cycles for DMEPOS items and 
services will occur no less frequently than biannually. For 2020, the 
deadline for HCPCS Level II code applications for biannual Coding Cycle 
1 for DMEPOS items and services was January 6, 2020 with issuance of 
final code decisions occurring July 2020. These final code decisions 
are effective October 1, 2020. For biannual Coding Cycle 2, the code 
application deadline for DMEPOS items and services is June 29, 2020 
with issuance of final code decisions occurring January 2021 or 
earlier. These final code decisions are effective April 1, 2021. These 
dates are specific for 2020 and may change annually. Specific dates for 
biannual Coding Cycles 1 and 2 for future years will be published on 
the HCPCS website annually.
---------------------------------------------------------------------------

    \2\ https://www.cms.gov/newsroom/press-releases/cms-outlines-comprehensive-strategy-foster-innovation-transformative-medical-technologies.
    \3\ https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/2018-11-30-HCPCS-Level2-Coding-Procedure.pdf.
    \4\ https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/2020-HCPCS-Application-and-Instructions.pdf.
---------------------------------------------------------------------------

    Under the new biannual Coding Cycle 2 for DMEPOS items and 
services, in order to obtain a final HCPCS Level II code decision by 
January 1, 2021, the applicant must submit a complete HCPCS Level II 
code application along with the FDA marketing authorization 
documentation to CMS by June 29, 2020. In light of the change to 
biannual coding cycles, we have reassessed the TPNIES eligibility 
criterion in Sec.  413.236(b)(4), which is related to submission of the 
HCPCS Level II code

[[Page 42144]]

application as well as Sec.  413.236(c), which discusses the deadlines 
for consideration of new renal dialysis equipment or supply 
applications and have found that they conflict with the current HCPCS 
Level II coding guidelines.
    Because our HCPCS Level II coding guidelines require that 
applicants submit complete code applications for DMEPOS items and 
services to CMS by the deadline for biannual Coding Cycle 2 as 
specified in the HCPCS Level II coding guidance on the CMS website in 
order for a final HCPCS Level II code decision to be made by the 
following January 1 and require that documentation of FDA marketing 
authorization be submitted by the applicant to CMS by the HCPCS Level 
II code application deadline, we propose to align the TPNIES regulation 
at Sec.  413.236(b)(4) and (c) with these guidelines. We believe this 
alignment would provide consistency across CMS processes and 
transparency on deadlines for applicants for the TPNIES. In the event 
of a delay in the final HCPCS Level II coding decision, a miscellaneous 
code will be used in the interim until a final coding decision is made.
    We are also proposing to correct a technical error in Sec.  
413.236(b)(4), which requires the HCPCS application to be submitted by 
September 1 ``of'' the particular calendar year, meaning the year in 
which the payment adjustment would take effect. In accordance with the 
TPNIES policy, we would need to have the HCPCS application submitted 
``prior to'' the particular calendar year to be able to make a 
determination of TPNIES eligibility for payment to occur in the 
particular calendar year.
    Therefore, we propose to revise at Sec.  413.236(b)(4) to add the 
word ``complete'' and to replace ``September 1'' with ``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,'' and replace the word ``of'' with ``prior to'' to 
reflect that the HCPCS code application for biannual Coding Cycle 2 
must be complete and submitted as specified in the HCPCS Level II 
coding guidance on the CMS website prior to the particular calendar 
year. This HCPCS application submission deadline for a HCPCS Level II 
code application may result in a final HCPCS code determination by 
January 1, when the TPNIES payment would begin. We note that, for 2020 
biannual Coding Cycle 2, final decisions on HCPCS Level II codes issued 
by January 1, 2021 are not effective until April 1, 2021. For this 
reason, during this interim period, we propose to use a miscellaneous 
HCPCS code to provide the TPNIES payment. In the event of a delay in 
the final HCPCS Level II coding decision, a miscellaneous code will be 
used in the interim until the later effective date. In addition, we 
propose a technical change to Sec.  413.236(b)(4) to be consistent with 
how CMS references the HCPCS Level II coding procedures. That is, we 
propose to revise Sec.  413.236(b)(4) from ``official Level II HCPCS 
coding procedures'' to ``HCPCS Level II coding procedures on the CMS 
website''.
    In addition, we propose to revise Sec.  413.236(c) to replace 
``September 1'' with ``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'' to reflect that 
FDA marketing authorization for the new and innovative equipment or 
supply must accompany the HCPCS application prior to the particular 
calendar year in order for the item to qualify for the TPNIES in the 
next calendar year. Although applicants for TPNIES may submit a TPNIES 
application while the equipment or supply is undergoing the FDA 
marketing authorization process (since the deadline for the TPNIES 
application is February 1), under our proposal, FDA marketing 
authorization of the equipment or supply must be granted prior to the 
HCPCS Level II code application deadline. If FDA marketing 
authorization is not granted prior to the HCPCS Level II code 
application deadline, the TPNIES application would be denied and the 
applicant would need to reapply and submit an updated application by 
February 1 of the following year or within 3 years beginning on the 
date of FDA marketing authorization, in accordance with the proposed 
revisions to Sec.  413.236(b)(2) discussed previously in this proposed 
rule.
    Currently, Sec.  413.236(b)(5) requires that the new equipment or 
supply be innovative, meaning it meets the criteria specified in Sec.  
412.87(b)(1) of this chapter and related guidance. As discussed 
previously in this proposed rule, Sec.  412.87(b)(1) includes the 
criteria used under the IPPS NTAP to determine whether a new technology 
represents an advance that substantially improves, relative to 
technologies previously available, the diagnosis or treatment of 
Medicare beneficiaries. In Sec.  413.236(b)(5) we adopt the same SCI 
criteria to determine if a new renal dialysis equipment or supply is 
innovative for purposes of the TPNIES under the ESRD PPS. We also 
stated in the CY 2020 ESRD PPS final rule (84 FR 60690) our intention 
to adopt any future modifications to the IPPS SCI criteria so that 
innovators would have standard criteria to meet for both settings. 
While we adopted the IPPS SCI criteria under Sec.  412.87(b)(1), we did 
not adopt the alternative pathway for breakthrough devices (84 FR 
42296) under the ESRD PPS.
    In the fiscal year (FY) 2020 IPPS final rule (84 FR 42180 through 
42181), CMS codified additional SCI criteria that had been included in 
manuals and other sub-regulatory guidance. In accordance with the 
reference to Sec.  412.87(b)(1), we adopted the FY 2020 IPPS changes to 
the SCI criteria, and any future changes to the SCI criteria, by 
reference, unless and until we make any changes to the criteria through 
notice-and-comment rulemaking. Although the codification of the related 
guidance for the IPPS SCI occurred prior to the publication of the CY 
2020 ESRD PPS final rule, we inadvertently included a reference to 
related guidance in Sec.  413.236(b)(5). Therefore, we propose to 
revise Sec.  413.236(b)(5) to remove ``and related guidance'' to 
reflect that all related SCI guidance has now been incorporated into 
Sec.  412.87(b)(1).
3. Proposed Expansion of the TPNIES for New and Innovative Capital-
Related Assets That are Home Dialysis Machines When Used in the Home 
for a Single Patient
a. Background
    In response to the proposed expansion of the TDAPA in the CY 2019 
ESRD PPS proposed rule, we received several comments regarding payment 
under the ESRD PPS for certain new, innovative equipment and supplies 
used in the treatment of ESRD. For example, as we described in the CY 
2019 ESRD PPS final rule (83 FR 56972), a device manufacturer and 
device manufacturer association asked CMS to establish a transitional 
add-on payment adjustment for new FDA approved devices. They commented 
on the lack of FDA approved or authorized new devices for use in an 
ESRD facility, highlighting the need to promote dialysis device 
innovation.
    Other commenters, including a professional association and a large 
dialysis organization (LDO) urged CMS and other relevant policymakers 
to prioritize the development of a clear pathway to add new devices to 
the ESRD PPS bundled payment (83 FR 56973). A home dialysis patient 
group also expressed concern regarding the absence of a pathway for 
adding new devices to the ESRD PPS bundled

[[Page 42145]]

payment, stating that it left investors and industry wary of investing 
in the development of new devices for patients. In response, we 
expressed appreciation for the commenters' thoughts regarding payment 
for new and innovative devices, and stated that because we did not 
include any proposals regarding this issue in the CY 2019 ESRD PPS 
proposed rule, we considered these suggestions to be beyond the scope 
of that rule.
    However, in response to this feedback, in the CY 2020 ESRD PPS 
proposed rule (84 FR 38354 through 38355), we agreed that additional 
payment for certain renal dialysis equipment and supplies may be 
warranted under specific circumstances. We proposed to provide the 
TPNIES for certain new and innovative renal dialysis equipment and 
supplies furnished by ESRD facilities, but exclude from eligibility 
capital-related assets, which are defined in the Provider Reimbursement 
Manual (Pub. L. 15-1) (chapter 1, section 104.1) as assets that a 
provider has an economic interest in through ownership (regardless of 
the manner in which they were acquired). The Provider Reimbursement 
Manual is available on the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929. Examples of capital-related assets for ESRD facilities are 
dialysis machines and water purification systems.
    As we explained in the CY 2020 ESRD PPS proposed rule (84 FR 
38354), we did not believe capital-related assets should be eligible 
for additional payment through the TPNIES because the cost of these 
items is captured in cost reports, they depreciate over time, and they 
are generally used for multiple patients. In addition, we noted that 
since the costs of these items are reported in the aggregate, there is 
considerable complexity in establishing a cost on a per treatment 
basis. For these reasons, we therefore believed capital-related assets 
should be excluded from eligibility for the TPNIES at that time, and we 
proposed an exclusion to the eligibility criteria in Sec.  
413.236(b)(6). However, we noted that CMS uses capital-related asset 
cost data from cost reports in regression analyses to refine the ESRD 
PPS so that the cost of any new capital-related assets is accounted for 
in the ESRD PPS payment.
    In response to the proposed exclusion of capital-related assets, we 
received comments from a device manufacturers' association, which 
stated that since most medical equipment is purchased as a capital-
related asset, the TPNIES effectively would exclude the innovative 
equipment identified in the title of the adjustment. The association 
asserted that meaningful clinical improvements and patient experience 
improvements are arguably more likely to come from innovation outside 
single-use supplies. The association maintained that expanding the 
TPNIES to include medical equipment, regardless of how it is purchased 
by the provider, would stimulate greater investment in a broader array 
of new technologies for ESRD patients.
    In response, we stated in the CY 2020 ESRD PPS final rule (84 FR 
60688) that we recognize that accounting for renal dialysis service 
equipment can vary depending on the individual ESRD facility's business 
model. For example, when the owner of the capital-related asset retains 
title, then the renal dialysis service equipment is a depreciable asset 
and depreciation expense could be itemized. When there is no ownership 
of the renal dialysis service equipment, then the item is recorded as 
an operating expense.
    In addition, in response to comments regarding capital leases, we 
noted that regulations at Sec.  413.130(b)(1) specify that leases and 
rentals are includable in capital-related costs if they relate to the 
use of assets that would be depreciable if the provider owned them 
outright. We stated that in the future, we will be closely examining 
the treatment of capital-related assets under Medicare, including our 
regulations at Sec.  412.302 regarding capital costs in inpatient 
hospitals and Sec.  413.130, as they relate to accounting for capital-
related assets, including capital leases and the newly implemented 
guidance for finance lease arrangements, to determine if similar 
policies would be appropriate under the ESRD PPS.
b. Proposed Additional Payment for New and Innovative Capital-Related 
Assets That are Home Dialysis Machines When Used in the Home for a 
Single Patient
    Following publication of the CY 2020 ESRD PPS final rule, in which 
we finalized the TPNIES policy, we continued to study the issue of 
payment for capital-related assets under the ESRD PPS, taking into 
account information from a wide variety of stakeholders and recent 
developments and initiatives regarding kidney care. For example, we 
received additional comments and information from dialysis equipment 
and supply manufacturers, and a Technical Expert Panel (TEP) meeting 
held in December 2019, regarding the need for additional payment for 
capital-related assets under the ESRD PPS.
    We also took into account the President's Executive Order, signed 
on July 10, 2019, aimed at transforming kidney care in America. The 
Executive Order discussed many new initiatives, including the launch of 
a public awareness campaign to prevent patients from going into kidney 
failure and proposals for the Secretary to support research regarding 
preventing, treating, and slowing progression of kidney disease and 
encouraging the development of breakthrough technologies to provide 
patients suffering from kidney disease with better options for care 
than those that are currently available. Currently, most dialysis is 
furnished at ESRD facilities. In-center dialysis can be time-consuming 
and burdensome for patients. In addition, the current system 
prioritizes payment to in-center dialysis and the goal of the agency is 
to incentivize in-home dialysis. A key focus of the Executive Order is 
the effort to encourage in-home dialysis.
    The Executive Order is available at: https://www.whitehouse.gov/presidential-actions/executive-order-advancing-american-kidney-health/.
    In conjunction with the Executive Order, HHS laid out three goals 
for improving kidney health (see https://www.hhs.gov/about/news/2019/07/10/hhs-launches-president-trump-advancing-american-kidney-health-initiative.html):
     Reducing the number of Americans developing ESRD by 25 
percent by 2030.
     Having 80 percent of new ESRD patients in 2025 either 
receiving dialysis at home or receiving a transplant; and
     Doubling the number of kidneys available for transplant by 
2030.
    In addition, in connection with the President's Executive Order, on 
July 10, 2019, CMS issued a proposed rule (84 FR 34478) to implement a 
new mandatory payment model, known as the ESRD Treatment Choices (ETC) 
Model, which would provide new incentives to encourage the provision of 
dialysis in the home. The proposed ETC Model would be a mandatory 
payment model, focused on encouraging greater use of home dialysis and 
kidney transplants for ESRD beneficiaries among ESRD facilities and 
Managing Clinicians located in selected geographic areas.
    Lastly, we note that ESRD patients who receive in-center dialysis 
are particularly vulnerable during a PHE and other disasters, and that 
greater use of home dialysis modalities may expose these patients to 
less risk. The U.S. is responding to an outbreak of respiratory

[[Page 42146]]

disease caused by a novel (new) coronavirus that was first detected in 
China and which has now been detected in more than 190 countries 
internationally, and all 50 States and the District of Columbia. The 
virus has been named ``severe acute respiratory syndrome coronavirus 
2'' (SARS-CoV-2) and the disease it causes has been named ``coronavirus 
disease 2019'' (`COVID-19').
    On January 30, 2020, the International Health Regulations Emergency 
Committee of the World Health Organization (WHO) declared the outbreak 
a ``Public Health Emergency of international concern.'' On January 31, 
2020, the Secretary determined that a PHE exists for the U.S. to aid 
the nation's healthcare community in responding to COVID-19 and on 
April 21, 2020, the Secretary renewed, effective April 26, 2020, the 
determination that a PHE exists. On March 11, 2020, the WHO publicly 
declared COVID-19 a pandemic. On March 13, 2020, the President of the 
U.S. declared the COVID-19 pandemic a national emergency.
    The experience of multiple countries across the globe has 
demonstrated that older patients and patients with multiple 
comorbidities and underlying health conditions are patients who are 
more susceptible to the virus and have a higher risk of morbidity than 
younger patients without underlying health conditions. Per the CDC, the 
risk factors for COVID-19 include older adults and people of any age 
who have serious underlying medical conditions, such as diabetes and 
chronic kidney disease undergoing dialysis. Medicare's ESRD population 
aligns with the profile of patients who are more susceptible to COVID-
19. Therefore, it is important to reduce the risk of infection and this 
can be done through isolating patients from in-center exposure by 
encouraging home dialysis.
    Home dialysis would mitigate the risks associated with dialysis for 
these patients if the pandemic lasts longer than expected or is 
refractory in some way.
(1) Proposed Expansion of the TPNIES to Certain New and Innovative 
Capital-Related Assets That are Home Dialysis Machines When Used in the 
Home for a Single Patient
    In response to the President's Executive Order, the various HHS 
home dialysis initiatives, and the particular benefits of home dialysis 
for ESRD beneficiaries during PHEs like the current COVID-19 pandemic, 
which we discussed in the previous section, and in consideration of the 
feedback we have received from stakeholders, we agree that additional 
payment through the TPNIES for certain capital-related assets may be 
warranted under specific circumstances outlined in this section of the 
proposed rule. We note that in the CY 2020 ESRD PPS final rule (84 FR 
60607), we specifically excluded capital-related assets from the 
TPNIES. In commenting on the proposed rule, most stakeholders expressed 
concern that the TPNIES would exclude capital-related assets. In our 
response to commenters, we acknowledged that significant innovation and 
technology improvement is occurring with dialysis machines and 
peritoneal dialysis cyclers, as well as innovation in the efficiency 
and effectiveness of water systems. However, at that time we did not 
have enough information regarding current usage of the various 
financial and leasing arrangements, such as those involving capital 
leases for depreciable assets versus operating leases recorded as 
operating expenses. In addition, we noted that we would need to assess 
methodological issues regarding depreciation to determine whether 
TPNIES eligibility for these items would be appropriate.
    We stated in the CY 2020 ESRD PPS final rule that we needed to 
further study the specifics of the various business arrangements for 
equipment related to renal dialysis services. This would include items 
that are: (1) Purchased in their entirety and owned as capital-related 
assets; (2) assets that are acquired through a capital lease 
arrangement; (3) equipment obtained through a finance lease and 
recorded as an asset per the Financial Accounting Standards Board 
(FASB) guidance on leases (Topic 842) effective for fiscal years 
beginning after December 15, 2018; \5\ or (4) equipment obtained 
through an operating lease and recorded as an operating expense. In 
addition to the variety of business arrangements, we noted, there are 
unknown issues relating to ownership of the item and who retains title, 
which may affect the equipment's maintenance expenses for capital-
related assets.
---------------------------------------------------------------------------

    \5\ https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176167901010&acceptedDisclaimer=true.
---------------------------------------------------------------------------

    Further, there is the issue of single use versus multiple use for 
capital-related assets used for renal dialysis services. For example, 
some capital-related assets used in-center and in the home setting, 
such as skilled nursing facilities (SNFs) and nursing facilities, may 
be used by multiple patients in a day, and by multiple patients over 
their useful lifetime. Specifically, equipment classified as capital-
related assets may be refurbished and used by another patient. For 
example, capital-related assets used by multiple patients in a day 
could be Hoyer lifts to transfer patients and wheelchair scales. In 
this proposed rule, we are not proposing to include capital-related 
assets with multi-patient usage as being eligible for the TPNIES 
because we are supporting the President's Executive Order and HHS goals 
of promoting home dialysis, which involves a single machine for patient 
use. In addition, as we discussed earlier in this section, it is more 
complicated to develop a per treatment payment amount for those items. 
However, we seek comments on this aspect of our proposal, and we intend 
to gather additional information about how ESRD facilities obtain their 
capital-related assets that have multi-patient usage in future meetings 
with the TEP.
    As we further studied this issue, we determined that one business 
arrangement, that is, where the capital-related assets are purchased in 
their entirety and owned as capital-related assets, could be considered 
for TPNIES eligibility. We continue to analyze other business 
arrangements, but we understand that this arrangement is more 
straightforward due to ownership being clear, retained at the end of 
the TPNIES period, and on the facility's balance sheet. CMS' intent 
would be to pay for assets that are owned, whether purchased or 
attained through a capital lease. The entity who holds the title to the 
asset is the legal owner. At the end of the TPNIES period, the entity 
retains ownership of the asset. We would not pay TPNIES for equipment 
that is leased, as the ESRD facility has no ownership rights. We 
believe this is an appropriate initial step to support home dialysis.
    In support of the HHS goals and initiatives to increase home 
dialysis following the President's Executive Order, we propose to 
provide the TPNIES for eligible new and innovative capital-related 
assets that are home dialysis machines when used in the home. We would 
limit the payment for new and innovative dialysis machines to those 
used for home dialysis in order to target the additional payment 
through the TPNIES to equipment that supports the various home dialysis 
initiatives currently underway, as discussed previously in this section 
of the proposed rule. As more ESRD patients and their nephrologists and 
other clinicians opt for home dialysis modalities, we would seek to 
support ESRD facility use and beneficiary access to the latest 
technological improvements to hemodialysis and peritoneal dialysis

[[Page 42147]]

home dialysis machines. As we explained in prior ESRD PPS rules 
establishing the TDAPA and TPNIES, ESRD facilities face unique 
challenges in incorporating new renal dialysis drugs, biological 
products, equipment and supplies into their businesses and these add-on 
payment adjustments are intended to support ESRD facilities' use of new 
technologies during the uptake period for these new products.
    To codify our proposals for expanding the TPNIES to include 
capital-related assets that are home dialysis machines when used in the 
home for a single patient, we are proposing further revisions to Sec.  
413.236, in addition to the revisions proposed earlier in section 
II.B.2 of this proposed rule.
    Specifically, we propose to revise the heading at Sec.  413.236(a) 
and adding paragraphs (a)(1) and (2) to distinguish this paragraph as 
both the ``basis and definitions.'' We propose to define ``capital-
related asset'' at Sec.  413.236(a)(2) as an asset that an ESRD 
facility has an economic interest in through ownership (regardless of 
the manner in which it was acquired) and is subject to depreciation. 
Equipment obtained by the ESRD facility through operating leases are 
not considered capital-related assets. This proposed definition is 
based on the definition of ``depreciable assets'' in the Provider 
Reimbursement Manual (chapter 1, section 104.1). The Provider 
Reimbursement Manual is available on the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
    We propose to define ``home dialysis machines'' at Sec.  
413.236(a)(2) as hemodialysis machines and peritoneal dialysis cyclers 
in their entirety, meaning that one new part of a machine does not make 
the entire capital-related asset new, that receive FDA marketing 
authorization for home use and when used in the home for a single 
patient. FDA provides a separate marketing authorization for equipment 
intended for home use, and this proposal is focused on supporting 
efforts to increase home dialysis.
    We propose to define ``particular calendar year'' at Sec.  
413.236(a)(2) as the year in which the payment adjustment specified in 
paragraph (d) of Sec.  413.236 would take effect. We also propose to 
include definitions for the terms ``depreciation,'' ``straight-line 
depreciation method,'' and ``useful life,'' which are discussed in 
section II.B.3.b.(2) of this proposed rule.
    We propose to revise Sec.  413.236(b)(6) to provide an exception to 
the general exclusion for capital-related assets from eligibility for 
the TPNIES for capital-related assets that are home dialysis machines 
when used in the home for a single patient and that meet the other 
eligibility criteria in the proposed revisions to Sec.  413.236(b). We 
also propose to remove ``that an ESRD facility has an economic interest 
in through ownership (regardless of the manner in which it was 
acquired)'' in Sec.  413.236(b)(6) since we are proposing a separate 
definition for ``capital-related asset'' at Sec.  413.236(a)(2).
    Under this proposal, we would continue to exclude other capital-
related assets from the TPNIES that are not home dialysis machines when 
used in the home because those items would not be advancing HHS's goal 
of increasing home dialysis. Examples of capital-related assets that 
would continue to be excluded from TPNIES are water purification 
systems and dialysis machines when they are used in-center. We continue 
to believe that we should not provide additional payment for these 
capital-related assets because the cost of these items are captured in 
cost reports and reported in the aggregate, depreciate over time, are 
generally used for multiple patients and, most importantly, it would 
not support the goal of increasing use of home dialysis. However, 
capital-related assets that are home dialysis machines when used in the 
home are intended for use by a single patient and can be reported on a 
per treatment basis on the ESRD facility's claim. These characteristics 
provide for a simple methodology for aligning the use of the asset with 
the per treatment TPNIES payment.
    As we stated previously in this section, we are not proposing to 
expand the TPNIES eligibility to in-center dialysis machines or home 
dialysis machines when they are used in-center. Currently, our focus is 
promoting the increase in home dialysis rather than in-center dialysis. 
In addition, in-center dialysis machines are used by multiple patients 
each day and would require additional analysis, along with 72X claims 
and cost report modifications, in order to provide payment. For this 
same reason, we are not proposing to provide the TPNIES for home 
dialysis machines when they are used in SNFs and nursing facilities and 
are used by multiple patients each day.
    We believe the SCI criteria required under Sec.  413.236(b)(5), 
with our proposed revisions, and the process used to evaluate SCI 
currently applicable to TPNIES equipment and supplies are also 
appropriate for identifying new and innovative capital-related assets 
that are home dialysis machines that are worthy of temporary additional 
payment under the ESRD PPS. This approach would provide consistent 
criteria and evaluation for all equipment and supplies that are 
potentially eligible for the TPNIES. In addition, we want to ensure 
that we do not pay the TPNIES for new home dialysis machines that are 
substantially similar to existing machines and not truly innovative.
    Under our proposal, we would utilize the determination process we 
established last year for the TPNIES and those requirements we are 
proposing to revise in section II.B.2 of this proposed rule. That is, 
pursuant to Sec.  413.236(c), interested parties would submit all 
information necessary for determining that the home dialysis machine 
meets the TPNIES eligibility criteria listed in Sec.  413.236(b). This 
would include FDA marketing authorization information, the HCPCS 
application information, and studies submitted as part of these two 
standardized processes, an approximate date of commercial availability, 
and any information necessary for SCI criteria evaluation. For example, 
clinical trials, peer reviewed journal articles, study results, meta-
analyses, systematic literature reviews, and any other appropriate 
information sources can be considered. We note, for purposes of 
determining whether the home dialysis machine is new under Sec.  
413.236(b)(2), we would look at the date the machine is granted 
marketing authorization by FDA for home use.
    Using our current process at Sec.  413.236(c), we would provide a 
description of the new home dialysis machine and pertinent facts in the 
ESRD PPS proposed rule so the public may comment on them and then 
publish the results in the ESRD PPS final rule. We would consider 
whether the new home dialysis machine meets the eligibility criteria 
specified in the proposed revisions to Sec.  413.236(b) and announce 
the results in the Federal Register as part of our annual updates and 
changes to the ESRD PPS. Per Sec.  413.236(c), we would only consider, 
for additional payment using the TPNIES for a particular calendar year, 
an application for a capital-related asset that is a home dialysis 
machine we receive by February 1 prior to the particular calendar year. 
If the application is not received by February 1, the application would 
be denied and the applicant would need to reapply within 3 years 
beginning on the date of FDA marketing authorization in order to be 
considered for the TPNIES, in accordance with the proposed revisions to 
Sec.  413.236(b)(2). We note, applicants are expected to submit 
information on the price of their home dialysis machine as part of the 
TPNIES application. While we

[[Page 42148]]

recognize this information is proprietary, CMS requests this 
information along with the equipment or supply's projected utilization.
    For example, under our proposed revisions to Sec.  413.236, in 
order for a particular home dialysis machine to be eligible for the 
TPNIES under the ESRD PPS beginning in CY 2022, CMS must receive a 
complete application meeting our requirements no later than February 1, 
2021. FDA marketing authorization and submission of the HCPCS Level II 
code application for Coding Cycle 2 for DMEPOS items and services must 
occur as specified in the HCPCS Level II coding guidance on the CMS 
website. We would include a discussion of the new capital-related asset 
that is a home dialysis machine in the CY 2022 ESRD PPS proposed rule 
and the CMS final determination would be announced in the CY 2022 ESRD 
PPS final rule. If the home dialysis machine qualifies for the TPNIES, 
the payment adjustment would begin January 1, 2022 with a miscellaneous 
code and the designated HCPCS code would be effective April 1, 2022.
(2) Pricing of New and Innovative Capital-Related Assets That are Home 
Dialysis Machines When Used in the Home
    As we explained in the CY 2020 ESRD PPS final rule (84 FR 60692), 
we are not aware of pricing compendia currently available to price 
renal dialysis equipment and supplies for the TPNIES. We also noted 
that, unlike new renal dialysis drugs and biological products eligible 
for the TDAPA, ASP and WAC pricing do not exist for renal dialysis 
equipment and supplies, including capital-related assets that are home 
dialysis machines.
    In addition, as we explained in the CY 2020 ESRD PPS final rule (84 
FR 60692), ESRD facility charges are gross values; that is, charges 
before the application of allowances and discounts deductions. We 
believe the TPNIES payment amount should reflect the discounts, rebates 
and other allowances the ESRD facility (or its parent company) 
receives. These terms are defined in the Provider Reimbursement Manual 
(chapter 8).\6\ If the TPNIES payment amount does not reflect 
discounts, rebates and other allowances, the price would likely exceed 
the facility's cost for the item and result in higher co-insurance 
obligations for beneficiaries.
---------------------------------------------------------------------------

    \6\ Medicare Provider Reimbursement Manual (chapter 8). 
Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R450PR1.pdf.
---------------------------------------------------------------------------

    For this reason, in Sec.  413.236(e), we established an invoice-
based approach for MACs to use on behalf of CMS to price new and 
innovative renal dialysis equipment and supplies that meet the 
eligibility criteria for the TPNIES. We require the MACs to establish a 
price, using verifiable information from the following sources of 
information, if available: (1) The invoice amount, facility charges for 
the item, discounts, allowances, and rebates; (2) the price established 
for the item by other MACs and the sources of information used to 
establish that price; (3) payment amounts determined by other payers 
and the information used to establish those payment amounts; and (4) 
charges and payment amounts required for other equipment and supplies 
that may be comparable or otherwise relevant. As discussed in the CY 
2020 ESRD PPS final rule (84 FR 60692 through 60693), in order to 
maintain consistency with the IPPS NTAP payment policy and to mitigate 
the Medicare expenditures incurred as a result of the TPNIES, we 
finalized a policy at Sec.  413.236(d) to base the TPNIES payment on 65 
percent of the MAC-determined price.
    We believe that the invoice-based approach established for the 
TPNIES also should be applied to capital-related assets that are home 
dialysis machines, which are the focus of this proposal. However, 
capital-related assets that are home dialysis machines when used in the 
home for a single patient are depreciable assets as defined in the 
Provider Reimbursement Manual (chapter 1, section 104), which defines 
depreciation as ``that amount which represents a portion of the 
depreciable asset's cost or other basis which is allocable to a period 
of operation.'' The Provider Reimbursement Manual provides the American 
Institute of Certified Public Accountant's definition of depreciation 
as a process of cost allocation: ``Depreciation accounting is a system 
of accounting which aims to distribute the cost or other basic value of 
tangible capital assets, less salvage (if any), over the estimated 
useful life of the unit (which may be a group of assets) in a 
systematic and rational manner. It is a process of allocation, not of 
valuation. Depreciation for the year is the portion of the total charge 
under such a system that is allocated to the year.''
    Because capital-related assets that are home dialysis machines when 
used in the home for a single patient are depreciable assets, we are 
proposing to apply a 5-year straight-line depreciation method to 
determine the basis of the TPNIES for these items. The Provider 
Reimbursement Manual, (chapter 1, section 116.1) discusses the 
straight-line depreciation method as a method where the annual 
allowance is determined by dividing the cost of the capital-related 
asset by the years of useful life. Section 104.17 of the Provider 
Reimbursement Manual discusses that the useful life of a capital-
related asset is its expected useful life to the provider, not 
necessarily the inherent useful or physical life. Further, the manual 
provides that under the Medicare program, only the American Hospital 
Association (AHA) guidelines may be used in selecting a proper useful 
life for computing depreciation.
    Using the Provider Reimbursement Manual definitions as the basis, 
we propose to define the following terms at Sec.  413.236(a)(2): 
``depreciation'' as the amount that represents a portion of the 
capital-related asset's cost and that is allocable to a period of 
operation; ``straight-line depreciation method'' as a method in 
accounting in which the annual allowance is determined by dividing the 
cost of the capital-related asset by the years of useful life; and 
``useful life'' as the estimated useful life of a capital-related asset 
is its expected useful life to the ESRD facility, not necessarily the 
inherent useful or physical life.
    In keeping with the Medicare policy, we propose to rely on the AHA 
guidelines to determine the useful life of a capital-related asset that 
is a home dialysis machine. That is, the useful life of a home dialysis 
machine is 5 years. Since we are proposing a methodology using the 
Provider Reimbursement Manual's guidance, we believe these terms are 
appropriate to codify for purposes of calculating the price of a home 
dialysis machine that is a capital-related asset.
    That is, under Sec.  413.236(e), MACs, on behalf of CMS, would 
establish prices, using verifiable information as described above, for 
new and innovative capital-related assets that are home dialysis 
machines when used in the home for a single patient that meet the 
eligibility criteria specified in Sec.  413.236(b). This price would be 
the only element used to determine the total cost basis for applying 
the straight-line depreciation method. For example, we would exclude 
financing, sales tax, freight, installation and testing, excise taxes, 
legal or accounting fees, and maintenance. This specific price element 
would act as the proxy for the all-encompassing cost basis in other 
accounting methodologies. Using the straight-line depreciation method, 
we would divide the MAC-determined price by the useful life of the 
capital-related asset that is a home dialysis machine when used in the 
home for a

[[Page 42149]]

single patient. The resulting number is the annual allowance.
    We considered other depreciation methods, such as units of 
production and accelerated depreciation methods such as double 
declining balance and sum-of-the-years-digits, but concluded that these 
methods would be more complex to implement and that the simpler method 
would be preferable for the calculation of an add-on payment 
adjustment. In addition, since we are not reimbursing the cost of the 
equipment, nor are we revising the ESRD PPS at the end of the two-year 
add-on payment period, based on the information gathered, we believe 
this policy is appropriate for encouraging and supporting the uptake of 
new and innovative renal dialysis equipment and supplies.
    In order to determine the basis of payment for capital-related 
assets that are home dialysis machines when used in the home for a 
single patient, we are proposing certain additional steps that MACs 
would take after determining the price to develop the TPNIES per 
treatment payment amount. That is, we propose to add paragraph (f) to 
Sec.  413.236 to establish the pricing for the TPNIES for capital-
related assets that are home dialysis machines when used in the home 
for a single patient that meet the eligibility criteria in Sec.  
413.236(b). We are proposing in Sec.  413.236(f)(1) that, using the 
price determined under Sec.  413.236(e), the MACs would follow a 2-step 
methodology for calculating a pre-adjusted per treatment amount.
    Under the first step, the MACs would determine the annual 
allowance, that represents the amount of the MAC-determined price that 
is allocable to 1 year. To calculate the annual allowance, we propose 
that the MACs would use the straight-line depreciation method by 
dividing the MAC-determined price by the useful life of the home 
dialysis machine. In accordance with the straight-line depreciation 
method, the MAC would divide the MAC-determined price by 5 (the useful 
life for dialysis machines established by the AHA is 5 years).
    Under the second step, the MACs would calculate a pre-adjusted per 
treatment amount by dividing the annual allowance by the expected 
number of treatments to yield a pre-adjusted per treatment amount. That 
is, the MACs would establish a pre-adjusted per treatment amount by 
dividing the annual allowance by the number of treatments expected to 
be furnished in a year. For home dialysis machines that are expected to 
be used 3 times per week, the annual number of treatments is 156 (3 
treatments/week x 52 weeks = 156 treatments/year). We note, for 
purposes of calculating this TPNIES add-on payment adjustment, MACs do 
not determine the number of expected treatments. This information will 
be provided by CMS through the Change Request.
    We note, below in section II.B.3.b.(3) of this proposed rule, we 
are considering an alternative to our proposal. The alternative is a 
methodology that would offset the pre-adjusted per treatment amount by 
a value that would reflect the amount already included in the ESRD PPS 
base rate.
    Finally, consistent with the policies finalized last year in Sec.  
413.236(d) for the TPNIES, we propose to revise Sec.  413.236(d) to 
reflect that we would pay 65 percent of the pre-adjusted per treatment 
amount for capital-related assets that are home dialysis machines when 
used in the home for a single patient. That is, as discussed in the CY 
2020 ESRD PPS final rule (84 FR 60692 through 60693), we finalized a 
policy to base the TPNIES payment on 65 percent of the MAC-determined 
price in order to maintain consistency with the IPPS NTAP payment 
policy and to mitigate the Medicare expenditures incurred as a result 
of the TPNIES. Therefore, we propose to pay 65 percent of the pre-
adjusted per treatment amount for these machines.
    For example, for a home dialysis machine that has a MAC-determined 
price of $25,000 and a 5-year useful life, using the proposed straight-
line depreciation method, the annual allowance would equate to $5,000 
per year. At 156 treatments per year, the pre-adjusted per treatment 
amount is $32.05 ($5,000/156) and 65 percent of that amount equals a 
TPNIES per treatment add-on payment amount of $20.83 ($32.05 x .65). We 
note that at this time the useful life of 5 years and the expected 
number of treatments of 156 is fixed since these variables have been 
established by CMS. That is, as we discussed above in this section with 
regard to the use of the AHA guidance that dialysis machines have a 5-
year useful life. With regard to the expected number of treatments, 
this is based on the current payment policy of 3 treatments per week.
    In the future, if an innovative home dialysis machine is designed 
to require fewer treatments per week relative to existing machines, 
MACs, using the same methodology could account for fewer treatments in 
the denominator in the calculation of the pre-adjusted per treatment 
amount. This change to the denominator would allow the total TPNIES 
amount paid at the end of the year to be equivalent to the annual 
allowance and we would then proceed with the calculation to achieve the 
targeted 65 percent of that annual allowance. The following example 
demonstrates that the annual allowance stays fixed even if there is a 
change in the number of treatments the machine is expected to deliver 
per year. The TPNIES payment adjustment would increase because the 
annual allowance would be spread over less treatments so that the 
targeted amount would pay out by the end of the year.
    For a home dialysis machine that is used two times per week, using 
the same example as above, the annual allowance for TPNIES would remain 
at $5,000 per year. Two treatments per week equals 104 treatments per 
year (2 treatments per week x 52 weeks = 104 treatments per year). The 
annual allowance (numerator) would be divided by the number of 
treatments (denominator). At 104 treatments per year, the pre-adjusted 
per treatment amount would be $48.08 ($5,000/104 treatments = $48.08); 
and 65 percent of that amount would yield a TPNIES per treatment add-on 
payment of $31.25.
    For a peritoneal dialysis cycler that is used 7 times per week, 
using the same example as above, the annual allowance for TPNIES would 
remain at $5,000 per year. A daily modality, or 7 treatments per week, 
equals 364 treatments per year (7 treatments per week x 52 weeks = 364 
treatments per year). The annual allowance (numerator) would be divided 
by the number of treatments (denominator). At 364 treatments per year, 
the pre-adjusted per treatment amount would be $13.74 ($5,000/364 
treatments = $13.74); and 65 percent of that amount would yield a 
TPNIES per treatment add-on payment of $8.93.
    The methodology is the same. The two variables, regardless of 
modality, are: (1) The cost of the machine used to calculate annual 
allowance (2) the number of treatments the machine is expected to 
deliver per year.
    We are inviting public comment on using this proposed method for 
determining the pricing of capital-related assets that are home 
dialysis machines when used in the home for a single patient and that 
meet the eligibility criteria in Sec.  413.236(b), including the 
proposed revisions discussed in section II.B.3.b.(1) of this proposed 
rule.
    Consistent with the TPNIES policy and in accordance with Sec.  
413.236(d)(1), we would apply the TPNIES for these home dialysis 
machines for 2-calendar years from the effective date of the change 
request, which would coincide

[[Page 42150]]

with the effective date of a CY ESRD PPS final rule. In the change 
request we would specify that the add-on payment adjustment would be 
applicable to home dialysis treatments and provide the billing guidance 
on how to report the miscellaneous code for the eligible item on the 
claim until a permanent HCPCS is available.
    We believe the duration of the application of the TPNIES for all 
equipment and supplies determined eligible for this payment adjustment 
should be consistent, and that 2 years would be a sufficient timeframe 
for ESRD facilities to set up or adjust business practices so that 
there is seamless access to the new and innovative home dialysis 
machines. In addition, in light of the current COVID-19 pandemic, 
stakeholders are increasingly aware of the importance of having home 
dialysis readily available and in place to prevent ESRD patients from 
being exposed to asymptomatic or pre-symptomatic infections that 
contribute to COVID-19 transmission by having to utilize in-center 
dialysis.
    We further believe providing the TPNIES for 2 years for these 
machines would address the stakeholders' concerns regarding additional 
payment to account for higher cost of more new and innovative home 
dialysis machines that they believe may not be adequately captured by 
the dollars allocated in the ESRD PPS base rate. That is, this TPNIES 
would give these new and innovative home dialysis machines a foothold 
in the market and the opportunity to compete with the other dialysis 
machines. We note that this proposal would increase Medicare 
expenditures, which would result in increases to ESRD beneficiary co-
insurance, since we have not previously provided a payment adjustment 
for any capital-related assets in the past. However, to support HHS's 
goals and initiatives to increase home dialysis and the President's 
Executive Order of July 10, 2019, we believe that the proposed 
expansion of the TPNIES to capital-related assets that are home 
dialysis machines when used in the home for a single patient would be 
appropriate to support ESRD facility uptake in furnishing new and 
innovative renal dialysis equipment to ESRD patients.
    The intent of the proposed TPNIES for new and innovative capital-
related assets that are home dialysis machines when used in the home 
would be to provide a transition period to support ESRD facility use of 
these machines when they are new and innovative to the market. At this 
time, we do not believe that it would be appropriate to add dollars to 
the ESRD PPS base rate for new and innovative home dialysis machines 
because, as noted previously in this proposed rule, the ESRD PPS base 
rate includes the cost of equipment and supplies used to furnish a 
dialysis treatment.
    While we would monitor renal dialysis service utilization trends 
during the TPNIES payment period, we propose that these capital-related 
assets that are home dialysis machines when used in the home would not 
be eligible outlier services as provided in Sec.  413.237. As assets, 
capital-related home dialysis machines are distinct from operating 
expenses such as the disposable supplies and leased equipment with no 
conveyed ownership rights. These expenses are generally accounted for 
on a per patient basis and therefore, when used in excess of the 
average constitute outlier use, which makes them eligible for outlier 
payments.
    Therefore, we are proposing revisions at Sec.  413.236(d)(2) to 
reflect that following payment of the TPNIES for new and innovative 
capital-related assets that are home dialysis machines when used in the 
home for a single patient, the ESRD PPS base rate will not be modified 
and the equipment would not be an eligible outlier service as provided 
in Sec.  413.237. In addition, we propose revisions at Sec.  
413.237(a)(1)(v) to exclude capital-related assets that are home 
dialysis machines when used in the home for a single patient from 
outlier eligibility after the TPNIES period ends. We also propose minor 
editorial changes to paragraph (a)(1)(i) to remove the semicolon at the 
end of the sentence and adding a period in its place; and in paragraph 
(a)(1)(iv) to remove ``; and'' and adding a period in its place.
    With regard to the TPNIES application, we would post any final 
changes to both the timing of the various eligibility criteria and the 
content of the TPNIES application to the TPNIES website, along with 
information about all renal dialysis equipment and supplies that CMS 
has determined are eligible for the TPNIES, consistent with the 
policies we finalize in the CY 2021 ESRD PPS final rule. The TPNIES 
website is available at: https://www.cms.gov/medicare/esrd-pps/esrd-pps-transitional-add-payment-adjustment-new-and-innovative-equipment-and-supplies-tpnies.
(3) Alternative To Offset the Proposed Pre-Adjusted per Treatment 
Amount
    In the CY 2011 ESRD PPS final rule (75 FR 49075), we stated that 
when we computed the ESRD PPS base rate, we used the composite rate 
payments made under Part B in 2007 for dialysis in computing the ESRD 
PPS base rate. These are identified in Table 19 of the CY 2011 ESRD PPS 
final rule (75 FR 49075) as ``composite rate services.'' Sections 
1881(b)(14)(A)(i) and 1881(b)(14)(B) of the Act specify the renal 
dialysis services that must be included in the ESRD PPS bundled 
payment, which includes items and services that were part of the 
composite rate for renal dialysis services as of December 31, 2010. As 
we indicated in the CY 2011 ESRD PPS proposed rule (74 FR 49928), the 
case-mix adjusted composite payment system represents a limited PPS for 
a bundle of outpatient renal dialysis services that includes 
maintenance dialysis treatments and all associated services including 
historically defined dialysis-related drugs, laboratory tests, 
equipment, supplies and staff time (74 FR 49928). In the CY 2011 ESRD 
PPS final rule (75 FR 49062), we noted that total composite rate costs 
in the per treatment calculation included costs incurred for training 
expenses, as well as all home dialysis costs.
    In addition, as we discussed in section II.B.3.(a) of this proposed 
rule, these composite rate payments, and consequently the ESRD PPS base 
rate, include an amount associated with the costs of capital-related 
assets that are home dialysis machines. We believe that capital-related 
assets are distinguishable from drugs and biological products and 
supplies, which are single-use or disposable items, whereas ESRD 
facilities can continually use a home dialysis machine past its 
expected useful life and for multiple patients (consecutively). 
Therefore, we believe that an offset of the proposed TPNIES pre-
adjusted per treatment amount may be warranted so that the TPNIES would 
cover the estimated marginal costs of new and innovative home dialysis 
machines. That is, ESRD facilities using the new and innovative home 
dialysis machine would receive a per treatment payment to cover some of 
the cost of the new machine per treatment minus a per treatment payment 
amount that we estimate to be included in the ESRD PPS base rate for 
current home dialysis machines that they already own.
    To account for the costs already paid through the ESRD PPS base 
rate for current home dialysis machines that ESRD facilities already 
own, we are considering an alternative to our proposal that would 
include an additional step to calculating the TPNIES. That is, we could 
apply an offset to the pre-adjusted per treatment amount. The following 
section discusses

[[Page 42151]]

the methodology that we would use for determining the offset. If we 
were to adopt an offset in the final rule, we would add language to the 
proposed Sec.  413.236(f) specifying the methodology used to compute 
the offset and its place--the final step--in the computation of the 
TPNIES for new and innovative home dialysis machines that meet the 
eligibility criteria.
(4) Methodology for Estimating Home Machine and Equipment Cost per Home 
Treatment
    As we stated in the previous section, we considered proposing an 
alternative to our proposed methodology for calculating the pre-
adjusted per treatment amount, which would involve applying an offset 
to the pre-adjusted per treatment amount. This section discusses the 
methodology we would use for determining the value of that offset, 
which would be an estimate of an average home dialysis machine and 
equipment cost per hemodialysis (HD)-equivalent home dialysis treatment 
to use as the offset amount. First, we would estimate annualized 
dialysis machine and equipment cost and treatment counts from cost 
reports for each ESRD facility for 2018. Next, we would compute an HD-
equivalent home dialysis treatment percentage for each ESRD facility by 
dividing the annualized HD-equivalent home treatment counts by the 
annualized HD-equivalent treatment counts across all modalities. Then 
we would apply the home dialysis treatment percentage to the annualized 
dialysis machine and equipment cost to derive an estimated home 
dialysis machine and equipment cost for each ESRD facility. Next, we 
would aggregate the home dialysis machine and equipment costs and the 
HD-equivalent home treatment counts to derive an average home dialysis 
machine and equipment cost per home dialysis treatment across all ESRD 
facilities. Finally, we would scale the 2018 average home dialysis 
machine and equipment cost per home treatment to 2021 using the ESRDB 
market basket less productivity update for CY 2019, CY 2020, and CY 
2021.
    We would obtain annualized dialysis machine and equipment cost and 
treatment counts from freestanding and hospital-based ESRD cost 
reports. For independent/freestanding ESRD facilities, we would use 
renal facility cost reports (CMS form 265-11). We would obtain dialysis 
machine and equipment cost \7\ from Worksheet B, Column 4, and sum up 
Lines 8.01 through 17.02. We would obtain dialysis treatment counts by 
modality from Worksheet D, Column 1, Lines 1 through 10. Since home 
continuous ambulatory peritoneal dialysis (CAPD) and continuous cycling 
peritoneal dialysis (CCPD) treatment counts are reported in patient 
weeks, we would multiply them by 3 to get HD-equivalent counts. 
Finally, we would aggregate all home dialysis treatment counts to 
obtain each ESRD facility's HD-equivalent home dialysis treatment 
counts and we would aggregate the treatment counts to obtain each 
freestanding ESRD facility's HD-equivalent dialysis treatment counts 
for all modalities.
---------------------------------------------------------------------------

    \7\ Here dialysis machine and equipment cost includes capital-
related costs of moveable equipment, rented and/or purchased, and 
maintenance on the dialysis machine and any support equipment. This 
also includes the equipment and associated maintenance and repair 
and installation costs necessary to render the water acceptable for 
use in dialysis.
---------------------------------------------------------------------------

    For hospital-based ESRD facilities, we would use hospital cost 
reports (CMS form 2552-10). We would obtain dialysis machine and 
equipment cost from Worksheet I-2, Column 2, and then sum up Lines 2 
through 11. We would derive dialysis treatment counts by modality from 
Worksheet I-4, Column 1, Lines 1 through 10. Home CAPD and CCPD 
treatment counts are reported in patient weeks, so we would multiply 
them by 3 to get HD-equivalent counts. We would aggregate all home 
treatment counts to obtain each hospital-based ESRD facility's HD-
equivalent home dialysis treatment counts. Then we would aggregate all 
treatment counts to obtain each hospital-based ESRD facility's HD-
equivalent dialysis treatment counts for all modalities.
    Using this methodology for both freestanding and hospital-based 
ESRD facilities, it would result in an offset of $9.23. If we were to 
adopt this approach, the MAC would apply this additional step in 
calculating the pre-adjusted per treatment amount. That is, the MAC 
would offset the pre-adjusted per treatment amount by deducting $9.23 
to account for the costs already paid through the ESRD PPS base rate 
for current home dialysis machines that ESRD facilities already own. We 
believe that this methodology would provide an approximation of the 
cost of the home dialysis machine in the base rate. Further, we believe 
that deducting it from the calculated pre-adjusted per treatment amount 
would be reasonable because the beneficiary would not be using two home 
dialysis machines at the same time and at the end of the 2 years, the 
ESRD facility would retain ownership of the asset, specifically, the 
home dialysis machine.
    Using the example from section II.B.3.b.(2), for a home dialysis 
machine that has a MAC-determined price of $25,000 and a 5-year useful 
life, using the proposed straight-line depreciation method, the annual 
allowance would equate to $5,000 per year. At 156 treatments per year, 
the pre-adjusted per treatment amount is $32.05 ($5,000/156). Under the 
alternative to our proposal, we would offset the pre-adjusted per 
treatment amount of $32.05 by deducting $9.23. This would result in a 
per treatment amount of $22.82 ($32.05-$9.23). Then 65 percent of that 
amount would equal a TPNIES per treatment add-on payment amount of 
$14.83 ($22.82 x .65). After the TPNIES per treatment add-on payment 
amount is determined, there would be no change in the policy as 
described in section II.B.3.b.(2) with regard to the TPNIES duration, 
process, and the ESRD PPS base rate, that is, no change to the base 
rate would be made.
    We are soliciting comment on this alternative approach to apply an 
offset to the proposed pre-adjusted per treatment amount. We are 
specifically soliciting comment on the methodology we would use to 
compute the value of the offset.
4. Proposed CY 2021 ESRD PPS Update
a. Proposed CY 2021 ESRD Bundled (ESRDB) Market Basket Update, 
Productivity Adjustment, and Labor-Related Share
    In accordance with section 1881(b)(14)(F)(i) of the Act, as added 
by section 153(b) of MIPPA and amended by section 3401(h) of the 
Affordable Care Act, beginning in 2012, the ESRD PPS payment amounts 
are required to be annually increased by an ESRD market basket increase 
factor and reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act. The application of the productivity 
adjustment may result in the increase factor being less than 0.0 for a 
year and may result in payment rates for a year being less than the 
payment rates for the preceding year. The statute also provides that 
the market basket increase factor should reflect the changes over time 
in the prices of an appropriate mix of goods and services used to 
furnish renal dialysis services.
    As required under section 1881(b)(14)(F)(i) of the Act, CMS 
developed an all-inclusive ESRD Bundled (ESRDB) input price index (75 
FR 49151 through 49162). In the CY 2015 ESRD PPS final rule we rebased 
and revised the ESRDB input price

[[Page 42152]]

index to reflect a 2012 base year (79 FR 66129 through 66136). 
Subsequently, in the CY 2019 ESRD PPS final rule, we finalized a 
rebased ESRDB input price index to reflect a 2016 base year (83 FR 
56951 through 56962).
    Although ``market basket'' technically describes the mix of goods 
and services used for ESRD treatment, this term is also commonly used 
to denote the input price index (that is, cost categories, their 
respective weights, and price proxies combined) derived from a market 
basket. Accordingly, the term ``ESRDB market basket,'' as used in this 
document, refers to the ESRDB input price index.
    We propose to use the CY 2016-based ESRDB market basket as 
finalized and described in the CY 2019 ESRD PPS final rule (83 FR 56951 
through 56962) to compute the CY 2021 ESRDB market basket increase 
factor based on the best available data. Consistent with historical 
practice, we propose to estimate the ESRDB market basket update based 
on IHS Global Inc.'s (IGI), forecast using the most recently available 
data. IGI is a nationally recognized economic and financial forecasting 
firm that contracts with CMS to forecast the components of the market 
baskets. Using this methodology and the IGI first quarter 2020 forecast 
of the CY 2016-based ESRDB market basket (with historical data through 
the fourth quarter of 2019), the proposed CY 2021 ESRDB market basket 
increase factor is 2.2 percent.
    Under section 1881(b)(14)(F)(i) of the Act, for CY 2012 and each 
subsequent year, the ESRD market basket percentage increase factor 
shall be reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act. The multifactor productivity (MFP) is 
derived by subtracting the contribution of labor and capital input 
growth from output growth. We finalized the detailed methodology for 
deriving the MFP projection in the CY 2012 ESRD PPS final rule (76 FR 
40503 through 40504). The most up-to-date MFP projection methodology is 
available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/Downloads/MFPMethodology.pdf. Using this 
methodology and the IGI first quarter 2020 forecast, the proposed MFP 
adjustment for CY 2021 (the 10-year moving average of MFP for the 
period ending CY 2021) is projected to be 0.4 percent.
    As a result of these provisions, the proposed CY 2021 ESRD market 
basket adjusted for MFP is 1.8 percent (2.2-0.4). This market basket 
increase is calculated by starting with the proposed CY 2021 ESRDB 
market basket percentage increase factor of 2.2 percent and reducing it 
by the proposed MFP adjustment (the 10-year moving average of MFP for 
the period ending CY 2021) of 0.4 percent.
    As is our general practice, we are proposing that if more recent 
data become available after the publication of this proposed rule and 
before the publication of the final rule (for example, a more recent 
estimate of the market basket update or MFP), we would use such data, 
if appropriate, to determine the final CY 2021 market basket update 
and/or MFP adjustment.
    For the CY 2021 ESRD payment update, we propose to continue using a 
labor-related share of 52.3 percent for the ESRD PPS payment, which was 
finalized in the CY 2019 ESRD PPS final rule (83 FR 56963).
b. The Proposed CY 2021 ESRD PPS Wage Indices
(1) Background
    Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD 
PPS may include a geographic wage index payment adjustment, such as the 
index referred to in section 1881(b)(12)(D) of the Act, as the 
Secretary determines to be appropriate. In the CY 2011 ESRD PPS final 
rule (75 FR 49200), we finalized an adjustment for wages at Sec.  
413.231. Specifically, CMS adjusts the labor-related portion of the 
base rate to account for geographic differences in the area wage levels 
using an appropriate wage index, which reflects the relative level of 
hospital wages and wage-related costs in the geographic area in which 
the ESRD facility is located. We use the Office of Management and 
Budget's (OMB's) core-based statistical area (CBSA)-based geographic 
area designations to define urban and rural areas and their 
corresponding wage index values (75 FR 49117). OMB publishes bulletins 
regarding CBSA changes, including changes to CBSA numbers and titles. 
The bulletins are available online at https://www.whitehouse.gov/omb/information-for-agencies/bulletins/.
    For CY 2021, we would update the wage indices to account for 
updated wage levels in areas in which ESRD facilities are located using 
our existing methodology. We use the most recent pre-floor, pre-
reclassified hospital wage data collected annually under the inpatient 
PPS. The ESRD PPS wage index values are calculated without regard to 
geographic reclassifications authorized under sections 1886(d)(8) and 
(d)(10) of the Act and utilize pre-floor hospital data that are 
unadjusted for occupational mix. For CY 2021, the updated wage data are 
for hospital cost reporting periods beginning on or after October 1, 
2016 and before October 1, 2017 (FY 2017 cost report data).
    We have also adopted methodologies for calculating wage index 
values for ESRD facilities that are located in urban and rural areas 
where there is no hospital data. For a full discussion, see CY 2011 and 
CY 2012 ESRD PPS final rules at 75 FR 49116 through 49117 and 76 FR 
70239 through 70241, respectively. For urban areas with no hospital 
data, we compute the average wage index value of all urban areas within 
the state to serve as a reasonable proxy for the wage index of that 
urban CBSA, that is, we use that value as the wage index. For rural 
areas with no hospital data, we compute the wage index using the 
average wage index values from all contiguous CBSAs to represent a 
reasonable proxy for that rural area. We apply the statewide urban 
average based on the average of all urban areas within the state to 
Hinesville-Fort Stewart, Georgia (78 FR 72173), and we apply the wage 
index for Guam to American Samoa and the Northern Mariana Islands (78 
FR 72172). We note that for the CY 2020 ESRD PPS final rule, we did not 
apply the statewide urban average to Carson City, Nevada because 
hospital data was available to compute the wage index.
    A wage index floor value (0.5000) is applied under the ESRD PPS as 
a substitute wage index for areas with very low wage index values. 
Currently, all areas with wage index values that fall below the floor 
are located in Puerto Rico. However, the wage index floor value is 
applicable for any area that may fall below the floor. A description of 
the history of the wage index floor under the ESRD PPS can be found in 
the CY 2019 ESRD PPS final rule (83 FR 56964 through 56967).
    An ESRD facility's wage index is applied to the labor-related share 
of the ESRD PPS base rate. In the CY 2019 ESRD PPS final rule (83 FR 
56963), we finalized a labor-related share of 52.3 percent, which is 
based on the 2016-based ESRDB market basket. Thus, for CY 2021, the 
labor-related share to which a facility's wage index would be applied 
is 52.3 percent.
    For CY 2021, in addition to proposing to update the ESRD PPS wage 
index to use more recent hospital wage data, we are also proposing to 
adopt new OMB delineations and a transition policy in a budget-neutral 
manner as discussed in sections II.B.4.b.(2) and II.B.4.b.(3), 
respectively, of this proposed rule. The proposed CY 2021 ESRD PPS wage

[[Page 42153]]

index is set forth in Addendum A and is available on the CMS website at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.html. Addendum A provides a crosswalk between the CY 2020 wage 
index for an ESRD facility using the current OMB delineations in effect 
in CY 2020, the CY 2021 wage index using the current OMB delineations 
in effect in CY 2020, and the CY 2021 wage index using the proposed new 
OMB delineations. Addendum B provides an ESRD facility-level impact 
analysis. In Addendum B are the proposed transition wage index values 
that would be in effect in CY 2021 if these proposed changes are 
finalized. Addendum B is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.html.
(2) Proposed Implementation of New OMB Labor Market Delineations
    As discussed previously in this proposed rule, the wage index used 
for the ESRD PPS is calculated using the most recent pre-floor, pre-
reclassified hospital wage data collected annually under the inpatient 
PPS and is assigned to an ESRD facility on the basis of the labor 
market area in which the ESRD facility is geographically located. ESRD 
facility labor market areas are delineated based on the CBSAs 
established by the OMB. In accordance with our established methodology, 
we have historically adopted through rulemaking CBSA changes that are 
published in the latest OMB bulletin. Generally, OMB issues major 
revisions to statistical areas every 10 years, based on the results of 
the decennial census. However, OMB occasionally issues minor updates 
and revisions to statistical areas in the years between the decennial 
censuses.
    In the CY 2015 ESRD PPS final rule (79 FR 66137 through 66142), we 
finalized changes to the ESRD PPS wage index based on the newest OMB 
delineations, as described in OMB Bulletin No. 13-01 \8\ issued on 
February 28, 2013. We implemented these changes with a 2-year 
transition period (79 FR 66142). OMB Bulletin No. 13-01 established 
revised delineations for U.S. Metropolitan Statistical Areas, 
Micropolitan Statistical Areas, and Combined Statistical Areas based on 
the 2010 Census. OMB Bulletin No. 13-01 also provided guidance on the 
use of the delineations of these statistical areas using standards 
published on June 28, 2010 in the Federal Register (75 FR 37246 through 
37252).
---------------------------------------------------------------------------

    \8\ https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2013/b13-01.pdf.
---------------------------------------------------------------------------

    On July 15, 2015, OMB issued OMB Bulletin No. 15-01,\9\ which 
updated and superseded OMB Bulletin No. 13-01 issued on February 28, 
2013. The attachment to OMB Bulletin No. 15-01 provided detailed 
information on the update to statistical areas since February 28, 2013. 
These updates were based on the application of the 2010 Standards for 
Delineating Metropolitan and Micropolitan Statistical Areas to the U.S. 
Census Bureau population estimates for July 1, 2012 and July 1, 2013.
---------------------------------------------------------------------------

    \9\ https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2015/15-01.pdf.
---------------------------------------------------------------------------

    On August 15, 2017, OMB issued OMB Bulletin No. 17-01,\10\ which 
updated and superseded OMB Bulletin No. 15-01 issued on July 15, 2015. 
The attachment to OMB Bulletin No. 17-01 provided detailed information 
on the update to statistical areas since July 15, 2015. These updates 
were based on the application of the 2010 Standards for Delineating 
Metropolitan and Micropolitan Statistical Areas to the U.S. Census 
Bureau population estimates for July 1, 2014 and July 1, 2015. In OMB 
Bulletin No. 17-01, OMB announced a new urban CBSA, Twin Falls, Idaho 
(CBSA 46300).
---------------------------------------------------------------------------

    \10\ https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf.
---------------------------------------------------------------------------

    On April 10, 2018, OMB issued OMB Bulletin No. 18-03 \11\ which 
updated and superseded OMB Bulletin No. 17-01 issued on August 15, 
2017. The attachment to OMB Bulletin No. 18-03 provided detailed 
information on the update to statistical areas since August 15, 2017. 
On September 14, 2018, OMB issued OMB Bulletin No. 18-04,\12\ which 
updated and superseded OMB Bulletin No. 18-03 issued on April 10, 2018. 
OMB Bulletin Numbers 18-03 and 18-04 established revised delineations 
for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and 
Combined Statistical Areas, and provided guidance on the use of the 
delineations of these statistical areas. These updates were based on 
the application of the 2010 Standards for Delineating Metropolitan and 
Micropolitan Statistical Areas to the U.S. Census Bureau population 
estimates for July 1, 2015 and July 1, 2016.
---------------------------------------------------------------------------

    \11\ https://www.whitehouse.gov/wp-content/uploads/2018/04/OMB-BULLETIN-NO.-18-03-Final.pdf.
    \12\ https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf.
---------------------------------------------------------------------------

    While OMB Bulletin No. 18-04 is not based on new census data, there 
were some material changes to the CBSA-based geographic area 
designations based on the new OMB delineations. For example, if we 
adopt the new OMB delineations, there would be new CBSAs, urban 
counties that would become rural, rural counties that would become 
urban, and some existing CBSAs would be split apart. We believe that 
the new OMB delineations accurately reflect the local economies and 
wage levels of the areas where ESRD facilities are located. We believe 
it is important for the ESRD PPS to use the new OMB delineations 
available in order to maintain a more accurate and up-to-date payment 
system that reflects the reality of population shifts and labor market 
conditions. We further believe that using the new OMB delineations 
would increase the integrity of the ESRD PPS wage index system by 
creating a more accurate representation of geographic variations in 
wage levels.
    Therefore, we are proposing to adopt the new OMB delineations 
established in OMB Bulletin No. 18-04 effective for CY 2021 under the 
ESRD PPS. We are also proposing a wage index transition applicable to 
all ESRD facilities that experience negative impacts due to the 
proposed implementation of the new OMB delineations. This transition 
policy is discussed in section II.B.4.b.(3) of this proposed rule.
    We note that, on March 6, 2020, OMB issued OMB Bulletin 20-01 
(available at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf.). While the March 6, 2020 OMB Bulletin 20-01 was 
not issued in time for development of this proposed rule, we were able 
to review the updates it provides and have determined that they are 
minor. While we do not believe the minor updates included in OMB 
Bulletin 20-01 would impact our CY 2021 proposed updates to the CBSA-
based labor market area delineations, if appropriate, we would propose 
any updates from this Bulletin in the CY 2022 ESRD PPS proposed rule.
    For CY 2021, to implement the new OMB delineations established in 
OMB Bulletin No. 18-04 under the ESRD PPS, it is necessary to identify 
the new labor market area delineation for each affected county and ESRD 
facility in the U.S. We discuss these changes in more detail in the 
following sections.
(a) Urban Counties That Would Become Rural Under the New OMB 
Delineations
    As previously discussed in this proposed rule, we are proposing to

[[Page 42154]]

implement the new OMB labor market area delineations (based upon the 
2010 Decennial Census data) beginning in CY 2021. Our analysis of the 
new OMB delineations shows that a total of 34 counties (and county 
equivalents) that are currently considered part of an urban CBSA would 
be considered located in a rural area, beginning in CY 2021. Table 1 
shows the 34 urban counties that would be rural if we finalize our 
proposal to adopt the new OMB delineations beginning in CY 2021.
BILLING CODE 4120-01-C
[GRAPHIC] [TIFF OMITTED] TP13JY20.001


[[Page 42155]]


    We are proposing that the wage data for all ESRD facilities located 
in the counties listed above would now be considered rural, beginning 
in CY 2021, when calculating their respective State's rural wage index. 
We recognize that rural areas typically have lower area wage index 
values than urban areas, and ESRD facilities located in these counties 
may experience a negative impact in their payment under the ESRD PPS 
due to the proposed adoption of the new OMB delineations. A discussion 
of the proposed wage index transition policy due to these proposed 
changes is available in section II.B.4.b.(3) of this proposed rule.
(b) Rural Counties That Would Become Urban Under the New OMB 
Delineations
    As previously discussed in this proposed rule, we are proposing to 
implement the new OMB labor market area delineations (based upon the 
2010 Decennial Census data) beginning in CY 2021. Our analysis of the 
new OMB delineations shows that a total of 47 counties (and county 
equivalents) that are currently considered located in rural areas would 
be considered located in urban CBSAs, beginning in CY 2021. Table 2 
shows the 47 rural counties that would be urban if we finalize our 
proposal to adopt the new OMB delineations beginning in CY 2021.
BILLING CODE 4120-01-P

[[Page 42156]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.002


[[Page 42157]]


[GRAPHIC] [TIFF OMITTED] TP13JY20.003

BILLING CODE 4120-01-C
    We are proposing that when calculating the area wage index, 
beginning with CY 2021, the wage data for ESRD facilities located in 
these counties would be included in their new respective urban CBSAs. 
Typically, ESRD facilities located in an urban area receive a higher 
wage index value than or equal wage index value to ESRD facilities 
located in their state's rural area. A discussion of the proposed wage 
index transition policy due to these proposed changes is available in 
section II.B.4.b.(3) of this proposed rule.
(c) Urban Counties That Would Move to a Different Urban CBSA Under the 
New OMB Delineations
    In certain cases, adopting the new OMB delineations would involve a 
change only in CBSA name and/or number, while the CBSA continues to 
encompass the same constituent counties. For example, CBSA 19380 
(Dayton, OH) would experience both a change to its number and its name, 
and become CBSA 19430 (Dayton-Kettering, OH), while all of its three 
constituent counties would remain the same. In other cases, only the 
name of the CBSA would be modified, and none of the currently assigned 
counties would be reassigned to a different urban CBSA. Table 3 shows 
the current CBSA code and our proposed CBSA code where we are proposing 
to change either the name or CBSA number only.
BILLING CODE 4120-01-P

[[Page 42158]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.004


[[Page 42159]]


[GRAPHIC] [TIFF OMITTED] TP13JY20.005

BILLING CODE 4120-01-C
    As we explained previously in this proposed rule, ESRD facilities 
located in an urban area that, due to the new OMB delineations, 
involves a change only in the CBSA name or number would not experience 
a consequential change in their wage index value.
    However, in other cases, if we adopt the new OMB delineations, 
counties would shift between existing and new CBSAs, changing the 
constituent makeup of the CBSAs. We consider these types of changes, 
where CBSAs are split into multiple new CBSAs or a CBSA loses one or 
more counties to another urban CBSAs, to be significant modifications.
    Table 4 (CY 2021 Proposed Urban to a Different Urban CBSA 
Crosswalk) shows the urban counties that would move from one urban CBSA 
to another a newly proposed or modified CBSA, if we adopt the new OMB 
delineations.

[[Page 42160]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.006

    If ESRD facilities located in these counties move from one CBSA to 
another under the new OMB delineations, there may be impacts, both 
negative and positive, to their specific wage index values. A 
discussion of the proposed wage index transition policy due to these 
proposed changes is available in section II.B.4.b.(3) of this proposed 
rule.
(d) Changes to the Statewide Rural Wage Index
    ESRD facilities currently located in a rural area may remain rural 
under the new OMB delineations but experience a change in their rural 
wage index value due to the movement of constituent counties. If ESRD 
facilities located in these counties move from one CBSA to another 
under the new OMB delineations, there may be impacts, both negative and 
positive, upon their specific wage index values. A discussion of the 
proposed wage index transition policy due to these proposed changes is 
available in section II.B.4.b.(3) of this proposed rule.
    We believe these revisions to the CBSA-based labor market area 
delineations as established in OMB Bulletin 18-04 would ensure that the 
ESRD PPS area wage level adjustment most appropriately accounts for and 
reflects the relative wage levels in the geographic area of the ESRD 
facility. Therefore, we are proposing to adopt the new OMB delineations 
under the ESRD PPS, effective January 1, 2021.
    We invite public comment on the proposal to adopt the new OMB 
delineations, effective beginning with the CY 2021 ESRD PPS wage index.
(3) Proposed Transition for ESRD Facilities Negatively Impacted
    To mitigate the potential impacts of proposed policies on ESRD 
facilities, we

[[Page 42161]]

have in the past provided for transition periods when adopting changes 
that have significant payment implications, particularly large negative 
impacts. For example, we have proposed and finalized budget-neutral 
transition policies to help mitigate negative impacts on ESRD 
facilities following the adoption of the new OMB delineations as 
described in the February 28, 2013 OMB Bulletin No. 13-01 (79 FR 
66142). Specifically, as part of the CY 2015 ESRD PPS rulemaking, we 
implemented a 2-year transition blended wage index for all ESRD 
facilities. ESRD facilities received 50 percent of their CY 2015 wage 
index value based on the OMB delineations for CY 2014 and 50 percent of 
their CY 2015 wage index value based on the new OMB delineations. This 
resulted in an average of the two values. Then, in CY 2016, an ESRD 
facility's wage index value was based 100 percent on the new OMB 
delineations.
    We considered having no transition period and fully implementing 
the proposed new OMB delineations beginning in CY 2021, which would 
mean that all ESRD facilities would have payments based on updated 
hospital wage data and the new OMB delineations starting on January 1, 
2021. However, because the overall amount of ESRD PPS payments would 
increase slightly due to the new OMB delineations, the wage index 
budget neutrality factor would be higher. This higher factor would 
reduce the ESRD PPS per treatment base rate for all ESRD facilities 
paid under the ESRD PPS, despite the fact that the majority of ESRD 
facilities would be unaffected by the new OMB delineations. Thus, we 
believe it would be appropriate to provide for a transition period to 
mitigate the resulting short-term instability of a lower ESRD PPS base 
rate as well as consequential negative impacts to ESRD facilities that 
experience reduced payments. For example, ESRD facilities currently 
located in CBSA 35614 (New York-Jersey City-White Plains, NY-NJ) that 
would be located in new CBSA 35154 (New Brunswick-Lakewood, NJ) under 
the proposed changes to the OMB delineations would experience a nearly 
17 percent decrease in the wage index as a result of the proposed 
change.
    Therefore, under the authority of section 1881(b)(14)(D)(iv)(II) of 
the Act and consistent with past practice, we are proposing a 
transition policy to help mitigate any significant, negative impacts 
that ESRD facilities may experience due to our proposal to adopt the 
new OMB delineations under the ESRD PPS. Specifically, as a transition 
for CY 2021, we are proposing to 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 would allow the effects 
of our proposed adoption of the new OMB delineations to be phased in 
over 2 years, where the estimated reduction in an ESRD facility's wage 
index would be capped at 5 percent in CY 2021, and no cap would be 
applied to the reduction in the wage index for the second year, CY 
2022. We believe a 5 percent cap on the overall decrease in an ESRD 
facility's wage index value, regardless of the circumstance causing the 
decline, would be an appropriate transition for CY 2021 as it would 
provide predictability in payment levels from CY 2020 to the upcoming 
CY 2021 and additional transparency because it is administratively 
simpler than our prior 2-year 50/50 blended wage index approach. We 
believe 5 percent is a reasonable level for the cap because it would 
effectively mitigate any significant decreases in an ESRD facility's 
wage index for CY 2021. We solicit comment on the proposal to apply a 5 
percent cap on any decrease in an ESRD facility's wage index for CY 
2021 from the ESRD facility's wage index from the prior calendar year, 
CY 2020.
(4) Proposed Budget Neutrality Adjustments for Changes to the ESRD PPS 
Wage Index
    Consistent with the historical wage index budget-neutrality 
adjustment policy finalized in the CY 2012 ESRD PPS final rule (76 FR 
70241 through 70242) under the authority of section 
1881(b)(14)(D)(iv)(II) of the Act, we are proposing that the proposed 
adoption of the new OMB delineations and the proposed transition policy 
would not result in any change of estimated aggregate ESRD PPS payments 
by applying a budget neutrality factor to the ESRD PPS base rate. We 
note budget neutrality was also applied to the adoption of new OMB 
delineations and transition policy in the CY 2015 ESRD PPS final rule 
(79 FR 66128 through 66129). Our proposed methodology for calculating 
this proposed budget neutrality factor is discussed in section 
II.B.4.d.(2) of this proposed rule.
    The proposed CY 2021 ESRD PPS wage index is set forth in Addendum A 
and is available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.html. Addendum A provides a 
crosswalk between the CY 2020 wage index for an ESRD facility using the 
current OMB delineations in effect in CY 2020, the CY 2021 wage index 
using the current OMB delineations in effect in CY 2020, and the CY 
2021 wage index using the proposed new OMB delineations. Addendum B 
provides an ESRD facility-level impact analysis. In Addendum B are the 
proposed transition wage index values that would be in effect in CY 
2021 if these proposed changes are finalized. Addendum B is available 
on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices.html.
c. Proposed CY 2021 Update to the Outlier Policy
    Section 1881(b)(14)(D)(ii) of the Act requires that the ESRD PPS 
include a payment adjustment for high cost outliers due to unusual 
variations in the type or amount of medically necessary care, including 
variability in the amount of ESAs necessary for anemia management. Some 
examples of the patient conditions that may be reflective of higher 
facility costs when furnishing dialysis care would be frailty, obesity, 
and comorbidities, such as secondary hyperparathyroidism. The ESRD PPS 
recognizes high cost patients, and we have codified the outlier policy 
and our methodology for calculating outlier payments at Sec.  413.237. 
The policy provides that the following ESRD outlier items and services 
are included in the ESRD PPS bundle: (1) Renal dialysis drugs and 
biological products that were or would have been, prior to January 1, 
2011, separately billable under Medicare Part B; (2) Renal dialysis 
laboratory tests that were or would have been, prior to January 1, 
2011, separately billable under Medicare Part B; (3) Renal dialysis 
medical/surgical supplies, including syringes, used to administer renal 
dialysis drugs and biological products that were or would have been, 
prior to January 1, 2011, separately billable under Medicare Part B; 
(4) Renal dialysis drugs and biological products that were or would 
have been, prior to January 1, 2011, covered under Medicare Part D, 
including renal dialysis oral-only drugs effective January 1, 2025; and 
(5) Renal dialysis equipment and supplies that receive the transitional 
add-on payment adjustment as specified in Sec.  413.236 after the 
payment period has ended.
    In the CY 2011 ESRD PPS final rule (75 FR 49142), we stated that 
for purposes of determining whether an ESRD facility would be eligible 
for an outlier payment, it would be necessary for the facility to 
identify the actual

[[Page 42162]]

ESRD outlier services furnished to the patient by line item (that is, 
date of service) on the monthly claim. Renal dialysis drugs, laboratory 
tests, and medical/surgical supplies that are recognized as outlier 
services were originally specified in Attachment 3 of Change Request 
7064, Transmittal 2033 issued August 20, 2010, rescinded and replaced 
by Transmittal 2094, dated November 17, 2010. Transmittal 2094 
identified additional drugs and laboratory tests that may also be 
eligible for ESRD outlier payment. Transmittal 2094 was rescinded and 
replaced by Transmittal 2134, dated January 14, 2011, which included 
one technical correction.
    Furthermore, we use administrative issuances and guidance to 
continually update the renal dialysis service items available for 
outlier payment via our quarterly update CMS Change Requests, when 
applicable. We use this separate guidance to identify renal dialysis 
service drugs that were or would have been covered under Medicare Part 
D for outlier eligibility purposes and in order to provide unit prices 
for calculating imputed outlier services. In addition, we identify 
through our monitoring efforts items and services that are either 
incorrectly being identified as eligible outlier services or any new 
items and services that may require an update to the list of renal 
dialysis items and services that qualify as outlier services, which are 
made through administrative issuances.
    Under Sec.  413.237, an ESRD facility is eligible for an outlier 
payment if its actual or imputed Medicare allowable payment (MAP) 
amount per treatment for ESRD outlier services exceeds a threshold. The 
MAP amount represents the average incurred amount per treatment for 
services that were or would have been considered separately billable 
services prior to January 1, 2011. The threshold is equal to the ESRD 
facility's predicted ESRD outlier services MAP amount per treatment 
(which is case-mix adjusted and described in the following paragraphs) 
plus the fixed-dollar loss (FDL) amount. In accordance with Sec.  
413.237(c), facilities are paid 80 percent of the per treatment amount 
by which the imputed MAP amount for outlier services (that is, the 
actual incurred amount) exceeds this threshold. ESRD facilities are 
eligible to receive outlier payments for treating both adult and 
pediatric dialysis patients.
    In the CY 2011 ESRD PPS final rule and at Sec.  413.220(b)(4), 
using 2007 data, we established the outlier percentage, which is used 
to reduce the per treatment base rate to account for the proportion of 
the estimated total payments under the ESRD PPS that are outlier 
payments, at 1.0 percent of total payments (75 FR 49142 through 49143). 
We also established the FDL amounts that are added to the predicted 
outlier services MAP amounts. The outlier services MAP amounts and FDL 
amounts are different for adult and pediatric patients due to 
differences in the utilization of separately billable services among 
adult and pediatric patients (75 FR 49140). As we explained in the CY 
2011 ESRD PPS final rule (75 FR 49138 through 49139), the predicted 
outlier services MAP amounts for a patient are determined by 
multiplying the adjusted average outlier services MAP amount by the 
product of the patient-specific case-mix adjusters applicable using the 
outlier services payment multipliers developed from the regression 
analysis used to compute the payment adjustments.
    In the CY 2020 ESRD PPS final rule (84 FR 60705), we stated that 
based on the CY 2018 claims data, outlier payments represented 
approximately 0.5 percent of total payments. We also noted that, 
beginning in CY 2020, the total expenditure amount includes add-on 
payment adjustments made for calcimimetics under the TDAPA policy. We 
projected that for each dialysis treatment furnished, the average 
amount attributed to the TDAPA was $21.03 (84 FR 60704).
    For CY 2021, we propose that the outlier services MAP amounts and 
FDL amounts would be derived from claims data from CY 2019. Because we 
believe that any adjustments made to the MAP amounts under the ESRD PPS 
should be based upon the most recent data year available in order to 
best predict any future outlier payments, we propose the outlier 
thresholds for CY 2021 would be based on utilization of renal dialysis 
items and services furnished under the ESRD PPS in CY 2019. We note 
that, for CY 2020, the total expenditure amount includes add-on payment 
adjustments made for calcimimetics under the TDAPA policy (calculated 
to be $14.87 per treatment). However, as discussed in section II.B.1 of 
this proposed rule, for CY 2021 we propose to modify the ESRD PPS base 
rate by adding $12.06 to account for calcimimetics in the ESRD PPS 
bundled payment and no longer pay for these drugs using the TDAPA. In 
addition, we are proposing that beginning January 1, 2021, 
calcimimetics would be eligible outlier services.
    As discussed in section II.B.4.c.(2) of this proposed rule, CY 2019 
claims data show outlier payments represented approximately 0.5 percent 
of total payments. We recognize that the utilization of ESAs and other 
outlier services have continued to decline under the ESRD PPS, and that 
we have lowered the MAP amounts and FDL amounts every year under the 
ESRD PPS. For CY 2021, the predicted outlier services MAP amounts and 
FDL amounts have increased as a result of our proposal to incorporate 
oral and injectable calcimimetics into the outlier policy.
(1) CY 2021 Update to the Outlier Services MAP Amounts and FDL Amounts
    For CY 2021, we propose to update the outlier services MAP amounts 
and FDL amounts to reflect the utilization of outlier services reported 
on 2019 claims. For this proposed rule, the outlier services MAP 
amounts and FDL amounts were updated using 2019 claims data. The impact 
of this update is shown in Table 5, which compares the outlier services 
MAP amounts and FDL amounts used for the outlier policy in CY 2020 with 
the updated proposed estimates for this rule. The estimates for the 
proposed CY 2021 outlier policy, which are included in Column II of 
Table 5, were inflation adjusted to reflect projected 2021 prices for 
outlier services.

[[Page 42163]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.007

    As demonstrated in Table 5, the estimated FDL amount per treatment 
that determines the CY 2021 outlier threshold amount for adults (Column 
II; $133.52) is higher than that used for the CY 2020 outlier policy 
(Column I; $48.33). The higher threshold is accompanied by an increase 
in the adjusted average MAP for outlier services from $35.78 to $54.26. 
For pediatric patients, there is an increase in the FDL amount from 
$41.04 to $47.73. There is a corresponding increase in the adjusted 
average MAP for outlier services among pediatric patients, from $32.32 
to $33.08.
    As we stated previously, the predicted outlier services MAP amounts 
and FDL amounts have increased as a result of our proposal to 
incorporate oral and injectable calcimimetics into the outlier policy. 
Approximately 30 percent of ESRD beneficiaries receive calcimimetics 
and a subset of these beneficiaries tend to have the highest ESRD PPS 
expenditures, which trigger outlier payments under the ESRD PPS. Since 
the highest per-beneficiary ESRD PPS expenditures would increase under 
our proposal for calcimimetics to become eligible ESRD outlier 
services, the outlier FDL would increase to ensure that total outlier 
payments project to 1 percent of total Medicare ESRD PPS expenditures.
    We estimate that the percentage of patient months qualifying for 
outlier payments in CY 2021 would be 4.91 percent for adult patients 
and 8.65 percent for pediatric patients, based on the 2019 claims data. 
The outlier MAP and FDL amounts continue to be lower for pediatric 
patients than adults due to the continued lower use of outlier services 
(primarily reflecting lower use of calcimimetics, ESAs and other 
injectable drugs).
(2) Outlier Percentage
    In the CY 2011 ESRD PPS final rule (75 FR 49081) and under Sec.  
413.220(b)(4), we reduced the per treatment base rate by 1 percent to 
account for the proportion of the estimated total payments under the 
ESRD PPS that are outlier payments as described in Sec.  413.237. Based 
on the 2019 claims, outlier payments represented approximately 0.5 
percent of total payments, which is below the 1 percent target due to 
declines in the use of outlier services. Recalibration of the 
thresholds using 2019 data is expected to result in aggregate outlier 
payments close to the 1 percent target in CY 2021.
    We believe the update to the outlier MAP and FDL amounts for CY 
2021 would increase payments for ESRD beneficiaries requiring higher 
resource utilization and move us closer to meeting our 1 percent 
outlier policy because we are using more current data for computing the 
MAP and FDL, which is more in line with current outlier services 
utilization rates. The proposed inclusion of calcimimetics as ESRD 
outlier services in CY 2021 would fundamentally change the per-
treatment distribution of outlier services relative to previous CYs. In 
2019 claims, roughly 33 percent of ESRD beneficiaries and 28 percent of 
dialysis treatments are associated with calcimimetics and those that 
often have significantly higher utilization of ESRD outlier services 
relative to beneficiaries who do not receive calcimimetics. The MAP and 
FDL increases account for this change. We note that recalibration of 
the FDL amounts in this proposed rule would result in no change in 
payments to ESRD facilities for beneficiaries with renal dialysis items 
and services that are not eligible for outlier payments.
d. Proposed Impacts to the CY 2021 ESRD PPS Base Rate
(1) ESRD PPS Base Rate
    In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), we 
established the methodology for calculating the ESRD PPS per-treatment 
base rate, that is, ESRD PPS base rate, and the determination of the 
per-treatment payment amount, which are codified at Sec. Sec.  413.220 
and 413.230. The

[[Page 42164]]

CY 2011 ESRD PPS final rule also provides a detailed discussion of the 
methodology used to calculate the ESRD PPS base rate and the 
computation of factors used to adjust the ESRD PPS base rate for 
projected outlier payments and budget neutrality in accordance with 
sections 1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) of the Act, 
respectively. Specifically, the ESRD PPS base rate was developed from 
CY 2007 claims (that is, the lowest per patient utilization year as 
required by section 1881(b)(14)(A)(ii) of the Act), updated to CY 2011, 
and represented the average per treatment MAP for composite rate and 
separately billable services. In accordance with section 1881(b)(14)(D) 
of the Act and our regulation at Sec.  413.230, the per-treatment 
payment amount is the sum of the ESRD PPS base rate, adjusted for the 
patient specific case-mix adjustments, applicable facility adjustments, 
geographic differences in area wage levels using an area wage index, 
any applicable outlier payment and training adjustment add-on, the 
TDAPA, and the TPNIES.
(2) Annual Payment Rate Update for CY 2021
    We are proposing an ESRD PPS base rate for CY 2021 of $255.59. This 
update reflects several factors, described in more detail as follows:
     Wage Index Budget-Neutrality Adjustment Factor: We compute 
a wage index budget-neutrality adjustment factor that is applied to the 
ESRD PPS base rate. For CY 2021, we are not proposing any changes to 
the methodology used to calculate this factor, which is described in 
detail in the CY 2014 ESRD PPS final rule (78 FR 72174). We computed 
the proposed CY 2021 wage index budget-neutrality adjustment factor 
using treatment counts from the 2019 claims and facility-specific CY 
2020 payment rates to estimate the total dollar amount that each ESRD 
facility would have received in CY 2020. The total of these payments 
became the target amount of expenditures for all ESRD facilities for CY 
2021. Next, we computed the estimated dollar amount that would have 
been paid for the same ESRD facilities using the ESRD PPS wage index 
for CY 2021. As discussed in section II.B.4.b of this proposed rule, 
the proposed ESRD PPS wage index for CY 2021 includes an update to the 
most recent hospital wage data, the proposed adoption of the new OMB 
delineations, and a 5 percent cap on wage index decreases applied for 
CY 2021. The total of these payments becomes the new CY 2021 amount of 
wage-adjusted expenditures for all ESRD facilities. The wage index 
budget-neutrality factor is calculated as the target amount divided by 
the new CY 2021 amount. When we multiplied the wage index budget-
neutrality factor by the applicable CY 2021 estimated payments, 
aggregate payments to ESRD facilities would remain budget neutral when 
compared to the target amount of expenditures. That is, the wage index 
budget-neutrality adjustment factor ensures that wage index adjustments 
do not increase or decrease aggregate Medicare payments with respect to 
changes in wage index updates. The CY 2021 proposed wage index budget-
neutrality adjustment factor is .998652. This application would yield a 
CY 2021 ESRD PPS proposed base rate of $239.01, ($239.33 x .998652 = 
$239.01), prior to the proposed addition to the ESRD PPS base rate to 
include calcimimetics and the application of the proposed market basket 
increase.
     Addition to the ESRD PPS Base Rate to Include 
Calcimimetics: As discussed in section II.B.1 of this proposed rule, 
for CY 2021 we are proposing to modify the ESRD PPS base rate by adding 
$12.06 to account for calcimimetics in the ESRD PPS bundled payment. 
This application would yield a CY 2021 ESRD PPS proposed base rate of 
$251.07 ($239.01 + $12.06 = $251.07), prior to the application of the 
proposed market basket increase.
     Market Basket Increase: Section 1881(b)(14)(F)(i)(I) of 
the Act provides that, beginning in 2012, the ESRD PPS payment amounts 
are required to be annually increased by the ESRD market basket 
percentage increase factor. The latest CY 2021 projection for the 
proposed ESRDB market basket is 2.2 percent. In CY 2021, this amount 
must be reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act, as required by section 
1881(b)(14)(F)(i)(II) of the Act. As discussed previously, the proposed 
MFP adjustment for CY 2021 is 0.4 percent, thus yielding a proposed 
update to the base rate of 1.8 percent for CY 2021. Therefore, the CY 
2021 ESRD PPS proposed base rate is $255.59 ($251.07 x 1.018 = 
$255.59).
    In summary, we are proposing a CY 2021 ESRD PPS base rate of 
$255.59. This amount reflects a proposed CY 2021 wage index budget-
neutrality adjustment factor of .998652, a proposed addition of $12.06 
to the ESRD PPS base rate to include calcimimetics, and the CY 2021 
ESRD PPS payment update of 1.8 percent.
5. Proposed Changes to the Low-Volume Payment Adjustment
a. Background
    As required by section 1881(b)(14)(D)(iii) of the Act, the ESRD PPS 
includes a payment adjustment that reflects the extent to which costs 
incurred by low-volume facilities in furnishing renal dialysis services 
exceed the costs incurred by other facilities in furnishing such 
services. We have established a LVPA factor of 23.9 percent for ESRD 
facilities that meet the definition of a low-volume facility. Under 
Sec.  413.232(b), a low-volume facility is an ESRD facility that, based 
on the submitted documentation--(1) Furnished less than 4,000 
treatments in each of the 3 cost reporting years (based on as-filed or 
final settled 12-consecutive month cost reports, whichever is most 
recent) preceding the payment year; and (2) Has not opened, closed, or 
received a new provider number due to a change in ownership in the 3 
cost reporting years (based on as-filed or final settled 12-consecutive 
month cost reports, whichever is most recent) preceding the payment 
year. Under Sec.  413.232(c), for purposes of determining the number of 
treatments furnished by the ESRD facility, the number of treatments 
considered furnished by the ESRD facility equals the aggregate number 
of treatments furnished by the ESRD facility and the number of 
treatments furnished by other ESRD facilities that are both under 
common ownership with, and 5 road miles or less from, the ESRD facility 
in question.
    For purposes of determining eligibility for the LVPA, 
``treatments'' mean total hemodialysis (HD) equivalent treatments 
(Medicare and non-Medicare as well as ESRD and non-ESRD). For 
peritoneal dialysis (PD) patients, 1 week of PD is considered 
equivalent to 3 HD treatments. As noted, we base eligibility on the 3 
years preceding the payment year and those years are based on cost 
reporting periods. Specifically, under Sec.  413.232(g), the ESRD 
facility's cost reports for the periods ending in the 3 years preceding 
the payment year must report costs for 12-consecutive months (76 FR 
70237).
    In order to receive the LVPA under the ESRD PPS, an ESRD facility 
must submit a written attestation statement to its Medicare 
Administrative Contractor (MAC) confirming that it meets all of the 
requirements specified in Sec.  413.232 and qualifies as a low-volume 
ESRD facility. The attestation is required because: (1) ESRD facility's 
cost reporting periods vary and may not be based on the

[[Page 42165]]

calendar year; and (2) the cost reports are due 5 months after the 
close of the cost reporting period (that is, there is a lag in the cost 
reporting submission). Thus, the MACs may not have the cost report for 
the third year to determine eligibility and would need to rely on the 
attestation for that year until the cost report is available. Section 
413.232(e) imposes a yearly November 1 deadline for attestation 
submissions, with a few exceptions where the deadline is December 31. 
The November 1 timeframe provides 60 days for a MAC to verify that an 
ESRD facility meets the LVPA eligibility criteria (76 FR 70236).
    As stated in the Medicare Benefit Policy Manual, (Pub. L. 100-02), 
(chapter 11, section 60.B.1),\13\ once the attested ESRD facility's 
cost report is submitted to the MAC, the MAC verifies the as-filed cost 
report for the third eligibility year and finds that the ESRD facility 
met the eligibility criteria, the ESRD facility would then receive the 
LVPA payment for all the Medicare-eligible treatments in the payment 
year. However, if the attested ESRD facility's cost report for the 
third eligibility year exceeds the total dialysis treatment threshold, 
then the MAC recoups by reprocessing claims paid during the payment 
year in which the ESRD facility incorrectly received the LVPA. 
Recoupment also occurs if any cost reports used for eligibility are 
subsequently found to have not met the low-volume criteria, for 
example, reopening or appeals.
---------------------------------------------------------------------------

    \13\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c11.pdf.
---------------------------------------------------------------------------

    Further information regarding the administration of the LVPA is 
provided in the Medicare Benefit Policy Manual, chapter 11, section 
60.B.1.\14\
---------------------------------------------------------------------------

    \14\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c11.pdf.
---------------------------------------------------------------------------

b. Revisions to the LVPA Requirements and Regulations
    As we discussed in the CY 2019 ESRD PPS final rule (83 FR 56949), 
we have heard from stakeholders that low-volume facilities rely on the 
low-volume adjustment and loss of the adjustment could result in 
beneficiary access issues. Specifically, stakeholders expressed concern 
that the eligibility criteria in the LVPA regulations are very explicit 
and leave little room for flexibility in certain circumstances.
    As discussed in section II.B.2 of this proposed rule, according to 
the Centers for Disease Control and Prevention (CDC), the risk factors 
for COVID-19 include older adults and people of any age who have 
serious underlying medical conditions, such as diabetes and chronic 
kidney disease undergoing dialysis. Medicare's ESRD population aligns 
with the profile of patients who are more susceptible to COVID-19. As a 
result, ESRD facilities are working together to keep the risk of 
spreading COVID-19 down as much as possible by shifting patients among 
the ESRD facilities in the same area. In some cases, this shifting of 
patients has caused some low-volume ESRD facilities to temporarily 
dialyze patients that they otherwise would not have dialyzed if there 
had not been a PHE. In addition, since cases of acute kidney injury 
(AKI) have increased in certain areas of the country due to COVID-19, 
there is also an increase in the number of patients discharged that 
need outpatient dialysis for some period of time while their kidneys 
regain normal function. We are concerned that these increases in 
dialysis treatments due to the COVID-19 PHE in CY 2020 may put certain 
low-volume facilities over the LVPA's treatment threshold causing the 
loss of, or the inability to qualify for, the 23.9 percent per 
treatment payment adjustment for payment years 2021, 2022, and 2023. We 
note that in CY 2020, 338 ESRD facilities receive the LVPA. We also 
note that in a typical year, we estimate that between 50-60 facilities 
lose their LVPA status. That is, there are between 50-60 ESRD 
facilities that typically lose their LVPA status because their patient 
population grew for reasons other than the COVID-19 PHE.
    In light of the unique circumstance due to the COVID-19 PHE, we are 
proposing to hold ESRD facilities harmless if an increase in their 
treatment counts in 2020 is COVID-19-related such that the increase 
would prevent them from qualifying for the LVPA. We propose that the 
ESRD facility would attest that the increase in treatments, meaning 
total HD equivalent treatments (for ESRD and AKI), was temporary and 
related to the redistribution of patients in response to the COVID-19 
PHE. When this occurs, instead of using total dialysis treatments 
furnished in cost reporting periods ending in 2020, CMS would rely on 
the facility's attestation that the increase in total dialysis 
treatments was due to the PHE for the COVID-19 pandemic. We propose for 
purposes of determining LVPA eligibility for payment years 2021, 2022, 
and 2023, we would only consider total dialysis treatments furnished 
for 6 months of a facility's cost-reporting period ending in 2020, and 
that an ESRD facility would decide which 6 months to use (consecutive 
or non-consecutive) for purposes of reporting total treatments. That 
is, ESRD facilities would attest that, while it furnished 4,000 or more 
treatments in its cost-reporting period ending in 2020, the number of 
treatments exceeding the allowed threshold to otherwise qualify for the 
LVPA was due to temporary patient shifting as a result of the COVID-19 
PHE, and that their total dialysis treatments for any 6 months of that 
period is less than 2,000. MACs would annualize the total dialysis 
treatments for those 6 months by multiplying by 2. ESRD facilities 
would be expected to provide supporting documentation to the MACs upon 
request.
    This proposal is responsive to requests we have received from 
stakeholders, and would prevent the loss of, or the inability to 
qualify for, the LVPA for facilities who accommodated additional 
patients in 2020 because of the COVID-19 PHE. We believe this proposal 
targets just those facilities that would not qualify for the LVPA for 
the reason that they accommodated additional patients in response to 
the COVID-19 PHE to, for example, prevent the spread of the infection.
    We propose to revise Sec.  413.232(g) by adding paragraph (g)(4) to 
reflect that, for purposes of determining LVPA eligibility for payment 
years 2021, 2022, and 2023, an ESRD facility's attestation must 
indicate that the ESRD facility meets all the LVPA criteria except 
that, for a facility that does not otherwise meet the number-of-
treatments criterion (that is, less than 4,000 in a year) because of 
the COVID-19 PHE, the facility furnished less than 2,000 treatments in 
any 6 months during its cost-reporting period ending in 2020 due to 
temporary patient shifting as a result of the COVID-19 PHE. We also 
propose that the MAC would rely on the facility's attestation and would 
annualize the total dialysis treatments for the 6 months by multiplying 
those collective 6 month treatments by 2.
    In addition, since CMS changed cost reporting deadlines due to the 
COVID-19 PHE, we believe the extraordinary circumstances of the COVID-
19 pandemic justify an exception to the November 1, 2020 attestation 
deadline. Therefore, for payment year 2021, we propose to allow more 
time for ESRD facilities to submit attestations by extending the 
deadline to December 31, 2020. We would reflect this change in Sec.  
413.232(e) by reformatting the section to reflect already established 
exceptions to the November 1 attestation deadline in paragraphs (e)(1) 
through (3), and to include in new paragraph (e)(4) that, for

[[Page 42166]]

payment year 2021, the attestation must be provided by December 31, 
2020.
    We are proposing a technical change at Sec.  413.232(b) to remove 
the heading ``Definition of low-volume facility'' to be consistent with 
the current CFR requirements.\15\
---------------------------------------------------------------------------

    \15\ Document Drafting Handbook, chapter 2, section 2.10, page 
2-18: https://www.archives.gov/files/federal-register/write/handbook/ddh.pdf.
---------------------------------------------------------------------------

    We are also proposing a technical change at Sec.  413.232(e) and 
(g). We propose to add ``MAC'' in Sec.  413.232(e) to establish the 
acronym for Medicare Administrative Contractor. We propose to replace 
``Medicare Administrative Contractor (MAC)'' with ``MAC'' in Sec.  
413.232(g) since the acronym would now be established in Sec.  
413.232(e).
c. Clarification for MAC LVPA Determinations
    As we discuss in section II.B.5.(a) of this proposed rule, in order 
to receive the LVPA, an ESRD facility must meet the requirements of 
Sec.  413.232, including submitting attestations to the MACs indicating 
its eligibility for the adjustment. In its attestation for the third 
eligibility year, which is the cost-reporting year immediately 
preceding the payment year, a facility attests that it will be eligible 
for the adjustment; this attestation typically occurs prior to the MAC 
having the facility's cost report for the third eligibility year, in 
which case the MAC relies on the facility's attestation to determine if 
the facility qualifies for the LVPA. When an ESRD facility qualifies 
for the adjustment, the LVPA would be applied to all the Medicare-
eligible treatments for the entire payment year. If the MAC 
subsequently determines, however, that the ESRD facility failed to 
qualify for the LVPA, and the facility had already begun to receive the 
adjustment to which the MAC has determined it is not entitled, the MAC 
would reprocess the claims to remove and recoup the low-volume 
payments.
    We understand that in some instances, MACs may be discontinuing 
LVPA payments to a facility in the payment year for which the facility 
is eligible for the adjustment. However, the established policy is such 
that, if an ESRD facility meets the LVPA eligibility criteria in Sec.  
413.232, it is entitled to the payment adjustment for the entire 
payment year. Because there may be some inconsistent application of 
this policy, we are taking this opportunity to make this aspect of the 
LVPA policy clear in the regulation text.
    We propose to revise Sec.  413.232 by adding paragraph (h) to 
specify that, if an ESRD facility provides an attestation in accordance 
with Sec.  413.232(e) for the third eligibility year, the MAC verifies 
the as-filed cost report. If the MAC determines an ESRD facility meets 
the definition of a low-volume facility, CMS adjusts the low-volume 
facility's base rate for the entire payment year. However, if the MAC 
determines an ESRD facility does not meet the definition of a low-
volume facility, the MAC reprocesses claims and recoups low volume 
adjustments paid during the payment year.

C. Proposed Transitional Add-On Payment Adjustment for New and 
Innovative Equipment and Supplies for CY 2021 Payment

1. Background
    As we discussed in section II.B.2.a in the CY 2020 ESRD PPS final 
rule, we finalized the establishment of a transitional add-on payment 
adjustment for new and innovative equipment and supplies (TPNIES) to 
support ESRD facilities in the uptake of certain new and innovative 
renal dialysis equipment and supplies under the ESRD PPS. Under our 
current regulation at Sec.  413.236(b), we will provide the TPNIES to 
an ESRD facility for furnishing a covered equipment or supply only if 
the item: (1) Has been designated by CMS as a renal dialysis service 
under Sec.  413.171, (2) is new, meaning it is granted marketing 
authorization by FDA on or after January 1, 2020, (3) is commercially 
available by January 1 of the particular calendar year, meaning the 
year in which the payment adjustment would take effect; (4) has a 
Healthcare Common Procedure Coding System (HCPCS) application submitted 
in accordance with the official Level II HCPCS coding procedures by 
September 1 of the particular calendar year; (5) is innovative, meaning 
it meets the criteria specified in Sec.  412.87(b)(1) of this chapter 
and related guidance; and (6) is not a capital-related asset that an 
ESRD facility has an economic interest in through ownership (regardless 
of the manner in which it was acquired). Specifically, the equipment or 
supply must represent an advance that substantially improves, relative 
to renal dialysis services previously available, the diagnosis or 
treatment of Medicare beneficiaries.
    Under the first criterion, as reflected in the CY 2020 ESRD PPS 
final rule, renal dialysis equipment and supplies will be considered 
``new'' if FDA grants them marketing authorization on or after January 
1, 2020. By including FDA marketing authorizations on or after January 
1, 2020, we intended to support ESRD facility use and beneficiary 
access to the latest technological improvements to renal dialysis 
equipment and supplies. We note in section II.B.2.b of this proposed 
rule, we are proposing to refine the newness criteria (year in which 
the product was approved) and establish that an equipment or supply is 
considered ``new'' within 3 years beginning on the date of FDA 
marketing authorization for that equipment or supply. For capital-
related assets that are dialysis machines when used in the home 
setting, the 3 years would begin from the date of FDA marketing 
authorization for home use.
    We stated in the CY 2020 ESRD PPS proposed rule that, for new and 
innovative equipment and supplies, we believed the IPPS SCI criteria 
and the process used to evaluate SCI under the IPPS could be used for 
identifying new and innovative equipment and supplies worthy of 
additional payment under the ESRD PPS. We noted that under the IPPS, 
CMS has been assessing new technologies for many years to assure that 
the additional new technology add-on payments to hospitals are made 
only for truly innovative and transformative products, and we stated 
that CMS is proposing to adopt the IPPS SCI criteria under the ESRD PPS 
for the same reason. We explained that we wanted to ensure that the 
add-on payment adjustments made under the ESRD PPS are limited to new 
equipment and supplies that are truly innovative. In addition, since 
renal dialysis services are routinely furnished to hospital inpatients 
and outpatients, we stated that we believed the same SCI criteria 
should be used to assess whether a new renal dialysis equipment or 
supply warrants additional payment under Medicare.
    We finalized the adoption of IPPS's SCI criteria specified in Sec.  
412.87(b)(1), including modifications finalized in future IPPS final 
rules, to determine when a new and innovative renal dialysis equipment 
or supply is eligible for the TPNIES under the ESRD PPS. That is, we 
would adopt IPPS's SCI criteria in Sec.  412.87(b)(1) and any 
supporting policy around these criteria as discussed in IPPS preamble 
language. We stated that we believed that by incorporating the IPPS SCI 
criteria for new and innovative renal dialysis equipment under the ESRD 
PPS, we would be consistent with IPPS and innovators would have 
standard criteria to meet for both settings. We also proposed to 
establish a process modeled after IPPS's process of determining if a 
new medical service or technology meets the SCI criteria specified in 
Sec.  412.87. That is, we proposed that CMS

[[Page 42167]]

would use a similar process to determine whether the renal dialysis 
equipment or supply meets the eligibility criteria proposed in newly 
added Sec.  413.236(b). Similar to how we evaluate whether a new renal 
dialysis drug or biological product is eligible for the TDAPA, as 
discussed in the CY 2016 ESRD PPS final rule (80 FR 69019), we would 
need to determine whether the renal dialysis equipment and supply meets 
our eligibility criteria for the TPNIES.
    Specifically, under Sec.  413.236(b)(5) we evaluate SCI for 
purposes of the TPNIES under the ESRD PPS based on the IPPS SCI 
criteria (see Sec.  412.87(b)(1)). We note that in section II.B.2.a of 
this proposed rule we provide a detailed discussion of the SCI 
criteria. In addition, in section II.B.2.b of this proposed rule we are 
proposing to revise Sec.  413.236(b)(5) to remove ``and related 
guidance'' to reflect that all related SCI guidance has now been 
incorporated into Sec.  412.87(b)(1).
    As we discuss in section II.B.2.a, in the CY 2020 ESRD PPS final 
rule (84 FR 60681 through 60698), we established in Sec.  413.236(c) a 
process for our announcement of TPNIES determinations and a deadline 
for consideration of new renal dialysis equipment or supply 
applications under the ESRD PPS. CMS will consider whether a new renal 
dialysis equipment or supply meets the eligibility criteria specified 
in Sec.  413.236(b). Then, after consideration of public comments we 
will announce the results in the Federal Register as part of our annual 
ESRD PPS final rule. We noted we would only consider a complete 
application received by February 1 prior to the particular calendar 
year. FDA marketing authorization for the equipment or supply must 
occur by September 1 prior to the particular calendar year. We note in 
section II.B.2.b of this proposed rule we are proposing to revise Sec.  
413.236(c) to replace ``September 1'' with ``the HCPCS Level II code 
application deadline for Coding Cycle 2 for DMEPOS items and services 
as specified in the HCPCS Level II coding guidance on the CMS website'' 
to reflect that FDA marketing authorization for the new and innovative 
equipment or supply must accompany the HCPCS application prior to the 
particular calendar year in order for the item to qualify for the 
TPNIES in the next calendar year.
2. CY 2021 Applications for the TPNIES
    We received two applications for the TPNIES for CY 2021. A 
discussion of these applications is presented below.
a. Theranova 400 Dialyzer and Theranova 500 Dialyzer
(1) Baxter Healthcare Corporation (Baxter) Application
    Baxter submitted an application for the Theranova 400 Dialyzer/
Theranova 500 Dialyzer. The 400 and 500 denote differences in surface 
area. The applicant stated that Theranova represents an SCI over 
currently available hemodialysis (HD) therapies for the treatment of 
renal failure. The applicant stated that Theranova is a new class of 
hollow-fiber, single-use dialyzer intended to treat renal failure by 
HD. The applicant stated that it features an innovative 3-layer 
membrane structure that offers a higher permeability than high-flux 
dialyzers, with improved removal of large proteins up to 45 kilodaltons 
(kDa) while selectively maintaining essential proteins such as 
albumin.16 17 18 The applicant stated that Theranova has the 
potential to transform in-center HD by allowing Medicare beneficiaries 
with renal failure to benefit from expanded hemodialysis (HDx). HDx is 
defined as a process of blood purification that includes the clearance 
of small uremic toxins through large middle molecule (LMM) (categorized 
as uremic solute whose molecular size is 25kDa up to 60 kDa) toxins 
without the need for an external infusion of replacement fluid. For 
purposes of the application, HDx is collectively referred to in the 
application as ``Theranova''. The applicant asserted that the Theranova 
dialyzer integrates with existing HD machines that an ESRD facility 
already owns and replaces other dialyzers.
---------------------------------------------------------------------------

    \16\ Boschetti-de-Fierro, A., et al., ``MCO Membranes: Enhanced 
Selectivity in High-Flux Cases,'' www.nature.com/Scientific Reports, 
[5:18448]DOI: 10.1038/srep18448.
    \17\ Krause, B., et al., ``Highly selective membranes for Blood 
purification,'' Gambro Dialysatoren GmbH, Hechingen/Germany, 
Presentation abstract March 26, 2015.
    \18\ Zweigart, C., et al., ``Medium cut-off membranes--closer to 
the natural kidney removal function,'' Int. J Artif Organs, 2017, 
40(7), pp. 328-334. DOI: 10.5301/uijao.5000603.
---------------------------------------------------------------------------

    The applicant described the Theranova membrane as unique and stated 
it allows for the removal of an expanded range of solutes, creating a 
filtration profile closer to a natural kidney. The applicant described 
the membrane structure as being divided into three distinct layers: A 
fingerlike porous outer layer, a sponge-like intermediate layer, and a 
very thin inner layer (skin). By reducing the inner diameter of the 
membrane, internal filtration is increased, allowing for enhanced 
clearance of LMMs through additional convective transport.\19\ The 
Theranova dialyzer enables the efficient removal of uremic toxins (up 
to 45 kDa).20 21 The applicant included an adapted figure 
from a book titled, ``Modelling and Control of Dialysis Systems \22\ to 
compare removal of toxins by Theranova to the kidney and to other 
dialysis therapies, such as low flux dialyzers (LF), high flux 
dialyzers (HFD) and hemodiafiltration (HDF). The applicant's adapted 
figure showed the following: LF, HFD, HDF and HDx remove urea (60 
Daltons (Da)), phosphate (96 Da), Parathyroid hormone (9,500 Da); HFD, 
HDF and HDx remove Beta 2 microglobulin (12 kDa), cystatin C (13 kDa), 
Myoglobulin (17 kDa), and, kappa free-light-chains (23 kDa); HDF and 
HDx remove complement factor D (24 kDa), Interleukin (IL)-6 (25 kDa), 
alpha 1 microglopbulin (33 kDa); and, HDx removes Chitinase-3-like 
protein 1 (40 kDa), lambda free-light-chains (45 kDa) and albumin (67 
kDa).
---------------------------------------------------------------------------

    \19\ Lorenzin, A., et al., ``Quantification of Internal 
Filtration in Hollow Fiber Hemodialyzers with Medium Cut-Off 
Membrane,'' Blood Purif, 2018, 46, pp. 196-204.
    \20\ Boschetti-de-Fierro, A., et al., ``MCO Membranes: Enhanced 
Selectivity in High-Flux Cases,'' www.nature.com/Scientific Reports, 
[5:18448] DOI: 10.1038/srep18448.
    \21\ Boschetti-de-Fierro, A., et al., ``MCO Dialyzers: Enhanced 
Selectivity High-Flux,'' Gambro Dialysatoren GmbH, Research and 
Development, Hechingen, Germany, Poster No. SAT-481 (Baxter).
    \22\ Azar, A.T. and Canaud, B., ``Chapter 8: Hemodialysis 
System,'' Modeling and Control of Dialysis Systems, 2013, pp. 99-
106, SCI 404 Berlin, Springer-Verlag, Berlin, Heidelberg. ISBN: 978-
3642274572.
---------------------------------------------------------------------------

    The applicant stated that compared with low-flux HD, high-flux HD, 
and HDF, the Theranova dialyzer filtration profile is more similar to 
that of a natural kidney, as shown in vitro 23 24 giving it 
expanded clearance of uremic toxins.
---------------------------------------------------------------------------

    \23\ Krause, B., et al., ``Highly selective membranes for Blood 
purification,'' Gambro Dialysatoren GmbH, Hechingen/Germany, 
Presentation abstract March 26, 2015.
    \24\ Boschetti-de-Fierro, A., et al., ``MCO Membranes: Enhanced 
Selectivity in High-Flux Cases,'' www.nature.com/Scientific Reports, 
[5:18448] DOI: 10.1038/srep18448.
---------------------------------------------------------------------------

    The applicant asserted that the design of the Theranova dialyzer 
allows for use on any HD machine, made by any manufacturer, by merely 
changing the dialyzer. The applicant stated that the membrane is 
compatible with standard fluid quality and does not require any 
additional fluid quality control measure.
    Theranova received approval for Investigational Device Exemption 
(IDE) protocol from the FDA, on August 31, 2017 and then received 
approval for coverage on September 13, 2017. The Class II 
investigational device exemption received the code

[[Page 42168]]

G170157.\25\ The FDA requested a 6-month clinical study to validate 
efficacy of large toxin removal and safety. According to the applicant, 
safety is defined in part by albumin loss. The applicant stated that it 
is seeking authorization through the FDA's De Novo pathway and 
marketing authorization this year for the May 2020 cycle. The applicant 
stated that it plans to submit a HCPCS application to CMS in June 2020.
---------------------------------------------------------------------------

    \25\ Available on p. 49828 at: https://www.federalregister.gov/documents/2017/10/27/2017-23447/medicare-and-medicaid-programs-quarterly-listing-of-program-issuances-july-through-september-2017.
---------------------------------------------------------------------------

    The applicant noted that it has not submitted an application for 
pass-through payments under the Medicare Outpatient Prospective Payment 
System (OPPS) or the NTAP program under the Medicare IPPS for the 
Theranova 400 Dialyzer/Theranova 500 Dialyzer.
    The applicant stated that it expects Theranova to be commercially 
available immediately after receiving marketing authorization and will 
provide proof of commercial availability.
    With regard to demonstrating the requirements for SCI, the 
applicant asserted that Theranova represents an SCI in outcomes for 
Medicare beneficiaries over currently available HD therapies treating 
renal failure. The applicant noted that ESRD patients on current HD 
therapies suffer unsatisfactorily high mortality and morbidity from 
cardiovascular disease and infections.\26\
---------------------------------------------------------------------------

    \26\ United States Renal Data System. 2018 USRDS annual data 
report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2018.
---------------------------------------------------------------------------

    In addition, the applicant stated that the HDx enabled by Theranova 
effectively targets the removal of LMM uremic toxins (25 kDa to 60 
kDa), which are linked to the development of inflammation, 
cardiovascular disease, and other comorbidities in dialysis patients. 
The applicant stated that this results in improved clinical outcomes, 
relative to current dialyzers in four clinical categories. First, a 
decreased rate of subsequent therapeutic interventions, including fewer 
infections, reduced hospitalization duration, and reduced medication 
usage. Specifically, the applicant stated that patients treated with 
HDx therapy have decreased infections. A prospective cross-over study 
found an average of seven episodes of infection for patients treated 
with HDx versus 18 for high flux HD (p=0.003).\27\ The applicant also 
stated that patients receiving HDx therapy with Theranova had hospital 
stays averaging 4.4 days versus 5.9 days for patients receiving 
traditional HD (p=0.0001) along with lower hospitalization rates (71 
percent versus 77 percent (p=0.69)).\28\ The U.S. IDE Randomized 
Controlled Trial (NCT032574 l 0) of 172 patients, although not powered 
for all-cause hospitalization events, showed a 49 percent decreased 
number of hospitalization events in the Theranova arm (18 events) as 
compared to the control arm (37 events).\29\ With regard to improved 
medication usage, the applicant stated that patients receiving HDx 
therapy had reduced medication usage. The applicant cited three studies 
that showed a significant decrease in erythropoietin stimulating agents 
(ESA) usage.30 31 32 One study also found a substantial 
reduction in the need for iron usage.33 34 Two studies saw 
an improvement in EPO resistance index (ERI) and one study showed a 
statistically significant decrease in phosphate binder (calcium 
carbonate) usage.35 36
---------------------------------------------------------------------------

    \27\ Cozzolino, C., et al., ``Effects of a medium cut-off 
(Theranova) dialyzer on haemodialaysis patients: a prospective, 
cross-over study,'' Clinical Kidney Journal, 2019, pp. 1-8. Doi 
10.1093/ckj/sfz 155.
    \28\ Sanabria, R.M., et al., ``Expanded Hemodialysis and its 
effects on hospitalizations and medication usage,'' Submitted for 
publication.
    \29\ Weiner, D.E., et al., 2019, ``Efficacy and Safety of 
Expanded Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Control Trial,'' Abstract at ASN meeting, FR-PO 488.
    \30\ Gallo, M., ``The Real-Life Study on Expanded Hemodialysis 
(HDx): 9 Months Experience of a Single Hemodialysis Unit,'' 
Nephrology Dialysis Transplantation, 34, Issue Supplement_1, June 
2019, gfz106.FP539, https://doi.org/10.1093/ndt/gfz106.FP539.
    \31\ Sanabria, R.M., et al., Ibid.
    \32\ Lim, J-H., et al., ``Novel Medium Cut-Off Dialyzer Improves 
Erythropoietin Stimulating Agent Resistance in Maintenance 
Hemodialysis Patients: A Randomized Controlled Trial,'' Manuscript 
submitted for publication.
    \33\ Sanabria, R.M., et al., Ibid.
    \34\ Lim, J-H., et al., Ibid.
    \35\ Sanabria, R.M., et al., Ibid.
    \36\ Lim, J-H., et al., Ibid.
---------------------------------------------------------------------------

    The second clinical improvement category listed by the applicant is 
a more rapid beneficial resolution of the disease process treatment. 
The applicant cited a 2019 publication which noted that the average 
recovery time after dialysis is reduced with HDx therapy, with the 
median self-reported recovery time at 120 minutes, 60 min., 60 min., 
and 105 min. at 3,6,9, and 12 months compared to a baseline 240 min. 
(p<0.01 for 6, 9, and 12-month ratings; N=110).\37\
---------------------------------------------------------------------------

    \37\ Bolton, S., et al., ``Dialysis symptom burden and recovery 
time in expanded hemodialysis,'' Manuscript submitted.
---------------------------------------------------------------------------

    The third category of improved clinical outcomes listed by the 
applicant is reduced inflammation in patients receiving HDx Therapy 
with Theranova. The applicant referenced a 2018 review article, which 
notes that chronic inflammation in ESRD patients is associated with the 
build-up of known uremic toxins spanning the molecular size spectrum 
from 12kDa to 45kDa such as beta- 2-microglobulin, soluble tumor 
necrosis factor (TNF), Receptor 2, IL-1, Prolactin, IL-18, IL-6, 
Hyaluronic Acid, TNF-a, Soluble TNF Receptor 1, Pentraxin-3, and 
Advanced Glycation End-Products. The same article notes the following: 
(1) LMM (25 kDa to 60 kDa) have been associated with inflammation, 
cardiovascular events and other dialysis-related comorbidities; (2) 
current dialytic therapies, though efficient in removing small solutes, 
have limited capability in removing LMM; (3) current dialyzer design, 
limited by membrane permeability, does not provide long-lasting, 
effective reduction of the full spectrum of small molecular uremic 
toxins (<500 Da), conventional middle molecular uremic toxins (500 Da 
to <25 kDa) and large middle molecular uremic toxins (25 kDa to 60kDa), 
even when their usage is enhanced with convective transport; and (4) a 
broad spectrum of uremic toxins are not effectively treated by 
conventional HD nor HDF which is not readily utilized in the U.S.\38\ 
The applicant asserted that for the first time, HDx enabled by 
Theranova results in the superior removal of the aggregate of small, 
conventional middle and large middle molecular uremic toxins.\39\ The 
applicant asserted that Theranova, in effectively targeting the 
spectrum of uremic toxins, that this spectrum encompasses the totality 
of these inflammation-modulating molecules.
---------------------------------------------------------------------------

    \38\ Wolley, M., et al., ``Exploring the Clinical Relevance of 
Providing Increased Removal of Large Middle Molecules,'' Cli, J Am 
Soc Nephrol, 2018, 13, pp.805-813.
    \39\ Kirsch AH, Lyko R, Nilsson LG., et al., Performance of 
hemodialysis with novel medium cut-off dialyzers. Nephrol Dial 
Transplant, 2017; 32: 165-172.

---------------------------------------------------------------------------

[[Page 42169]]

    The applicant also asserted that when analyzing the full set of 
studies utilizing Theranova dialyzers, the collective evidence shows 
consistent improvement in these inflammatory marker levels. Of 14 
measurements of inflammation across four studies,40 41 42 43 
71 percent (10 of 14) showed statistically significant improvement in 
the inflammatory marker. For the remaining 29 percent of the measured 
inflammatory markers, all showed improvement in the inflammatory 
profile but were not statistically significant. In most of the 
situations where statistically significant results were not achieved, 
the applicant asserted, the studies were underpowered to demonstrate 
statistically significant change of the particular marker.
---------------------------------------------------------------------------

    \40\ Belmouaz, M., et al., ``Comparison of the Removal of Uremic 
Toxins with Medium Cut-Off and High Flux Dialyzers: A Randomized 
Clinical Trial,'' Nephrol Dial Transplant, 2020, 35, pp. 328-335.
    \41\ Kharbanda, K., et al., ``A Randomised Study Investigating 
the Effect of Medium Cut-Off Haemodialysis on Markers of Vascular 
Health Compared with On-Line Haemodiafiltration (MoDal Study)''. 
Poster presented at the American Society of Nephrology, 2019.
    \42\ Cozzolino, M, ``Effects of Mediun Cut-Off (Theranova) 
Dialyzer on Hemodialysis Patients: A Prospective Cross-Over Study 
[Abstract].'' J Am Soc Nephrol, 29. 2018, pp. 616-617.
    \43\ Cantaluppi, V., et al., ``Removal of Large Middle Molecules 
on Expanded Hemodialysis (HDx): A Multicentric Observantional Study 
of 6 Months Follow-Up,'' J Am Soc Nephrol, 29, 2018, Poster TH-PO 
357.
---------------------------------------------------------------------------

    The applicant stated that studies have demonstrated stable albumin 
levels,44 45 and a reduction of endothelial dysfunction and 
Albumin and C-Reactive Protein (CRP) levels.46 47 48 In 
addition, the applicant specifically described a single cohort study 
(N=41) showing a significant decrease in serum levels for urea, 
[beta]2m, kappa and lambda free light chain at 3 months. At 3 and 6 
months, there was a substantial decrease in serum CRP levels. Also, 
blood assay demonstrated a decline in the production of IL-6.\49\ In a 
40-participant cross-over prospective study, HDx with Theranova versus 
high flux HD demonstrated both a higher reduction ratio and a decrease 
in serum levels for lambda free light chains.50 51 52
---------------------------------------------------------------------------

    \44\ Krishnasamy, R., et al., ``Trial evaluating mid cut-off 
value membrane clearance of albumin and light chains in hemodialysis 
patients (REMOVAL-HD): a safety and efficacy study,'' 2018, ASN 2018 
Kidney Week Abstract TH-P0353.
    \45\ Bunch, A., et al., ``Long-Term Effects of Expanded 
Hemodialysis (HDx) on Clinical and Laboratory Parameters in a Large 
Cohort of Dialysis Patients,'' 2018, ASN 2018 Kidney Week Abstract 
FR-P0766.
    \46\ Kharbanda, k., et al. 2019, Ibid.
    \47\ Cantaluppi, V., et al., Ibid.
    \48\ Cantaluppi, V., et al., ``Removal of Large- Middle 
Molecules, Inhibition of Neutrophil Activation and Modulation of 
Inflammation-Related Endothelial Dysfunction During Expanded 
Hemodialysis (HDx),'' June 2019, Nephrol Dial Transplantation, 34, 
Issue Supplement_1. gfz096.FO048, https://doi.org/10.1093/ndt/gfz096.FO048.
    \49\ Cantaluppi, V., et al., Ibid.
    \50\ Belmouaz, M., et al., ``Comparison of the Removal of Uremic 
Toxins with Medium Cut-Off and High Flux Dialyzers: A Randomized 
Clinical Trial,'' J Am Soc Nephrol, 2018, 29, Poster TH-PO348.
    \51\ Belmouaz M, et al., ``Comparison of hemodialysis with 
medium cut-off dialyzer and on-line hemodiafiltration on the removal 
of small and middle-sized molecules,'' Clin Nephrol. Jan 2018, 89 
(2018)(1):50-56.
    \52\ Belmouaz, M., et al., ``Comparison of the Removal of Uremic 
Toxins with Medium Cut-Off and High-Flux Dialyzers: A Randomized 
Clinical Trial,'' Nephrol Dial Transplant, 2020, 35, pp. 328-335.
---------------------------------------------------------------------------

    The applicant also noted that, in addition to IL-6, a well-
recognized biological marker of inflammation, there is also a broader 
spectrum of uremic toxins associated with inflammation. The applicant 
listed references for elevated levels of IL-6 leading to the following: 
Hepcidin production with decreased iron availability; \53\ increased 
endothelial damage; 54 55 increased CRP and decreased 
albumin production.\56\ The applicant attested that with the use of 
Theranova, patients present clinically with the opposite of each of the 
above listed concerns, suggesting that chronic inflammation mediated by 
IL-6 is reduced by treatment with Theranova. However, the applicant 
submitted a reference which concluded that when compared to HD using 
high flux membrane, HD using a medium cut-off (MCO) membrane may be not 
inferior in albumin loss.\57\
---------------------------------------------------------------------------

    \53\ Caramelo, C., et al., ``Anemia: Pathophysiology, 
pathogenesis, treatment, incognitate,'' Rev Esp Cardiol., 2007, 60, 
pp. 848-60.
    \54\ Kharbanda, K., et al., ``A randomized study investigating 
the effect of medium cut off haemodialysis on markers of vascular 
health compared with on-line hemodiafiltration (MoDal Study),'' 
2019, Presented at the Scientific Congress American Society of 
Nephrology, 2019.
    \55\ Cozzolino, C., et al., ``Effects of a medium cut-off 
(Theranova) dialyzer on haemodialaysis patients: a prospective, 
cross-over study,'' Clinical Kidney Journal, 2019, pp. 1-8. Doi 
10.1093/ckj/sfz 155.
    \56\ Gillerot, G., et al. ``Genetic and Clinical Factors 
Influence the Baseline Permeability of the Peritoneal Membrane,'' 
Kidney Int. 2005, 67, pp. 2477-2487.
    \57\ Jung, J.H., et al., ``A 6-Month Study on the Efficacy of 
Hemodialysis Therapy Using Dialyzers with Mediun Cut-Off Membranes 
in Asian Patients with End-Stage Renal Disease,'' Nephrol Dial 
Transplant, June 2019. 84, Issue Supplement, gfz103.SP487, https://doi.org/10.1093/ndt/gfz103.SP487.
---------------------------------------------------------------------------

    An additional prospective cross-over study (N=20) showed reduced 
levels of IL-6 (6.4561.57 pg/m vs. 9.4862.15 pg/ml) in patients treated 
with HDx.\58\ The applicant included findings from their U.S. IDE Study 
in the TPNIES application. Although the IL-6 level was not a primary 
endpoint of the U.S. IDE Study (NCT03257410), nor was the study 
sufficiently powered to statistically prove a change in IL-6 level, the 
analysis of the U.S. IDE Study (NCT03257410), comparing Theranova to HD 
with Elisio 17H, indicates a trend for difference in the pre- to post-
dialysis change in plasma IL-6 level, favoring Theranova (p=0.07 and 
p=0.08 at 4 weeks and 24 weeks, respectively). The pre-dialysis level 
of IL-6 shows a positive trend for Theranova (p=0.2).\59\ The applicant 
stated that the accumulation of IL-6 and lambda free light chains may 
contribute to the chronic inflammation state of ESRD patients, 
increasing the risk of chronic vascular disease and bacterial 
infections, respectively. The applicant noted that the company is 
exploring options to assess the impact of the reduction of these 
solutes via HDx in ongoing studies.
---------------------------------------------------------------------------

    \58\ Cozzolino, C., et al., 2019, Ibid.
    \59\ Weiner, D.E., et al., 2019 ``Efficacy and Safety of 
Expanded Hemodialysis with the Theranova 400 Dialyzer: A Randomized 
Control Trial,'' Abstract at ASN meeting, FR-PO 488.
---------------------------------------------------------------------------

    Finally, the last category of improved clinical outcomes listed by 
the applicant is enhanced quality of life across many different 
measures, including, but not limited to, decreased recovery time, 
decreased restless leg syndrome, and reduced pruritus. The applicant 
stated that there was decreased symptom burden, citing a study of 
patients who switched to HDx with Theranova in a multicenter 6-month 
observational study (N=992), who had statistically significant 
improvements in measures of symptoms of kidney disease, effects of 
kidney disease, and the burden of kidney disease.\60\ The applicant 
also stated that there was improved reported mental health component 
and statistically significant reduced Restless Leg Syndrome 
diagnosis.61 62 63 64

[[Page 42170]]

Regarding improved physical functioning and decreased pruritis, the 
applicant submitted an article reporting the results of a randomized 
control trial (N=50), where Theranova resulted in improved results for 
physical functioning and physical role, and the mean scores of mean 
pruritus distribution and frequency of scratching during sleep were 
significantly lower with Theranova.\65\ In another study (single 
cohort, N=14), Theranova was associated with statistically significant 
improvement in the physical and mental component quality of life 
measures.\66\ The applicant also submitted a case report of a HD 
patient with pruritis who responded to the initiation of HDx using a 
MCO dialysis membrane.\67\
---------------------------------------------------------------------------

    \60\ Alarcon, J.C., et al., ``Real World Evidence on the Impact 
of Expanded Hemodialysis (HDx) Therapy on Patient Reported Outcomes 
(PROs): COREXH Registry,'' Manuscript submitted for Publication.
    \61\ Alarcon, J.C., Manuscript submitted for publication, Ibid.
    \62\ Gernone, G., et al., ``Mid-term Evaluation of the New 
Medium Cut-Off Filter (Theranova) on Removal Efficiency and Quality 
of Life,'' Nephrology Dialysis Transplantation, 2018, ERA EDTA 
Scientific Congress Abstract, SP 489, doi.10.1093/ndt/gfy104.
    \63\ Florens, N and Juillard, L., ``Expanded haemodialysis: news 
from the field,'' Nephrol Dial Transplant, 2018, 33, pp. iii48-
iii52.
    \64\ Bunch, A., et al. ``Long-Term Effects of Expanded 
Hemodialysis (HDx) on Clinical and Laboratory Parameters in a Large 
Cohort of Dialysis Patients'' ASN 2018 Kidney Week Abstract FR-
P0766.
    \65\ Lim, J-H., et al. ``Novel medium cut off dialyzer improves 
erythropoietin stimulating agent resistance in maintenance 
hemodialysis: a randomized controlled trial,'' Submitted for 
publication.
    \66\ Gernone, G., et al., ``Mid-term Evaluation of the New 
Medium Cut-Off Filter (Theranova) on Removal Efficiency and Quality 
of Life,'' Nephrology Dialysis Transplantation, 2018, ERA EDTA 
Scientific Congress Abstract, SP 489, doi.10.1093/ndt/gfy104.
    \67\ Penny, J., et al. ``Pruritus: Is there a salty truth?'' 
Submitted for publication.
---------------------------------------------------------------------------

(2) CMS TPNIES Work Group Analysis
(a) Summary of Current Equipment or Supply by the CMS TPNIES Work Group
    The following discussion was part of the content of the CMS TPNIES 
Work Group evaluative meetings.
    Patients with ESRD requiring dialysis are at high risk of mortality 
due to the presence of uremic toxins.\68\ However, identifying the 
putative uremic toxin (or toxins) has proven challenging; the European 
Uremic Toxin Work Group previously identified at least 90 compounds 
that are retained in patients undergoing dialysis.\69\ Current HD 
technology relies on diffusion of toxins across a semi-permeable 
membrane to allow for the removal of small-sized (<500 Da) water-
soluble molecules. While HD is generally able to remove water-soluble 
small toxins (<500 Da), HD has limited ability to clear protein bound 
solutes, those that are sequestered, or LMM solutes (>500 
Da).70 71 72 The accumulation of uremic toxins with higher 
molecular weight is associated with immunodeficiency, inflammation, 
protein-wasting, and cardiovascular complications. For instance, 
solutes such as Beta-2 microglobulin (11.8 kDa) 73 74 are 
associated with increased mortality.\75\ Protein-bound solutes such as 
indoxyl sulfate and p-cresol sulfate also appear to be poorly 
dialyzable and are associated with the uremic syndrome and 
cardiovascular disease.\76\
---------------------------------------------------------------------------

    \68\ Boschetti-de-Fierro, A., et al., ``MCO Membranes: Enhanced 
Selectivity in High-Flux Cases,'' www.nature.com/Scientific Reports, 
[5:18448] DOI: 10.1038/srep18448.
    \69\ Vanholder R, et al., European Uremic Toxin Work Group 
(EUTox). Review on uremic toxins: Classification, concentration, and 
interindividual variability. Kidney Int, 2003 May;63 (5):1934-43.
    \70\ Mac[iacute]as N., et al., ``Middle molecule elimination in 
expanded haemodialysis: only convective transport'' Clin Kidney J., 
Dec. 2018, 15;12 (3), pp. 447-455.
    \71\ Garc[iacute]a-Prieto, A., et al., ``Evaluation of the 
efficacy of a medium cut-off dialyser and comparison with other 
high-flux dialysers in conventional haemodialysis and online 
haemodiafiltration.'' Clin Kidney J., Oct. 2018, 11(5):742-746.
    \72\ Dobre, M., et al., ``Searching for Uremic Toxins'' Clinical 
Journal of American Society of Nephrology. February 2013, 8 (2) 322-
327.
    \73\ Belmouaz, M., et al. ``Comparison of the Removal of Uremic 
Toxins with Medium Cut-Off and High-Flux Dialyzers: A Randomized 
Clinical Trial,'' J Am Soc Nephrol, 29, 2018, Poster TH-PO348.
    \74\ Belmouaz, M., et al., ``Comparison of hemodialysis with 
medium cut-off dialyzer and on-line hemodiafiltration on the removal 
of small and middle-sized molecules,'' Clin Nephrol. Jan 2018, 89 
(2018)(1):50-56.
    \75\ Cordeiro, I., et al.'' High-Flux versus High-Retention-
Onset Membranes: In vivo Small and Middle Molecules Kinetics in 
Convective Dialysis Modalities,'' Blood Purification, Jul 2019, 
30:1-8.
    \76\ Vanholder, R., et al., ``Protein-bound uremic solutes: The 
forgotten toxin,'' Kidney International. Feb 2001, 59 (78), S266-
S270.
---------------------------------------------------------------------------

    While dialysis can eliminate the immediate risk of death from 
uremia, it does not replace functioning kidneys. Patients receiving 
adequate dialysis do not completely recover from the uremic syndrome, 
indicating that other uremic toxins may not fully be 
cleared.77 78 Compared to the general population, patients 
with ESRD who receive dialysis are at an increased risk of death, 
commonly suffer from uremic symptoms such as itching, restless legs, 
and malnutrition, and are at increased infection risk. Conventional 
dialysis is effective in removing small molecules, but is less 
effective in removing larger molecules, sequestered molecules, and 
protein-bound toxins. Accumulation of middle molecule and protein-bound 
toxins may contribute to adverse outcomes among patients receiving 
dialysis \79\ and may explain why even a small amount of ``residual'' 
kidney function is strongly associated with increased survival 
80 81 and higher quality of life.82 83
---------------------------------------------------------------------------

    \77\ Tanaka H, Sirich TL, Plummer NS, Weaver DS, Meyer TW. An 
Enlarged Profile of Uremic Solutes. PLoS One. 2015; 10(8): e0135657.
    \78\ Sirich, T.L, et al., ``The Frequent Hemodialysis Network 
Trial Group. Limited reduction in uremic solute concentrations with 
increased dialysis frequency and time in the Frequent Hemodialysis 
Network Daily Trial.Kidney Int, May 2017, 91 (5): 1186-
1192.doi:10,1016/j.kint.2016.11.002.Epub 2017 Jan 12.
    \79\ Clark,W.R.' et al. ``Uremic Toxins and their Relation to 
Dialysis Efficacy.'' Blood Purif., 2019,48(4), pp.299-314. Epub 2019 
Sep 27.
    \80\ Obi, Y., et al., ``Residual Kidney Function Decline and 
Mortality in Incident Hemodialysis Patients,'' J Am Soc Nephrol., 
Dec. 2016, 27(12), pp. 3758-3768. Epub 2016 May 11.
    \81\ Wang, A.Y. and Lai, K.N. ``The importance of residual renal 
function in dialysis patients.'' Kidney Int., May, 2006, 69(10), pp. 
1726-32.
    \82\ Dobre, M., et al., ``Searching for Uremic Toxins'' Clinical 
Journal of American Society of Nephrology. February 2013, 8 (2) 322-
327.
    \83\ Bargman, J.M., et al., ``CANUSA Peritoneal Dialysis Study 
Group. Relative contribution of residual renal function and 
peritoneal clearance to adequacy of dialysis: a reanalysis of the 
CANUSA Study,'' J Am Soc Nephrol., Oct. 2001, 12(10), pp. 2158-62.
---------------------------------------------------------------------------

    Innovations in dialysis care include the development of 
technologies that might remove potential toxins resistant to clearance 
using current devices. One technology called HDF removes larger 
molecules by combining convection with diffusion. Convection relies on 
pressure gradients across the dialyzer membrane, leading to more 
effective removal of middle to large molecules from the blood. 
Substantial fluid losses with convection, must be replaced via infusion 
of typically ultrapure water and dialysis fluids.\84\ This newer 
technology was later supplemented by online HDF, which enables dialysis 
providers with ultrapure water systems to generate replacement fluid 
solution. Although HDF has been associated with improvements to 
survival in retrospective, observational studies,\85\ randomized 
controlled trials have been less consistent.86 87 88 89 
Online HDF has become more widely used in Europe,

[[Page 42171]]

but it not commonly used in the U.S. due to costs associated with the 
need for ultrapure water.\90\
---------------------------------------------------------------------------

    \84\ Zweigart, C., et al., ``Medium cut-off membranes--closer to 
the natural kidney removal function,'' Int. J Artif Organs, 2017, 
40(7), pp. 328-334. DOI: 10.5301/uijao.5000603.
    \85\ Garc[iacute]a-Prieto, A., et al., ``Evaluation of the 
efficacy of a medium cut-off dialyser and comparison with other 
high-flux dialysers in conventional haemodialysis and online 
haemodiafiltration.'' Clin Kidney J., Oct. 2018, 11(5):742-746.
    \86\ Grooteman, M.P., et al.; ``CONTRAST Investigators. Effect 
of online hemodiafiltration on all-cause mortality and 
cardiovascular outcomes,'' J Am Soc Nephrol., June 2012, 23(6), 
pp.1087-1096.
    \87\ Maduell, F., et al., ``ESHOL Study Group. High-efficiency 
postdilution online hemodiafiltration reduces all-cause mortality in 
hemodialysis patients'' J Am Soc Nephrol., Feb 2013, 24(3), pp. 487-
497. doi: 10.1681/ASN.2012080875. Epub 2013 Feb 14. Erratum in: J Am 
Soc Nephrol. 2014 May; 25(5):1130.
    \88\ Morena, M., et al., ``FRENCHIE Study Investigators. 
Treatment tolerance and patient-reported outcomes favor online 
hemodiafiltration compared to high-flux hemodialysis in the 
elderly,'' Kidney Int., June 2017, 91(6):1495-1509.
    \89\ Ok, E., et al., ``Online Haemodiafiltration Study. 
Mortality and cardiovascular events in online haemodiafiltration 
(OL-HDF) compared with high-flux dialysis: results from the Turkish 
OL-HDF Study,'' Nephrol Dial Transplant, Jan 2013, 28(1), pp. 192-
202.
    \90\ Zweigart, C., 2017. Ibid.
---------------------------------------------------------------------------

    Newer dialysis membranes aimed at improved middle molecule 
clearance are an active area of research.\91\ High flux membranes with 
larger pore sizes can remove larger molecules, including inflammatory 
cytokines and immunoglobulin light chains but at the cost of albumin 
loss.\92\ This is significant because low albumin levels are associated 
with higher mortality rates in patients with ESRD.\93\
---------------------------------------------------------------------------

    \91\ Zweigart, C., 2017. Ibid.
    \92\ Krause, B., et al., ``Highly selective membranes for Blood 
purification,'' Gambro Dialysatoren GmbH, Hechingen/Germany, 
Presentation abstract March 26, 2015.
    \93\ Zweigart, C., et al., ``Medium cut-off membranes--closer to 
the natural kidney removal function,'' Int. J Artif Organs, 2017, 
40(7), pp. 328-334. DOI: 10.5301/uijao.5000603.
---------------------------------------------------------------------------

    In addition to potential risks associated with efforts to remove 
larger molecules during dialysis (such as the loss of albumin and 
immunoglobulins), benefits of improved middle molecule clearance have 
not been demonstrated in large, randomized-controlled trials. In 2002, 
a large multicenter randomized controlled trial (HEMO) compared 
patients receiving maintenance dialysis via high-flux versus low-flux 
dialyzer membranes. There was no difference in the primary endpoint 
(death from all causes) or in secondary endpoints (hospitalizations for 
cardiac cause or death, and hospitalizations for infection or death) 
between the two groups. In rhabdomyolysis, myoglobin clearance has been 
demonstrated with large pore dialyzers and HDF, but clinical benefit 
remains largely unproven.\94\ Similarly, HDF has historically garnered 
much attention in sepsis due to its ability to efficiently clear 
inflammatory cytokines like IL-6, but numerous studies have shown no 
mortality benefit in sepsis with possible downsides in the form of 
shortened filter life.\95\ No trials have examined the potential 
benefit of removing larger quantities of middle molecules than is 
typically achieved from high-flux membranes.
---------------------------------------------------------------------------

    \94\ Amyot, S.L, et al., ``Myoglobin clearance and removal 
during continuous venovenous hemofiltration,'' Intensive Care 
Medicine, 1999 (25), PP. 1169-1172.
    \95\ Friedrich J.O., et al., ``Hemofiltration compared to 
hemodialysis for acute kidney injury: systematic review and meta-
analysis,'' Critical Care, Aug 6, 2012 (16): R146.
---------------------------------------------------------------------------

    The clearance of protein-bound and sequestered molecules remains a 
technical challenge and may explain why HDF and other technologies 
aimed at improved middle-molecule clearance have not significantly 
changed clinical outcomes.\96\ Theoretically, intensive long-duration 
dialysis should improve the clearance of these difficult to remove 
substances.\97\ In practice, large randomized trials have not shown any 
difference in the level of substances like indoxyl sulfate and p-cresol 
sulfate.98 99 Improving clearance of these molecules could 
improve clinical outcomes in patients without residual renal function 
and would be a boon to the dismal outcomes faced by patients undergoing 
dialysis.
---------------------------------------------------------------------------

    \96\ Vanholder, R., et al., ``Protein-bound uremic solutes: The 
forgotten toxin,'' Kidney International. Feb 2001, 59 (78), S266-
S270.
    \97\ Sirich, T.L, et al., ``The Frequent Hemodialysis Network 
Trial Group. Limited reduction in uremic solute concentrations with 
increased dialysis frequency and time in the Frequent Hemodialysis 
Network Daily Trial.'' Kidney Int, May 2017, 91 (5): 1186-
1192.doi:10,1016/j.kint.2016.11.002. Epub 2017 Jan 12.
    \98\ Kalim, S., et al., ``Extended Duration Nocturnal 
Hemodialysis and Changes in Plasma Metabolite Profiles,'' Clin J Am 
Soc Nephrol, Mar 7, 2018, 13(3), pp.436-444.
    \99\ Sirich, T.L., et al., ``The Frequent Hemodialysis Network 
Trial Group. Limited reduction in uremic solute concentrations with 
increased dialysis frequency and time in the Frequent Hemodialysis 
Network Daily Trial.'' Kidney Int, May 2017, 91 (5): 1186-
1192.doi:10,1016/j.kint.2016.11.002.Epub 2017 Jan 12.
---------------------------------------------------------------------------

(b) Assessment of Substantial Similarity to Currently Available 
Equipment or Supplies
    With regard to the criterion as to whether Theranova uses the same 
or a similar mechanism of action to achieve a therapeutic outcome, the 
CMS TPNIES Work Group believes that this product slightly modifies 
existing HD technology. A MCO membrane was designed for use in HD (but 
not HFD or HDF) modes. These modifications include the removal of 
larger molecules and increased convection compared to existing HD. As 
to whether the new use of the technology involves treatment of the same 
or similar type of disease and the same or similar patient population, 
the CMS TPNIES Work Group notes that Theranova treats similar patients, 
specifically, patients with ESRD.
(c) Preliminary Assessment of SCI (see Sec. Sec.  413.236(b)(5) and 
412.87(b)(1))
    With regard to the SCI criteria, we note that Theranova is a 
treatment modality and does not offer the ability to diagnose a medical 
condition as discussed in Sec.  412.87(b)(1)(ii)(B). We note that 
Theranova does not offer a treatment option for a patient population 
unresponsive to, or ineligible for, currently available treatments. The 
patients who are eligible for this treatment would also be eligible for 
HD, HDF, or online HDF. The CMS TPNIES Work Group carefully analyzed 
the evidence submitted as to whether Theranova significantly improves 
the treatment and clinical outcomes of Medicare beneficiaries relative 
to renal dialysis services previously available as demonstrated by the 
totality of the circumstances. Below, we have summarized the clinical 
evidence for claims of SCI, along with the references submitted by the 
applicant.
    There is significant literature on the topic of MCO membranes and 
high retention onset dialyzers. To evaluate this specific technology, 
the CMS TPNIES Work Group performed a literature search for published 
articles using the Theranova dialyzer and reviewed all articles 
submitted by the applicant. They are categorized according to an 
estimated degree of peer review. Summaries are also provided beneath 
each citation with disclosures also noted. On the studies with more 
clinically significant measures, there is more annotation added.
(d) Clinical Evidence for Claims of SCI
    Below is a list of references for SCI based on evidence beginning 
with the highest form of evidence, peer-reviewed journals. We summarize 
the studies grouped by listings with the most rigorous review to those 
with the least rigorous review, specifically, those published in Peer-
Reviewed Journals, then Review Articles and Editorials, to Posters and 
Abstracts, including submitted manuscripts, and ending with Incomplete 
Manuscripts.
Published in Peer-Reviewed Journals
     Belmouaz M, et al.\100\ is a retrospective analysis of 10 
patients treated with online HDF and then switched to MCO dialysis over 
1 year. The authors evaluated three dialysis sessions per patient and 
noted that there were not significant differences between the two 
methods in clearance of urea, creatinine, [beta]2-microglobulin, and 
myoglobin. The authors received funding support by Baxter.
---------------------------------------------------------------------------

    \100\ Belmouaz M, Diolez J, Bauwens M, Duthe F, Ecotiere L, 
Desport E, Bridoux F. Comparison of hemodialysis with medium cut-off 
dialyzer and online HDF on the removal of small and middle-sized 
molecules. Clin Nephrol. 2018 Jan;89 (2018)(1):50-56.
---------------------------------------------------------------------------

     Belmouaz M, et al.\101\ is a cross-over prospective study 
performed in France. It included 40 patients randomly assigned to 
receive either 3 months of medium cut-off hemodialysis (MCO-

[[Page 42172]]

HD) followed by 3 months of high-flux HD (HF-HD), or vice versa. The 
primary endpoint was myoglobin reduction ratio (RR) after 3 months of 
MCO-HD. Secondary endpoints were the effect of MCO-HD on other middle-
weight toxins and protein-bound toxins, and on parameters of nutrition, 
inflammation, anemia, and oxidative stress. Compared with HF-HD, MCO-HD 
provides higher myoglobin and other middle molecules RR and is 
associated with moderate hypoalbuminemia. The authors noted that the 
potential benefits of this strategy on long-term clinical outcomes 
deserve further evaluation. This study was supported by Baxter.
---------------------------------------------------------------------------

    \101\ Belmouaz M, Bauwens M, Hauet T, Bossard V, Jamet P, Joly 
F, Chikhi E, Joffrion S, Gand E, Bridoux F. Comparison of the 
removal of uremic toxins with medium cut-off and high-flux 
dialysers: A randomized clinical trial. Nephrol Dial Transplant. 
2020:35:328-335.
---------------------------------------------------------------------------

     Boschetti-de-Fierro A, et al.\102\ is a report on in vitro 
testing of four prototypes for MCO membranes as compared to high-flux, 
high cut-off membranes, and a rat glomerular membrane model. Sieving 
characteristics were evaluated before and after blood contact. Authors 
note that increasing pore sizes often results in loss of albumin but 
controlling the pore size diameter and variance results in enhanced 
selection for middle sized proteins. A protein layer also forms along 
the synthetic membrane, further restricting the loss of albumin. All 
authors were employed by Gambro Dialysatoren, which is part of Baxter 
International Inc.
---------------------------------------------------------------------------

    \102\ Boschetti-de-Fierro A, Voigt M, Storr M, Krause B. MCO 
Membranes: Enhanced Selectivity in High-Flux Class. Sci. Rep. 5, 
18448; doi: 10.1038/srep18448 (2015).
---------------------------------------------------------------------------

     Cordeiro ISF, et al.\103\ is a prospective crossover trial 
of 16 patients undergoing HF-HD and switched to online 
hemodiafiltration (olHDF) and high retention onset (HRO) HD for 4 
weeks. Molarity concentrations were lowered to greater extent in olHDF 
and HRO-HD.
---------------------------------------------------------------------------

    \103\ Cordeiro ISF, Cordeiro L, Wagner CS, et al. High-Flux 
versus High-Retention-Onset Membranes: In vivo Small and Middle 
Molecules Kinetics in Convective Dialysis Modalities. Blood 
Purification. 2019 Jul 30:1-8.
---------------------------------------------------------------------------

     Cozzolino M, et al.\104\ is an Italian prospective, open-
label, cross-over study in 20 patients which compared the Theranova 400 
HDx membrane to conventional HD, showing a non-significant trend of 
lower IL-1B and IL-6 levels with HDx. Although infections were 
statistically more likely in the HD population, the definition of 
infection was vague, and most of them appeared to be with respiratory 
tract and fever of unknown origin. Because culture evidence was not 
required, the risk of bias in the categorization of infection is high 
(for example, upper respiratory tract infections inappropriately 
treated with antibiotics). The HDx had a non-significant trend towards 
fewer hospitalizations. Potential risks from HDx include an allergic 
reaction to polysulphone and lower serum albumin levels. The small 
sample size, single center disease, and short follow-up mean that the 
results, while promising, require substantial corroborating evidence in 
the form of a multi-center, blinded randomized controlled trial. The 
study was supported by an unrestricted grant from Baxter.
---------------------------------------------------------------------------

    \104\ Cozzolino M. Magagnoli L, Ciceri P, Conte F, Galassi A. 
Effects of a medium cut-off (Theranova) dialyser on haemodialysis 
patients: A prospective, cross-over study. Clinical Kidney Journal, 
2019, 1-8.
---------------------------------------------------------------------------

     Garc[iacute]a-Prieto A, et al.\105\ is a crossover study 
of 18 HD patients who received online HDF for one week, then 
conventional HD the second week, and the use of a MCO membrane for the 
third week. Authors collected RR and albumin losses and noted that MCO 
membranes were similar in efficacy as olHDF. Both online and MCO 
methods had greater reduction of middle molecules. The study was 
conducted in Spain and authors did not declare any conflicts of 
interest.
---------------------------------------------------------------------------

    \105\ Garc[iacute]a-Prieto A,Vega A, Linares T, Abad S, 
Mac[iacute]as N, Aragoncillo I, Torres E, Hern[aacute]ndez A, 
Barbieri D, Lu[ntilde]o J. Evaluation of the efficacy of a medium 
cut-off dialyser and comparison with other high-flux dialysers in 
conventional haemodialysis and online haemodiafiltration. Clin 
Kidney J. 2018 Oct;11(5):742-746.
---------------------------------------------------------------------------

     Gillerot G, et al.\106\ is a research paper submitted by 
the applicant in which the investigators tested the role of IL-6 gene 
expression on 156 peritoneal dialysis (PD) patients and its putative 
role in inflammation. They tested a homogeneous population of 152 from 
Belgium and the North of France. The investigators believe their 
findings substantiate the critical role played by IL-6 in the 
peritoneal membrane and support the hypothesis that underlying 
mechanisms (regulation of IL-6 gene expression) could regulate systemic 
and local inflammation in association with comorbidity and uremia. 
However, they note that confirmation of this hypothesis will require 
well-designed, adequately powered studies, in different populations and 
different settings. This study was focused on PD and the Theranova 
membrane is used in HD, so extrapolation of the IL-6 data to that 
modality is questionable. These studies were supported by Baxter 
Belgium.
---------------------------------------------------------------------------

    \106\ Gillerot G, Goffin E, Michel C, Evenepoel P, Van Biesen W, 
TIntillier M, Stenvinkel P, Heimburger O, Lindholm B, Nordfors L, 
Robert A, Devuyst O. Genetic and Clinical Factors Influence the 
Baseline Permeability of the Peritoneal Membrane. Kid Int. 2005; 76: 
2477-2487.
---------------------------------------------------------------------------

     Lorenzin A, et al.\107\ is a performed mathematical 
modeling, and through it, the authors calculated that the HRO membranes 
allowed for internal filtration and high convective volumes.
---------------------------------------------------------------------------

    \107\ Lorenzin A, Neri M, Clark WR, et al. Ronco C (ed): 
Expanded Hemodialysis--Innovative Clinical Approach in Dialysis. 
Contrib Nephrol. Basel, Karger, 2017, vol 191, pp 127-141.
---------------------------------------------------------------------------

     Lorenzin A, et al.\108\ is a paper in which the authors 
used semi-empirical methods to estimate convective volumes for 
Theranova 400 and Theranova 500 under standard 4-hour HD conditions. 
Using their ``most complex'' mathematical model that incorporated 
gradients and blood changes along the dialyzer length, authors 
estimated internal filtration rates of 300ml/min and 400 ml/min for 
both hemodialyzers.
---------------------------------------------------------------------------

    \108\ Lorenzin A, Neri M, Clark WR, Garzotto F, Brendolan A, 
Nalesso F, Marchionna N, Zanella M, Sartori M, Fiore GB, Ronco C. 
Modeling of Internal Filtration in Theranova Hemodialyzers. Contrib 
Nephrol. 2017;191:127-141.
---------------------------------------------------------------------------

     Lorenzin A, et al.\109\ is an in vitro test of Theranova 
400 and 500 at zero net ultrafiltration. Albumin macro-aggregates were 
labeled with Technetium-99m (99mTc) to assess cross filtration through 
the length of the filter. Using a gamma camera, local cross filtration 
and internal filtration were calculated. Authors noted that the MCO 
membrane allowed for clearance of medium-large molecular weight solutes 
(~11 KDa) and retention of more albumin without requiring special 
equipment. The authors had no disclosures.
---------------------------------------------------------------------------

    \109\ Lorenzin A, Neri M, Lupi A, Todesco M, Santimaria M, 
Alghisi A, Brendolan A, Ronco C. Quantification of Internal 
Filtration in Hollow Fiber Hemodialyzers with Medium Cut-Off 
Membrane. Blood Purif. 2018;46(3):196-204.
---------------------------------------------------------------------------

     Mac[iacute]as N, et al.\110\ is a prospective study of 14 
patients on maintenance olHDF. Patients underwent a midweek dialysis 
session with the Theranova-500 machine under their usual dialysis 
conditions. Researchers measured the presence of uremic toxins at 
various molecular weights pre-dialysis, and post-dialysis. Pressures at 
the inlet and outlet of dialyzer compartments were also measured to 
estimate direct filtration and back filtration volumes. Researchers 
used semi-empirical methods to determine that diffusive clearance was 
more prominent than convective transport (which requires higher 
volumes). No funding or financial contribution was supplied. Membranes, 
monitors, and laboratory

[[Page 42173]]

tests were those routinely used in the dialysis unit.
---------------------------------------------------------------------------

    \110\ Mac[iacute]as N, Vega A, Abad S, Aragoncillo I, 
Garc[iacute]a-Prieto AM, Santos A, Torres E, Lu[ntilde]o J. Middle 
molecule elimination in expanded haemodialysis: Only convective 
transport? Clin Kidney J. 2018 Dec 15;12(3):447-455.
---------------------------------------------------------------------------

     Reque J, et al.\111\ is a prospective study of eight 
patients who either underwent olHDF or underwent HDx with Theranova 500 
for 24 sessions. After a 1-week washout with HF-HD, all patients 
crossed over to the alternative method. Laboratory values were obtained 
before and after each session, specifically of urea, creatinine, 
phosphorous, beta2-microglobulin, myoglobin, and prolactin. The urea 
and beta2-microglobulin reduction ratios were the same but HDx 
demonstrated higher RR of myoglobin (60 percent compared to 35 percent 
in HDF). The authors had no disclosures.
---------------------------------------------------------------------------

    \111\ Reque J, P[eacute]rez Alba A, Panizo N, S[aacute]nchez-
Canel JJ, Pascual MJ, Pons Prades R. Is Expanded Hemodialysis an 
Option to Online Hemodiafiltration for Small- and Middle-Sized 
Molecules Clearance? Blood Purif. 2019;47(1-3):126-131.
---------------------------------------------------------------------------

Review Articles/Editorials
    This is the second grouping in the list of evidence for SCI from 
most compelling to least compelling. We summarize the studies the 
applicant provided as follows:
     Caramelo C, et al.\112\ is an article that reviews the 
clinical and pathophysiological characteristics of anemia in this 
context. Particular emphasis has been placed on cellular and molecular 
regulatory mechanisms, and their implications for treatment. The 
applicant referenced the review article's language on hepcidin, because 
it is considered the homeostatic regulator of iron in its intestinal 
absorption, its recycling by macrophages and its mobilization from 
liver stores. Its transcription is markedly induced in inflammatory 
processes, especially by cytokines like IL-6.
---------------------------------------------------------------------------

    \112\ Caramelo C, Just S, Gil P. Anemia in Heart Failure: 
Pathophysiology, Pathogenesis, Treatment and Incognitae. Rev Esp 
Cardiol. 2007; 60(8): 848-860.
---------------------------------------------------------------------------

     Florens N, et al.\113\ is a review article included by the 
applicant in their application. It summarizes feedback from the first 
routine use of HDx therapy under real-life conditions in European 
facilities. The authors reported no adverse event after 5,191 HDx 
treatments, and opined that patients suffering from itching, restless 
legs syndrome, persistent asthenia or malnourishment could benefit from 
HDx therapy. While they discuss here the promising applications in 
which HDx could be valuable (myeloma, rhabdomyolysis or cardiovascular 
diseases), the message is mitigated by reminding why and how prudence 
should be taken in the design of future HDx studies, particularly with 
poor de-aeration of the filter in automatic mode and manual 
intervention required to prime the membrane. Some patients requiring 
more anti-coagulation using the Theranova membrane, and patients being 
aware of the use of the Theranova device because of lack of logo 
removal. The authors note that although promising, the clinical 
evidence is incomplete. Both authors received a grant Investigator 
Initiated research for the evaluation of HDx in clinical practice and 
one performed occasional lectures for Baxter.
---------------------------------------------------------------------------

    \113\ Florens N, Juillard L. ``Expanded Haemodialysis: News from 
the Field,'' Nephrol Dial Transplant, 2018; 33: iii48-iii52.
---------------------------------------------------------------------------

     Wolley M, et al.\114\ is a clinical review article that 
recognizes that advances in dialysis technology do not always improve 
patient outcomes, and it reviews the clinical relevance regarding the 
removal of LMMs, particularly those involved in chronic inflammation, 
atherosclerosis, structural heart disease, and secondary 
immunodeficiency. The authors note that single-center safety and 
efficacy studies have identified that use of these membranes in 
maintenance dialysis populations is associated with limited loss of 
albumin and increased clearance of large middle molecules. When the 
review was published in 2018, the authors noted that larger, robustly 
conducted, multicenter studies were evaluating these findings. They 
concluded that after completion of these safety and efficacy studies, 
the perceived clinical benefits of providing clearance of LMMs must be 
assessed in rigorously conducted, randomized clinical studies. One of 
the authors received research funding from Baxter and participated on 
advisory boards and speaker bureaus for Baxter.
---------------------------------------------------------------------------

    \114\ Wolley M, Jardin M, Hutchinson, C. ``Exploring the 
Clinical Relevance of Providing Increased Removal of Large Middle 
Molecules,'' Cli, J Am Soc Nephrol 2018;13: 805-813.
---------------------------------------------------------------------------

     Zweigart C, et al.\115\ is an editorial review submitted 
by the applicant on MCOs, which was generally favorable with regard to 
high quality and good performance. All of the authors are employees of 
the Gambro Dialysatoren GmbH, Hechingen (Germany) or Gambro Lundia AG. 
Gambro AB (including all direct and indirect subsidiaries) is now part 
of Baxter International Inc.
---------------------------------------------------------------------------

    \115\ Zweigart C, Boschetti-de-Fierro A, Hulko M, Nilsson L-G, 
Beck W, Storr M, Krause B. Medium Cut-Off Membranes--Closer to the 
Natural Kidney Removal Function.Int j Artif Organs. 2017; 40(7); 
328-334.
---------------------------------------------------------------------------

Posters and Abstracts
    This is the third grouping in the list of evidence for SCI from 
most compelling to least compelling. We summarize the poster sessions 
and abstracts, including submitted manuscripts which the applicant 
provided as follows:
     Belmouaz M, et al.\116\ is a randomized open label 
crossover study in which 46 patients underwent MCO-HD and HF-H). MCO-HD 
had higher medium RRs of myoglobin and beta-2 microglobulin and 
increased albumin loss compared to HF-HD. The authors received funding 
support by Baxter.
---------------------------------------------------------------------------

    \116\ Belmouaz M, Bauwens M, Bouteau I, Thierry A, Ecotiere L, 
Bridoux F. Comparison of the Removal of Uremic Toxins with Medium 
Cut-Off and High-Flux Dialyzers: A Randomized Clinical Trial. TH-
PO348, 2018.
---------------------------------------------------------------------------

     Boschetti-de-Fierro A, et al.\117\ is a poster in which 
the investigators assessed the performance of the MCO devices in 
simulated HD and HDF treatments. The applicant's submission of the 
material presented in this poster was incomplete regarding date and 
location of the poster session. This study was funded by Baxter.
---------------------------------------------------------------------------

    \117\ Boschetti-de-Fierro A, Voigt M, Huiko M, Krause B. MCO 
Dialyzers: Enhanced Selectivity in High-Flux. Gambro Dialysatoren 
GmbH, Research and Development, Hechingen, Germany, Poster No. SAT-
481 (Baxter).
---------------------------------------------------------------------------

     Kharbanda K, et al.\118\ is a randomized study funded by 
Baxter Healthcare and the National Institute for Health Research which 
compared HDF with HDx and suggested an improved recovery time with HDx. 
The study showed lower levels of endothelial cell microvesicles in HDx. 
However, the study did not have comparable baseline recovery times (for 
example, 41 percent with <2 hours with HDx versus 35 percent with HDF) 
and the authors performed a per-protocol rather than an intention to 
treat analysis, exacerbating bias in the study.
---------------------------------------------------------------------------

    \118\ Kharbanda K, Herring A, Wilkinson F, Alexander Y, Mitra S. 
A Randomised Study Investigating the Effect of Medium Cut-Off 
Haemodialysis on Markers of Vascular Health Compared with On-Line 
Haemodiafiltration (MoDal Study). Manchester Metropolitan 
University. 2019
---------------------------------------------------------------------------

     Kirsch AH, et al.\119\ is a poster that summarizes a two 
pilot randomized controlled prospective open-label crossover studies, 
in which 39 HD patients underwent treatment with MCO membranes, a HFD, 
and HDF. Authors concluded that MCO-HD removed middle molecules (free 
light chain) more effectively than high-flux and high-volume HDF. 
However, the authors noted that there are several limitations of the 
study. First, compared to the control dialyzers used, the experimental 
membranes used were different, less tight membranes. Second, the study

[[Page 42174]]

design was confined to only one single treatment with each dialyzer for 
each patient and the study did not examine the long term effects of 
such membranes on serum levels of middle molecules and albumin. The 
authors conclude that future studies should assess whether the 
performance of MCO-HD improves clinical outcomes. The study was 
conducted in Germany and funded by Baxter, and the conflicts of 
interest statement in the paper lists three of the ten authors as 
employees of Baxter.
---------------------------------------------------------------------------

    \119\ Kirsch AH, Lyko R, Nilsson LG., et al. Performance of 
hemodialysis with novel medium cut-off dialyzers. Nephrol Dial 
Transplant 2017; 32: 165-172.
---------------------------------------------------------------------------

     Bunch, A, et al.\120\ is a multicenter prospective study 
in prevalent HD patients, older than 18 years old; enrolled from 
September 1 to November 30, 2017, and converted to HDx using Theranova 
400. The investigators found an initial small decrease in serum albumin 
level, which stabilized and was within the normal range per their 
Bogata, Columbia laboratory references. Although Table 1 and Table 2 
were cited in the abstract, both were missing. Dialysis performance 
adequacy (Kt/V) was achieved. No clinically significant differences in 
laboratory values at 6 months with November 30 of 2017, and converted 
to HDx using Theranova 400 (3 sessions per week, 4 hours per session, 
same heparin dose). The lead author has been listed as the medical 
director of Renal Therapy Services, owned by Baxter, in Bogota, 
Columbia.
---------------------------------------------------------------------------

    \120\ Bunch A., Nilsson L, Vesga J, Ardila F, Zuniga E, Alarcon 
J. ``Long-Term Effects of Expanded Hemodialysis (HDx) on Clinical 
and Laboratory Parameters in a Large Cohort of Dialysis Patients'' 
ASN 2018 Kidney Week Abstract FR-P0766.
---------------------------------------------------------------------------

     Cantaluppi V, et al.\121\ is a multicentric observational 
study of 6 months follow-up. American Society of Nephrology (ASN) Week, 
2018, Abstract, Thu-PO357. This multicenter (Italy) study evaluated 41 
HD patients comparing standard HD molecular levels versus HDx and found 
a significant decrease in urea, beta-2-microglobulin, and free light 
chains. The study did not evaluate clinical outcomes.
---------------------------------------------------------------------------

    \121\ Cantaluppi V, Donati G, Lacquaniti A, Cosa F, Gernone G, 
Marengo M, Teatii U Removal of large-middle molecules on expanded 
hemodialysis (HDx): A multicentric observational study of 6 months 
follow-up. ASN Week, 2018, Abstract, Thu-PO357.
---------------------------------------------------------------------------

     Cantaluppi V, et al.\122\ is an abstract submitted by the 
applicant reporting on a study where 41 HD patients (age 67,613,4) in standard high flux HD were shifted to HDx using 
Theranova 400 (1.7 m2, Baxter). Each patient was studied at baseline HD 
(T0), 3 months (T3) and 6 months (T6) after HDx, after which they were 
evaluated the following pre-dialysis parameters: Urea, Creatinine, 
Phosphate, Beta2-microglobulin, Myoglobin, Free Light Chains, 
Hemoglobin, Albumin and CRP. For in vitro studies, T0 and T6 plasma 
were used to evaluate neutrophil activation (ROS generation, apoptosis, 
adhesion) and endothelial dysfunction/senescence. The investigators 
concluded that HDx therapy provided high removal of different LMMs, 
leading to a significant reduction of molecules involved in uremia-
associated inflammation and organ dysfunction (in particular Free Light 
Chains kappa and lambda). Long-term studies with a larger sample size 
are needed to evaluate the clinical impact of HDx.
---------------------------------------------------------------------------

    \122\ Cantaluppi V, Marengo M, Allessandro Q, Berto M, Donati G, 
Antonio L, Cosa F, Gernone G, Teatini U, Migliori M, Panichi V. 
Removal of Large-Middle Molecules, Inhibition of Neutrophil 
Activation and Modulation of Inflammation-Related Endothelial 
Dysfunction During Expanded Hemodialysis (HDx), Nephrol Dial 
Transplantation, June 2019, 34, Issue Supplement_1. gfz096.FO048, 
https://doi.org/10.1093/ndt/gfz096.FO048.
---------------------------------------------------------------------------

     Cozzolino, M.\123\ is an abstract of a pilot study with 20 
prevalent HD patients studied for six months in two dialysis 
treatments: One MCO (Theranova) dialyzer and one high-flux dialyzer. 
The author claims the pilot study shows the Theranova dialyzer has a 
good tolerance profile and reduces the cumulative number of infections 
in HD patients. The study was funded by an unrestricted grant from 
Baxter.
---------------------------------------------------------------------------

    \123\ ``Effects of Medium Cut-Off (Theranova) Dialyzer on 
Hemodialysis Patients: A Prospective Cross-Over Study [Abstract].'' 
J Am Soc Nephrol, 29. 2018, pp. 616-617.
---------------------------------------------------------------------------

     Gallo M.\124\ is a single cohort study in Italy which 
compared HDx to baseline HD treatments in 15 patients and showed no 
difference in uremic toxins, though there was a change in ESA dose.
---------------------------------------------------------------------------

    \124\ Gallo M. The Real-Life study on expanded hemodialysis 
(HDx): 9 months experience of a single hemodialysis unit. Nephrol 
Dial Transplantation and Transplantation, June 2019, ERA EDTA 
Abstract. FP539.
---------------------------------------------------------------------------

     Gernone G, et al.\125\ is a single cohort study in Italy 
which investigated 14 patients using Theranova with baseline HD and 
showed no statistical change in outcomes, clearance, or quality of 
life.
---------------------------------------------------------------------------

    \125\ Gernone G, Montemurro M, Capurso D, Colucci G., Dell'Anna 
D, Deltomaso F, LaRosa R, La Volpe M, Partipilo F., Pepe V, Ripa E. 
Mid-term evaluation of the new medium cut-off filter (Theranova) on 
removal efficiency and quality of life. Nephrology and 
Transplantation, Abstract. SP489.
---------------------------------------------------------------------------

     Jung JH, et al.\126\ is a study that was questionably 
designed since they chose young, well-nourished patients at the start 
of the study, which made it difficult to analyze the comparison of the 
two groups at various points in time. This observational study of 42 
Korean patients comparing HD to HDx showed no comparative difference 
between the two groups in any markers.
---------------------------------------------------------------------------

    \126\ Jung JH, Song JH, Ahn S-H. A 6-month study on the efficacy 
of hemodialysis therapy using dialyzers with medium cut-off 
membranes in Asian patients with end-stage renal disease. Nephrol 
Dial Transplantation, June 2019, 84 Issues Supplement-1, 
gfz103.SP487, https://doi.org/10.1093/ndt/gfz103.SP487.
---------------------------------------------------------------------------

     Krishnasamy R, and Hutchinson C.\127\ is an abstract 
submitted by the applicant from this single-arm, multi-center study 
with 92 Australian/New Zealand patients. The study examined the safety 
and efficacy and patient-centered outcomes of MCO dialyzer use in 
chronic HD patients over 6 months. The investigators concluded that 
there was a small but acceptable reduction in serum albumin in regular 
HD using the MCO dialyzer. However, the figures were not included in 
the abstract sent by the applicant for review by the CMS TPNIES Work 
Group. The investigator noted that future randomized controlled trials 
should assess the impact of the MCO dialyzer on clinical and long-term 
patient-centered outcomes.
---------------------------------------------------------------------------

    \127\ Krishnasamy R, and Hutchinson C. Trial Evaluating Mid Cut-
Off Value Membrane Clearance of Albumin and Light Chains in 
Hemodialysis Patients (REMOVAL-HD): A Safety and Efficacy Study. 
Oct. 2018 ASN Scientific Congress Abstract TH-PO363.
---------------------------------------------------------------------------

     Krause B, et al.\128\ is a description of membrane 
manufacturing utilizing hollow fiber technology.
---------------------------------------------------------------------------

    \128\ Krause B, Boschetti-de-Fierro A, Dutczak S, Zweigart C. 
Highly Selective Membranes for Blood Purification. Jahrestreffen der 
Fachgruppen ``Fluidverfahrenstechnik'' und ``Membrantechnik'' 26 Mar 
2015.
---------------------------------------------------------------------------

     Weiner DE, et al.\129\ included two items for this U.S. 
based study at a large academic medical center. The first was the ASN 
2019 Scientific Congress abstract and the second was a copy of the 
poster session at the ASN annual meeting in 2019. This open label 
randomized controlled trial in 172 patients who underwent 24 weeks of 
Theranova 400 MCO dialyzer compared to a high flux dialyzer showed a 
potential decrease in hospitalizations with HDx, but the authors did 
not produce statistical tests of significance. While this was a 
randomized control trial (RCT), covariates were not well-balanced, 
including substantially more patients with diabetes in the conventional 
HD arm. The study showed lower lambda free light chains in HDx compared 
to high flux HD. Albumin levels were maintained in both. The presenters 
concluded that larger studies of longer duration are needed to assess 
if better larger molecule clearance is associated with

[[Page 42175]]

improvements in clinical outcomes, including vascular disease, quality 
of life, and mortality. The authors received commercial support from 
Baxter.
---------------------------------------------------------------------------

    \129\ Weiner DE, Falzon L, Beck W, Xiao M, Tran H, Bernardo AA. 
Efficacy and Safety of Expanded Hemodialysis Enabled by a Medium 
Cut-Off Membrane: A Randomized Control Trial. FR-PO488, ASN 2019.
---------------------------------------------------------------------------

     Alarcon J, et al.\130\ describes a study over 12 months in 
which 992 patients from 12 renal clinics were followed after switching 
from high-flux HD to HDx. The authors assessed many patient quality of 
life outcomes using the short form kidney disease quality of life 
(KDQoL-SF36), dialysis symptom index (DSI) and prevalence of restless 
leg syndrome (RLS) and found modest reductions in DSI severity scores, 
increases in KDQoL-SF36 scores in some domains (but unchanged in the 
mental and physical domains), and reduced prevalence of restless leg 
syndrome. Unfortunately, the authors did not provide a control group. 
Also, the authors performed a large number of statistical tests without 
adjustment, further increasing the risk of Type 1 error. The study was 
supported by Renal Therapy Services-Columbia, owned by Baxter. Five of 
the eight authors are employees of Renal Therapy Services. One author 
is a full-time employee of Baxter and has a patent pending for RLS 
medication.
---------------------------------------------------------------------------

    \130\ Alarcon J, Bunch A, Ardila F, Zuniga E, Vesga J, Rivera A, 
Sanchez R, Sanabria M. Real world evidence on the impact of expanded 
hemodialysis (HDx) therapy on Patient Reported Outcomes (PROs): 
CPREXH Registry (in submission).
---------------------------------------------------------------------------

     Ariza J, et al.\131\ is a manuscript that was provided by 
the applicant. Cost estimates were extrapolated using an observational 
design, which suggested lower hospital days (but not hospitalizations) 
and lower medication use in the HDx. However, the lack of randomization 
makes this study difficult to evaluate. Furthermore, the authors did 
not show any difference in costs between HDx and HD. The study was 
funded by Baxter.
---------------------------------------------------------------------------

    \131\ Ariza J., Walton SM, Sanabria M, Vega J, Suarez A, Rivera 
A. An Initial Evaluation of the Potential Cost Impact and Cost 
Effectiveness of Expanded Hemodialysis (in submission).
---------------------------------------------------------------------------

     Penny JD, et al.\132\ is a manuscript in submission that 
was included by the applicant. It is a single case-study of a HD 
patient with pruritis and extreme levels of tissue sodium. Both 
responded to HDx therapy. The authors acknowledge that further robust 
clinical exploration is required.
---------------------------------------------------------------------------

    \132\ Penny JD, Salerno F, Akbari A, McIntyre, C. ``Pruritis-Is 
There a Salty Truth?'' (in submission). The applicant included a 
manuscript in submission.
---------------------------------------------------------------------------

     Sanabria RM, et al.\133\ is manuscript provided by the 
applicant and has not been published. The observational study followed 
81 patients receiving high-flux HD for 1 year who subsequently switched 
to HDx for 1 year. While there was a significant reduction in number of 
hospital days (but no change in hospitalization rate) and medication 
use, findings were limited by the lack of a control group. The 
shortening of hospital stays could be attributed to a systematic change 
in admission practice patterns, rather than HDx. Furthermore, Kt/V was 
higher in the HDx group, but the authors did not standardize dialysis 
dosing, making it difficult to attribute effects to HDx or to other 
causes of increased dialysis adequacy. Hemoglobin levels, albumin, 
hsCRP were not statistically different in the two arms. All 
investigators are employees of RTS Ltd, Columbia, an affiliate of 
Baxter Healthcare. The study was supported by Renal Therapy Services-
Columbia, an independent entity owned by Baxter International, Inc.
---------------------------------------------------------------------------

    \133\ Sanabria RM,Vesga JI, Ariza J, Sanchez R, Suarez A, 
Bernardo A, Rivera A. Expanded Hemodialysis and its effects on 
hospitalization and medication usage: An exploratory study. (in 
submission).
---------------------------------------------------------------------------

Incomplete Manuscripts
    This is the fourth and final grouping in the list of evidence for 
SCI from most compelling to least compelling. We summarize the 
incomplete manuscripts which the applicant provided as follows:
     Bolton S, et al.\134\ is a manuscript provided by the 
applicant and is unfinished. It describes a crossover study of patients 
previously treated with high-flux HD and switched to Theranova. Patient 
reported outcome measures (PROMs) suggested decreased self-reported 
dialysis recovery time and symptom burden, especially at 6 months. 
However, regression to the mean appeared common, and there was no 
control group.
---------------------------------------------------------------------------

    \134\ Bolton S, Gair S, Metthews M, Stewart L, McCullagh N, A 1-
year routine assessment of patient-reported symptom burden after 
implementing expanded hemodialysis, 2019. (in process).
---------------------------------------------------------------------------

     Lim J, et al.\135\ is a manuscript provided by the 
applicant, reporting a randomized trial comparing MCO to high-flux HD, 
with 50 patients undergoing 12 weeks of treatment in Korea. The study 
was small, and the authors performed a large number of statistical 
tests comparing quality-of-life outcomes, with only a couple 
statistically significant. Without adjusting p-values for the number of 
statistical test, the risk for Type 1 error is large and not 
unexpected. A second trial suggested lower medication doses, but again 
results were statistically significant only for a few of the parameters 
of interest. The study is small and requires replication at additional 
centers to confirm results.
---------------------------------------------------------------------------

    \135\ Lim J, Park Y, Yook J, Choi S, Jung H, Choi J, Park S, Kim 
C, Kim Y, Cho J. Randomized controlled trial of medium cut-off 
versus high-flux dialyzers on quality-of-life outcomes in 
maintenance hemodialysis patients. (in submission).
---------------------------------------------------------------------------

     Lim J-H, et al.\136\ is a manuscript provided by the 
applicant, reporting a randomized trial comparing MCO to high-flux HD, 
with 50 patients undergoing 12 weeks of treatment in Korea. Its purpose 
was to evaluate the effects of ESA resistance of HD using a MCO 
dialyzer. The number of registered patients was small and the study 
duration not long enough to assess definite results. Also, the study 
was not blinded to clinicians, which may have affected the ESA and iron 
supplementation prescriptions. Additional studies need to be performed 
to assess clinical outcomes.
---------------------------------------------------------------------------

    \136\ Lim J-H, Yook J-M, Choi S-Y, Jung H-Y, Choi, J-Y, Park S-
H, Kim C-D, Kim Y-L, Cho H-H. Novel Medium Cut-Off Dialyzer Improves 
Erythropoiesis Stimulating Agent Resistance in Maintenance 
Hemodialysis Patients: A Randomized Control Trial. (in submission).
---------------------------------------------------------------------------

(e) Comments by the Members of the CMS TPNIES Work Group
    The CMS TPNIES Work Group consists of CMS Medical Officers, senior 
staff, a senior technical adviser, a biomedical engineer and contracted 
physicians, including nephrologists. All materials sent by the 
applicant were reviewed by the members of the CMS TPNIES Work Group. 
The members of the CMS TPNIES Work Group voiced the specific concerns 
regarding the evidence submitted for proof of eligibility via the SCI 
criteria. While Theranova represents a unique technology, the CMS 
TPNIES Work Group noted that the current evidence supporting SCI is 
lacking but that other evidence may be forthcoming during the comment 
period. It is too early to tell if the patient-recorded outcomes, such 
as fewer cardiovascular events, are significant because of the small 
numbers in the studies. Specifically, a study for infection was cited 
with an N=20; another had an N=10. Also, the definition of the 
infection was vague. Although hospitalization rates are discussed in 
the articles, the cause of the hospitalization was unknown. Patient lab 
results should be correlated with patient-reported results. In the 
submitted articles, the studies are all open-label and observational, 
with tenuous findings; there should be larger studies focused on the 
U.S. dialysis population's patient health outcomes; the patients need 
to be blinded in these studies.

[[Page 42176]]

    The background information provided by the applicant and researched 
by the group is conflicting. This may be due to the variation in the 
location of the studies, including Colombia, France, Belgium, England, 
Ireland, Australia, New Zealand, and Korea. One of the CMS TPNIES Work 
Group members suggested a meta-analysis be done, along with the 
heterogeneity of dialysis care in those countries as compared to the 
care received by the Medicare population in the U.S.
    At this time, while HDx appears to be a promising technology, the 
CMS TPNIES Work Group has concerns that the current state of evidence 
insufficiently demonstrates SCI in Medicare patients undergoing 
dialysis, but that additional evidence may be forthcoming in the 
comment period does not believe that the current state of evidence 
sufficiently demonstrates SCI in Medicare patients undergoing dialysis. 
In general, the dialyzer appears to have improved middle molecule 
clearance. While observational studies show an association between high 
levels of middle molecules and poor outcomes, these correlations do not 
prove causation. For instance, a growing body of evidence suggests that 
protein-bound solutes such as indoxyl sulfate and p-cresol sulfate 
could be responsible for the uremic syndrome. Conventional HD, HDF, and 
HDx do not effectively clear protein-bound toxins.
    A summary of the current body of evidence is as follows:
     Theranova more effectively removes middle molecules 
compared to conventional dialysis with high-flux membranes. These 
include molecules that have varying degrees of plausible toxicity (for 
example, beta 2 microglobulin to cytokines to endothelial proteins). 
Because nephrologists have not identified the putative uremic toxin, it 
is not certain that clearance of these toxins will lead to improved 
clinical outcomes.
     Although small before and after studies suggest potential 
clinical benefits from MCO dialyzer membranes compared with 
conventional HD via high-flux membranes, such as reduced infection, 
improved itching and restless legs, and shorter recovery time from 
dialysis, these studies are mostly observational, small in nature, with 
a high potential for bias. A large, multi-center trial would be 
necessary to prove substantial benefit from HDx over conventional HD.
     Several small studies suggest that MCO dialyzer membranes 
are comparable to HDF in removal of middle molecules, but online HDF is 
not generally available in the U.S. Furthermore, online HDF has not 
consistently shown to improve health outcomes relative to conventional 
HD with high-flux membranes.
     There may be increased removal of albumin with MCO 
membranes compared to conventional high-flux dialysis, which could have 
negative health consequences.
     A large randomized controlled clinical trial examining the 
effects of removing larger molecules did not demonstrate clinical 
benefits from removing larger molecules, although it did not examine 
newer technologies which are more effective. This negative study 
provides reason to be somewhat skeptical about the benefits of HDx over 
HD.
     Following the FDA-requested 6-month clinical study to 
validate efficacy of large toxin removal and safety, the applicant 
stated that it anticipates FDA marketing approval in May 2020. However, 
we note that, per the application, safety is defined in part by albumin 
loss. At this time we do not believe the clinical trials included 
safety and efficacy studies for the large middle molecules the 
applicant asserts to be the cause of inflammation. Therefore, the 
perceived clinical benefits of providing clearance of those large 
middle molecules were not assessed in rigorously conducted, randomized 
clinical studies.
    In summary, while HDx is a promising new technology, there is 
insufficient evidence at this time to demonstrate a clear clinical 
benefit for Medicare dialysis patients. However, additional evidence 
may be forthcoming in the comment period. Therefore, we are inviting 
public comment as to whether Theranova meets the TPNIES SCI criteria.
b. Tablo[supreg] Cartridge for the Tablo Hemodialysis System
(1) Outset Medical Application
    For CY 2021, Outset Medical submitted an application for the TPNIES 
for the Tablo[supreg] Cartridge for use with the Tablo[supreg] 
Hemodialysis System. The applicant stated that the Tablo[supreg] 
Cartridge is intended to substantially improve the treatment of 
Medicare beneficiaries with ESRD by removing barriers to home dialysis.
    The applicant noted that the Tablo[supreg] Cartridge is necessary 
to operate the Tablo[supreg] Hemodialysis System for use in home. The 
cartridge is comprised of a pre-strung blood tubing set and series of 
sensor-receptors mounted to a user-friendly organizer, and together 
these are referred to as the Cartridge. The blood tubing set comprises 
a blood pump tubing segment that interfaces with a peristaltic (blood) 
pump mounted on the inner front panel of the Tablo[supreg] console and 
arterial and venous lines that connect to the corresponding lines on 
the patient. Additional components to the cartridge include consumable 
supplies: Bicarbonate and acid concentrate jugs and straws, and an 
adapter for disinfectant use.
    The applicant stated that the blood tubing set is primarily 
comprised of one arterial line and one venous line and is enhanced with 
a recirculating adaptor, a bifurcated saline line, a pressure 
transducer protector, a drip chamber with clot filter, and an arterial 
pressure pod.
    According to the applicant, in addition to the blood lines, there 
is an integrated saline line that enables automatic priming as well as 
monitored delivery of saline boluses during treatment. There is also an 
infusion line and two infusion ports (arterial and venous) for manual 
delivery of medicine, anticlotting agents, and blood sampling.
    In describing what the Tablo[supreg] Cartridge does, the applicant 
states that it was designed with features to seamlessly integrate with 
sensors on the front panel of the console (for example, air sensing, 
arterial and venous pressure sensing) and to reduce touch points during 
priming and blood return (for example, recirculating adapter and 
bifurcated saline line) to minimize contamination. The blood pump draws 
blood from the patient into the blood tubing set and passes the blood 
through a dialyzer before returning the treated blood to the patient.
    The applicant specifically stated that the Tablo[supreg] 
Hemodialysis System includes the Tablo[supreg] Cartridge. In its 
entirety, it has been specifically designed for patient-driven self-
care using an iterative human factors process, with key design 
objectives being to facilitate learning and to minimize device training 
time.\137\ Human factors studies performed in a laboratory setting have 
demonstrated that patients can accurately learn and manage the 
Tablo[supreg] Hemodialysis System after a brief training 
period.138 139 A recent prospective,

[[Page 42177]]

multicenter, open-label, crossover trial comparing in-center and in-
home HD using Tablo[supreg] Hemodialysis System further supports the 
clinical efficacy, safety, and ease of use of the system.\140\
---------------------------------------------------------------------------

    \137\ Alvarez, Luis, et al. ``Clinical Experience with a New 
Hemodialysis System Designed for In-Center Self-Care Hemodialysis.'' 
Self-Care, vol.8, no. 3, 2017, pp. 12-18. Self-Care vol. 8, no. 3, 
2017, pp.12-18
    \138\ Wilcox, Stephen B., et al. ``Results of Human Factors 
Testing in a Novel Hemodialysis System Designed for Ease of Patient 
Use.'' Hemodialysis International, vol. 20, no. 4,16 May 2016, pp. 
643-649.doi:10.1111/hdi.12430
    \139\ Alvarez, Luis, et al. ``Tablet-Based Training for In-
Center Self Dialysis -A Pilot Study.'' Journal of the American 
Society of Nephrology, vol. 27, no. Abstract Edition, Nov. 2016, p. 
895A.
    \140\ Plumb, Troy et al. ``Safety and efficacy of the Tablo 
hemodialysis system for in-center and home hemodialysis.'' 
Hemodialysis International, Online, 2019, DOI:10.1111/hdi.12795.
---------------------------------------------------------------------------

    The applicant stated that the Tablo[supreg] Hemodialysis System is 
the first and only all-in-one technology and includes a number of 
features that make it new and different from current standard of home 
dialysis care. These unique features include (1) A single-use 
Tablo[supreg] Cartridge with user-friendly pre-strung blood, saline, 
and infusion tubing and an integrated blood pressure monitor that 
interfaces with the console to enable automated features such as air 
removal, priming, and blood return which minimize use user errors, save 
time and streamline the user experience; \141\ (2) on demand water and 
dialysate production using a standard tap water source, eliminating the 
need for time-consuming advance water preparation, bagged dialysate or 
dialysate batching; \142\ (3) a consumer-centric touchscreen interface 
that guides users with step-by-step instructions including non-
technical language, animation, and color-coded parts, to enable easier 
training, faster set-up and simpler management including clear alarm 
explanations and resolution instructions; \143\ and (4) electronic data 
capture and automatic wireless transmission to eliminate the need for 
manual record keeping by the patient, care partner, or nurse.\144\
---------------------------------------------------------------------------

    \141\ Outset Medical, ``Safety Reference Guide.'' DOC-0004336 
Rev 04, 2019.
    \142\ Outset Medical, ``Tablo Preconfigured System White 
Paper.'' DOC-0004252 Rev 01, 2019.
    \143\ Alvarez, Luis, et al. ``Tablet-Based Training for In-
Center Self Dialysis -A Pilot Study.'' Journal of the American 
Society of Nephrology, vol. 27, no. Abstract Edition, Nov. 2016, p. 
895A.
    \144\ Outset Medical, ``Tablo Information Security Design White 
Paper.'' DOC-0003639 Rev 03, 2019.
---------------------------------------------------------------------------

    The applicant asserted, both in the written application and at an 
in-person meeting with CMS, that the observational studies with the 
Tablo[supreg] Hemodialysis System were able to achieve CMS adequacy 
targeted on three times per week dialysis at an average treatment time 
of less than 4 hours. Tablo[supreg] has demonstrated the ability to 
treat to adequacy targets within the Medicare standard reimbursement of 
three treatments per week.
    The applicant has not submitted an application for pass-through 
payments under the Medicare OPPS or the NTAP program under the Medicare 
IPPS for the Tablo Hemodialysis System, including the Tablo[supreg] 
Cartridge.
    This application for TPNIES is only for the Tablo[supreg] Cartridge 
and its components for use in the home, which the applicant stated that 
it intended to begin marketing in March 2020 following FDA clearance of 
the Tablo[supreg] Hemodialysis System for home use. On March 31, 2020, 
Outset Medical received FDA clearance to market the device for use in 
the home, and CMS received a copy of this letter.
    The applicant submitted a Premarket Notification 510(k) for 
marketing clearance of Tablo[supreg]. Previous 510(k) authorizations 
for the Tablo[supreg] Hemodialysis System and Tablo[supreg] Cartridge 
were for hospital and outpatient clinic use only. The applicant could 
not use or market the Tablo[supreg] Cartridge in the home setting until 
the Tablo[supreg] Hemodialysis System was granted marketing 
authorization by the FDA (note: Table Hemodialysis System and cartridge 
was granted FDA market authorization in November 2016). While the 
cartridge was previously cleared through a separate 510k and was not 
necessary to include in the submission for marketing clearance for home 
use, the Tablo[supreg] Hemodialysis System cannot be operated without 
the Tablo[supreg] Cartridge. According to the applicant, the cartridge 
was included in the use instructions for the home approval.
    The applicant noted that the Tablo[supreg] Cartridge is not 
currently available for marketing in the home setting. As explained 
above, the applicant intended to begin marketing in the home setting in 
March 2020, after the FDA clears the Tablo[supreg] Hemodialysis System 
for marketing for home use. The applicant expected the first shipments 
of the Tablo[supreg] Cartridge for use in the home to occur March 2020. 
However, it is our understanding that to-date, the first patient to 
start training is scheduled to begin June 1, 2020.
    The applicant does have an IDE to study the Tablo[supreg] 
Hemodialysis System's safety and efficacy for use in the home, which 
has been completed as of the filing of the TPNIES application. The 
applicant stated that the IDE would be closed once marketing 
authorization for the use of the Tablo[supreg] Hemodialysis System in 
the home is approved. The IDE study reference number is G140098. The 
Tablo[supreg] Cartridge is assigned a Class II device category.
    The applicant stated that it would submit a HCPCS application for 
the Tablo[supreg] Cartridge in advance of the September 1, 2020 
deadline.
    The applicant identified and described how the new and innovative 
renal dialysis equipment or supply meets the criteria for SCI over 
existing renal dialysis services. The applicant states the 
Tablo[supreg] Cartridge is necessary to operate the Tablo[supreg] 
Hemodialysis System and therefore enables the system to deliver the 
treatments that meet CMS's SCI criteria.
    The applicant states that the Tablo[supreg] Hemodialysis System 
enables a treatment option for a patient population unresponsive to, or 
ineligible or, currently available treatments. As supporting background 
material, the applicant notes that home HD is a highly underutilized 
treatment for ESRD patients. Currently 90 percent of patients receive 
HD in a clinic. Fewer than 2 percent have HD treatment at home. 
Contributing to this low penetration rate is also a high dropout rate 
with the incumbent home devices of 25 percent and 35 percent at 12 and 
24 months, respectively.\145\ The barriers to home dialysis adoption 
and retention have been well studied and include: (1) Treatment burden 
for patients and care partner fatigue; (2) technical challenges 
operating HD machine; (3) space, home modifications, and supplies 
management; (4) patients not wanting medical equipment in the home; and 
(5) safety concerns.146 147 The applicant asserts that 
Tablo[supreg] is the first new home HD system in over 15 years, 
designed to address many of the above-mentioned barriers that currently 
result in patients resigning themselves to in-center care and/or 
stopping home modalities due to the associated burden of self-managed 
therapy. Among other things, the objective of this order is for 80 
percent of ESRD patients starting kidney replacement therapy (KRT) with 
a transplant or home dialysis by 2025.\148\ The applicant states that 
this goal will require a multi-faceted solution, inclusive of less 
burdensome technology, to address the key barriers to home dialysis.
---------------------------------------------------------------------------

    \145\ Sehasi, Rebecca et al. Factors Associated With 
Discontinuation of Home Hemodialysis, American Journal of Kidney 
Disease, Volume 67, Issue 4, 2016, Pages 629-637.
    \146\ Seshasai, R.K., et al. The home hemodialysis patient 
experience: A qualitative assessment of modality use and 
discontinuation. Hemodialysis International, 23: 139-150, 2019. 
doi:10.1111/hdi.12713.
    \147\ Chan, Christopher T. et al. Exploring Barriers and 
Potential Solutions in Home Dialysis: An NKF-KDOQI Conference 
Outcomes Report, Mar 2019, American Journal of Kidney Diseases, 
Volume 73, Issue 3, 363-371.
    \148\ U.S. Department of Health and Human Services, Office of 
the Assistant Secretary for Planning and Evaluation, Advancing 
American Kidney Health, July 10, 2019.
---------------------------------------------------------------------------

    The applicant believes that the Tablo[supreg] Hemodialysis System 
has the potential to significantly increase home dialysis.

[[Page 42178]]

The applicant conducted an IDE study for the primary purpose of 
evaluating the safety and efficacy of Tablo[supreg] Hemodialysis System 
use in the home setting. The applicant stated that the results from the 
IDE study demonstrate the following: (1) Patients will opt for home 
dialysis if the Tablo[supreg] Hemodialysis System is available; (2) 
patients have confidence in the safety and efficacy of the 
Tablo[supreg] Hemodialysis System; (3) the unique features of the 
Tablo[supreg] Cartridge as part of the Tablo[supreg] Hemodialysis 
System simplify set-up and use; and (4) the wireless transmission of 
data feature is reassuring to patients because it relieves patients of 
the burden of recording and fear that the patient may forget to 
document some aspect of treatment. The applicant claims that the IDE 
study results show that these key features will facilitate growth and 
ongoing use of the Tablo[supreg] Hemodialysis System in the home 
setting.
    During the course of the study, with an average treatment time of 
3.4 hours, twenty-eight out of thirty patients completed all phases of 
the trial and no patient dropouts occurred during the in-home phase. 
There is only one other mobile HD machine on the market. Its IDE, based 
on six times per week therapy at an average treatment duration of 2.8 
hours, showed a higher drop-out rate (19 percent vs Tablo's[supreg] 7 
percent) and lower adherence to treatment at home (89 percent vs 
Tablo's[supreg] 99 percent).149 150
---------------------------------------------------------------------------

    \149\ Kraus, M., et al., A comparison of center-based vs. home-
based daily hemodialysis for patients with end-stage renal disease. 
Hemodialysis International, 11: 468-477 2007 doi:10.1111/j.1542-
4758.2007.00229.x.
    \150\ Plumb, T.J., Alvarez, et al. Safety and efficacy of the 
Tablo hemodialysis system for in-center and home hemodialysis. 
Hemodialysis Internationa 2019l. doi:10.1111/hdi.12795.
---------------------------------------------------------------------------

    The applicant asserts that the Tablo[supreg] Hemodialysis System 
significantly reduces training time for both patients and their 
caregivers, improving training completion and reducing patient 
technique failure and care partner burden. The applicant state that the 
cartridge element of the Tablo[supreg] Hemodialysis System removes many 
of the manual steps and minimizes both set up time, and the need to 
make difficult connections, which requires training to avoid 
contamination. In human factors testing submitted to the FDA, the use 
of the cartridge resulted in 90 percent of the users being able to set 
up Tablo[supreg] in under 10 minutes.\151\ The applicant stated that 
the Tablo[supreg] Hemodialysis System home IDE data demonstrates that 
on average it takes 3.5 training sessions to learn the Tablo[supreg] 
Hemodialysis System compared to 14.5 sessions on the device that is the 
current standard of care for home HD.\152\ The applicant asserts that 
reduced training time increases likelihood of successful completion, 
reduces patient technique failure, and decreases caregiver burden. The 
applicant notes the following: (1) The graphical user interface guides 
users through the treatment and eliminates the need for memorization 
and mental math; (2) sensors and automation eliminate multiple manual 
steps in treatment set-up; and (3) contextual alarms instantly alert 
patients to any issues with their treatment and provide video and text 
direction on how to resolve them. This is in comparison to numerical 
alarm codes with the incumbent device that requires reference to the 
user manual or memorization with no video guidance available.
---------------------------------------------------------------------------

    \151\ Alvarez, Luis, et al. ``Clinical Experience with a New 
Hemodialysis System Designed for In-Center Self-Care Hemodialysis.'' 
Self-Care, vol.8, no. 3, 2017, pp. 12-18. Self-Care vol. 8, no. 3, 
2017, pp.12-18.
    \152\ Chahal, Yaadveer, Decreased Time to Independence with the 
Tablo Hemodialysis System: A Subset Analysis of the Tablo Home 
Clinical Trial, Abstract accepted for the National Kidney Foundation 
Spring Clinical Meeting 2020.
---------------------------------------------------------------------------

    The applicant states that the Tablo[supreg] Hemodialysis System 
significantly reduces set up and treatment time reducing treatment 
burden, improving retention at home, and reducing the need for and 
involvement of a care partner. The applicant noted that data from 
Outset Medical's Tablo[supreg] Hemodialysis System home IDE trial 
showed that a patient could set up the Tablo[supreg] Hemodialysis 
System in 9.2 minutes.\153\ With the average number of treatments of 
3.6 per week for an average duration of 3.4 hours,\154\ a Tablo[supreg] 
Hemodialysis System user treating 4 times per week can expect to spend 
approximately 14 hours a week preparing for and conducting treatments, 
versus 40 hours a week on the incumbent device for patients who batch 
solutions.155 156 The applicant states that this significant 
reduction in setup and treatment time is a result of software and 
workflow improvements incorporated in the Tablo[supreg] Hemodialysis 
System and its cartridge, many of which were driven by patient 
feedback. Reducing overall treatment burden improves modality retention 
at home on behalf of the patient and limits the care partner burden by 
reducing the need for their active involvement in treatment.
---------------------------------------------------------------------------

    \153\ Outset Medical subset analysis of Home IDE Trial data on 
set up time for Tablo Cartridge and concentrates.
    \154\ Plumb, T.J., Alvarez, et al. Safety and efficacy of the 
Tablo hemodialysis system for in-center and home hemodialysis. 
Hemodialysis International, 2019l. doi:10.1111/hdi.12795.
    \155\ NxStage Medical, Transitional Dialysis Care Operational 
Guidance, June 2019, https://www.nxstage.com/wpcontent/uploads/2019/06/APM2548-Rev-B-TDC-Operational-Guidance.pdf.
    \156\ Kraus, M., et al., A comparison of center-based vs. home-
based daily hemodialysis for patients with end-stage renal disease. 
Hemodialysis International, 11: 468-477 2007 doi:10.1111/j.1542-
4758.2007.00229.x.
---------------------------------------------------------------------------

    The applicant states that the cartridge portion of the 
Tablo[supreg] Hemodialysis System is pre-strung and requires only two 
connections to operate as compared to other systems that require 
stringing, hanging, snapping, and tapping multiple lines. In the home 
IDE time set up of dialysate concentrates, the Tablo[supreg] Cartridge 
took less than 12 minutes on average. With an average time of 8 
minutes, an uninterrupted patient can initiate therapy in as little as 
20 minutes.\157\ This is a significant improvement in the standard of 
care, which can take approximately 45 minutes.\158\ The applicant 
asserts that the Tablo[supreg] Hemodialysis System's automatic and 
integrated sensors and automated degassing and priming also make the 
machine easier to use and quicker to set up and get to treatment.
---------------------------------------------------------------------------

    \157\ Outset Medical subset analysis of Home IDE Trial data on 
set up time for Tablo Cartridge and concentrates.
    \158\ Informal interviews with NxStage patients.
---------------------------------------------------------------------------

    The applicant states that the Tablo[supreg] Hemodialysis System is 
the only system with a fully integrated water treatment system that 
allows for real-time water purification and dialysate produced on 
demand with no need to batch solutions or hang bags of dialysate. In 
addition, the applicant noted that it requires only a standard, 
grounded electrical outlet and Environmental Protection Agency quality 
tap water to operate, obviating the need to store bags of dialysate in 
the home, significantly reducing the number of supplies patients need 
to receive each month.
    The applicant notes that the Tablo[supreg] Hemodialysis System 
reduces patient/care partner burden and technique failure. 
Specifically, the applicant stated that automation of processes such as 
prime and rinse back reduces the overall number of treatment related 
steps. In addition, the applicant says that the Tablo[supreg] 
Hemodialysis System's easy to use touchscreen interface walks users 
through each step of setup, treatment, and take down; the treatment 
information displays data that patients most wanted to see. The 
applicant asserts that this automation and patient-centric design 
reduces technique failure as evidence by results from the IDE study, 
which demonstrated a significant

[[Page 42179]]

increase in treatment adherence and high rate of study completion 
compared to the current standard.
    The applicant further states that the Tablo[supreg] Hemodialysis 
System eliminates documentation burden and reduces reporting errors, 
and that it is the only HD system with 2-way wireless transmission 
delivering HIPAA compliant data to the healthcare provider without any 
need for additional equipment. This frees patients from the need to 
manually document treatment data by hand or on a separate tablet and 
ensures higher data accuracy.
    The 28 patients who entered the home phase of the Tablo[supreg] 
Hemodialysis System home IDE answered weekly if they needed help with 
treatment over the prior seven days. The applicant stated that by the 
end of the study, 216 of 224 possible responses were obtained. The care 
partner burden rating for prior in-home patients who were previously 
dialyzing on the incumbent device decreased from 3.1 to 2.4 on 
Tablo[supreg]. Among prior in-home patients, 69 percent of patients 
reported needing help from a trained individual with their prior device 
with 46 percent of respondents stating the help needed was device 
related, 15 percent related to cannulation alone, and 8 percent 
reported other. By contrast, while on Tablo[supreg], only 38 percent of 
patients reported needing help with treatment--only 22 percent needed 
help related to use of Tablo[supreg] while 16 percent needed help 
related to cannulation. The applicant asserts that this data 
underscores a significant decrease in patients needing assistance with 
treatment at home.
    The applicant states that Tablo[supreg] Hemodialysis System's 
unique features increase patient safety and satisfaction. The applicant 
notes that Tablo[supreg] Hemodialysis System's integrated, 2-way 
wireless connection provides clinicians with the ability to monitor 
patients in real time without any separate equipment necessary. The 
applicant asserts that the Tablo[supreg] Hemodialysis System is the 
only HD technology with this function, which allows for early 
identification and intervention by a patient's healthcare team as a key 
safety feature. At 34 inches tall, Tablo[supreg] Hemodialysis System 
user interface matches the height of a user while seated in a standard 
dialysis chair allowing patients to directly, and quickly engage with 
the integrated touch screen to view progress of the treatment, resolve 
alarms, and adjust certain functions to tailor the treatment to his or 
her needs. As an example, a patient with limited mobility can reach the 
interactive touch screen to adjust the flow rate if they feel cramping 
coming on. The IDE generated data that demonstrated how the technology 
enabled more rapid resolution of alarms. During the home arm of the 
study, patients were able to resolve alarms on the Tablo[supreg] 
Hemodialysis System in 5 seconds.\159\ The applicant asserts that rapid 
resolution of alarms and enhanced communication improve safety by 
facilitating rapid correction of any treatment related events, limiting 
treatment interruptions and improving communication between the patient 
and provider.
---------------------------------------------------------------------------

    \159\ Wilcox, Stephen B. et al., Results of human factors 
testing in a novel hemodialysis system designed for ease of patient 
use, Hemodialysis International 2016; 20:643-649.
---------------------------------------------------------------------------

    Once approved for home use, the applicant states that the 
Tablo[supreg] Hemodialysis System will provide a simpler, easier to use 
system that is likely to increase the number of people who are able to 
receive and remain on dialysis at home by addressing many of the well-
documented, key barriers to home dialysis reported in peer-reviewed 
literature.
    In addressing the way in which the Tablo[supreg] Hemodialysis 
System with its cartridge significantly improves clinical outcomes 
relative to the renal dialysis services previously available, the 
applicant focused on hospitalization and quality of life. The applicant 
stated that the Tablo[supreg] Hemodialysis System's 2-way wireless 
connection allows for real-time intervention to prevent 
hospitalizations. The applicant stated that during the Tablo[supreg] 
Hemodialysis System home IDE, the patients using the Tablo[supreg] 
Hemodialysis System had an all cause admission rate of 426 per 1,000 
patient years. In the general dialysis population, the all cause 
admission rate is 1688 per 1,000 patient years and for patients who do 
PD, the hospitalization rate is 1460 per 1,000 patient years, 
highlighting that the Tablo[supreg] Hemodialysis System may 
significantly reduce hospitalizations and lower cost of care.\160\ The 
applicant states that Tablo[supreg] Hemodialysis System's integrated, 
2-way wireless connection provides clinicians the ability to monitor 
patients in real time without any separate equipment necessary, and is 
the only equipment with this embedded functionality which allows for 
earlier identification and intervention by a patient's healthcare team 
and could prevent unnecessary hospitalizations for dialysis related 
events or missed treatments.
---------------------------------------------------------------------------

    \160\ United States Renal Data System. 2019 USRDS annual data 
report: Epidemiology of kidney disease in the United States. 
National Institutes of Health, National Institute of Diabetes and 
Digestive and Kidney Diseases, Bethesda, MD, 2019, Executive Summary 
Reference Table G2.
---------------------------------------------------------------------------

    The applicant stated that the Tablo[supreg] Hemodialysis System can 
effectively deliver adequacy with 3-4 treatments per week, potentially 
reducing Medicare expenditures on additional dialysis treatments per 
week. The applicant said that among home HD patients, Medicare payment 
for dialysis treatments was highly variable across different regions at 
3.5 to 5.7 per week.\161\ In the IDE for the Tablo[supreg] Hemodialysis 
System, the applicant asserted that there was effectively delivered 
adequacy with 4 treatments per week with an average session length of 
3.4 hours, resulting in an average weekly treatment duration of ~13.6 
hours. An average weekly standard Kt/V of 2.8 was achieved and 94 
percent of patients achieved an ultrafiltration rate within 10 percent 
of the prescribed value.\162\ The applicant noted that a previous study 
of Tablo[supreg] Hemodialysis System used in the clinic showed 
achievement of a spKt/V of 1.2 based on 3 treatments per week including 
for patients over 90kg. While the frequency of how often patients 
should receive dialysis is a clinical decision that should be made 
between the physician and the patient, the Tablo[supreg] Hemodialysis 
System is the only mobile HD system with clinical data showing 
achievement of adequacy standards and ultrafiltration endpoints for 3 
and 4 treatments per week regardless of the size of the 
patient.163 164 The applicant concludes that in this way, 
the Tablo[supreg] Hemodialysis System has the potential to reduce 
Medicare expenditures on the billing of additional dialysis treatments.
---------------------------------------------------------------------------

    \161\ Wilk, Adam S. et al., Persistent Variation in Medicare 
Payment Authorization for Home Hemodialysis Treatments Health 
services research vol. 53,2 (2018): 649-670.
    \162\ Plumb, T.J., Alvarez, et al. Safety and efficacy of the 
Tablo hemodialysis system for in-center and home hemodialysis. 
Hemodialysis International, 2019. doi:10.1111/hdi.12795.
    \163\ Alvarez, Luis et al. Urea Clearance Results in Patients 
Dialyzed Thrice Weekly Using a Dialysate Flow of 300 mL/min, 
clinical abstract, presented March 2019, Annual Dialysis Conference, 
Dallas, TX.
    \164\ Alvarez, Luis and Chertow, Glenn, Real World In-Center 
Urea Clearance Experience with a Novel Hemodialysis System, clinical 
abstract, presented March 2019, Annual Dialysis Conference, Dallas, 
TX.
---------------------------------------------------------------------------

    The applicant states that Tablo[supreg] Hemodialysis System's 
ability to deliver adequacy on fewer treatments per week may also 
reduce vascular access complications due to frequent cannulation.\165\
---------------------------------------------------------------------------

    \165\ Agency for Healthcare Quality and Research, End Stage 
Renal Disease in the Medicare Population: Frequency and Duration of 
Hemodialysis and Quality of Life Assessment, Draft Technology 
Assessment, Agency for Healthcare Quality and Research November 22, 
2019.

---------------------------------------------------------------------------

[[Page 42180]]

    The applicant submitted several examples in four topics to 
demonstrate how the Tablo[supreg] Hemodialysis System improves the 
quality of life. The applicant noted that patients value having a high-
quality daily life, ability to live well, and feeling empowered to 
control their outcomes over mortality.\166\ The applicant asserted that 
the use of the Tablo[supreg] Hemodialysis System at home allows 
patients to have an improved quality of life and control over their 
outcomes.
---------------------------------------------------------------------------

    \166\ Urquhart-Secord, Rachel et al Patient and Caregiver 
Priorities for Outcomes in Hemodialysis: An International Nominal 
Group Technique Study American Journal of Kidney Diseases, Sept. 
2016, Volume 68, Issue 3, 444-454.
---------------------------------------------------------------------------

    The first topic of improved quality of life focused on sleep and 
reduction in fatigue. The applicant noted that kidney patients 
participating in an international research collaborative to identify 
outcome measures most important to them ranked fatigue/energy as their 
top priority.\167\ The applicant reported that patients in the IDE who 
were on home HD with an incumbent device experienced a 14 percent 
improvement in waking up feeling rested while on the Tablo[supreg] 
Hemodialysis System. Additionally, 22 percent fewer patients reported 
having trouble staying asleep, and 15 percent fewer patients reported 
waking up several times during the night while on the Tablo[supreg] 
Hemodialysis System.\168\ The applicant asserted that this data shows 
that the Tablo[supreg] Hemodialysis System is able to make a clinically 
significant improvement in the quality of life indicator most valued by 
dialysis patients.
---------------------------------------------------------------------------

    \167\ Ibid.
    \168\ Plumb, T.J., Alvarez, L., Ross, D.L., Lee, J.J., Mulhern, 
J.G., Bell, J.L., Abra, G., Prichard, S.S., Chertow, G.M. and 
Aragon, M.A. (2019), Safety and efficacy of the Tablo hemodialysis 
system for in-center and home hemodialysis. Hemodialysis 
International. doi:10.1111/hdi.12795.
---------------------------------------------------------------------------

    The second topic of improved quality of life discussed by the 
applicant was improvement in the patients' experience of hypotensive 
events. The applicant submitted that investigators report that a drop 
in blood pressure was also ranked in the top 10 of symptoms rated by 
patients that impact their quality of life.\169\ The applicant reported 
that a total of 12 (40.0 percent) and 8 (26.7 percent) subjects 
reported hypotensive events during the Tablo[supreg] Hemodialysis 
System treatments during the In-Center and In-Home treatment periods, 
respectively, compared to 27 (90.0 percent) subjects reporting 
hypotensive events at baseline on another HD machine. All patients who 
reported hypotensive events while on dialysis in the study had also 
reported hypotension in their baseline history.\170\
---------------------------------------------------------------------------

    \169\ Urquhart-Secord, Rachel et al. Patient and Caregiver 
Priorities for Outcomes in Hemodialysis: An International Nominal 
Group Technique Study American Journal of Kidney Diseases, Sept. 
2016, Volume 68, Issue 3, 444-454.
    \170\ Outset Medical Data from Home IDE Trial, pg 33 of clinical 
report submitted to the Food and Drug Administration, data table 43, 
2019.
---------------------------------------------------------------------------

    The third topic of improved quality of life was that fewer patients 
reported feeling cold. The applicant reported that a total of 15 (50.0 
percent) subjects during the in-center treatment period and 12 (40.0 
percent) subjects during the In-Home treatment period reported feeling 
cold while dialyzing on the Tablo[supreg] Hemodialysis System compared 
to 28 (93.3 percent) subjects who reported feeling cold at baseline 
while dialyzing on another dialysis machine. The applicant asserted 
that the Tablo[supreg] Hemodialysis System's design results in tight 
control of dialysate temperature and allows patients to easily and 
accurately adjust temperature through the graphical user 
interface.\171\
---------------------------------------------------------------------------

    \171\ Ibid.
---------------------------------------------------------------------------

    The fourth topic of improved quality of life was patient preference 
for the Tablo[supreg] Hemodialysis System. The applicant stated that 
the Kidney Health Initiative (KHI), a public private partnership 
between the FDA and the American Society of Nephrology, Renal 
Replacement Therapy (RRT) Roadmap prioritizes patient-centered 
innovation, which includes dialysis equipment that is more portable, 
removes barriers to home dialysis and improves patients ease of use to 
increase opportunities for self-care. The RRT, which was developed in 
conjunction with patients, also prioritizes patient centered outcomes 
and technology that reduces disruption in social and family life.\172\ 
The applicant reported that among prior home HD users in the IDE trial, 
85 percent reported they preferred the Tablo[supreg] Hemodialysis 
System to their current equipment.\173\ Patients also rated 
Tablo[supreg] as easier to set-up, treat, and take down. Ease of use 
ratings comparing the patient's prior device to Tablo[supreg] were as 
follows: Set up--3.5 to 4.5, Treatment--3.3 to 4.6, Take Down--3.8 to 
4.6.\174\
---------------------------------------------------------------------------

    \172\ Kidney Health Initiative, Technology Roadmap for 
Innovative Approaches to Renal Replacement Therapy, prepared by the 
Nexight Group, October 2018, https://www.asnonline.org/g/blast/files/KHI_RRT_Roadmap1.0_FINAL_102318_web.pdf.
    \173\ Chahal, Yaadveer, Patient Device Preference for Home 
Hemodialysis: A Subset Analysis of the Tablo Home IDE Trial, 
Abstract Accepted by the National Kidney Foundation Spring Clinical 
Meeting 2020.
    \174\ Outset Medical Data from Home IDE Trial, pg 33 of clinical 
report submitted to the Food and Drug Administration, data table 43, 
2019.
---------------------------------------------------------------------------

    In summary, the applicant submitted that the Tablo[supreg] 
Hemodialysis System has the potential to significantly expand the 
number of patients who are able to receive home HD and persist on the 
therapy. The applicant stated that it is an innovative HD system that 
removes most of the device-related key barriers, reduces dialysis-
related symptoms, is mobile and easy to use, and therefore minimizes 
dialysis-related disruptions in patients' lives.
(2) CMS TPNIES Work Group
(a) Summary of current technology by CMS TPNIES Work Group
    Patients with ESRD who are not able to receive a kidney transplant 
must undergo maintenance dialysis therapy. Patients can receive 
dialysis 3-4 days a week at an in-center HD facility, or they can 
administer dialysis themselves at home. Due to the reliance on 
outpatient dialysis units, numbers of patients utilizing home dialysis 
in the U.S. have remained low. In 2017, only 10.8 percent of US 
dialysis patients received home-based therapies.\175\ Patients and 
caregivers cite concerns with self-cannulation, fears of needle 
disconnect and complications.\176\ Home dialysis use is lower than many 
other rich countries.\177\
---------------------------------------------------------------------------

    \175\ United States Renal Data System (USRDS). 2019 Annual Data 
Report: Reference Tables. https://www.usrds.org/reference.aspx. Last 
Access Date Feb 20, 2020.
    \176\ Young BA, Chan C, Blagg C, Lockridge R, Golper T, 
Finkelstein F, Shaffer R, Mehrotra R; ASN Dialysis Advisory Group. 
How to overcome barriers and establish a successful home HD program. 
Clin J Am Soc Nephrol. 2012 Dec;7(12):2023-32. doi: 10.2215/
CJN.07080712. Epub 2012 Oct 4.
    \177\ Wilkie M. Home dialysis-an international perspective. NDT 
Plus. 2011 Dec;4(Suppl 3):iii4-iii6.
---------------------------------------------------------------------------

    Most patients administering dialysis at home use PD. However, home 
HD has more recently re-emerged as an alternative way for patients to 
dialyze at home. Home HD may offer many of the advantages observed with 
peritoneal dialysis, such as increased flexibility and quality-of-life 
benefits. However, adoption of home HD has been limited, with 
approximately only 1 percent of ESRD patients utilizing this 
modality.\178\
---------------------------------------------------------------------------

    \178\ Mailloux LU, Blagg CR. Berns JS (ed.) Home Hemodialysis. 
Uptodate. Nov 18, 2016.
---------------------------------------------------------------------------

    Observational studies do not indicate significant differences in 
survival when comparing home dialysis to in-center dialysis.\179\ Yet, 
there are some potential

[[Page 42181]]

benefits to home-based dialysis. Prior analyses have noted that home-
based dialysis affords greater patient flexibility, improved quality of 
life,\180\ increased likelihood of employment,\181\ and improved 
cost.\182\ However, regarding cost comparisons, it is important to note 
that many cost analyses of home-based dialysis include estimates from 
peritoneal dialysis. The machines for HD are costly and there may be 
higher rates of infection from self-cannulation, which could offset any 
savings. Since such a small percentage of patients receive home-based 
HD, it is challenging to know actual cost without pooling it with 
peritoneal dialysis estimates. Regardless, due to an executive order 
issued in 2019, economic incentives for home dialysis (both peritoneal 
and home HD) were increased with the goal of expanding its use.\183\
---------------------------------------------------------------------------

    \179\ Chiu YW, Jiwakanon S, Lukowsky L, Duong U, Kalantar-Zadeh 
K, Mehrotra R. An update on the comparisons of mortality outcomes of 
hemodialysis and peritoneal dialysis patients. Semin Nephrol. 
2011;31:152-158.
    \180\ Rubin HR, Fink NE, Plantinga LC, Sadler JH, Kliger AS, 
Powe NR. Patient ratings of dialysis care with peritoneal dialysis 
vs hemodialysis. JAMA. 2004;291:697-703.
    \181\ Muehrer RJ, Schatell D, Witten B, Gangnon R, Becker BN, 
Hofmann RM. Factors affecting employment at initiation of dialysis. 
Clin J Am Soc Nephrol. 2011 Mar;6(3):489-96.
    \182\ Berger A, Edelsberg J, Inglese GW, Bhattacharyya SK, Oster 
G. Cost comparison of peritoneal dialysis versus hemodialysis in 
end-stage renal disease. American Journal of Managed Care. 
2009;15:509-518.
    \183\ The White House. Executive Order on Advancing American 
Kidney Health. July 10, 2019. https://www.whitehouse.gov/presidential-actions/executive-order-advancing-american-kidney-health/ . Last Access Date Feb 18, 2020.
---------------------------------------------------------------------------

(b) Description of New Technology by the CMS TPNIES Work Group
    The first personal HD system on the market was called the Aksys 
personal HD (Aksys Ph.D.) system. It created its own ultrapure 
dialysate and was FDA cleared in 2002. It later underwent recall in 
2006 due to marketing inconsistencies with system design.\184\ 
Eventually, the manufacturer shut down operations after difficulties in 
securing financing.\185\ In addition to these issues, it was a large 
machine that required significant patient utility resources and 
specialized maintenance.\186\ Around this time, development of the 
Allient dialysis system began, which utilizes a sorbent column to 
regenerate dialysate from tap water.\187\ It is still in development 
for potential home based therapy.
---------------------------------------------------------------------------

    \184\ Food and Drug Administration. Class 2 Device Recall Aksys 
Ph.D. Personal Hemodialysis System. Medical Devices Database. June 
2006. https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfres/res.cfm?id=46686.
    \185\ Modern Healthcare. Dialyais machine firm Aksys shuts down. 
Feb 21, 2007. https://www.modernhealthcare.com/article/20070221/NEWS/70221010/dialysis-machine-firm-aksys-shuts-down. Last Access 
Date Feb 18, 2020.
    \186\ Mailloux LU, Blagg CR. Berns JS (ed.) Home Hemodialysis. 
Uptodate. Nov 18, 2016.
    \187\ Ash SR. The Allient dialysis system. Semin Dial. 2004 Mar-
Apr;17(2):164-6.
---------------------------------------------------------------------------

    Several home dialysis machines are currently available. Recently, 
the NxStage[supreg] System One dialysis machine was FDA approved for 
510(k) premarket status in August 2017.\188\ It has a smaller profile 
than the Aksys machine but requires 4 to 6 large bags of ultrapure 
dialysate and comes with home storage requirements. The NxStage[supreg] 
PureFlow SL was subsequently developed for use with the NxStage[supreg] 
System One. It allows patients to prepare dialysate from tap water with 
a reduced need to store dialysate bags. The NxStage[supreg] system 
advertises an easier experience learning how to administer home 
dialysis. Within this arena, the Tablo[supreg] Hemodialysis System has 
recently emerged and been approved for use in hospitals and outpatient 
settings. The Tablo[supreg] Hemodialysis System is most comparable to 
NxStage System One combined with NxStage[supreg] PureFlow, in that it 
may be easier to use than conventional home dialysis machines and can 
be used from a tap water source. The applicant is currently pursuing 
approval for use of cartridges for the Tablo[supreg] Hemodialysis 
System in the home setting. While this application centers on 
reimbursement of the Tablo[supreg] Cartridge, this cartridge is only 
compatible with the Tablo[supreg] Hemodialysis System. The cartridge is 
made up of a rigid ``Organizer'' which mounts the necessary tubing to 
allow for greater ease in set-up. This self-contained and single-use 
cartridge houses both the arterial and venous lines, an adaptor to 
connect the lines, a saline line, and an infusion line. There is also a 
pressure transducer protector, venous drip chamber with clot filter, 
and an arterial pressure pod. The applicant noted that the cartridge 
simplifies connection to the Tablo[supreg] Hemodialysis System and 
reduces set-up time. It would seem that this cartridge would be most 
useful in the home-setting, since hospital and clinic settings would 
normally have trained personnel to assist with set-up. Although 
separate from the Tablo[supreg] Cartridge, the Tablo[supreg] 
Hemodialysis System also performs real-time water purification on 
demand dialysate production.
---------------------------------------------------------------------------

    \188\ Food and Drug Administration. Traditional Section 510(k) 
Premarket Notification Letter, Number K171331. August 24, 2017. 
https://www.accessdata.fda.gov/cdrh_docs/pdf17/K171331.pdf.
---------------------------------------------------------------------------

    A significant challenge to increasing the use of home dialysis 
includes burn out (or technique failure) and return to in-center HD. 
According to one recent observational study, approximately 25 percent 
of patients who initiate home HD return to in-center HD within the 
first year.\189\ A good measure of a home-based system's success would 
be in its ability to allow patients to remain on the therapy long-term. 
Failure to maintain home HD, and low use of home HD, may be a result of 
anxiety and unease that many patients have about performing the 
treatment themselves (or with the help of care 
takers).190 191 192 This includes fear of self-cannulation 
in order to access the blood for dialysis and a lack of self-efficacy 
in performing the therapy. By simplifying the process of setting up 
dialysis tubing, offered by the Tablo[supreg] Hemodialysis System 
cartridge, some patients may be able to successfully perform home HD.
---------------------------------------------------------------------------

    \189\ Seshasai RK, Mitra N, Chaknos CM, Li J, Wirtalla C, 
Negoianu D, Glickman JD, Dember LM. Factors Associated With 
Discontinuation of Home Hemodialysis. Am J Kidney Dis. 2016 
Apr;67(4):629-37.
    \190\ Cafazzo JA, Leonard K, Easty AC, Rossos PG, Chan CT. 
Patient-perceived barriers to the adoption of Nocturnal Home 
Hemodialysis. Clin J Am Soc Nephrol. 2009;4:784-789.
    \191\ Suri RS, Larive B, Garg AX, et al. Burden on caregivers as 
perceived by hemodialysis patients in the frequent Hemodialysis 
network (FHN) trials. Nephrol Dial Transplant. 2011;26:2316-2322.
    \192\ Zhang AH, Bargman JM, Lok CE, et al. Dialysis modality 
choices among chronic kidney disease patients: Identifying the gaps 
to support patients on home-based therapies. Int Urol Nephrol. 
2010;42:759-764
---------------------------------------------------------------------------

(c) Approvals
    The applicant has not previously submitted applications for pass-
through or add-on payments. The applicant has received 510(k) marketing 
clearance for the machine to be used in hospital and outpatient clinic 
use only. As such, the applicant is pursuing FDA authorization for use 
in the home setting for February 2020. The Tablo[supreg] Hemodialysis 
System cartridge received FDA marketing approval in December, 2019 and 
the Tablo[supreg] Hemodialysis System received FDA marketing 
authorization for home setting in March 2020. The applicant noted that 
upon approval, the company plans to ship that same month. The 
technology had an investigational device exemption for use in the home 
and which closed after approval of marketing authorization. It is 
assigned as a Class II device category.

[[Page 42182]]

(d) Assessment of Substantial Similarity to Currently Available 
Technology
    The NxStage[supreg] One is the only home-based HD system that is 
FDA has approved at this time. The Tablo[supreg] Hemodialysis System 
differs from the NxStage[supreg] in that dialysate is produced on 
demand whereas the NxStage[supreg] requires that patients batch 
dialysate or use pre-filled concentrate with the PureFlow. The 
Tablo[supreg] Hemodialysis System also includes a cartridge (which is 
the portion being evaluated for TPNIES) designed to facilitate the 
connection of tubing in the appropriate configuration.
    This product treats similar patients, notably patients with ESRD 
requiring HD.
(e) Assessment of SCI (see Sec. Sec.  413.236(b)(5) and 412.87(b)(1))
    The Tablo[supreg] Hemodialysis System is a treatment modality, not 
a diagnostic tool. With regard to the question as to whether this new 
renal dialysis equipment offers a treatment option for a patient 
population unresponsive to, or ineligible for, currently available 
treatments, we note that patients who are eligible for this treatment 
would currently be eligible for in-center HD, home HD with currently 
available treatments, and possibly PD.
(f) Clinical Evidence for Claims of SCI
    The applicant included an annotated bibliography in its 
application. Many of the articles describe the features of the HD 
system: straightforward and relatively efficient set-up and training, 
presence of safety features, water purification system, and wireless 
communication. In terms of clinical outcomes and improvements, the 
referenced authors have presented or published data on safety, 
clearance and treatment times, hypotensive events and cold symptoms, 
and patient preference. As these are arguably more important 
considerations, we are focusing on the evidence with those claims of 
clinical improvement or patient reported outcomes.
    Below is a list of references for SCI based on evidence published 
from several sources. We summarize the studies grouped by listings with 
the most rigorous review to those with the least rigorous review, 
specifically, Trials Published in Peer-Reviewed Journals, then Posters 
and Abstracts, and ending with Unpublished Data.
Trials Published in Peer-Reviewed Journals
     Plumb TJ, et al.\193\ describes the IDE study, which was a 
prospective, multicenter, open-label crossover trial evaluating in-
center versus in-home use of the Tablo[supreg] Hemodialysis System. 
Thirty patients underwent a run-in period, 8 weeks of in-center therapy 
(4 treatments a week), then a 4-week transition period, and finally an 
8-week in-home treatment (4 times a week). Authors evaluated efficacy 
in effective removal of uremic toxins, as measured by a weekly standard 
Kt/Vurea >=2.1 and a secondary endpoint of delivered ultrafiltration 
within 10 percent of prescribed. Twenty-eight out of 30 patients 
completed the study. One patient died from cardiac arrest and the 
authors felt it was unrelated to the treatments. Another patient 
withdrew prior to starting in-home HD. There were primary outcomes, 
secondary outcomes, adverse event rates, alarms per treatment, and 
alarm response times between the two groups. Patients demonstrated high 
adherence rates of 96 percent, and 99 percent for the in-center and in-
home groups, respectively. There is bias from the open-label study and 
this is a small study conducted over a short period of 12 weeks total, 
4 weeks of in-home dialysis. Long-term and larger studies would be 
helpful to capture any safety signals. Some authors serve as Chief 
Medical Officer or consultants for Outset Medical.
---------------------------------------------------------------------------

    \193\ Plumb TJ, Alvarez L, Ross DL, Lee JJ, Mulhern JG, Bell JL, 
Abra G, Prichard SS, Chertow GM, Aragon MA. Safety and efficacy of 
the Tablo hemodialysis system for in-center and home hemodialysis. 
Hemodial Int. 2020 Jan;24(1):22-28. doi: 10.1111/hdi.12795. Epub 
2019 Nov 7.
---------------------------------------------------------------------------

     Kraus M, et al.\194\ is a study involving the comparator 
technology known as NxStage[supreg] System, which is a portable HD 
unit. This was a prospective, open-label, crossover study comparing in-
center HD versus home HD in 32 patients over 18 weeks total. The 
primary endpoint was delivery of 90 percent prescribed fluid volume, 
which was achieved in similar fashion and >90 percent in both groups. 
There were statistically significant differences in adverse events, 
which favored the home HD group. The applicant included this study to 
demonstrate similar evidence as well as compare time spent in 
performing the home sessions. Treatment durations were slightly shorter 
than what was noted in the IDE study above (mean 2.8 hours for 
NxStage[supreg] versus mean 3.4 hours with Tablo[supreg] Hemodialysis 
System). This study was supported by NxStage[supreg] Medical Inc.
---------------------------------------------------------------------------

    \194\ Kraus M, Burkart J, Hegeman R, Solomon R, Coplon N, Moran 
J, A comparison of center-based vs. home-based daily hemodialysis 
for patients with end-stage renal disease. Hemodialysis 
International,11: 468-477, (2007).
---------------------------------------------------------------------------

Posters/Abstracts
     Alvarez, Luis et al.\195\ is a retrospective study, 29 
patients underwent HD with the Tablo[supreg] Hemodialysis System at a 
lower flow rate than what is used in conventional in-center HD. Average 
treatment times were slightly higher in the Tablo[supreg] Hemodialysis 
System group compared to those using non-Tablo[supreg] systems. After 
patient weight stratification at 90 kg, authors felt that both groups 
achieved similar weight changes (extrapolated from pre and post 
weights), as well as Kt/Vurea change. This research was funded by 
Outset Medical, Inc.
---------------------------------------------------------------------------

    \195\ Alvarez L, Spry L. Mulhern J, PPrichard S, Shallall C, 
Chertow G, Aragon, M, Urea Clearance Results in Patients Dialyzed 
Thrice Weekly Using a Dialysate Flow of 300 mL/min, clinical 
abstract, presented March 2019, Annual Dialysis Conference, Dallas, 
TX.
---------------------------------------------------------------------------

     Alvarez, Luis et al.\196\ utilized lower flow rates of 300 
ml/min, and evaluated patients as they transitioned to in-center but 
self-directed HD with Tablo[supreg] Hemodialysis System. Patients 
underwent 3 times a week treatment and data was collected over a 3-
month period. Based on urea samples and calculated Kt/Vurea, authors 
concluded that this treatment resulted in adequate clearance.
---------------------------------------------------------------------------

    \196\ Alvarez, Luis and Chertow, Glenn, Real World In-Center 
Urea Clearance Experience with a Novel Hemodialysis System, clinical 
abstract, presented March 2019, Annual Dialysis Conference, Dallas, 
TX.
---------------------------------------------------------------------------

     Chahal, Yaadveer \197\ is a study that focused on the 
patient experience through surveys and compared the patient's responses 
to prior in-home and in-center experiences. As part of the IDE study, 
13 participants provided survey responses to compare their experience 
with the Tablo[supreg] Hemodialysis System to their prior experience 
with in-home dialysis. Of those 13 participants, 85.6 percent found 
this system easier to use. While this is promising, the true test of 
superiority in this realm would be rates of discontinuation at 1 year. 
Issues of self-cannulation and the burden of this responsibility still 
remain with this system. The primary study was undertaken by Outset 
Medical.
---------------------------------------------------------------------------

    \197\ Chahal, Yaadveer. Patient Device Preference for Home 
Hemodialysis: A Subset Analysis of the Tablo Home IDE Trial, 
Abstract Accepted by the National Kidney Foundation Spring Clinical 
Meeting 2020.

---------------------------------------------------------------------------

[[Page 42183]]

Unpublished Data
     Outset Medical Data \198\ is a limited section, in which 
the applicant submitted cold and hypotensive events while on in-center 
or in-home HD. From just raw numbers, there were lower percentages of 
either sign/symptom within the home dialysis group compared to in-
center.
---------------------------------------------------------------------------

    \198\ Outset Medical Data from Home IDE Trial, page 33 of 
clinical report submitted to the FDA, data Table 43, 2019.
---------------------------------------------------------------------------

(g) Comments of the CMS TPNIES Work Group
    Only the Tablo[supreg] Cartridge portion of the Tablo[supreg] 
Hemodialysis System is being evaluated in this application, but it is 
important to note that it can only be used with the Tablo[supreg] 
Hemodialysis System. Although there are changes to the Tablo[supreg] 
Hemodialysis System for home use, the cartridge portion remains 
unchanged from its original FDA approval. Therefore, the cartridge 
itself is not new. Also, it is unclear as to whether the Tablo[supreg] 
Hemodialysis System can be used in-center without the cartridge. As 
such, much of the evidence presented in this application is really 
about the system itself, such as ease of training, its various 
features, and less about the incremental benefit of using the 
cartridge. Additionally, the system itself may have its own risks and 
benefits which are not within the scope of this application, and 
peripherally and incompletely addressed with the provided materials. 
For example, a study should be conducted determining the number of 
patients who were back in the hospital for a dialysis-related 
condition.
    To evaluate the cartridge, it would be helpful to have studies on 
whether there are any issues with the components of the cartridge (that 
is, any dialyzer reactions to tubing, any issues affecting clearance). 
Since the primary intent of the cartridge is to facilitate patient set-
up at home, the most useful evidence would be in the form of larger 
studies of patient-reported outcomes, quality of life, analyses of 
patient/caregiver burnout, and sustained adherence (beyond 1 year) to 
the use of this home-based modality. If the applicant is claiming to 
improve the patients' quality of life, then it needs to be proven for 
patient-specific outcomes and with a risk-benefit analysis to the 
patient. In some of the references cited, the patient factors affecting 
home HD are self-cannulation, burdens to caregivers, and concerns for 
complications, yet the cartridge has not demonstrated improvements in 
addressing these issues.
    The cartridge is a promising concept to encourage home HD but 
again, the evaluation of this technology is complicated by the need to 
also peripherally assess the system. There does not appear to be a need 
for this cartridge in the hospital or clinic setting as trained 
personnel should be able to assist with set-up. Within the larger 
policy context of FDA approval and the fact that TPNIES does not 
currently cover capital-related assets, the CMS TPNIES Work Group 
believes there are some irregularities and misalignments in the current 
application, and is concerned that the stand-alone cartridge cannot be 
evaluated for meeting the criteria for SCI.
    We invite public comment as to whether the stand-alone cartridge of 
the Tablo[supreg] Hemodialysis System meets the SCI criteria for the 
TPNIES.

III. CY 2021 Payment for Renal Dialysis Services Furnished to 
Individuals With Acute Kidney Injury (AKI)

A. Background

    The Trade Preferences Extension Act of 2015 (TPEA) (Pub. L. 114-27) 
was enacted on June 29, 2015, and amended the Act to provide coverage 
and payment for dialysis furnished by an ESRD facility to an individual 
with acute kidney injury (AKI). Specifically, section 808(a) of the 
TPEA amended section 1861(s)(2)(F) of the Act to provide coverage for 
renal dialysis services furnished on or after January 1, 2017, by a 
renal dialysis facility or a provider of services paid under section 
1881(b)(14) of the Act to an individual with AKI. Section 808(b) of the 
TPEA amended section 1834 of the Act by adding a subsection (r) to 
provide payment, beginning January 1, 2017, for renal dialysis services 
furnished by renal dialysis facilities or providers of services paid 
under section 1881(b)(14) of the Act to individuals with AKI at the 
ESRD PPS base rate, as adjusted by any applicable geographic adjustment 
applied under section 1881(b)(14)(D)(iv)(II) of the Act and adjusted 
(on a budget neutral basis for payments under section 1834(r) of the 
Act) by any other adjustment factor under section 1881(b)(14)(D) of the 
Act that the Secretary elects.
    In the CY 2017 ESRD PPS final rule, we finalized several coverage 
and payment policies in order to implement subsection (r) of section 
1834 of the Act and the amendments to section 1881(s)(2)(F) of the Act, 
including the payment rate for AKI dialysis (81 FR 77866 through 77872, 
and 77965). We interpret section 1834(r)(1) of the Act as requiring the 
amount of payment for AKI dialysis services to be the base rate for 
renal dialysis services determined for a year under the ESRD PPS base 
rate as set forth in Sec.  413.220, updated by the ESRD bundled market 
basket percentage increase factor minus a productivity adjustment as 
set forth in Sec.  413.196(d)(1), adjusted for wages as set forth in 
Sec.  413.231, and adjusted by any other amounts deemed appropriate by 
the Secretary under Sec.  413.373. We codified this policy in Sec.  
413.372 (81 FR 77965).

B. Proposed Annual Payment Rate Update for CY 2021

1. CY 2021 AKI Dialysis Payment Rate
    The payment rate for AKI dialysis is the ESRD PPS base rate 
determined for a year under section 1881(b)(14) of the Act, which is 
the finalized ESRD PPS base rate, including the applicable annual 
market basket payment update, geographic wage adjustments and any other 
discretionary adjustments, for such year. We note that ESRD facilities 
have the ability to bill Medicare for non-renal dialysis items and 
services and receive separate payment in addition to the payment rate 
for AKI dialysis.
    As discussed in section II.B.4.d of this proposed rule, the CY 2021 
proposed ESRD PPS base rate is $255.59, which reflects the application 
of the proposed CY 2021 wage index budget-neutrality adjustment factor 
of .998652, a proposed addition to the ESRD PPS base rate to include 
calcimimetics, and the CY 2021 proposed ESRDB market basket increase of 
2.2 percent reduced by the multifactor productivity adjustment of 0.4 
percentage points, that is, 1.8 percent. Accordingly, we are proposing 
a CY 2021 per treatment payment rate of $255.59 for renal dialysis 
services furnished by ESRD facilities to individuals with AKI. This 
payment rate is further adjusted by the wage index as discussed below.
2. Geographic Adjustment Factor
    Under section 1834(r)(1) of the Act and Sec.  413.372, the amount 
of payment for AKI dialysis services is the base rate for renal 
dialysis services determined for a year under section 1881(b)(14) of 
the Act (updated by the ESRD bundled market basket and multifactor 
productivity adjustment), as adjusted by any applicable geographic 
adjustment factor applied under section 1881(b)(14)(D)(iv)(II) of the 
Act. Accordingly, we apply the same wage index under Sec.  413.231 that 
is used under the ESRD PPS and discussed in section II.B.4.b of this 
proposed rule. The AKI dialysis payment rate is adjusted by the wage 
index for a

[[Page 42184]]

particular ESRD facility in the same way that the ESRD PPS base rate is 
adjusted by the wage index for that facility (81 FR 77868). 
Specifically, we apply the wage index to the labor-related share of the 
ESRD PPS base rate that we utilize for AKI dialysis to compute the wage 
adjusted per-treatment AKI dialysis payment rate. As stated previously, 
we are proposing a CY 2021 AKI dialysis payment rate of $255.59, 
adjusted by the ESRD facility's wage index.

IV. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)

A. Background

    For a detailed discussion of the End-Stage Renal Disease Quality 
Incentive Program's (ESRD QIP's) background and history, including a 
description of the Program's authorizing statute and the policies that 
we have adopted in previous final rules, we refer readers to the 
following final rules:
     CY 2011 ESRD PPS final rule (75 FR 49030),
     CY 2012 ESRD PPS final rule (76 FR 628),
     CY 2012 ESRD PPS final rule (76 FR 70228),
     CY 2013 ESRD PPS final rule (77 FR 67450),
     CY 2014 ESRD PPS final rule (78 FR 72156),
     CY 2015 ESRD PPS final rule (79 FR 66120),
     CY 2016 ESRD PPS final rule (80 FR 68968),
     CY 2017 ESRD PPS final rule (81 FR 77834),
     CY 2018 ESRD PPS final rule (82 FR 50738),
     CY 2019 ESRD PPS final rule (83 FR 56922), and
     CY 2020 ESRD PPS final rule (84 FR 60713).
    We have also codified many of our policies for the ESRD QIP at 42 
CFR 413.177 and 413.178.

B. Proposed Updates to Requirements Beginning With the PY 2023 ESRD QIP

1. PY 2023 ESRD QIP Measure Set
    Under our current policy, we retain all ESRD QIP measures from year 
to year unless we propose through rulemaking to remove them or 
otherwise provide notification of immediate removal if a measure raises 
potential safety issues (77 FR 67475). Accordingly, the PY 2023 ESRD 
QIP measure set will include the same 14 measures as the PY 2022 ESRD 
QIP measure set. These measures are described in Table 6.
BILLING CODE 4120-01-P

[[Page 42185]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.008

BILLING CODE 4120-01-C
2. Estimated Performance Standards for the PY 2023 ESRD QIP
    Section 1881(h)(4)(A) of the Social Security Act (the Act) requires 
the Secretary to establish performance standards with respect to the 
measures selected for the ESRD QIP for a performance period with 
respect to a year. The performance standards must include levels of 
achievement and improvement, as required by section 1881(h)(4)(B) of 
the Act, and must be established prior to the beginning of the 
performance period for the year involved, as required by section 
1881(h)(4)(C) of the Act. We refer readers to the CY 2013 ESRD PPS 
final rule (76 FR 70277) for a discussion of the achievement and 
improvement standards that we have established for clinical measures 
used in the ESRD QIP. We recently codified definitions for the terms 
``achievement threshold,'' ``benchmark,'' ``improvement threshold,'' 
and ``performance standard'' in our regulations at Sec.  413.178(a)(1), 
(3), (7), and (12), respectively.
    In the CY 2020 ESRD PPS final rule (84 FR 60728), we set the 
performance period for the PY 2023 ESRD QIP as CY 2021 and the baseline 
period as CY

[[Page 42186]]

2019. In this proposed rule, we are estimating the achievement 
thresholds, 50th percentiles of the national performance, and 
benchmarks for the PY 2023 clinical measures in Table 7 using data from 
2018. We intend to update these standards, using CY 2019 data, in the 
CY 2021 ESRD PPS final rule.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP13JY20.009

BILLING CODE 4120-01-C
3. Proposed Update to the Scoring Methodology for the Ultrafiltration 
Rate Reporting Measure
    In the CY 2017 ESRD PPS final rule, we adopted the Ultrafiltration 
Rate reporting measure under the authority of section 1881(h)(2)(B)(ii) 
of the Act (81 FR 77912). The measure assesses the number of months for 
which a facility reports all data elements required to calculate 
ultrafiltration rates (UFR) for each qualifying patient. It is based 
upon the NQF-endorsed Avoidance of Utilization of High Ultrafiltration 
Rate (>/= 13 ml/kg/hr) (NQF #2701), which assesses the percentage of 
patient-months for patients with a UFR greater than or equal to 13 ml/
kg/hr.
    In the CY 2017 ESRD PPS final rule (81 FR 77917), we also finalized 
a policy to score the Ultrafiltration Rate reporting measure using the 
following equation, beginning in PY 2020 (81 FR 77917):

[[Page 42187]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.010

    In this proposed rule, we are proposing to replace the current 
Ultrafiltration Rate reporting measure scoring equation with the 
following equation, beginning with PY 2023:
[GRAPHIC] [TIFF OMITTED] TP13JY20.011

    This proposal would modify the scoring methodology for the 
Ultrafiltration Rate reporting measure so that facilities would be 
scored based on the number of eligible patient-months, as opposed to 
facility-months. The facility-month scoring methodology requires 
facilities to report every data element necessary to calculate a UFR 
reporting rate for 100 percent of its eligible patients each month in 
order to receive any credit for successfully reporting the measure for 
that month. The facility-month scoring approach then counts the number 
of months in the performance period that the facility received credit 
for reporting over the course of the performance period. For example, 
under the facility-scoring methodology, if a facility has 10 eligible 
patients in January, the facility must report all required UFR data 
elements for each of those 10 patients in order to receive any credit 
for January reporting. If the facility only reports the required UFR 
data elements for 9 of those 10 patients, the facility receives a zero 
for January. Our concern with this approach is that there may be 
circumstances, such as when an eligible patient is hospitalized, when 
facilities cannot obtain UFR data for a single patient, and as a 
consequence, cannot receive any credit for the data it did report that 
month. When we finalized the Ultrafiltration Rate reporting measure in 
the CY 2017 ESRD PPS final rule, stakeholders raised their concern 
regarding this issue (81 FR 77914). At the time, we responded that 
because we defined the population for this reporting measure by 
assignment to a facility for a full month, the facility is still 
required to provide data even in cases where a patient may spend part 
of that month hospitalized since the data elements are products of 
ongoing dialysis treatment. We stated that since we do not restrict 
facilities from coordinating with hospitals to obtain relevant data, we 
believed that such coordination is appropriate. However, our rationale 
for this was based on the reporting requirements prescribed by a 
facility-month definition. Furthermore, coordinating with hospitals to 
obtain relevant data continues to be a stakeholder concern in reporting 
UFR data. We believe that the proposed patient-month scoring 
methodology is more objective because it scores facilities based on the 
percentage of eligible patients across the entire performance period 
for which they report all UFR data elements. Thus, if a facility has 
100 eligible patients in CY 2020 and reports all data elements 
necessary to calculate a UFR rate for 90 of them, the facility will 
receive a rounded score based on a 90 percent reporting rate. We 
believe that this methodology will give facilities more flexibility to 
receive credit for UFR reporting throughout the 12-month performance 
period.
    The Ultrafiltration Rate reporting measure is intended to guard 
against risks associated with high ultrafiltration (that is, rapid 
fluid removal) rates for adult dialysis patients undergoing HD, because 
of indications that high ultrafiltration is an independent predictor of 
mortality. Faster ultrafiltration may lead to a number of health risks 
resulting from large volumes of fluid removed rapidly during each 
dialysis session, with deleterious consequences for the patient both in 
the short and longer term. The outcome of this reporting measure is the 
documentation of the ultrafiltration measurements, which ultimately 
contributes to the quality of the patient's ESRD treatment. We believe 
that calculating the measure rates using the patient-month scoring 
methodology better supports our goal of assessing performance on 
whether the facility is documenting UFR for its eligible patients, 
which we believe will lead to better patient-level outcomes.
    We also believe that this change is consistent with our plan to re-
evaluate our reporting measures for opportunities to more closely align 
them with NQF measure specifications (see 84 FR 60724). We believe that 
this proposed change would make the Ultrafiltration Rate reporting 
measure more consistent with the NQF measure upon which it is based, 
Avoidance of Utilization of High Ultrafiltration Rate (>/= 13 ml/kg/hr) 
(NQF #2701), which reports results using a ``patient-month'' 
construction. Although we recognize that both the Anemia Management 
reporting measure and the Serum Phosphorus reporting measure are also 
calculated using a facility-month construction, we are not proposing to 
change the scoring methodology used for either of those measures 
because both measures are finalized for removal beginning with the PY 
2021 ESRD QIP (83 FR 56986 through 56989). The proposed update to the 
UFR reporting measure scoring methodology will make the scoring 
methodology for that measure consistent with the scoring methodology we 
are using to calculate the Medication Reconciliation (MedRec) reporting 
measure (83 FR 57011). We also believe that the utilization of this 
patient-month scoring methodology for both the MedRec and the 
Ultrafiltration Rate reporting measures better reflects our intent to 
score facilities based on actions taken by the facility that impact 
patient experiences. .
    We seek comment on this proposal.
4. Eligibility Requirements for the PY 2023 ESRD QIP
    Our current minimum eligibility requirements for scoring the ESRD 
QIP measures are described in Table 8. We are not proposing any changes 
to these eligibility requirements for the PY 2023 ESRD QIP in this 
proposed rule.

[[Page 42188]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.012

5. Clarification of the Timeline for Facilities To Make Changes To 
Their NHSN Bloodstream Infection (BSI) Clinical Measure and NHSN 
Dialysis Event Reporting Measure Data for Purposes of the ESRD QIP
    Under our current policy for the NHSN BSI clinical measure and NHSN 
Dialysis Event reporting measure, facilities are required to submit 
monthly data on a quarterly basis, and each quarter's data is due 3 
months after the end of the quarter (81 FR 77879 through 77881). For 
example, data collected by facilities between January 1 and March 31, 
2021 is due to NHSN by June 30, 2021, data collected between April 1 
and June 30, 2021 is due to NHSN by September 30, 2021, and data 
collected between July 1 and September 30, 2021 is due to NHSN by 
December 31, 2021. After each quarterly data submission deadline, the 
Centers for Disease Control and Prevention (CDC) takes a snapshot of 
the facility's data for the quarter and creates a permanent data file. 
Each quarterly permanent data file is aggregated together to create the 
annual CMS ESRD QIP Final Compliance File, which the CDC transmits to 
CMS for purposes of determining whether the facility has met the 
reporting requirements for these measures. Facilities may make changes 
to their quarterly NHSN data for purposes of the ESRD QIP at any point 
up until the applicable quarterly submission data deadline.
    We have become aware that the NHSN system does not prevent 
facilities from making changes to their data for purposes of CDC 
surveillance after the applicable ESRD QIP quarterly submission 
deadline has passed. However, we are clarifying that any changes that a 
facility makes to its data after the ESRD QIP deadline that applies to 
those data will not be included in the quarterly permanent data file 
that the CDC generates for purposes of creating the annual CMS ESRD QIP 
Final Compliance File. Rather, as noted above, each quarterly permanent 
data file captures a snapshot of the facility's data as of the 
quarterly submission deadline, and that file cannot be updated for 
purposes of the ESRD QIP because of operational and timing issues.
6. Estimated Payment Reduction for the PY 2023 ESRD QIP
    Under our current policy, a facility will not receive a payment 
reduction for a payment year in connection with its performance for the 
ESRD QIP if it achieves a total performance score (TPS) that is at or 
above the minimum TPS (mTPS) that we establish for the payment year. We 
have defined the

[[Page 42189]]

mTPS in our regulations at Sec.  413.178(a)(8) as, with respect to a 
payment year, the TPS that an ESRD facility would receive if, during 
the baseline period it performed at the 50th percentile of national 
performance on all clinical measures and the median of national ESRD 
facility performance on all reporting measures.
    Our current policy, which is codified at Sec.  413.177 of our 
regulations, is also to implement the payment reductions on a sliding 
scale using ranges that reflect payment reduction differentials of 0.5 
percent for each 10 points that the facility's TPS falls below the 
minimum TPS (76 FR 634 through 635).
    For PY 2023, we estimate based on available data that a facility 
must meet or exceed a mTPS of 57 in order to avoid a payment reduction. 
We note that the mTPS estimated in this proposed rule is based on data 
from CY 2018 instead of the PY 2023 baseline period (CY 2019) because 
CY 2019 data are not yet available.
    We refer readers to Table 7 for the estimated values of the 50th 
percentile of national performance for each clinical measure. Under our 
current policy, a facility that achieves a TPS below 57 would receive a 
payment reduction based on the TPS ranges indicated in Table 9.
[GRAPHIC] [TIFF OMITTED] TP13JY20.013

    We intend to update the mTPS for PY 2023, as well as the payment 
reduction ranges for that payment year, in the CY 2021 ESRD PPS final 
rule.
7. Proposal To Reduce the Number of Records That a Facility Selected 
for NHSN Validation Must Submit
    One of the critical elements of the ESRD QIP's success is ensuring 
that the data submitted to calculate measure scores and TPSs are 
accurate. The ESRD QIP currently includes two validation studies for 
this purpose: the Consolidated Renal Operations in a Web-Enabled 
Network (CROWNWeb) data validation study (OMB Control Number 0938-1289) 
and the NHSN validation study (OMB Control Number 0938-1340). In the CY 
2019 ESRD PPS final rule, we adopted the CROWNWeb data validation study 
as a permanent feature of the Program (83 FR 57003). Under that policy, 
we will continue validating CROWNWeb data in PY 2023 and subsequent 
payment years, and we will deduct 10 points from a facility's TPS if it 
is selected for validation but does not submit the requested records.
    We also adopted a methodology for the PY 2022 NHSN validation 
study, which targets facilities for NHSN validation by identifying 
facilities that are at risk for under-reporting. For additional 
information on this methodology, we refer readers to the CY 2018 ESRD 
PPS final rule (82 FR 50766 through 50767). In the CY 2020 ESRD PPS 
final rule, we finalized our proposal to continue using this 
methodology for the NHSN validation study for PY 2023 and subsequent 
years (84 FR 60727). In that rule, we concluded that to achieve the 
most reliable results for a payment year, we would need to review 
approximately 6,072 charts submitted by 303 facilities, and that this 
sample size would produce results with a 95 percent confidence level 
and a 1 percent margin of error. Based on those results and our desire 
to ensure that dialysis event data reported to the NHSN for purposes of 
the ESRD QIP are accurate, we finalized our proposal to continue use of 
this methodology in the PY 2023 NHSN validation study and for 
subsequent years.
    Additionally, as we had previously finalized for CROWNWeb 
validation, we finalized our proposal to adopt NHSN validation as a 
permanent feature of the ESRD QIP with the methodology we first 
finalized for PY 2022 and are continuing for PY 2023 and subsequent 
years. We continue to believe that the purpose of our validation 
programs is to ensure the accuracy and completeness of data that are 
scored under the ESRD QIP, and we believe that validating NHSN data 
using this methodology achieves that goal.
    In the CY 2019 ESRD PPS final rule, we finalized that a sample of 
300 facilities will be selected for the NHSN validation study each 
year, and that each facility will be required to submit 20 patient 
records per quarter for each of the first two quarters of the calendar 
year (83 FR 57001), for a total of 40 records. In this proposed rule, 
we are proposing to change this requirement and allow facilities 
selected to participate in the NHSN validation study to submit a total 
of 20 patient records for the applicable calendar year. We are also 
proposing to allow facilities to submit patient records from any two 
quarters during the year, as long as all of the records are from no 
more than two quarters. For example, a facility could choose to submit 
2 records from Q1 and 18 records from Q4, or 6 records from Q2 and 14 
records from Q3, but it could not submit 4 records from Q1, 8 records 
from Q2, and 8 records from Q3.
    We have concluded that this revised approach would reduce facility 
burden by decreasing the required number of patient records and 
allowing more flexibility for facilities to choose what records to 
submit, while continuing to maintain a sample size that is adequate for 
our validation analysis. In reaching this conclusion, we were informed 
by the CDC's recommendations. Based on the sample estimation analysis, 
the CDC recommended the following factors to

[[Page 42190]]

improve the precision of estimation of accuracy of dialysis events 
reported to NHSN: An expected 80 percent of dialysis events reporting 
accuracy from facilities and setting the precision of the NHSN 
validation study to a 95 percent confidence level and 1 percent margin 
of error, which would require a total of 6,072 chart reviews. Beginning 
with the CY 2017 and CY 2018 NHSN dialysis validation, we have 
gradually increased the number of facilities randomly selected for 
validation, as well as the number of charts for review, in order to 
achieve the 6,000 chart threshold necessary for an accurate review. 
Initially, 35 facilities were randomly selected and 10 charts per 
facility were reviewed. For CY 2019, 150 facilities were randomly 
selected and each facility submitted a total of 20 records, to achieve 
the total of 3,000 charts available for review. For CY 2020, the goal 
was to increase from 150 to 300 facilities, where each facility would 
submit a total of 20 records thereby achieving the total of 6,000 
charts available for review, as we previously finalized (83 FR 57001). 
Because a total of 20 records would achieve the 6,000 chart threshold 
necessary for an accurate review, we concluded that we could reduce the 
sample size from 40 records to 20 records. We believe a total of 20 
medical records across a 6-month validation study time frame for a 
calendar year, rather than 20 records per quarter, would provide a 
sufficiently accurate sample size.
    We believe the reduction in patient records still provides an 
adequate sample size for the validation and reduces overall facility 
burden. A recent estimation analysis conducted by the CDC supports our 
belief that a review of 20 charts per facility across a specified 
validation timeline that are acquired by randomly selecting 
approximately 300 facilities would continue to meet the medical record 
selection criteria outlined in the NHSN Dialysis Validation 
methodology. This would meet the CDC's recommended sample estimate to 
achieve the 95 percent confidence level precision and 1 percent margin 
of error, while also reducing facility burden.
    We seek comment on this proposal.
    We are not proposing any changes to the CROWNWeb validation study 
methodology.

C. Proposals for the PY 2024 ESRD QIP

1. Continuing Measures for the PY 2024 ESRD QIP
    Under our previously adopted policy, the PY 2023 ESRD QIP measure 
set will also be used for PY 2024.
2. Performance Period for the PY 2023 ESRD QIP and Subsequent Years
    We continue to believe that 12-month performance and baseline 
periods provide us sufficiently reliable quality measure data for the 
ESRD QIP. In the CY 2020 ESRD PPS final rule, we finalized the 
performance and baseline periods for the PY 2023 ESRD QIP (84 FR 
60728). We also finalized our proposal to adopt automatically a 
performance and baseline period for each year that is 1 year advanced 
from those specified for the previous payment year. For example, under 
this policy, we would automatically adopt CY 2022 as the performance 
period and CY 2020 as the baseline period for the PY 2024 ESRD QIP.
    In this proposed rule, we are not proposing any changes to this 
policy.
3. Performance Standards for the PY 2024 ESRD QIP and Subsequent Years
    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish performance standards with respect to the measures selected 
for the ESRD QIP for a performance period with respect to a year. The 
performance standards must include levels of achievement and 
improvement, as required by section 1881(h)(4)(B) of the Act, and must 
be established prior to the beginning of the performance period for the 
year involved, as required by section 1881(h)(4)(C) of the Act. We 
refer readers to the CY 2012 ESRD PPS final rule (76 FR 70277) for a 
discussion of the achievement and improvement standards that we have 
established for clinical measures used in the ESRD QIP. We recently 
codified definitions for the terms ``achievement threshold,'' 
``benchmark,'' ``improvement threshold,'' and ``performance standard'' 
in our regulations at Sec.  413.178(a)(1), (3), (7), and (12), 
respectively.
a. Performance Standards for Clinical Measures in the PY 2024 ESRD QIP
    At this time, we do not have the necessary data to assign numerical 
values to the achievement thresholds, benchmarks, and 50th percentiles 
of national performance for the clinical measures because we do not 
have CY 2020 data. We intend to publish these numerical values, using 
CY 2020 data, in the CY 2022 ESRD PPS final rule.
b. Performance Standards for the Reporting Measures in the PY 2024 ESRD 
QIP
    In the CY 2019 ESRD PPS final rule, we finalized the continued use 
of existing performance standards for the Screening for Clinical 
Depression and Follow-Up reporting measure, the Ultrafiltration Rate 
reporting measure, the NHSN Dialysis Event reporting measure, and the 
MedRec reporting measure (83 FR 57010 through 57011). We will continue 
use of these performance standards in PY 2024.
4. Scoring the PY 2024 ESRD QIP
a. Scoring Facility Performance on Clinical Measures
    In the CY 2014 ESRD PPS final rule, we finalized policies for 
scoring performance on clinical measures based on achievement and 
improvement (78 FR 72215 through 72216). In the CY 2019 ESRD PPS final 
rule, we finalized a policy to continue use of this methodology for 
future payment years (83 FR 57011) and we codified these scoring 
policies at Sec.  413.178(e).
    We are not proposing to change our scoring policies in this 
proposed rule.
b. Scoring Facility Performance on Reporting Measures
    Our policy for scoring performance on reporting measures is 
codified at Sec.  413.178(e), and more information on our scoring 
policy for reporting measures can be found in the CY 2020 ESRD PPS 
final rule (84 FR 60728). We previously finalized policies for scoring 
performance on the NHSN Dialysis Event reporting measure in the CY 2018 
ESRD PPS final rule (82 FR 50780 through 50781), as well as policies 
for scoring the Ultrafiltration Rate reporting measure, MedRec 
reporting measure, and Clinical Depression Screening and Follow-up 
reporting measure in the CY 2019 ESRD PPS final rule (83 FR 57011). We 
also previously finalized the scoring policy for the STrR reporting 
measure in the CY 2020 ESRD PPS final rule (84 FR 60721 through 60723). 
We refer the reader to section IV.B.3 of this proposed rule for 
proposed changes to the scoring methodology for the Ultrafiltration 
Rate reporting measure.
5. Weighting the Measure Domains and the TPS for PY 2024
    Under our current policy, we assign the Patient & Family Engagement 
Measure Domain a weight of 15 percent of the TPS, the Care Coordination 
Measure Domain a weight of 30 percent of the TPS, the Clinical Care 
Measure Domain a weight of 40 percent of the TPS, and the Safety 
Measure domain a weight of 15 percent of the TPS.
    In the CY 2019 ESRD PPS final rule, we finalized a policy to assign 
weights to individual measures and a policy to redistribute the weight 
of unscored measures (83 FR 57011 through 57012). In the CY 2020 ESRD 
PPS final rule, we finalized a policy to use the measure weights we 
finalized for PY 2022 for the

[[Page 42191]]

PY 2023 ESRD QIP and subsequent payment years, and also to use the PY 
2022 measure weight redistribution policy for the PY 2023 ESRD QIP and 
subsequent payment years (84 FR 60728 through 60729). We are not 
proposing any updates to these policies. Under our current policy, a 
facility must be eligible to be scored on at least one measure in two 
of the four measures domains in order to be eligible to receive a TPS 
(83 FR 57012).

V. Collection of Information Requirements

A. Legislative Requirement for Solicitation of Comments

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection requirement 
should be approved by OMB, the Paperwork Reduction Act of 1995 (44 
U.S.C. 3506(c)(2)(A)) requires that we solicit comment on the following 
issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):
    Using the following format describe the information collection 
requirements that are in each section.

B. Requirements in Regulation Text

    In sections II.B.1 through II.B.3 and II.B.5 of this proposed rule, 
we are proposing changes to regulatory text for the ESRD PPS for CY 
2021. However, the changes that are being proposed do not impose any 
new information collection requirements.

C. Additional Information Collection Requirements

    This proposed rule does not impose any new information collection 
requirements in the regulation text, as specified above. However, there 
are changes in some currently approved information collections. The 
following is a discussion of these information collections.
1. ESRD QIP--Wage Estimates
    To derive wages estimates, we used data from the U.S. Bureau of 
Labor Statistics' May 2019 National Occupational Employment and Wage 
Estimates. In the CY 2016 ESRD PPS final rule (80 FR 69069), we stated 
that it was reasonable to assume that Medical Records and Health 
Information Technicians, who are responsible for organizing and 
managing health information data, are the individuals tasked with 
submitting measure data to CROWNWeb and NHSN, as well as compiling and 
submitting patient records for purpose of the data validation studies, 
rather than a Registered Nurse, whose duties are centered on providing 
and coordinating care for patients. The median hourly wage of a Medical 
Records and Health Information Technician is $20.50 per hour.\199\ 
Fringe benefit and overhead are calculated at 100 percent. Therefore, 
using these assumptions, we estimate an hourly labor cost of $41.00 as 
the basis of the wage estimates for all collections of information 
calculations in the ESRD QIP. We have adjusted these employee hourly 
wage estimates by a factor of 100 percent to reflect current HHS 
department-wide guidance on estimating the cost of fringe benefits and 
overhead. These are necessarily rough adjustments, both because fringe 
benefits and overhead costs vary significantly from employer to 
employer and because methods of estimating these costs vary widely from 
study to study. Nonetheless, there is no practical alternative and we 
believe that these are reasonable estimation methods.
---------------------------------------------------------------------------

    \199\ https://www.bls.gov/oes/current/oes292098.htm.
---------------------------------------------------------------------------

    We used this updated wage estimate, along with updated facility and 
patient counts to re-estimate the total information collection burden 
in the ESRD QIP for PY 2023 that we discussed in the CY 2020 ESRD QIP 
final rule (84 FR 60787 through 60788) and to estimate the total 
information collection burden in the ESRD QIP for PY 2024. We provide 
the re-estimated information collection burden associated with the PY 
2023 ESRD QIP and the newly estimated information collection burden 
associated with the PY 2024 ESRD QIP in sections IV.C.2 and IV.C.3 of 
this proposed rule.
2. Estimated Burden Associated With the Data Validation Requirements 
for PY 2023 and PY 2024
    In the CY 2020 ESRD PPS final rule, we finalized a policy to adopt 
the CROWNWeb data validation methodology that we previously adopted for 
the PY 2016 ESRD QIP as the methodology we would use to validate 
CROWNWeb data for all payment years, beginning with PY 2021 (83 FR 
57001 through 57002). Under this methodology, 300 facilities are 
selected each year to submit 10 records to CMS, and we reimburse these 
facilities for the costs associated with copying and mailing the 
requested records. The burden associated with these validation 
requirements is the time and effort necessary to submit the requested 
records to a CMS contractor. In this proposed rule, we are updating 
these estimates using a newly available wage estimate of a Medical 
Records and Health Information Technician. We estimate that it will 
take each facility approximately 2.5 hours to comply with this 
requirement. If 300 facilities are asked to submit records, we estimate 
that the total combined annual burden for these facilities will be 750 
hours (300 facilities x 2.5 hours). Since we anticipate that Medical 
Records and Health Information Technicians or similar administrative 
staff will submit these data, we estimate that the aggregate cost of 
the CROWNWeb data validation each year will be approximately $30,750 
(750 hours x $41.00), or an annual total of approximately $102.50 
($30,750/300 facilities) per facility in the sample. The decrease in 
our burden estimate is due to using the median hourly wage instead of 
the mean hourly wage for Medical Records and Health Information 
Technicians or similar staff and is not the result of any policies 
proposed in this proposed rule. The burden associated with these 
requirements is captured in an information collection request (OMB 
control number 0938-1289).
    In section IV.B.7 of this proposed rule, we proposed to reduce the 
number of records that a facility selected to participate in the NHSN 
data validation study must submit to a CMS contractor, beginning with 
PY 2023. Under the proposal, a facility would be required to submit 
records for 20 patients across any two quarters of the year, instead of 
20 records for each of the first two quarters of the year. The burden 
associated with this proposal is the time and effort necessary to 
submit the requested records to a CMS contractor. Applying our proposal 
to reduce the

[[Page 42192]]

number of records required from each facility participating in the NHSN 
validation study, we estimate that it would take each facility 
approximately 5 hours to comply with this requirement. If 300 
facilities are asked to submit records each year, we estimate that the 
total combined annual burden hours for these facilities per year would 
be 1,500 hours (300 facilities x 5 hours). Since we anticipate that 
Medical Records and Health Information Technicians or similar staff 
would submit these data, using the newly available wage estimate of a 
Medical Records and Health Information Technician, we estimate that the 
aggregate cost of the NHSN data validation each year would be 
approximately $61,500 (1,500 hours x $41), or a total of approximately 
$205 ($61,500/300 facilities) per facility in the sample. The reduction 
in our burden estimate is due to a reduction in the number of medical 
records collected and the utilization of the median hourly wage instead 
of the mean hourly wage. The burden associated with these requirements 
is captured in an information collection request (OMB control number 
0938-1340).
3. CROWNWeb Reporting Requirements for PY 2023 and PY 2024
    To determine the burden associated with the CROWNWeb reporting 
requirements, we look at the total number of patients nationally, the 
number of data elements per patient-year that the facility would be 
required to submit to CROWNWeb for each measure, the amount of time 
required for data entry, the estimated wage plus benefits applicable to 
the individuals within facilities who are most likely to be entering 
data into CROWNWeb, and the number of facilities submitting data to 
CROWNWeb. In the CY 2020 ESRD PPS final rule, we estimated that the 
burden associated CROWNWeb reporting requirements for the PY 2023 ESRD 
QIP was approximately $211 million.
    We are not proposing any changes that would affect the burden 
associated with CROWNWeb reporting requirements for PY 2023 or PY 2024. 
However, we have re-calculated the burden estimate for PY 2023 using 
updated estimates of the total number of dialysis facilities, the total 
number of patients nationally, and wages for Medical Records and Health 
Information Technicians or similar staff as well as a refined estimate 
of the number of hours needed to complete data entry for CROWNWeb 
reporting. In the CY 2020 ESRD PPS final rule, we estimated that the 
amount of time required to submit measure data to CROWNWeb was 2.5 
minutes per element and used a rounded estimate of 0.042 hours in our 
calculations. In this proposed rule, we did not use a rounded estimate 
of the time needed to complete data entry for CROWNWeb reporting. There 
are 229 data elements for 523,314 patients across 7,386 facilities. At 
2.5 minutes per element, this yields approximately 676.05 hours per 
facility. Therefore, the PY 2023 burden is 4,993,288 hours (676.05 
hours x 7,386 facilities). (Using the wage estimate of a Medical 
Records and Health Information Technician, we estimate that the PY 2023 
total burden cost is $205 million (4,993,288 hours x $41). There is no 
net incremental burden change from PY 2023 to PY 2024 because we are 
not proposing to change the reporting requirements for PY 2024.

VI. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

VII. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review, Executive Order 13563 on 
Improving Regulation and Regulatory Review, the Regulatory Flexibility 
Act (RFA) (Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4), Executive Order 13132 on Federalism, the Congressional Review Act 
(5 U.S.C. 801 et seq.), and Executive Order 13771 on Reducing 
Regulation and Controlling Regulatory Costs.
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). We estimate that this rulemaking is ``economically significant'' 
as measured by the $100 million threshold, and hence also a major rule 
under the Congressional Review Act. Accordingly, we have prepared a RIA 
that to the best of our ability presents the costs and benefits of the 
rulemaking.
    We solicit comments on the regulatory impact analysis provided.
2. Statement of Need
a. ESRD PPS
    This rule proposes a number of routine updates and several policy 
changes to the ESRD PPS for CY 2021. The proposed routine updates 
include the CY 2021 wage index values, the wage index budget-neutrality 
adjustment factor, and outlier payment threshold amounts. Failure to 
publish this proposed rule would result in ESRD facilities not 
receiving appropriate payments in CY 2021 for renal dialysis services 
furnished to ESRD beneficiaries.
b. AKI
    This rule also proposes routine updates to the payment for renal 
dialysis services furnished by ESRD facilities to individuals with AKI. 
Failure to publish this proposed rule would result in ESRD facilities 
not receiving appropriate payments in CY 2021 for renal dialysis 
services furnished to patients with AKI in accordance with section 
1834(r) of the Act.
c. ESRD QIP
    This rule proposes to implement requirements for the ESRD QIP, 
including a proposal to modify the scoring methodology for the 
Ultrafiltration Rate reporting measure

[[Page 42193]]

beginning with the PY 2023 ESRD QIP and a proposal to update the 
reporting requirements for facilities selected for NHSN data 
validation. The rule also clarifies the review and correction timeline 
for the NHSN BSI clinical measure and NHSN Dialysis Event reporting 
measure.
3. Overall Impact
a. ESRD PPS
    We estimate that the proposed revisions to the ESRD PPS would 
result in an increase of approximately $190 million in payments to ESRD 
facilities in CY 2021, which includes the amount associated with 
updates to the outlier thresholds, payment rate update, updates to the 
wage index, the proposal to adopt the new OMB delineations with a 
transition period, and the proposal to include calcimimetics in the 
ESRD PPS base rate. These figures do not reflect estimated increases or 
decreases in expenditures based on our proposal to expand eligibility 
for the TPNIES to certain new and innovative home dialysis machines 
when used in the home. The fiscal impact of this proposal cannot be 
determined due to the uniqueness of each new and innovative home 
dialysis machine and its cost.
b. AKI
    We estimate that the proposed updates to the AKI payment rate would 
result in an increase of approximately $5 million in payments to ESRD 
facilities in CY 2021.
c. ESRD QIP
    For PY 2023, we have re-estimated the costs associated with the 
information collection requirements under the ESRD QIP with updated 
estimates of the total number of dialysis facilities, the total number 
of patients nationally, wages for Medical Records and Health 
Information Technicians or similar staff, and a refined estimate of the 
number of hours needed to complete data entry for CROWNWeb reporting. 
We have made no changes to our methodology for calculating the annual 
burden associated with the information collection requirements for the 
CROWNWeb validation study and CROWNWeb reporting. We updated the annual 
burden associated with the NHSN validation study to reflect our 
proposal to reduce the total number of records collected. This proposed 
update would reduce the collection of information requirements 
associated with the NHSN validation study by $65,460 per year across 
the facilities selected for validation that year.
    We also updated the payment reduction estimates using more recent 
data for the measures in the ESRD QIP measure set and applying our 
proposal to modify the scoring methodology for the Ultrafiltration Rate 
reporting measure beginning with the PY 2023 ESRD QIP. We estimate $205 
million in information collection burden, which includes the cost of 
complying with this rule, and an additional $16 million in estimated 
payment reductions across all facilities for PY 2023.
    For PY 2024, we estimate that the proposed revisions to the ESRD 
QIP would result in $205 million in information collection burden and 
$16 million in estimated payment reductions across all facilities 
impact of $221 million as a result of the policies we have previously 
finalized and the policies we have proposed in this proposed rule.
4. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on last year's proposed rule will be the number of reviewers 
of this proposed rule. We acknowledge that this assumption may 
understate or overstate the costs of reviewing this rule. It is 
possible that not all commenters reviewed last year's rule in detail, 
and it is also possible that some reviewers chose not to comment on the 
proposed rule. For these reasons we thought that the number of past 
commenters would be a fair estimate of the number of reviewers of this 
rule. We welcome any comments on the approach in estimating the number 
of entities which will review this proposed rule. We also recognize 
that different types of entities are in many cases affected by mutually 
exclusive sections of this proposed rule, and therefore for the 
purposes of our estimate we assume that each reviewer reads 
approximately 50 percent of the rule. We seek comments on this 
assumption.
    Using the wage information from the Bureau of Labor Statistics 
(BLS) for medical and health service managers (Code 11-9111), we 
estimate that the cost of reviewing this rule is $109.36 per hour, 
including overhead and fringe benefits https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average reading speed, we estimate that it 
would take approximately 6.25 hours for the staff to review half of 
this proposed rule. For each entity that reviews the rule, the 
estimated cost is $683.50 (6.25 hours x $109.36). Therefore, we 
estimate that the total cost of reviewing this regulation rounds to 
$62,882. ($683.50 x 92 reviewers).

B. Detailed Economic Analysis

1. CY 2021 End-Stage Renal Disease Prospective Payment System
a. Effects on ESRD Facilities
    To understand the impact of the changes affecting payments to 
different categories of ESRD facilities, it is necessary to compare 
estimated payments in CY 2020 to estimated payments in CY 2021. To 
estimate the impact among various types of ESRD facilities, it is 
imperative that the estimates of payments in CY 2020 and CY 2021 
contain similar inputs. Therefore, we simulated payments only for those 
ESRD facilities for which we are able to calculate both current 
payments and new payments.
    For this proposed rule, we used CY 2019 data from the Part A and 
Part B Common Working Files as of April 3, 2020, as a basis for 
Medicare dialysis treatments and payments under the ESRD PPS. We 
updated the 2019 claims to 2020 and 2021 using various updates. The 
updates to the ESRD PPS base rate are described in section II.B.4.d of 
this proposed rule. Table 10 shows the impact of the estimated CY 2021 
ESRD PPS payments compared to estimated payments to ESRD facilities in 
CY 2020.
BILLING CODE 4120-01-P

[[Page 42194]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.014


[[Page 42195]]


[GRAPHIC] [TIFF OMITTED] TP13JY20.015

BILLING CODE 4120-01-C
    Column A of the impact table indicates the number of ESRD 
facilities for each impact category and column B indicates the number 
of dialysis treatments (in millions). The overall effect of the 
proposed changes to the outlier payment policy described in section 
II.B.4.c of this proposed rule is shown in column C. For CY 2021, the 
impact on all ESRD facilities as a result of the changes to the outlier 
payment policy would be a 0.3 percent increase in estimated payments. 
All ESRD facilities are anticipated to experience a positive effect in 
their estimated CY 2021 payments as a result of the proposed outlier 
policy changes.
    Column D shows the effect of the annual update to the wage index, 
as described in section II.B.4.b of this proposed rule. That is, this 
column reflects the update from the CY 2020 ESRD PPS wage index using 
CY 2020 OMB delineations with a basis of the FY 2021 pre-floor, pre-
reclassified IPPS hospital wage index data in a budget neutral manner. 
The total impact of this change is 0.0 percent, however, there are 
distributional effects of the change among different categories of ESRD 
facilities. The categories of types of facilities in the impact table 
show changes in estimated payments ranging from a 0.8 percent decrease 
to a 0.4 percent increase due to the annual update to the ESRD PPS wage 
index.
    Column E shows the effect of adopting the proposed new OMB 
delineations and the transition policy as described in sections 
II.B.4.b.(2) and II.B.4.b.(3), respectively, of this proposed rule. 
That is, the impact represented in this column reflects the change from 
using the CY 2020 OMB delineations and basing the CY 2021 ESRD PPS wage 
index on the FY 2021 pre-floor, pre-reclassified IPPS hospital wage 
index data to the new OMB delineations and a 5 percent cap on wage 
index decreases in CY 2021, in a budget neutral manner. The total 
impact of this change is 0.0 percent, however, there are distributional 
effects of the change among different categories of ESRD facilities. 
The categories of types of facilities in the impact table show changes 
in estimated payments ranging from a 1.2 percent decrease to a 0.3 
percent increase due to these proposals to the ESRD PPS wage index.
    Column F shows the effect of the proposed addition to the ESRD PPS 
base rate to include calcimimetics as described in section II.B.1 of 
this proposed rule. That is, the impact represented in this column 
reflects the change, under the ESRD PPS, proposed for payment to ESRD 
facilities for furnishing calcimimetics. Beginning January 1, 2018, 
ESRD facilities received payment for calcimimetics under the TDAPA 
policy in Sec.  413.234(c). Under our proposal, beginning January 1, 
2021, we would modify the ESRD PPS base rate by adding $12.06 to 
include calcimimetics and no longer pay for calcimimetics using the 
TDAPA. In addition, calcimimetics would become outlier eligible 
services under Sec.  413.237. The categories of types of facilities in 
the impact table show changes in estimated payments ranging from a 3.9 
percent decrease to a 4.5 percent increase due to this proposal.
    Column G shows the effect of the proposed CY 2021 ESRD PPS payment 
rate update as described in section II.B.4.a of this proposed rule. The 
proposed ESRD PPS payment rate update is 1.8 percent, which reflects 
the proposed ESRDB market basket percentage increase factor for CY 2021 
of 2.2 percent and the proposed MFP adjustment of 0.4 percent.
    Column H reflects the overall impact, that is, the effects of the 
proposed outlier policy changes, the proposed updated wage index and 
transition policy, the payment rate update, and the proposed addition 
to the ESRD PPS base rate to include calcimimetics. We expect that 
overall ESRD facilities would experience a 1.6 percent increase in 
estimated payments in CY 2021. The categories of types of facilities in 
the impact table show impacts ranging from a 2.0 percent decrease to a 
6.5 percent increase in their CY 2021 estimated payments.
b. Effects on Other Providers
    Under the ESRD PPS, Medicare pays ESRD facilities a single bundled 
payment for renal dialysis services, which may have been separately 
paid to other providers (for example, laboratories, durable medical 
equipment suppliers, and pharmacies) by Medicare prior to the 
implementation of the ESRD PPS. Therefore, in CY 2021, we estimate that 
the proposed ESRD PPS would have zero impact on these other providers.
c. Effects on the Medicare Program
    We estimate that Medicare spending (total Medicare program 
payments) for ESRD facilities in CY 2021 would be approximately $9.3 
billion. This estimate takes into account a projected decrease in fee-
for-service Medicare dialysis beneficiary enrollment of 8.6 percent in 
CY 2021.
d. Effects on Medicare Beneficiaries
    Under the ESRD PPS, beneficiaries are responsible for paying 20 
percent of the ESRD PPS payment amount. As a result of the projected 
1.6 percent overall increase in the proposed CY 2021 ESRD PPS payment 
amounts, we estimate that there would be an increase in beneficiary co-
insurance payments of 1.6 percent in CY 2021, which translates to 
approximately $40 million.
e. Alternatives Considered
(1) Inclusion of Calcimimetics Into the ESRD PPS Bundled Payment
    In section II.B.1 of this proposed rule, we propose that beginning 
January 1, 2021, we would modify the ESRD PPS base rate by adding 
$12.06 to include calcimimetics and no longer pay for calcimimetics 
using the TDAPA. In addition, calcimimetics would become ESRD outlier 
services eligible for outlier payments under Sec.  413.237. With regard 
to the methodology proposed to calculate the amount to be added the 
ESRD PPS base rate, we considered using the Medicare expenditures 
reflecting payments made for the calcimimetics in CYs 2018 and 2019, 
that is, approximately $2.3 billion and dividing by total treatments 
furnished in both years to arrive at an amount of $27.08. However, 
using the most recent calendar quarter of ASP data available to 
calculate the ASP-based values as the proxy rate incorporates the lower 
priced generic calcimimetics into the

[[Page 42196]]

calculation of the amount added for oral calcimimetics. We believe it 
is appropriate for the ESRD PPS base rate to reflect generic drug 
manufacturer ASP data since we believe that this aligns with how ESRD 
facilities would purchase and furnish the oral calcimimetics in the 
future.
(2) Expansion of the TPNIES to Capital-Related Assets That are Home 
Dialysis Machines When Used in the Home for a Single Patient
    In section II.B.3 of this proposed rule, we propose to expand the 
TPNIES policy and allow capital-related assets that are home dialysis 
machines when used in the home for a single patient to be eligible for 
the add-on payment adjustment when used in the home. Then, consistent 
with the policies finalized last year for other renal dialysis 
equipment and supplies eligible for the TPNIES, we would pay 65 percent 
of the pre-adjusted per treatment amount for a period of 2 years. With 
regard to the duration of applying the TPNIES for capital-related 
assets that are home dialysis machines when used in the home for a 
single patient, we considered paying the TPNIES for 3 years. However, 
we believe that the proposal is consistent with the TDAPA and other 
Medicare fee-for-service add-on payment programs (for example, the IPPS 
NTAP), and supports innovation for dialysis in the home setting, the 
President's Executive Order on Advancing American Kidney Health, and 
current HHS initiatives to support home dialysis, while taking into 
account the potential increase in ESRD PPS expenditures.
(3) CY 2021 ESRD PPS Wage index
    In section II.B.4.b of this proposed rule, we propose to adopt the 
new OMB delineations with a transition policy. That is, we are 
proposing to adopt the OMB delineations based on the September 14, 2018 
OMB Bulletin No. 18-04 and, to mitigate any potential negative impacts, 
we would 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 would be phased in over 2 years, such that the 
estimated reduction in an ESRD facility's wage index would be capped at 
5 percent in CY 2021 and no cap would be applied to the reduction in 
the wage index for the second year, CY 2022. With regard to the 
transition policy, we considered doing a 2-year 50/50 blended wage 
index approach consistent with the adoption of OMB delineations in the 
CY 2015 ESRD PPS final rule (79 FR 66142). However, we determined that 
the proposed 5 percent cap on any decrease policy would be an 
appropriate transition for CY 2021 as it provides predictability in 
payment levels from CY 2020 to the upcoming CY 2021 and additional 
transparency because it is administratively simpler than the 50/50 
blended approach.
2. Proposed Payment for Renal Dialysis Services Furnished to 
Individuals With AKI
a. Effects on ESRD Facilities
    To understand the impact of the changes affecting payments to 
different categories of ESRD facilities for renal dialysis services 
furnished to individuals with AKI, it is necessary to compare estimated 
payments in CY 2020 to estimated payments in CY 2021. To estimate the 
impact among various types of ESRD facilities for renal dialysis 
services furnished to individuals with AKI, it is imperative that the 
estimates of payments in CY 2020 and CY 2021 contain similar inputs. 
Therefore, we simulated payments only for those ESRD facilities for 
which we are able to calculate both current payments and new payments.
    For this proposed rule, we used CY 2019 data from the Part A and 
Part B Common Working Files as of April 3, 2020, as a basis for 
Medicare for renal dialysis services furnished to individuals with AKI. 
We updated the 2019 claims to 2020 and 2021 using various updates. The 
updates to the AKI payment amount are described in section III.B of 
this proposed rule. Table 11 shows the impact of the estimated CY 2021 
payments for renal dialysis services furnished to individuals with AKI 
compared to estimated payments for renal dialysis services furnished to 
individuals with AKI in CY 2020.
BILLING CODE 4120-01-P
BILLING CODE 4120-01-P

[[Page 42197]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.016


[[Page 42198]]


[GRAPHIC] [TIFF OMITTED] TP13JY20.017

BILLING CODE 4120-01-C
    Column A of the impact table indicates the number of ESRD 
facilities for each impact category and column B indicates the number 
of AKI dialysis treatments (in thousands).
    Column C shows the effect of the proposed CY 2021 wage indices.
    Column D shows the effect of the adjustment to the AKI dialysis 
payment rate that reciprocates the adjustment proposed to the ESRD PPS 
base rate for CY 2021, consistent with Sec.  413.372. As discussed in 
section II.B.1 of this proposed rule, we propose to modify the ESRD PPS 
base rate by adding $12.06 to include calcimimetics.
    Column E shows the effect of the proposed CY 2021 ESRD PPS payment 
rate update. The proposed ESRD PPS payment rate update is 1.8 percent, 
which reflects the proposed ESRDB market basket percentage increase 
factor for CY 2021 of 2.2 percent and the proposed MFP adjustment of 
0.4 percent.
    Column F reflects the overall impact, that is, the effects of the 
updated wage index, the proposed addition to the ESRD PPS base rate, 
and the payment rate update. We expect that overall ESRD facilities 
would experience a 6.9 percent increase in estimated payments in CY 
2021. The categories of types of facilities in the impact table show 
impacts ranging from an increase of 0.0 percent to 7.3 percent in their 
CY 2021 estimated payments.
b. Effects on Other Providers
    Under section 1834(r) of the Act, as added by section 808(b) of 
TPEA, we propose to update the payment rate for renal dialysis services 
furnished by ESRD facilities to beneficiaries with AKI. The only two 
Medicare providers and suppliers authorized to provide these outpatient 
renal dialysis services are hospital outpatient departments and ESRD 
facilities. The decision about where the renal dialysis services are 
furnished is made by the patient and his or her physician. Therefore, 
this proposal will have zero impact on other Medicare providers.
c. Effects on the Medicare Program
    We estimate approximately $56 million would be paid to ESRD 
facilities in CY 2021 as a result of AKI patients receiving renal 
dialysis services in the ESRD facility at the lower ESRD PPS base rate 
versus receiving those services only in the hospital outpatient setting 
and paid under the outpatient prospective payment system, where 
services were required to be administered prior to the TPEA.
d. Effects on Medicare Beneficiaries
    Currently, beneficiaries have a 20 percent co-insurance obligation 
when they receive AKI dialysis in the hospital outpatient setting. When 
these services are furnished in an ESRD facility, the patients would 
continue to be responsible for a 20 percent co-insurance. Because the 
AKI dialysis payment rate paid to ESRD facilities is lower than the 
outpatient hospital PPS's payment amount, we would expect beneficiaries 
to pay less co-insurance when AKI dialysis is furnished by ESRD 
facilities.
e. Alternatives Considered
    As we discussed in the CY 2017 ESRD PPS proposed rule (81 FR 
42870), we considered adjusting the AKI payment rate by including the 
ESRD PPS case-mix adjustments, and other adjustments at section 
1881(b)(14)(D) of the Act, as well as not paying separately for AKI 
specific drugs and laboratory tests. We ultimately determined that 
treatment for AKI is substantially different from treatment for ESRD 
and the case-mix adjustments applied to ESRD patients may not be 
applicable to AKI patients and as such, including those policies and 
adjustment would be inappropriate. We continue to monitor utilization 
and trends of items and services furnished to individuals with AKI for 
purposes of refining the payment rate in the future. This monitoring 
would assist us in developing knowledgeable, data-driven proposals.
3. ESRD QIP
a. Effects of the PY 2023 ESRD QIP on ESRD Facilities
    The ESRD QIP is intended to prevent possible reductions in the 
quality of ESRD dialysis facility services provided to beneficiaries. 
The general methodology that we are using to determine a facility's TPS 
is described in our regulations at Sec.  413.178(e).
    Any reductions in the ESRD PPS payments as a result of a facility's 
performance under the PY 2023 ESRD QIP would apply to the ESRD PPS 
payments made to the facility for services furnished in CY 2023, as 
codified in our regulations at Sec.  413.177.
    For the PY 2023 ESRD QIP, we estimate that, of the 7,386 dialysis 
facilities (including those not receiving a TPS) enrolled in Medicare, 
approximately 23.2 percent or 1,657 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2023. We are presenting an estimate for the PY 2023 ESRD QIP to 
update the estimated impact that was provided in the CY 2020 ESRD PPS 
final rule (84 FR 60797). If our proposal to update the scoring 
methodology for the Ultrafiltration Rate reporting measure is 
finalized, the total estimated payment reductions for all the 1,657 
facilities expected to receive a payment reduction in PY 2023 would 
decrease from $18,247,083.76 to approximately $15,586,453.64. 
Facilities that do not receive a TPS do not receive a payment 
reduction.
    Table 12 shows the overall estimated distribution of payment 
reductions resulting from the PY 2023 ESRD QIP.

[[Page 42199]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.018

    To estimate whether a facility would receive a payment reduction 
for PY 2023, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from CROWNWeb and Medicare claims. Payment 
reduction estimates are calculated using the most recent data available 
(specified in Table 13) in accordance with the policies proposed in 
this proposed rule. Measures used for the simulation are shown in Table 
13. These estimates also incorporate the proposed update to the scoring 
methodology for the Ultrafiltration Rate reporting measure.
[GRAPHIC] [TIFF OMITTED] TP13JY20.019

    For all measures except SHR and SRR, clinical measures with less 
than 11 patients for a facility were not included in that facility's 
TPS. For SHR and STrR, facilities were required to have at least 5 
patient-years at risk and 11 index discharges, respectively, in order 
to be included in the facility's TPS. Each facility's TPS was compared 
to an estimated mTPS and an estimated payment reduction table that were 
consistent with the proposals outlined in sections IV.B and IV.C of 
this proposed rule. Facility reporting measure scores were estimated 
using available data from CY 2017 and CY 2018. Facilities were required 
to have at least one measure in at least two domains to receive a TPS.
    To estimate the total payment reductions in PY 2023 for each 
facility resulting from this proposed rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2018 and December 2018 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 14 shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2023. The table also 
details the distribution of ESRD facilities by size (both among 
facilities considered to be small entities and by number of treatments 
per facility), geography (both rural and urban and by region), and by 
facility type (hospital based and freestanding facilities). Given that 
the performance period used for these calculations differs from the 
performance period we are using for the PY 2023 ESRD QIP, the actual 
impact of the PY 2023 ESRD QIP may vary significantly from the values 
provided here.

[[Page 42200]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.020


[[Page 42201]]


b. Effects of the PY 2024 ESRD QIP on ESRD Facilities
    For the PY 2024 ESRD QIP, we estimate that, of the 7,386 dialysis 
facilities (including those not receiving a TPS) enrolled in Medicare, 
approximately 23.2 percent or 1,657 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2024. The total payment reductions for all the 1,657 facilities 
expected to receive a payment reduction is approximately 
$15,586,453.64. Facilities that do not receive a TPS do not receive a 
payment reduction.
    Table 15 shows the overall estimated distribution of payment 
reductions resulting from the PY 2024 ESRD QIP.
[GRAPHIC] [TIFF OMITTED] TP13JY20.021

    To estimate whether a facility would receive a payment reduction in 
PY 2024, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from CROWNWeb and Medicare claims. Payment 
reduction estimates were calculated using the most recent data 
available (specified in Table 15) in accordance with the policies 
proposed in this proposed rule. Measures used for the simulation are 
shown in Table 16.
[GRAPHIC] [TIFF OMITTED] TP13JY20.022

    For all measures except SHR, SRR, and STrR, measures with less than 
11 patients for a facility were not included in that facility's TPS. 
For SHR and SRR, facilities were required to have at least 5 patient-
years at risk and 11 index discharges, respectively, in order to be 
included in the facility's TPS. For the STrR reporting measure, 
facilities were required to have at least 10 patient-years at risk in 
order to be included in the facility's TPS. Each facility's TPS was 
compared to an estimated mTPS and an estimated payment reduction table 
that incorporates the proposals outlined in section IV.B and IV.C of 
this proposed rule. Facility reporting measure scores were estimated 
using available data from CY 2018. Facilities were required to have at 
least one measure in at least two domains to receive a TPS.
    To estimate the total payment reductions in PY 2024 for each 
facility resulting from this proposed rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2018 and December 2018 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 17 shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2024. The table 
details the distribution of ESRD facilities by size (both among 
facilities considered to be small entities and by number of treatments 
per facility), geography (both rural and

[[Page 42202]]

urban and by region), and by facility type (hospital based and 
freestanding facilities). Given that the performance period used for 
these calculations differs from the performance period we are proposing 
to use for the PY 2024 ESRD QIP, the actual impact of the PY 2024 ESRD 
QIP may vary significantly from the values provided here.

[[Page 42203]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.023


[[Page 42204]]


c. Effects on Other Providers
    The ESRD QIP is applicable to dialysis facilities. We are aware 
that several of our measures impact other providers. For example, with 
the introduction of the SRR clinical measure in PY 2017 and the SHR 
clinical measure in PY 2020, we anticipate that hospitals may 
experience financial savings as dialysis facilities work to reduce the 
number of unplanned readmissions and hospitalizations. We are exploring 
various methods to assess the impact these measures have on hospitals 
and other facilities, such as through the impacts of the Hospital 
Readmission Reduction Program and the Hospital-Acquired Conditions 
Reduction Program, and we intend to continue examining the interactions 
between our quality programs to the greatest extent feasible.
d. Effects on the Medicare Program
    For PY 2024, we estimate that the ESRD QIP would contribute 
approximately $15,586,453.64 in Medicare savings. For comparison, Table 
18 shows the payment reductions that we estimate will be applied by the 
ESRD QIP from PY 2018 through PY 2024.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP13JY20.024

e. Effects on Medicare Beneficiaries
    The ESRD QIP is applicable to dialysis facilities. Since the 
Program's inception, there is evidence on improved performance on ESRD 
QIP measures. As we stated in the CY 2018 ESRD PPS final rule, one 
objective measure we can examine to demonstrate the improved quality of 
care over time is the improvement of performance standards (82 FR 
50795). As the ESRD QIP has refined its measure set and as facilities 
have gained experience with the measures included in the Program, 
performance standards have generally continued to rise. We view this as 
evidence that facility performance (and therefore the quality of care 
provided to Medicare beneficiaries) is objectively improving. We are in 
the process of monitoring and evaluating trends in the quality and cost 
of care for patients under the ESRD QIP, incorporating both existing 
measures and new measures as they are implemented in the Program. We 
will provide additional information about the impact of the ESRD QIP on 
beneficiaries as we learn more. However, in future years we are 
interested in examining these impacts through the analysis of available 
data from our existing measures.
f. Alternatives Considered
    In section IV.B.7 of this proposed rule, we are proposing that 
facilities selected to participate in the NHSN data validation study 
can submit a total of 20 records across two quarters. We considered 
retaining our current reporting requirement, under which facilities 
must submit 20 records per quarter for each of the first two quarters 
of the CY, for a total of 40 records. However, we concluded that the 
reduction in patient records provides an adequate sample size for the 
validation. This approach would lower administrative costs and would 
reduce the burden on facilities.

C. Accounting Statement

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 19, we have prepared an accounting statement showing 
the classification of the transfers and costs associated with the 
various provisions of this proposed rule.

[[Page 42205]]

[GRAPHIC] [TIFF OMITTED] TP13JY20.025

    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

D. Regulatory Flexibility Act Analysis (RFA)

    The Regulatory Flexibility Act requires agencies to analyze options 
for regulatory relief of small entities, if a rule has a significant 
impact on a substantial number of small entities. For purposes of the 
RFA, small entities include small businesses, nonprofit organizations, 
and small governmental jurisdictions. Approximately 11 percent of ESRD 
dialysis facilities are considered small entities according to the 
Small Business Administration's (SBA) size standards, which classifies 
small businesses as those dialysis facilities having total revenues of 
less than $41.5 million in any 1 year. Individuals and states are not 
included in the definitions of a small entity. For more information on 
SBA's size standards, see the Small Business Administration's website 
at http://www.sba.gov/content/small-business-size-standards (Kidney 
Dialysis Centers are listed as 621492 with a size standard of $41.5 
million).
    We do not believe ESRD facilities are operated by small government 
entities such as counties or towns with populations of 50,000 or less, 
and therefore, they are not enumerated or included in this estimated 
RFA analysis. Individuals and states are not included in the definition 
of a small entity.
    For purposes of the RFA, we estimate that approximately 11 percent 
of ESRD facilities are small entities as that term is used in the RFA 
(which includes small businesses, nonprofit organizations, and small 
governmental jurisdictions). This amount is based on the number of ESRD 
facilities shown in the ownership category in Table 10. Using the 
definitions in this ownership category, we consider 534 facilities that 
are independent and 299 facilities that are shown as hospital-based to 
be small entities. The ESRD facilities that are owned and operated by 
Large Dialysis Organizations (LDOs) and regional chains would have 
total revenues of more than $41.5 million in any year when the total 
revenues for all locations are combined for each business (individual 
LDO or regional chain), and are not, therefore, included as small 
entities.
    For the ESRD PPS updates proposed in this rule, a hospital-based 
ESRD facility (as defined by type of ownership, not by type of dialysis 
facility) is estimated to receive a 0.1 percent increase in payments 
for CY 2021. An independent facility (as defined by ownership type) is 
estimated to have no change in payments for CY 2021.
    For AKI dialysis, we are unable to estimate whether patients would 
go to ESRD facilities, however, we have estimated there is a potential 
for $56 million in payment for AKI dialysis treatments that could 
potentially be furnished in ESRD facilities.
    For the ESRD QIP, we estimate that of the 1,657 ESRD facilities 
expected to receive a payment reduction as a result of their 
performance on the PY 2024 ESRD QIP, 817 are ESRD small entity 
facilities. We present these findings in Table 15 (``Estimated 
Distribution of PY 2024 ESRD QIP Payment Reductions'') and Table 17 
(``Impact of Proposed QIP Payment Reductions to ESRD Facilities for PY 
2024''). We estimate that the payment reductions would average 
approximately $9,406.43 per facility across the 1,657 facilities 
receiving a payment reduction, and $8,698.69 for each small entity 
facility. We also estimate that there are 817 small entity facilities 
in total, and that the aggregate ESRD PPS payments to these facilities 
would decrease 0.30 percent in CY 2022.
    Therefore, the Secretary has determined that this proposed rule 
would not have a significant economic impact on a substantial number of 
small entities. The economic impact assessment is based on estimated 
Medicare payments (revenues) and HHS's practice in interpreting the RFA 
is to consider effects economically ``significant'' only if greater 
than 5 percent of providers reach a threshold of 3 to 5 percent or more 
of total revenue or total costs. We solicit comment on the RFA analysis 
provided.
    In addition, section 1102(b) of the Act requires us to prepare a 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 603 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a metropolitan statistical area and has fewer 
than 100 beds. We do not believe this proposed rule would have a 
significant impact on operations of a substantial number of

[[Page 42206]]

small rural hospitals because most dialysis facilities are 
freestanding. While there are 127 rural hospital-based dialysis 
facilities, we do not know how many of them are based at hospitals with 
fewer than 100 beds. However, overall, the 127 rural hospital-based 
dialysis facilities would experience an estimated 0.3 percent decrease 
in payments.
    Therefore, the Secretary has determined that this proposed rule 
would not have a significant impact on the operations of a substantial 
number of small rural hospitals.

E. Unfunded Mandates Reform Act Analysis (UMRA)

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2020, that 
threshold is approximately $156 million. This proposed rule does not 
mandate any requirements for state, local, or tribal governments in the 
aggregate, or by the private sector. Moreover, HHS interprets UMRA as 
applying only to unfunded mandates. We do not interpret Medicare 
payment rules as being unfunded mandates, but simply as conditions for 
the receipt of payments from the federal government for providing 
services that meet federal standards. This interpretation applies 
whether the facilities or providers are private, state, local, or 
tribal.

F. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has federalism 
implications. We have reviewed this proposed rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
it would not have substantial direct effects on the rights, roles, and 
responsibilities of states, local or Tribal governments.

G. Regulatory Reform Analysis Under Executive Order 13771

    Executive Order 13771, entitled Reducing Regulation and Controlling 
Regulatory Costs (82 FR 9339), was issued on January 30, 2017. It has 
been determined that this is a transfer rule, which imposes no more 
than de minimis costs. As a result, this rule is not considered a 
regulatory or deregulatory action under Executive Order 13771.

VIII. Files Available to the Public via the internet

    The Addenda for the annual ESRD PPS proposed and final rulemakings 
will no longer appear in the Federal Register. Instead, the Addenda 
will be available only through the internet and is posted on the CMS 
website at http://www.cms.gov/ESRDPayment/PAY/list.asp. In addition to 
the Addenda, limited data set files are available for purchase at 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/EndStageRenalDiseaseSystemFile.html. Readers who 
experience any problems accessing the Addenda or LDS files, should 
contact [email protected].

List of Subjects in 42 CFR Part 413

    Diseases, Health facilities, Medicare, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR chapter IV as follows:

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT 
RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY 
INJURY DIALYSIS

0
1. The authority citation for part 413 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), 
(i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww.

0
2. Section 413.232 is amended by--
0
a. Revising paragraphs (b) introductory text, (b)(1), (e), and (g) 
introductory text; and
0
b. Adding paragraphs (g)(4) and (h).
    The revisions and additions read as follows:


Sec.  413.232  Low-volume adjustment.

* * * * *
    (b) A low-volume facility is an ESRD facility that, as determined 
based on the documentation submitted pursuant to paragraph (g) of this 
section:
    (1) Furnished less than 4,000 treatments in each of the 3 cost 
reporting years (based on as-filed or final settled 12-consecutive 
month cost reports, whichever is most recent, except as specified in 
paragraph (g)(4) of this section) preceding the payment year; and
* * * * *
    (e) Except as provided in paragraph (f) of this section and unless 
extraordinary circumstances justify an exception, to receive the low-
volume adjustment an ESRD facility must provide an attestation 
statement, by November 1st of each year preceding the payment year, to 
its Medicare Administrative Contractor (MAC) that the facility meets 
all the criteria established in this section, except that:
    (1) For payment year 2012, the attestation must be provided by 
January 3, 2012;
    (2) For payment year 2015, the attestation must be provided by 
December 31, 2014;
    (3) For payment year 2016, the attestation must be provided by 
December 31, 2015; and
    (4) For payment year 2021, the attestation must be provided by 
December 31, 2020.
* * * * *
    (g) To receive the low-volume adjustment, an ESRD facility must 
include in their attestation provided pursuant to paragraph (e) of this 
section a statement that the ESRD facility meets the definition of a 
low-volume facility in paragraph (b) of this section. To determine 
eligibility for the low-volume adjustment, the MAC on behalf of CMS 
relies upon as filed or final settled 12-consecutive month cost 
reports, except as specified in paragraph (g)(4) of this section, for 
the 3 cost reporting years preceding the payment year to verify the 
number of treatments, except that:
* * * * *
    (4) For payment years 2021, 2022, and 2023, the attestation 
specified in paragraph (e)(4) of this section must indicate that the 
ESRD facility meets all the criteria specified in this section, except 
that, for a facility that would not otherwise meet the number of 
treatments criterion specified in paragraph (b)(1) of this section 
because of the COVID-19 PHE, the facility may attest that it furnished 
less than 2,000 treatments in any six months during the cost-reporting 
period ending in 2020. For any facility that so attests--
    (i) The facility must also attest that it furnished treatments 
equal to or in excess of 4,000 in the payment year due to temporary 
patient shifting as a result of the COVID-19 PHE; and
    (ii) The MAC relies on the attestation and multiplies the total 
number of treatments for the 6 months period by 2.
    (h) When an ESRD facility provides an attestation in accordance 
with paragraph (e) of this section, for the

[[Page 42207]]

third eligibility year, the MAC verifies the as-filed cost report and 
takes one of the following actions:
    (1) If the MAC determines an ESRD facility meets the definition of 
a low-volume facility as described in paragraph (b) of this section, 
CMS adjusts the low-volume facility's base rate for the entire payment 
year; or
    (2) If the MAC determines an ESRD facility does not meet the 
definition of a low-volume facility as described in paragraph (b) of 
this section, the MAC reprocesses claims and recoups low-volume 
adjustments paid during the payment year.
0
3. Section 413.234 is amended by adding paragraph (f) to read as 
follows:


Sec.  413.234   Drug designation process.

* * * * *
    (f) Methodology for modifying the ESRD PPS base rate to account for 
the costs of calcimimetics in the ESRD PPS bundled payment. Beginning 
January 1, 2021, payment for calcimimetics are included in the ESRD PPS 
base rate using the following data sources and methodology:
    (1) The methodology specified in paragraph (f)(2) of this section 
for determining the average per treatment payment amount for 
calcimimetics that is added to the ESRD PPS base rate uses the 
following data sources:
    (i) Total units of oral and injectable calcimimetics and total 
number of paid hemodialysis-equivalent dialysis treatments furnished, 
as derived from Medicare ESRD facility claims, that is, the 837-
institutional form with bill type 072X, for calendar years 2018 and 
2019.
    (ii) The weighted average ASP based on the most recent 
determinations by CMS.
    (2) CMS uses the following methodology to calculate the average per 
treatment payment amount for calcimimetics that is added to the ESRD 
PPS base rate:
    (i) Determines utilization of oral and injectable calcimimetics by 
aggregating the total units of oral and injectable calcimimetics in 
paragraph (f)(1) of this section.
    (ii) Determines a price for each form of the drug by calculating 
100 percent of the values from the most recent calendar quarter ASP 
calculations available to the public for the oral and injectable 
calcimimetic.
    (iii) Calculates the total calcimimetic expenditure amount by 
multiplying the utilization of the oral and injectable calcimimetics 
determined in paragraph (f)(2)(i) of this section by their respective 
prices determined in paragraph (f)(2)(ii) of this section and adding 
the expenditure amount for both forms.
    (iv) Calculates the average per treatment payment amount by 
dividing the total calcimimetic expenditure amount determined in 
paragraph (f)(2)(iii) of this section by the total number of paid 
hemodialysis-equivalent dialysis treatments in calendar years 2018 and 
2019.
    (v) Calculates the amount added to the ESRD PPS base rate by 
reducing the average per treatment payment amount determined in 
paragraph (f)(2)(iv) of this section by 1 percent to account for the 
outlier policy under Sec.  413.237.
0
4. Section 413.236 is amended by--
0
a. Revising paragraphs (a), (b) introductory text, (b)(2), (4) through 
(6), (c), (d) introductory text, and (d)(2); and
0
b. Adding paragraph (f).
    The revisions and addition read as follows:


Sec.  413.236  Transitional add-on payment adjustment for new and 
innovative equipment and supplies.

    (a) Basis and definitions. (1) Effective January 1, 2020, this 
section establishes an add-on payment adjustment to support ESRD 
facilities in the uptake of new and innovative renal dialysis equipment 
and supplies under the ESRD prospective payment system under the 
authority of section 1881(b)(14)(D)(iv) of the Social Security Act.
    (2) For purposes of this section, the following definitions apply:
    Capital-related asset. Asset that an ESRD facility has an economic 
interest in through ownership (regardless of the manner in which it was 
acquired) and is subject to depreciation. Equipment obtained by the 
ESRD facility through operating leases are not considered capital-
related assets.
    Depreciation. The amount that represents a portion of the capital-
related asset's cost and that is allocable to a period of operation.
    Home dialysis machines. Hemodialysis machines and peritoneal 
dialysis cyclers in their entirety, meaning that one new part of a 
machine does not make the entire capital-related asset new, that 
receive FDA marketing authorization for home use and when used in the 
home for a single patient.
    Particular calendar year. The year in which the payment adjustment 
specified in paragraph (d) of this section would take effect.
    Straight-line depreciation method. A method in accounting in which 
the annual allowance is determined by dividing the cost of the capital-
related asset by the years of useful life.
    Useful life. The estimated useful life of a capital-related asset 
is its expected useful life to the ESRD facility, not necessarily the 
inherent useful or physical life.
    (b) Eligibility criteria. CMS provides for a transitional add-on 
payment adjustment for new and innovative equipment and supplies (as 
specified in paragraph (d) of this section) to an ESRD facility for 
furnishing a covered equipment or supply only if the item:
* * * * *
    (2) Is new, meaning within 3 years beginning on the date of the 
Food and Drug Administration (FDA) marketing authorization;
* * * * *
    (4) Has a complete Healthcare Common Procedure Coding System 
(HCPCS) Level II code application submitted, in accordance with the 
HCPCS Level II coding procedures on the CMS website, by the HCPCS Level 
II code application deadline for biannual Coding Cycle 2 for durable 
medical equipment, orthotics, prosthetics and supplies (DMEPOS) and 
services as specified in the HCPCS Level II coding guidance on the CMS 
website prior to the particular calendar year;
    (5) Is innovative, meaning it meets the criteria specified in Sec.  
412.87(b)(1) of this chapter; and
    (6) Is not a capital-related asset, except for capital-related 
assets that are home dialysis machines.
    (c) Announcement of determinations and deadline for consideration 
of new renal dialysis equipment or supply applications. CMS will 
consider whether a new renal dialysis supply or equipment meets the 
eligibility criteria specified in paragraph (b) of this section and 
announce the results in the Federal Register as part of its annual 
updates and changes to the ESRD prospective payment system. CMS will 
only consider a complete application received by CMS by February 1 
prior to the particular calendar year. FDA marketing authorization for 
the equipment or supply must occur 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 prior to the particular calendar year.
    (d) Transitional add-on payment adjustment for new and innovative 
equipment and supplies. A new and innovative renal dialysis equipment 
or supply will be paid for using a transitional add-on payment 
adjustment for new and innovative equipment and supplies based on 65 
percent of the MAC-determined price, as specified in paragraph (e) of 
this section. For capital-related assets that are home dialysis

[[Page 42208]]

machines, payment is based on 65 percent of the pre-adjusted per 
treatment amount, as specified in paragraph (f)(1)(ii) of this section.
* * * * *
    (2) Following payment of the transitional add-on payment adjustment 
for new and innovative equipment and supplies, the ESRD PPS base rate 
will not be modified and the new and innovative renal dialysis 
equipment or supply will be an eligible outlier service as provided in 
Sec.  413.237, except a capital-related asset that is a home dialysis 
machine will not be an eligible outlier service as provided in Sec.  
413.237.
* * * * *
    (f) Pricing of new and innovative renal dialysis equipment and 
supplies that are capital-related assets that are home dialysis 
machines. (1) The MACs calculate a pre-adjusted per treatment amount, 
using the prices they establish under paragraph (e) of this section for 
a capital-related asset that is a home dialysis machine, as defined in 
paragraph (a)(2) of this section, as follows:
    (i) Calculate an annual allowance to determine the amount that 
represents the portion of the cost allocable to 1 year for use in 
calculating the pre-adjusted per treatment amount, using the straight-
line depreciation method, by dividing the MAC-determined price by its 
useful life of 5 years.
    (ii) Calculate a pre-adjusted per treatment amount to determine the 
amount that is adjusted by the 65 percent under paragraph (d) of this 
section, by dividing the annual allowance, as determined in paragraph 
(f)(1)(i) of this section, by the expected number of treatments.
    (2) [Reserved]
0
5. Section 413.237 is amended--
0
a. In paragraphs (a)(1)(i) through (iii) by removing the semicolon at 
the end of the sentence and adding a period in its place;
0
b. In paragraph (a)(1)(iv) by removing ``; and'' and adding a period in 
its place; and
0
c. By revising paragraph (a)(1)(v).
    The revision reads as follows:


Sec.  413.237  Outliers.

    (a) * * *
    (1) * * *
    (v) Renal dialysis equipment and supplies, except for capital-
related assets that are home dialysis machines (as defined in Sec.  
413.236(a)(2)), that receive the transitional add-on payment adjustment 
as specified in Sec.  413.236, after the payment period has ended.
* * * * *

    Dated: June 12, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: June 19, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-14671 Filed 7-6-20; 4:15 pm]
BILLING CODE 4120-01-P