[Federal Register Volume 85, Number 217 (Monday, November 9, 2020)]
[Rules and Regulations]
[Pages 71398-71487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24485]



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Vol. 85

Monday,

No. 217

November 9, 2020

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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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; 
Final Rule

  Federal Register / Vol. 85 , No. 217 / Monday, November 9, 2020 / 
Rules and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 413

[CMS-1732-F]
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), Health and 
Human Services (HHS).

ACTION: Final rule.

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

DATES: These regulations are effective on January 1, 2021.

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:

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. Summary of the Proposed Provisions, Public Comments, and 
Responses to Comments on the Calendar Year (CY) 2021 ESRD PPS
    C. 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. Summary of the Proposed Provisions, Public Comments, and 
Responses to Comments on the Annual Payment Rate Update for CY 2021
IV. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    A. Background
    B. Summary of the Proposed Provisions, Public Comments, 
Responses to Comments, and Finalized Policies for the ESRD QIP
    C. Updates to Requirements Beginning With the PY 2023 ESRD QIP
    D. Updates for the PY 2024 ESRD QIP
V. Collection of Information Requirements
    A. Legislative Requirement for Solicitation of Comments 
Requirements in Regulation Text
    C. Additional Information Collection Requirements
VI. Economic Analyses
    A. Regulatory Impact Analysis
    B. Detailed Economic Analysis
    C. Accounting Statement
    D. Regulatory Flexibility Act Analysis (RFA)
    E. Unfunded Mandates Reform Act Analysis (UMRA)
    F. Federalism
    G. Regulatory Reform Under Executive Order 13771
    H. Congressional Review Act
VII. Files Available to the Public via the Internet

I. Executive Summary

A. Purpose

    This final rule finalizes changes 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 
updates and makes 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 
updates the AKI payment rate for CY 2021.
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 final rule finalizes several 
updates for the payment year (PY) 2023. Although no new requirements 
were proposed for the PY 2024 ESRD QIP, this final rule includes 
policies continuing for PY 2024.

B. Summary of the Major Provisions

1. ESRD PPS
     Update to the ESRD PPS base rate for CY 2021: The final CY 
2021 ESRD PPS base rate is $253.13. This amount reflects the 
application of the wage index budget-neutrality adjustment factor 
(.999485), the addition to the base rate of $9.93 to include 
calcimimetics, and a productivity-adjusted market basket increase as 
required by section 1881(b)(14)(F)(i)(I) of the Act (1.6 percent), 
equaling $253.13 (($239.33 x .999485) + $9.93) x 1.016 = $253.13).
     Annual update to the wage index: 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 updating the wage index values based on the latest 
available data.

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     2018 Office of Management and Budget (OMB) delineations 
and 2-year transition policy: We are updating 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 finalizing the application of a 5 percent cap on 
any decrease in an ESRD facility's wage index from the ESRD facility's 
wage index from the prior CY. This transition will be phased in over 2 
years, such that the reduction in an ESRD facility's wage index will be 
capped at 5 percent in CY 2021, and no cap will be applied to the 
reduction in the wage index for the second year, CY 2022.
     Update to the outlier policy: We are updating the outlier 
policy using the most current data, as well as updating the outlier 
services fixed-dollar loss (FDL) amounts for adult and pediatric 
patients and Medicare allowable payment (MAP) amounts for adult and 
pediatric patients for CY 2021 using CY 2019 claims data. Based on the 
use of the latest available data, the final FDL amount for pediatric 
beneficiaries will increase from $41.04 to $44.78, and the MAP amount 
will decrease from $32.32 to $30.88, as compared to CY 2020 values. For 
adult beneficiaries, the final FDL amount will increase from $48.33 to 
$122.49, and the MAP amount will increase from $35.78 to $50.92. The 
1.0 percent target for outlier payments was not achieved in CY 2019. 
Outlier payments represented approximately 0.5 percent of total 
payments rather than 1.0 percent.
     Inclusion of calcimimetics in the ESRD PPS base rate: We 
are finalizing the methodology for modifying the ESRD PPS base rate to 
include calcimimetics in the ESRD PPS bundled payment. Using the final 
methodology based on the latest available data, we are adding $9.93 to 
the CY 2021 ESRD PPS base rate.
     Changes to the eligibility criteria for the transitional 
add-on payment adjustment for new and innovative equipment and supplies 
(TPNIES): For CY 2021, we are finalizing the proposed changes to the 
TPNIES eligibility criteria in light of the changes implemented in CY 
2020 to provide a biannual coding cycle 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 finalizing 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, a copy of the applicable 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 
finalizing the proposed definition of ``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 expanding eligibility for the TPNIES 
to include certain capital-related assets that are home dialysis 
machines when used in the home for a single patient. As with other 
renal dialysis equipment and supplies potentially eligible for the 
TPNIES, CMS will 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 42 CFR 413.236(b). We are finalizing the additional 
steps that the Medicare Administrative Contractors (MACs) must follow 
to establish the basis of payment of the TPNIES for these capital-
related assets that are home dialysis machines when used in the home, 
including an offset to the pre-adjusted per treatment amount to account 
for the cost of the home dialysis machine that is already in the ESRD 
PPS base rate. We will pay 65 percent of the MAC-determined pre-
adjusted per treatment amount reduced by an offset for 2-calendar 
years. We are finalizing that after the 2-year TPNIES period, the home 
dialysis machines will not become outlier services and that no change 
will be made to the ESRD PPS base rate.
     Low-Volume Payment Adjustment (LVPA): We are finalizing 
our proposal 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 
will only consider total dialysis treatments furnished for any 6 months 
of a facility's cost-reporting period ending in 2020; ESRD facilities 
will select those 6 months (consecutive or non-consecutive) during 
which treatments will be counted for purposes of the LVPA 
determination. We are finalizing that ESRD facilities will 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 
will annualize the total dialysis treatments for the total treatments 
reported in those 6 months by multiplying by 2. ESRD facilities will be 
expected to provide supporting documentation to the MACs upon request.
2. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
    We are updating the AKI payment rate for CY 2021. The final CY 2021 
payment rate is $253.13, which is the same as the base rate finalized 
under the ESRD PPS for CY 2021.
3. ESRD QIP
    We are finalizing our proposal 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. We are also finalizing our proposal to 
reduce the number of records that facilities selected for National 
Health Safety Network (NHSN) validation are required to submit. This 
final 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 final rule also announces final performance standards and payment 
reductions that will apply for PY 2023.
    This final rule describes several policies continuing for PY 2024, 
but does not include any new requirements beginning with the PY 2024 
ESRD QIP.

C. Summary of Costs and Benefits

    In section VI of this final rule, we set forth a detailed analysis 
of the impacts of the finalized changes for affected entities and 
beneficiaries. The impacts include the following:

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1. Impacts of the Final CY 2021 ESRD PPS
    The impact chart in section VI.B of this final 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 CY 2021 
changes is projected to be a 2.0 percent increase in payments. 
Hospital-based ESRD facilities have an estimated 0.2 percent decrease 
in payments compared with freestanding facilities with an estimated 2.0 
percent increase.
    We estimate that the aggregate ESRD PPS expenditures will increase 
by approximately $250 million in CY 2021 compared to CY 2020. This 
reflects a $210 million increase from the payment rate update, a $50 
million increase due to the updates to the outlier threshold amounts, 
and an $10 million decrease from the finalized 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 2.0 percent overall payment increase, we 
estimate there will be an increase in beneficiary co-insurance payments 
of 2.0 percent in CY 2021, which translates to approximately $60 
million.
    These figures do not reflect increases or decreases in expenditures 
based on expanding the TPNIES to include certain capital-related assets 
that are home dialysis machines when used in the home for a single 
patient. The fiscal impact of this 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 Final CY 2021 Payment for Renal Dialysis Services 
Furnished to Individuals With AKI
    The impact chart in section VI.B of this final 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 final CY 2021 
changes is projected to be a 5.7 percent increase in payments for 
individuals with AKI. Hospital-based ESRD facilities have an estimated 
5.8 percent increase in payments compared with freestanding ESRD 
facilities with an estimated 5.7 percent increase. The overall impact 
reflects the effects of the updated wage index, the finalized addition 
to the ESRD PPS base rate of $9.93 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 final CY 2021 
ESRD PPS base rate will increase by $4 million in CY 2021 compared to 
CY 2020.
3. Impacts of the Final ESRD QIP
    We estimate that the overall economic impact of the PY 2023 ESRD 
QIP would be approximately $224 million as a result of the policies we 
have previously finalized and the proposals we are finalizing in this 
final rule. The $224 million figure for PY 2023 includes costs 
associated with the collection of information requirements, which we 
estimate would be approximately $208 million, and $16 million in 
estimated payment reductions across all facilities. We note that the 
total overall economic impact and the collection of information 
requirements have been updated from the estimates in the proposed rule 
due to updated information about the total number of facilities 
participating in the ESRD QIP and the total number of patients. We also 
estimate that the overall economic impact of the PY 2024 ESRD QIP would 
be approximately $224 million as a result of the policies we have 
previously finalized. The $224 million figure for PY 2024 includes 
costs associated with the collection of information requirements, which 
we estimate would be approximately $208 million, and has been updated 
from the estimates in the proposed rule due to updated information 
about the total number of facilities participating in the ESRD QIP and 
the total number of patients.

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) 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.

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    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. Summary of the Proposed Provisions, Public Comments, and Responses 
to Comments on the Calendar Year (CY) 2021 ESRD PPS

    The proposed rule, titled ``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'' (85 FR 42132 through 42208), 
referred to as the ``CY 2021 ESRD PPS proposed rule,'' was published in 
the Federal Register on July 13, 2020, with a comment period that ended 
on September 4, 2020. In that proposed rule, we proposed to make a 
number of annual updates for CY 2021, including updates to the ESRD PPS 
base rate, wage index, and outlier policy. We also proposed to modify 
the ESRD PPS base rate to incorporate calcimimetics, revise the 
eligibility criteria for the TPNIES, and expand the TPNIES to include 
capital-related assets that are home dialysis machines when used in the 
home by a single patient. We also proposed revisions to the low-volume 
payment adjustment (LVPA) regulations in response to the Public Health 
Emergency (PHE) for the coronavirus disease 2019 (COVID-19) pandemic. 
We received 114 public comments on our proposals, including comments 
from: ESRD facilities; national renal groups, nephrologists and patient 
organizations; patients and care partners; manufacturers; health care 
systems; and nurses.
    We also received many comments related to issues that we either did 
not discuss in the proposed rule or that we discussed for the purpose 
of background or context, but for which we did not propose changes. 
These include, for example, refinements to modeling payment and 
accounting for new and innovative items and services under the ESRD 
PPS, incentives for home dialysis, reporting furnished services on the 
ESRD claim, network fee, and issues related to the COVID-19 pandemic. 
While we are not addressing those comments in this final rule because 
they are either out of scope of the proposed rule or concern topics for 
which we did not propose changes, we thank the commenters for their 
input and will consider the recommendations in future rulemaking.
    In this final rule, we provide a summary of each proposed 
provision, a summary of the public comments received and our responses 
to them, and the policies we are finalizing for the CY 2021 ESRD PPS.
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,

[[Page 71402]]

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 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) of the Act, 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 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 final 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

[[Page 71403]]

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 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, and 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

[[Page 71404]]

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 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. Methodology for Modifying the ESRD PPS Base Rate to Account for 
Calcimimetics in the ESRD PPS Bundled Payment
    As we discussed in the CY 2021 ESRD PPS proposed rule (85 FR 
42138), 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 explained that 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 in the base rate--we would 
utilize the TDAPA to collect utilization data before adding this drug 
to the ESRD PPS base rate. This would 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. 
The collection of this data for 2 or more years would allow us, with 
sufficient data, to incorporate these drugs into the ESRD PPS bundled 
payment through notice-and-comment rulemaking.
    As we stated in the proposed rule, 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 also monitored the ASP data for the calcimimetics 
coinciding with 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 and a steep decline 
in the utilization of brand-name oral calcimimetic. Weighting the ASP 
price data based on the utilization data resulted in an overall lower 
ASP because the generic calcimimetic drugs are less expensive than the 
brand calcimimetics. 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, as we stated in the CY 2021 ESRD PPS proposed rule (85 
FR 42138), we believed that we were at the step of the ESRD PPS drug 
designation process where we should propose to adopt the methodology 
for modifying the ESRD PPS base rate to account for calcimimetics in 
the ESRD PPS bundled payment, which we did in the CY 2021 ESRD PPS 
proposed rule. In this final rule, we are adding a per treatment amount 
to the ESRD PPS base rate to include the calcimimetics in the ESRD PPS 
bundled payment amount.
    In developing the 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.

[[Page 71405]]

    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 proposed a similar methodology to calculate a one-time 
modification to the ESRD PPS base rate on a per-treatment basis to 
account for calcimimetics. We stated that the 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 proposed to calculate a per-
treatment amount for calcimimetics that would be added to the ESRD PPS 
base rate. We proposed to 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 to 
provide the calcimimetic expenditure amount. We proposed to divide the 
calcimimetic expenditure amount by the total number of hemodialysis 
(HD)-equivalent dialysis treatments paid in CYs 2018 and 2019 under the 
ESRD PPS. We proposed to reduce this average per treatment amount by 1 
percent to account for the outlier policy, since calcimimetics would be 
ESRD outlier services eligible for outlier payments beginning January 
1, 2021. We proposed to add the resulting amount to the ESRD PPS base 
rate. We noted that this amount would be permanently included in the 
ESRD PPS base rate and be subject to the annual ESRD PPS payment 
updates (that is, the productivity-adjusted market basket increase and 
wage index budget neutrality adjustment factor). Under the proposal, 
CMS would stop paying for these drugs using the TDAPA for dates of 
service on or after January 1, 2021.
    In the CY 2021 ESRD PPS proposed rule (85 FR 42141), we proposed 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 proposed, 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 noted that the proposed methodology would only modify the ESRD 
PPS base rate for calcimimetic drugs. As stated in the CY 2016 ESRD PPS 
final rule (80 FR 69022), the TDAPA would be paid for a minimum of 2 
years, during which time we would collect and analyze utilization data. 
At the end of that time, the drug would be included within its new 
functional category and the base rate would potentially be modified to 
account for the cost of the drug, depending upon what the utilization 
data show. Accordingly, we explained, our policy is to propose and 
adopt this methodology when 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 considered utilization of calcimimetics as the units of 
the product furnished to an ESRD beneficiary.
    For the CY 2018 utilization data for calcimimetics, we proposed 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 proposed to 
use the latest available claims data based on the CY 2019 ESRD facility 
claims 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).
    In the CY 2021 ESRD PPS proposed rule (85 FR 42139), we stated that 
for the final rule, the latest available CY 2019 ESRD facility claims 
are those 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).
    We explained that while we have continued to pay the TDAPA for 
calcimimetics for dates of service in CY 2020, we did not propose 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 was unknown at that time. However, we noted that our 
policy to continue paying for calcimimetics using the TDAPA in CY 2020 
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 solicited 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). We stated that 
we believed 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 
also solicited 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
    We proposed to 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). As we explained in the CY 2021 
ESRD PPS proposed rule, 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

[[Page 71406]]

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.
    We noted that 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 proposed to 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 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).
    As stated in the CY 2021 ESRD PPS proposed rule, 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 provides 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 proposed 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 the CY 2021 ESRD PPS proposed rule, values from the most recent 
calendar quarter of ASP calculations available to the public was the 
second quarter of 2020,\1\ and as a result of the two-quarter data lag 
this reflects manufacturer sales data submitted into CMS for the fourth 
quarter of 2019. We stated that 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.
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    \1\ https://www.cms.gov/medicare/medicare-part-b-drug-average-sales-price/2020-asp-drug-pricing-files, April 2020 ASP Pricing 
File.
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    We proposed to 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 proposed to add Sec.  413.234(f) to specify 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 solicited 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 the proposed rule and section II.B.1.c.(1) of this final 
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 the CY 
2021 ESRD PPS proposed rule, we used the values from the most recent 
calendar quarter ASP + 0 calculations available to the public, which at 
the time of rulemaking was 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 noted 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 the CY 2021 ESRD PPS proposed rule, we calculated the 
total calcimimetic expenditure amount of $1,096,200,947. The total 
number of paid HD-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 HD-
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

[[Page 71407]]

for outlier payments under Sec.  413.237. As we discussed in the 
proposed rule and section II.B.1.c of this final 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 calcimimetics would become ESRD outlier 
services beginning January 1, 2021, 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 
stated that 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 proposed to 
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 the CY 2021 ESRD PPS proposed rule (85 
FR 42164), the proposed CY 2021 ESRD PPS base rate was $255.59. This 
amount reflected 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 stated 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 noted, that the inflation factor used for drugs and 
biological products for the ESRD bundled market basket is the Producer 
Price Index as discussed in the CY 2019 ESRD PPS final rule (83 FR 
56958 through 56959).
    Therefore, we proposed to add Sec.  413.234(f) to specify 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 HD-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.
    We stated in the CY 2021 ESRD PPS proposed rule that, 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 solicited 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 HD-equivalent 
dialysis treatments furnished during that same time period. However, we 
noted that 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 stated that 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 further stated that we believe that ESRD 
facilities would want to support CMS's goal of lower drug and 
biological products prices for its beneficiaries. In addition, we 
noted, this alternative methodology would have a more significant 
impact on beneficiary cost sharing in terms of a higher 20 percent co-
pay than the methodology in the proposed rule. We solicited 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 HD-equivalent dialysis 
treatments furnished during that same time period.
    The comments and our responses to the comments on our proposed 
methodology for including calcimimetics in the ESRD PPS base rate are 
set forth below.
    Comment: The majority of commenters recommended that CMS trim the 
analysis data set to exclude data that is not representative of steady 
utilization trends. The commenters were supportive of CMS collecting 2 
full years of data for rate-setting purposes, but disagreed with the 
methodology to incorporate the full data set into the analysis. 
Specifically, the commenters recommended CMS remove CY 2018 claims 
utilization from the analysis because it includes early utilization 
data from CY 2018, the first year that CMS began paying for 
calcimimetics under the ESRD PPS using the TDAPA. Commenters described 
various changes occurring with regard to calcimimetics, including 
changes in prescriber behavior, facility operational systems, and the 
use of oral and IV calcimimetic products. The commenters asserted that 
the following factors make utilization data from 2018 inaccurate 
because the data fails to account for: (1) Slow adoption of the 
intravenous form of calcimimetics due to the change in payment for the 
drugs under Part D to Part B; (2) the time it takes for ESRD facilities 
to adopt new treatment methods; and (3) a recent steady increase in 
clinical utilization.
    The commenters stated that the first quarter of 2018 is not an 
accurate depiction of utilization because many beneficiaries had a 
supply of oral calcimimetics that was paid under the Part D benefit 
from 2017, being used at the start of 2018, which reduced utilization 
under Part B. The commenters also stated that moving the payment from 
Medicare Part D to Part B disrupted business and billing practices for 
ESRD facilities. The commenters maintained that small and independent 
ESRD facilities had a difficult time incorporating calcimimetics into 
clinical practice compared to larger and hospital-based facilities. The 
commenters explained that ESRD facilities usually need a longer time to 
institute system modifications and adjust business practices when new 
treatment methods become available.
    The commenters stated that in the beginning of 2018 the new 
intravenous form of calcimimetics was approved for treatment, and 
clinical adoption has been gradual because it was a new form of 
treatment, which is evidenced by

[[Page 71408]]

very low utilization in the early part of CY 2018 followed by steady 
growth throughout the year, as shown in the Part B claims data. The 
commenters stated that, while use of the intravenous drug increased 
each quarter in 2018, the pace of that increase flattened out during CY 
2019.
    The commenters stated that due to these challenges and shifts in 
utilization, they believed that claims data from CY 2018 reflected 
lower units of calcimimetics being reported. A few commenters who 
disagreed with including CY 2018 claims in the analysis, suggested CMS 
trim the first and second quarter of 2018 utilization data from the 
data set; however, another subset of commenters recommended CMS remove 
the entire year of 2018 data and use CY 2019 data only, since their 
analysis shows that year of data to be stable. The majority of the 
commenters who disagreed with including the CY 2018 data recommended 
that CMS use the most recent 12 months for which complete claims data 
are available for rate-setting purposes. In addition, the commenters 
asserted that using the most recent utilization data would align with 
the proposed approach to use the most recent ASP.
    MedPAC supported increasing the ESRD PPS base rate to include the 
costs of calcimimetics in the ESRD PPS bundled payment. However, MedPAC 
recommended refinements to CMS's proposed methodology to use units 
reported on claims from both CYs 2018 and 2019 to determine utilization 
for calcimimetics. MedPAC recommended that CMS use only the single year 
of claims data that would result in the lowest add-on payment amount 
for these products. MedPAC stated that this approach would be 
consistent with the methodology used to establish the ESRD PPS base 
rate beginning January 1, 2011, as required under MIPPA, which provided 
that the estimated amount of total payments under the ESRD PPS for 2011 
must be made based on the lowest per patient utilization data from 
2007, 2008, or 2009. (Based on CMS's analysis in the CY 2011 ESRD PPS 
final rule, claims data from CY 2007 reflected the lowest utilization 
of ESRD services.) MedPAC noted the increase of utilization in ESAs 
prior to the CY 2011 ESRD PPS final rule and recommended that our 
methodology to include calcimimetics in the base rate be consistent 
with the lowest per patient utilization methodology. Therefore, MedPAC 
recommended that CMS use the year that would result in the lowest 
average payment amount per treatment for calcimimetics.
    Response: We appreciate the feedback on our proposal and the 
viewpoints expressed by the commenters. Based on the recommendations we 
received to use a single year or the most recent 12 months of claims 
data, we re-examined the most recently available data. First, an 
approach that uses the most recent 12 months of claims data would 
result in a base rate increase that is larger than when both 2018 and 
2019 data are used. Second, using the most recent 12 months of claims 
data would not sufficiently capture the developments with calcimimetics 
that took place at the end of 2018. For these reasons, we believe this 
is not the better approach.
    Next, using only 2019 claims data would diminish the impact of the 
entry of oral generic calcimimetics into the market in mid-2018. In 
examining the 2 full years of data, we see a continued increase in the 
utilization of the oral generic calcimimetic drugs, a steep decline in 
the brand-name oral calcimimetic, and a slow increase in the brand-name 
injectable version. Using only CY 2019 claims data would also result in 
a base rate increase that is larger than when both CYs 2018 and 2019 
data are used. We recognize the 2018 claims data may have demonstrated 
low uptake for the injectable calcimimetic, but it also may reflect 
that the significant upswings in utilization of the injectable 
calcimimetic in 2019 were from ESRD facilities anticipating CMS ending 
the TDAPA for calcimimetics beginning January 2020. As MedPAC noted, 
when the ESRD PPS was implemented in 2011, there had been a pattern of 
ESA overutilization before the ESRD PPS bundled payment was implemented 
and a decline in utilization of ESAs post-implementation of the ESRD 
PPS that required a rebasing of the amount included in the ESRD PPS 
bundled payment for ESAs. We believe it is appropriate to consider both 
the slow uptake of the injectable calcimimetic and the ramping up of 
utilization of generic oral calcimimetics, following the loss of the 
exclusivity of the brand name product in addition to the anticipation 
of the TDAPA ending in 2019. If we used only CY 2019 data, we believe 
that we would be overestimating the use of calcimimetics in the ESRD 
PPS bundled payment. For these reasons, we also believe using only 2019 
claims data for rate setting is not the better approach.
    Lastly, we examined an approach that would take into account some 
commenters' request for the lowest add-on payment amount, other 
commenters' request to focus on more recent data, and CMS's goal to use 
a robust data set that accounts for the different types of medication 
and innovation. For this approach, we examined 18 months of claims data 
starting with the third quarter of 2018 through the fourth quarter of 
2019. In reviewing the 18 months of data, we continue to capture the 
increase in the utilization of the oral generic calcimimetic drugs and 
the decline in the brand-name oral calcimimetic, which, as we noted 
above, was apparent to us when we examined the full 2 years of data. 
Using the 18 months of data from the third quarter of 2018 through the 
fourth quarter of 2019 would result in a base rate increase that is 
larger than when both CYs 2018 and 2019 data are used, but smaller than 
when only CY 2019 is used. We believe the data set should reflect both 
the slow uptake of the injectable calcimimetic and the ramping up of 
utilization of generic oral calcimimetics. We also believe that the 
commenters are reasonable in wanting to incorporate more recent data in 
the utilization, and view the use of 18 months of data as a mid-point 
between the proposal and what commenters suggested is appropriate. 
Accordingly, we have concluded that using 18 months of claims data is 
the most appropriate approach. We also agree with commenters that there 
have been shifts in the utilization of calcimimetics. We believe that 
the shifts in utilization reveal a rapidly changing market. We plan to 
revisit the calcimimetic Medicare expenditures in the future, such as 
when a generic injectable comes on the market.
    We believe using 18 months of claims data provides us with the most 
accurate data set reflecting paid claims for generic and brand-name 
oral calcimimetic, along with the injectable calcimimetic. Therefore, 
for this final rule, we used adjudicated claims from the third quarter 
of 2018 through the fourth quarter of 2019 in the final calculation of 
the modification to the base rate. For the CY 2018 utilization data for 
calcimimetics, we used the latest available claims data based on the 
third and fourth quarters of CY 2018 ESRD facility claims, updated 
through June 30, 2019 (that is, claims with dates of service from July 
1 through December 31, 2018, that were received, processed, paid, and 
passed to the NCH file as of June 30, 2019). For CY 2019 utilization 
data, we used the latest available CY 2019 ESRD facility claims, 
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).
    Comment: MedPAC recommended that we set the price for calcimimetics

[[Page 71409]]

using values from the calendar quarter of ASP data that would result in 
the lowest total expenditures for these drugs, at ASP+0. MedPAC also 
stated that using the most recent calendar quarter of 2020 ASP data 
would best reflect the increasing use of oral generic calcimimetics, 
which entered the market in late December 2018, and how ESRD facilities 
are likely to purchase and furnish the oral calcimimetics in the 
future. MedPAC recommended this methodology because it is consistent 
with how CMS bases the price for calcimimetics under current 
regulations. MedPAC strongly supported pricing for calcimimetics under 
the proposed methodology at ASP+0.
    The majority of the commenters recommended that CMS calculate the 
price using the most recent quarter ASP data available at ASP+6 because 
they believed this would more accurately reflect the cost ESRD 
facilities incur when purchasing and administering these drugs. 
Commenters stated that most small and independent providers experience 
less favorable acquisition costs for calcimimetics than other provider 
types, with costs that exceed 100 percent of ASP. The commenters stated 
that CMS's methodology should account for actual acquisition costs 
incurred by providers, especially small and independent providers with 
limited resources, and for these reasons, recommended that the 
methodology be refined to add the price for calcimimetics at ASP+6 
rather than ASP+0.
    Response: We appreciate the feedback we received from the 
commenters with regard to our proposal to base pricing for 
calcimimetics at ASP+0. We agree with MedPAC that ASP+0 is appropriate 
as the basis for calcimimetics. Although some commenters suggested that 
the base pricing for calcimimetics should be ASP + 6, we believe this 
would be a duplicative payment because the 6 percent accounts for 
storage and administration of drugs and drug products, along with 
routine administrative costs, and these costs are already included in 
the ESRD PPS base rate. We understand the concerns expressed by the 
commenters about ASP, and the difficulties that small ESRD facilities 
may encounter if they are unable to negotiate the lower drug prices 
attributed to volume, and inaccessibility to supply chain discounts; 
however, we do not think this overrides the concern about providing 
duplicative payment. As we discussed in the CY 2019 ESRD PPS final rule 
(83 FR 56945), the intent of the TDAPA is to support ESRD facilities in 
the uptake of the drugs and biological products that are eligible for 
the add-on payment adjustment. In addition to the reasons discussed 
previously, and since our payment policy for the TDAPA is based on 
ASP+0, we believe basing the price for calcimimetics in the ESRD PPS 
base rate on ASP+0 is appropriate and consistent with our policy; 
therefore we are finalizing as proposed.
    Comment: A few commenters recommended CMS create a methodology for 
a beneficiary-targeted add-on payment to the ESRD PPS base rate. The 
commenters recommended a targeted adjustment for the oral calcimimetic 
and a separate adjustment for the intravenous calcimimetic, given that 
only a subset of beneficiaries receive calcimimetics and the costs of 
calcimimetics would be targeted to only beneficiaries receiving the 
drug. MedPAC agreed with our proposal to spread the cost of 
calcimimetics across all dialysis treatments, rather than just for the 
treatments of beneficiaries receiving the drugs.
    Response: The ESRD PPS is a payment system based on the ``average 
patient,'' which means it is based on the costs of the average patient. 
Currently, payment under the ESRD PPS is not targeted towards patients 
who utilize specific drugs, items, or services. Our proposed 
methodology would result in a flat increase to the base rate for all 
treatments and would not vary when facilities use more or less than the 
average amount. We believe the proposed methodology aligns with how 
other services are paid under the bundled payment system and reflects 
the average cost for furnishing renal dialysis services to patients. 
Therefore, we are finalizing this aspect of our proposal as proposed.
    Comment: A few commenters disagreed with the proposed methodology 
to reduce the average per-treatment payment amount by 1 percent. The 
commenters stated that it would be harder for ESRD facilities to meet 
the eligibility requirements for outlier payments in CY 2021 and 
beyond.
    Response: Beginning January 1, 2021, calcimimetics are eligible for 
outlier payments. In the CY 2011 ESRD PPS final rule, we applied a 1 
percent reduction to the unadjusted ESRD PPS base rate to account for 
outlier payments. An ESRD facility that treats beneficiaries with 
unusually high resource requirements, as measured by their use of 
identified services beyond a specified threshold, is entitled to 
outlier payments. In order for the application of the 1 percent outlier 
to be maintained, we believe 1 percent must be excluded from the 
addition to the ESRD PPS base rate for calcimimetics. We continue to 
believe that a 1 percent outlier payment adjustment balances the need 
to pay for unusually costly resource-intensive cases, while also 
ensuring an adequate add-on to the base rate for beneficiaries who do 
not qualify for outlier payments. Therefore, we are finalizing this 
aspect of our proposal as proposed.
    Comment: Some commenters stated that CMS should not use the 
alternative method discussed in the CY 2021 ESRD PPS proposed rule, 
under which total calcimimetic expenditures would be divided by the 
total number of HD-equivalent dialysis treatments in 2018 and 2019. The 
commenters stated that the alternative method expenditures for 
calcimimetics is based upon the previous policy of paying ASP+6 percent 
and does not reflect ASP+0. The commenters stated that the alternative 
method would likely result in a much higher increase to the base rate, 
which in turn would result in higher cost-sharing for beneficiaries. 
The commenters agreed that the alternative method does not factor in 
the impact of the oral generic calcimimetics, whereas the proposed 
methodology incorporates the recent pricing of oral generic 
calcimimetics into the weighting.
    Response: We agree with the commenters' assessment of the 
alternative methodology, that it does not factor in the impact of oral 
generic calcimimetics and does not reflect ASP+0, and we are not 
adopting it in this final rule. We continue to believe that 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. Further, including the higher payment for oral calcimimetics 
that have lower priced generic equivalents is not in keeping with the 
agency's overall goals of lowering drug prices.
    Comment: We received several comments that were beyond the scope of 
the proposed rule. Some commenters stated that CMS should apply the 3-
year data collection policy to all TDAPA-eligible therapies in the 
future because it is critical for CMS to have 2-full calendar years of 
claims data (which requires 3 years of payment of the TDAPA to address 
data lags) to enable an appropriate understanding of actual product 
utilization in clinical care.
    Response: Currently, the TDAPA payment is applicable for a minimum 
period of 2 years. For new drugs and biological products that are 
eligible for the TDAPA in the future and are not considered included in 
the ESRD PPS

[[Page 71410]]

base rate, CMS will continue to require that the TDAPA is paid until 
sufficient claims data for rate setting analysis is available, as 
required by the regulations. When a new renal dialysis drug or 
biological product is already included in a functional category, then 
the purpose of the TDAPA is to facilitate uptake of the new product 
into the business process of the ESRD facility. Although we would 
collect the data for purposes of analyzing utilization, we would not 
collect it for purposes of a potential modification to the base rate. 
Therefore we would not need 3 years of data for those drugs.
    Comment: Some commenters stated concerns with the payment increase 
to the patient's out-of-pocket cost due to the proposed increase to the 
ESRD PPS bundled payment for calcimimetics, and recommended CMS keep 
the financial burden to the beneficiary population in consideration.
    Response: We understand that beneficiary coinsurance is a concern. 
When evaluating the methodology for modifying the ESRD PPS base rate 
for calcimimetics, we were cognizant of the burden of beneficiary co-
insurance and worked to strike a balance with beneficiary need for 
access at a reasonable price, and supporting a new therapy for a 
significant portion of the dialysis population. We believe the final 
policy for the inclusion of dollars in the base rate strikes the 
balance we are seeking.
    Final Rule Action: After consideration of the comments we received, 
we are finalizing Sec.  413.234 to add paragraph (f), which establishes 
the methodology for modifying the ESRD PPS base rate to account for 
calcimimetics in the ESRD PPS bundled payment, as proposed, with one 
modification. We are using claims data from the third quarter of CY 
2018 through the fourth quarter of CY 2019, instead of CYs 2018 and 
2019 claims data, to determine the utilization of calcimimetics for 
purposes of our methodology.
    Specifically, to calculate the final amount for calcimimetics to be 
added to the ESRD PPS base rate beginning January 1, 2021, we applied 
the values from the most recent calendar quarter 2020 ASP + 0 
calculations available to the public for calcimimetics to the 
utilization period of third quarter of 2018 through the fourth quarter 
of 2019 to calculate the calcimimetic expenditure amount for 18 months.
    We determined that 1,350,414,515 total units (mg) of oral 
calcimimetics were used from Q3 2018 through Q4 2019. With regard to 
injectable calcimimetics, we determined that 280,998,916 total units 
(0.1 mg) were used from Q3 2018 through Q4 2019. We used the values 
from the most recent calendar quarter ASP + 0 calculations available to 
the public, which is the fourth quarter of 2020. We used $0.085 per mg 
for the oral calcimimetic and $2.023 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. 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 results in the total 18-months (Q3 2018 through Q4 2019) 
calculated calcimimetic expenditure amount. That is, for this final 
rule, we calculated the total calcimimetic expenditure amount to be 
$683,246,041.
    The total number of paid HD-equivalent dialysis treatments 
furnished to Medicare ESRD beneficiaries from the third quarter of CY 
2018 through the fourth quarter of CY 2019 was 68,148,651. 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 HD-
equivalent dialysis treatments provides an average per treatment 
payment amount of $10.03. We then reduced this amount by 1 percent to 
account for the outlier policy under Sec.  413.237 to get a total of 
$9.93 ($10.03 x .99 = $9.93). Due to the effect of generic 
calcimimetics in lowering the drug prices for calcimimetics, $9.93 is 
the final amount added to the CY 2021 ESRD PPS base rate to account for 
calcimimetics in the ESRD PPS bundled payment.
2. 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.
    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.
    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

[[Page 71411]]

     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 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.
    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.
    The medical condition diagnosed or treated by the new renal 
dialysis equipment or supply may have a low prevalence among Medicare 
beneficiaries.
    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. As we discuss in the CY 2020 ESRD PPS final rule (84 
FR 60682), 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 were discussed in section 
II.C.2 of the CY 2021 ESRD PPS proposed rule as well as section II.C.2 
of this final 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. 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. As 
we stated in the CY 2021 ESRD PPS proposed rule, 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

[[Page 71412]]

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, in the CY 2020 ESRD 
PPS final rule, we finalized the proposed definition of new to mean the 
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 in the CY 2020 ESRD PPS final rule 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.
    As we stated in the CY 2021 ESRD PPS proposed rule (85 FR 42142 
through 42143), 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 
noted that, under the 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 proposed 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 proposed 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 to 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 noted that 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 proposed 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 
proposed other revisions to this paragraph, which are discussed in 
section II.B.3.b.(1) of this final rule.
    We sought 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, we stated that we understood 
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 PHE, such as the current COVID-19 
pandemic. Therefore, we also sought 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 
durable medical equipment, prosthetics, orthotics, and supplies 
(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, HCPCS Level II Coding Procedures 
\3\, and 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.

[[Page 71413]]

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 have submitted 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 stated in the CY 2021 ESRD PPS proposed rule 
that we reassessed the TPNIES eligibility criterion in Sec.  
413.236(b)(4), which is related to submission of the HCPCS Level II 
code application as well as Sec.  413.236(c), which discusses the 
deadlines for consideration of new renal dialysis equipment or supply 
applications and 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 proposed to align the TPNIES 
regulation at Sec.  413.236(b)(4) and (c) with these guidelines. We 
stated in the CY 2021 ESRD PPS proposed rule (85 FR 42144) that we 
believe this alignment would provide consistency across CMS processes 
and transparency on deadlines for applicants for the TPNIES. We further 
stated that 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 also proposed 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. As we explained in the 
CY 2021 ESRD PPS proposed rule (85 FR 42144), 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 proposed to revise 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. We explained in the CY 2021 ESRD PPS proposed rule that 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 noted 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 proposed to use a miscellaneous 
HCPCS code to provide the TPNIES payment. We stated that 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 proposed 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 proposed 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 proposed 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 the 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 final 
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 the CY 2021 ESRD PPS proposed rule and this final 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 adopted 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 proposed 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).
    The comments and our responses to the comments on our proposed 
changes

[[Page 71414]]

to the eligibility criteria for the TPNIES are set forth below.
    Comment: Several national associations of dialysis stakeholders, 
including organizations representing large dialysis organizations (LDO) 
and non-profit facilities, expressed support for the proposal to change 
the current definition of ``new'' to give entities wishing to apply for 
the TPNIES 3 years beginning on the date of FDA marketing authorization 
in which to submit their applications. An LDO requested that CMS 
monitor this window to ensure that 3 years is sufficient to allow 
manufacturers time to gather high-quality evidence of SCI for their 
technologies. However, a software company that developed a renal 
product that has demonstrated SCI, but was approved by the FDA almost 7 
years ago, commented that 3 years is not long enough for its product to 
qualify for TPNIES consideration. The software company asked CMS to 
consider a longer period of eligibility for the TPNIES primarily 
because the dialysis industry is slow to uptake innovations. The 
company suggested that CMS could extend the window selectively if the 
applicant can show that an innovative technology has no other FDA-
authorized counterpart with similar technology. The software company 
asserted that by lengthening the period of eligibility for the TPNIES 
program, with added criteria to maintain a high level of selectivity, 
CMS would allow that company and other worthy innovators to receive the 
TPNIES. The company asked that CMS consider making changes to the 
eligibility criteria for TPNIES that will open up the potential for 
providers to receive reimbursement for the use of technologies that can 
still be proven to be innovative and demonstrate SCI even though their 
FDA authorization is beyond the 3-year period.
    Response: We appreciate the commenters' support for the proposal 
and want to point out that TPNIES applicants may submit an application 
while the equipment or supply is pending marketing authorization by the 
FDA, however, FDA marketing authorization must be submitted with the 
HCPCS application. We believe that 3 years is sufficient time for 
manufacturers to gather high-quality evidence of SCI for their product 
and establish their manufacturing, marketing, and distribution 
strategies. This is consistent with the period of time during which 
qualifying items and services under the Hospital Inpatient Prospective 
Payment System NTAP are considered new. We intend to monitor the 
process to ensure we provide the TPNIES to new and innovative renal 
dialysis equipment and supplies.
    Regarding the suggestion that CMS extend the window of TPNIES 
eligibility if the applicant can show an innovative technology has no 
other FDA-authorized counterpart with similar technology, we thank the 
commenter for this input. We did not propose this policy in the CY 2021 
ESRD PPS proposed rule, but will take this into consideration for 
future rulemaking.
    Comment: Several national associations of dialysis stakeholders, 
including organizations representing LDOs and non-profit facilities, 
expressed support for the proposal to align the TPNIES with the new 
biannual Coding Cycle 2 application deadline as specified in the HCPCS 
Level II coding guidance on the CMS website. One commenter pointed out 
the alignment of the TPNIES and HCPCS processes can promote developer 
and manufacturer confidence by enabling them to better navigate 
multiple processes, specifically, marketing authorization at the FDA 
and HCPCS coding at CMS, both critical to bringing a product to market.
    Response: We appreciate the support for the proposal.
    Comment: We did not receive comments on the proposed technical 
change to Sec.  413.236(b)(5) to remove ``and related guidance'' to 
reflect that all related SCI guidance has been incorporated into Sec.  
412.87(b)(1). However, several commenters expressed their views about 
the SCI criteria. While most commenters expressed support for the use 
of the SCI criteria to target the increase in Medicare payments and 
beneficiary coinsurance to clinically meaningful and innovative items, 
others stated that the criteria are overly restrictive. One commenter 
stated that some of the SCI criteria do not seem relevant to home 
dialysis machines and suggested that the user-friendly nature of these 
devices should be considered in the SCI criteria. Several commenters 
requested that CMS establish a two-way process for the review of 
evidence for TPNIES applicants that allows for rapid patient access to 
new and innovative products and that CMS provide reasonable and clear 
parameters in discussions with applicants on the types of evidence and 
studies technical expert panel reviewers want to see.
    Several organizations recommended that the TPNIES process follow 
the NTAP program and exempt home dialysis devices classified as 
``breakthrough'' by the FDA from the SCI requirement for the two-year 
TPNIES period. One association asserted that requiring these devices to 
navigate approval processes in both the FDA and CMS creates another 
disincentive to parties entering the kidney care arena.
    Another commenter stated that evaluation of home dialysis machines 
is not the same as evaluation of medications by the FDA where the 
evidence of efficacy and safety can be readily attributed to medication 
exposure. The commenter noted that, in evaluating home dialysis 
machines, clinical outcomes cannot be so readily attributed to the 
machine itself because the effect of a home dialysis prescription is a 
complex function of three factors: The technical specifications of the 
machine; the dialysis prescription; and how patients and care partners 
interact with the machine. The commenter disagreed with an exclusive 
focus on clinical outcomes in evaluating TPNIES applications and 
suggested an approach that involves evaluation of whether the home 
dialysis machine improves access to home dialysis, the length of home 
dialysis, and clinical outcomes.
    Response: We note that the SCI criteria were put into regulation 
with the establishment of the TPNIES in the CY 2020 ESRD PPS final 
rule. We did not propose changes to Sec.  413.236(b)(5) beyond the 
technical change described previously or to the SCI criteria in Sec.  
412.87(b)(1). We note that, as we stated in the CY 2020 ESRD PPS final 
rule (84 FR 60691), since renal dialysis services are routinely 
furnished to hospital inpatients and outpatients, we believe the same 
SCI criteria should be used to assess whether a new renal dialysis 
equipment or supply warrants additional payment under the ESRD PPS. 
However, we appreciate the information provided by the commenters and 
will take the comments regarding SCI criteria for the TPNIES into 
consideration in future rulemaking.
    Final Rule Action: After consideration of the comments we received, 
we are finalizing the changes to Sec.  413.236(b) introductory text, 
(b)(2) through (5), and (c), as proposed, with the following 
modification. As we stated previously, we proposed to revise Sec.  
413.236(b)(4) 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.'' However, we inadvertently omitted the word ``items'' from 
the proposed regulation text. In this final rule, we are adding the 
word ``items'' to Sec.  413.236(b)(4) consistent with our proposal.

[[Page 71415]]

3. 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 devices that have received FDA 
marketing authorization. They commented on the lack of new devices that 
have received FDA marketing authorization for use in an ESRD facility, 
highlighting the need to promote dialysis device innovation.
    Other commenters, including a professional association and a 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 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 excluded from eligibility 
capital-related assets, which are defined in the Provider Reimbursement 
Manual (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. 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-

[[Page 71416]]

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 ETC Model, which CMS finalized in a final 
rule published in the Federal Register on September 29, 2020 (85 FR 
61114), is 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, as we noted in the CY 2021 ESRD PPS proposed rule, ESRD 
patients who receive in-center dialysis are particularly vulnerable 
during a PHE and other disasters, and greater use of home dialysis 
modalities may expose these patients to less risk. The U.S. is 
responding to an outbreak of respiratory disease caused by a novel 
(new) coronavirus that was first detected in China and which has now 
been detected in more than 215 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.
    As we discussed in the CY 2021 ESRD PPS proposed rule, 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.
    We also noted that 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) 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 stated in the CY 2021 
ESRD PPS proposed rule that we agree that additional payment through 
the TPNIES for certain capital-related assets may be warranted under 
specific circumstances outlined in the proposed rule. We noted 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 CY 2020 
ESRD PPS 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 
(PD) 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.
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    \5\ https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176167901010&acceptedDisclaimer=true.
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    Further, we noted 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 the 
CY 2021 ESRD PPS proposed rule, we did not propose to include capital-
related assets with multi-patient usage as being eligible for the 
TPNIES because we aimed to support 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 sought comments on this aspect of our 
proposal, and stated our intention to gather additional information 
about how ESRD facilities obtain their capital-related assets that have 
multi-patient usage in future meetings with the TEP.
    We stated in the CY 2021 ESRD PPS proposed rule that 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

[[Page 71417]]

TPNIES eligibility. We noted that we continued to analyze other 
business arrangements, but we understood 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 stated we would not pay the TPNIES 
for equipment that is leased, as the ESRD facility has no ownership 
rights. We stated that 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 proposed 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 the CY 2021 
ESRD PPS proposed rule and this section of this final 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 HD and 
PD 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 proposed further revisions to Sec.  
413.236, in addition to the revisions finalized earlier in section 
II.B.2 of this final rule.
    Specifically, we proposed to revise the heading at Sec.  413.236(a) 
and add paragraphs (a)(1) and (2) to distinguish this paragraph as both 
the ``basis and definitions.'' We proposed 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 was 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 proposed 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 our proposal was focused on supporting 
efforts to increase home dialysis.
    We proposed 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 proposed 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 final rule.
    We proposed 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 Sec.  413.236(b). We also proposed 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 proposed a separate definition for 
``capital-related asset'' at Sec.  413.236(a)(2).
    Under the proposal, we continued 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 stated that we 
continue to believe 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 did not propose 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 did not propose to provide the TPNIES for home dialysis 
machines when they are used in SNFs and nursing facilities that are 
used by multiple patients each day.
    We stated in the CY 2021 ESRD PPS proposed rule that 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 noted that we want to ensure we do not pay the TPNIES for 
new home dialysis machines that are substantially similar to existing 
machines and not truly innovative.
    We proposed to utilize the determination process we established in 
the CY 2020 ESRD PPS final rule for the TPNIES and those requirements 
we proposed to revise in section II.B.2 of the CY 2021 ESRD PPS 
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,

[[Page 71418]]

peer reviewed journal articles, study results, meta-analyses, 
systematic literature reviews, and any other appropriate information 
sources can be considered. We noted, 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.
    We stated that, 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 this 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 noted, 
applicants are expected to submit information on the price of their 
home dialysis machine as part of the TPNIES application. While we 
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.
    In accordance with Sec.  413.236(c), the CMS TPNIES final 
determinations for CY 2021 are presented in section II.C of this final 
rule.
    The comments and our responses to the comments on our proposed 
expansion of the TPNIES to include certain home dialysis machines are 
set forth below.
    Comment: Most commenters generally supported expanding the 
eligibility for TPNIES to include capital-related assets that are home 
dialysis machines and provided suggestions on ways to improve the 
proposal. However, MedPAC and LDOs did not support the proposal. MedPAC 
and other commenters stated that, instead of paying the TPNIES for new 
home dialysis machines, CMS should address the clinical and nonclinical 
factors known to affect home dialysis use. They stated that CMS's 
proposal to expand the TPNIES as proposed would undermine the integrity 
of the ESRD PPS bundled payment and limit the competitive forces that 
generate price reductions. They stated that if CMS proceeds with the 
proposal, eligible equipment should be innovative and payment should 
not be duplicative. They urged CMS to take more time and engage the 
industry to develop a comprehensive policy and indicated there were 
more meaningful ways to support the Executive order. One LDO commented 
that access to home dialysis machines is not currently a roadblock to 
home therapy, and proposed add-on payments to purchase home machines 
will not address any of the real barriers to home dialysis or further 
the goals of the Executive order. Another LDO expressed concerns about 
the proposed exclusion of dialysis machines used in-center and urged 
CMS to expand the capital-related assets policy before it is finalized.
    However, several device manufacturers and a home dialysis patient 
organization urged CMS to not make patients wait over a year to have 
access to the newest innovative home dialysis machines. Instead, they 
proposed that CMS, in the final rule, allow a new application 
submission period to consider applicants under the capital-related home 
dialysis machines pathway for eligibility for payment beginning April 
1, 2021, and provide for a 30-day comment period. They believe 
proceeding in such a way would satisfy the Administrative Procedure Act 
requirements for notice and comment and put CMS on a faster pathway to 
success in meeting the rapidly growing demand from patients for home 
dialysis, given the COVID-19 pandemic, by providing them with new 
options to perform treatments safely and easily in their homes. The 
patient organization noted that patients need choices and, currently, 
if a patient fails to thrive on a home dialysis machine, often the 
patient has no choice but to return to in-center dialysis. The patient 
organization stated that new home dialysis machines in the pipeline 
will be critical to achieving the Executive order goal of moving 
dialysis patients home. Another commenter urged CMS to act boldly and 
without delay.
    Response: In order to support the goals of the Executive order, we 
believe that providing the TPNIES for new and innovative home dialysis 
machines is a good start because it will increase home dialysis by 
leading to technological change in those machines, which will make a 
difference in patient-related outcomes and long-term adherence to home 
dialysis. For example, beneficiary feedback reveals that one of the 
most significant drawbacks to home dialysis is fear of self-
cannulation; despite training, this remains a significant drawback. A 
new and innovative home dialysis machine that is able to cannulate the 
dialysis recipient would substantially improve the treatment of ESRD 
beneficiaries and be a huge advancement toward increasing home 
dialysis.
    With regard to the suggestion that we issue the final rule with a 
comment period in order to accept new applications for capital-related 
home dialysis machines for payment eligibility beginning April 1, 2021, 
we note that our process of evaluating substantial clinical improvement 
is lengthy. An IFC published in November 2020, and accepting 
applications for capital-related assets that are home dialysis machines 
used in the home by February 1, 2021, with a payment eligibility date 
of April 1, 2021 would not provide adequate time for review of SCI. We 
note that a commenter indicated there at least 3 home dialysis machines 
currently under development. Providing eligibility for home dialysis 
machines earlier than our proposed effective date would give an unfair 
advantage to the current applicant that has already received FDA 
marketing authorization for home use. Had the other companies known 
about an earlier effective date, they may have altered their testing 
protocols and marketing plans. We thank MedPAC and the LDOs for their 
comments and share their concern about maintaining the integrity of the 
ESRD PPS bundled payment. We have tried to strike a balance between 
supporting the uptake of new and

[[Page 71419]]

innovative home dialysis machines that demonstrate substantial clinical 
improvement, while maintaining the integrity of the ESRD PPS bundled 
payment. As discussed later in this section, as part of our final 
methodology, we are offsetting the TPNIES payment for home dialysis 
machines used in the home by $9.32, the amount currently included in 
the base rate for the dialysis machine. Regarding the expansion of 
capital-related assets to include in-center dialysis machines, at this 
time we are striving to support the Executive order for payment 
incentives for greater use of home dialysis.
    Comment: Several commenters, including both LDOs and small dialysis 
organizations, asked CMS to affirm in the final rule that the TPNIES 
will attach to the device and not to the initial patient utilizing the 
device. They acknowledged that CMS seeks to develop a policy for home 
dialysis machines that are used by a single patient, however, they 
pointed out that it is the current standard of care and practice that 
such home dialysis machines are repurposed during their lifetimes to 
serve successive patients who have the exclusive use of the machine 
while it is in the patient's custody. They asked CMS to affirm in the 
final rule that a facility may continue to claim the TPNIES for that 
specific device until the facility reaches the maximum allowable TPNIES 
amount pursuant to the adopted methodology.
    The organization of LDOs also recommended that CMS modify the 
policy to ensure that ESRD facilities are held harmless for missed 
treatments. The commenter stated that the proposed methodology ties 
TPNIES to the per-treatment claim for a patient. If a patient misses a 
treatment, whether due to personal choice, hospitalization, travel, or 
otherwise, the facility will lose a portion of the TPNIES payment. They 
suggested that CMS consider an alternate methodology that would allow 
providers to continue to claim these TPNIES payments for missed 
treatments. For example, they suggested that CMS could allow each 
facility to continue to claim the TPNIES payment on an ongoing basis 
until the facility reaches the maximum allowable TPNIES amount pursuant 
to the adopted methodology.
    Response: The TPNIES is paid based on the HCPCS code and as such is 
attached to the device, when the HCPCS code is billed. In addition, we 
are aware that patients may, for various reasons, no longer require the 
home dialysis machine, or may become unable to do home dialysis, and 
that, when a patient no longer uses the home dialysis machine, the 
machine may be refurbished and given to another home patient. With 
regard to the suggestion that facilities bill Medicare for the machine 
even though it wasn't used because the treatment was not furnished, it 
is not appropriate for payment purposes since payment is only made for 
services furnished and when the device is used. Such an approach would 
not comport with the False Claims Act. We note that the calculated 
TPNIES amount based on the invoice, is not a guarantee for a maximum 
allowable reimbursement. Payment is tied to the dialysis treatment 
provided. If the machine is purchased and not used in a treatment, the 
TPNIES is not paid. The TPNIES is a payment adjustment to the ESRD PPS 
base rate and is dependent on the ESRD facility providing the dialysis 
treatment.
    Comment: One commenter stated that although the phrase ``in the 
home for a single patient'' is clear, the phrase causes confusion about 
whether CMS is encouraging on-site dialysis in a SNF. The commenter 
noted that in the ESRD Treatment Choices payment model proposal, CMS 
included condition code 80 (home dialysis furnished in a SNF or nursing 
facility) in its definition of home dialysis, suggesting that CMS 
recognizes that dialysis in a SNF ought to be classified as home 
dialysis--on par with home dialysis in a private residence. However, 
the commenter stated that CMS's proposal seems to take the position 
that the TPNIES expansion will not apply to on-site dialysis in the 
SNF, apparently because a single machine there may be used by multiple 
patients. The commenter recommended that, if the concern is that a 
single machine may be used by multiple patients, resulting in excess 
payment to the ESRD facility, then CMS could reduce the TPNIES amount 
by a factor commensurate with the average number of treated patients 
per machine. The commenter stated that it is in the interest of CMS and 
patients alike to promote on-site dialysis in the SNF and recommended 
using the TPNIES expansion to do so.
    Response: It is our longstanding policy 6 7 under the 
ESRD PPS (and the composite rate system that preceded it) that a 
skilled nursing facility (SNF) or a nursing facility (NF) can be 
considered a patient's home for dialysis. As a result, ESRD facilities 
may furnish home dialysis to individual patients who are residing in 
these facilities. Therefore, for purposes of the TPNIES, our 
longstanding policy holds. That is, ESRD facilities may furnish home 
dialysis to patients residing in SNFs and NFs, and we would provide the 
TPNIES for home dialysis machines when they are used in SNFs and NFs 
and are used by a single patient. Per the 1981 Committee on United 
States Senate Finance Report,\8\ home dialysis machines were intended 
for single patient use. While we have provided additional flexibilities 
9 10 during the current PHE for ESRD facilities to furnish 
in-center dialysis to groups of ESRD patients residing in SNFs or NFs, 
we would not provide the TPNIES for the use of home dialysis machines 
for multiple patients.
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    \6\ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/QSO18-24-ESRD.pdf.
    \7\ https://ecfr.io/Title-42/Section-494.100.
    \8\ https://www.finance.senate.gov/imo/media/doc/SPrt97-9.pdf.
    \9\ https://www.cms.gov/files/document/qso-20-19-esrd-revised.pdf.
    \10\ https://www.cms.gov/files/document/covid-19-esrd-facilities.pdf.
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    Comment: We received comments from stakeholders across the ESRD 
industry asking that CMS consider other factors that are critical to 
successful home dialysis as we assess innovative home dialysis machines 
for TPNIES eligibility. For example, one commenter stated that some of 
these machines may require patients to have internet and broadband 
services so that data can easily transfer from the patient's home to 
the ESRD facility managing the home dialysis. The commenter stated that 
in rural areas particularly, access to internet and broadband services 
may be challenging and patients in rural areas in many ways could most 
benefit from new access to innovative home dialysis machines, which 
could help them avoid frequent extended travel times to and from ESRD 
facilities to receive in-center treatment.
    Another commenter recommended expansion of the TPNIES to include 
water and sewer systems, explaining that innovation in the efficiency 
and effectiveness of water systems would both improve patient quality 
of care, as well as reduce costs for facilities and reduce the amount 
of water that ESRD facilities currently waste, helping to preserve the 
nation's water supply.
    One organization expressed appreciation that CMS is refining TPNIES 
and considering ways to include some capital-related assets in the 
TPNIES policy, but stated the final rule should recognize the option 
for other capital-related assets to qualify for the TPNIES potentially 
in the future. The organization asked that CMS gather

[[Page 71420]]

additional information about home dialysis machines that may be 
eligible for the TPNIES, as well as other types of capital-related 
assets, and construct a policy that supports the TPNIES for more than 
one narrow type of product. The organization suggested that we seek 
additional information about how ESRD facilities obtain their capital-
related assets that have multi-patient usage through a request for 
information, as well as convening a technical expert panel(s).
    An LDO and LDO organization stated that the TPNIES policy should be 
focused on transition payment for new equipment that represents SCI, 
and not skewed by site of service. They stated that to combine the 
requirement for SCI with an in-home only requirement would likely 
discourage investment in new technology, undercutting the entire TPNIES 
policy. They also agreed, stating that the ESRD program's fundamental 
purpose is to service all patients. The LDO urged CMS not to establish 
a policy that benefits only those ESRD patients who are clinically 
suited for and have the social support structure necessary to elect 
home dialysis. Rather, CMS should adopt a comprehensive TPNIES capital-
related expenses policy that supports technological advances across all 
treatment modalities and provides adequate and sustained payment upon a 
TPNIES's expiration. They encouraged CMS to establish a working group 
or a TEP to inform the development of a broader TPNIES eligibility to 
include in-center capital-related assets.
    We received many comments from patient groups, device 
manufacturers, dialysis organizations, health plans and a pharmacy 
regarding the requirement that the home dialysis machine must be owned 
by the ESRD facility and not leased equipment. One commenter stated 
that financial incentives for acquiring breakthrough dialysis 
innovations should not be limited only to the facilities that have the 
financial reserves to outright purchase this equipment, that is, the 
larger dialysis providers in the marketplace. They stated that smaller 
and medium-size ESRD facilities may lack the capital to be able to 
purchase the latest home dialysis technologies, and thus may prefer to 
rely on operating leases to obtain it.
    A pharmacy stated that smaller and medium-size facilities and their 
patients must not be disadvantaged compared to larger facilities with 
regard to financial incentives to propel use of the latest, clinically 
optimal home dialysis equipment. The pharmacy commented that facilities 
might choose to obtain the new home dialysis devices via operating 
leases because technical support services are available under that 
arrangement, which benefits both the facility and the patient. In 
addition, operating leases can provide clinics the ability to more 
quickly scale and increase the volume of available new devices, as more 
patients choose home therapies. They believe these business 
arrangements complement the accelerated trend toward home dialysis, and 
therefore should be supported under the TPNIES policy. Another 
commenter urged CMS to consider business arrangements other than 
outright purchase of home dialysis machines and equipment, stating that 
many facilities maintain subscriptions with manufacturers or lease 
equipment, and the commenter believes that these arrangements should be 
accounted for under TPNIES.
    Response: We thank the commenters for their suggestions. We will 
take these suggestions under consideration for future rulemaking. We 
believe it is appropriate to implement a narrow capital-related asset 
eligibility under the TPNIES at this time to advance the goals of the 
Executive order. We believe we will gain valuable information through 
implementation of the TPNIES for home dialysis machines that are owned 
in their entirety by the ESRD facility and used for a single patient. 
We are continuing to analyze and consider how to account for 
depreciation for multi-patient use machines and other capital-related 
assets, such as water and sewer systems. We will also consider the 
commenters' suggestion regarding a TEP or RFI to get information from 
ESRD facilities about the machines they use and how they acquire them.
    When there is no ownership of the renal dialysis service equipment, 
then the item is recorded as an operating expense. Equipment obtained 
by the ESRD facility through operating leases are not considered 
capital-related assets. The proposed definition of capital-related 
assets 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 did not propose to make an add-on payment 
adjustment for operating expenses, but appreciate the suggestion and 
will consider it in future rulemaking.
    We appreciate the suggestions that we consider other factors than 
SCI for TPNIES eligibility and allow the TPNIES for in-center 
treatments. While we considered other factors than SCI for TPNIES 
eligibility, our focus on the beneficiary and clinical improvement was 
a primary factor. As we stated previously in the background section of 
this final rule, at this point we believe it is important we use the 
same criteria used under the NTAP so there are consistent standards for 
manufacturers and CMS. At this time, our focus is on supporting the 
goals of the Executive order to increase home dialysis as opposed to 
in-center dialysis.
    Comment: A health plan expressed appreciation for CMS's efforts to 
encourage innovation through new technology payments, and especially 
supported the proposed addition of in-home dialysis equipment to the 
TPNIES program, as there has been very little innovation in this arena 
in the past decade. However, the health plan expressed concern about 
the financial barriers to ESRD facilities adopting new technology. As 
an example, the commenter stated that the Tablo[supreg] Hemodialysis 
System described in section II.C of this final rule can cost 
approximately $40,000 which is twice the cost of alternative home 
dialysis systems. The health plan explained that, although there may be 
benefits to the new Tablo[supreg] system, the cost is financially 
prohibitive to many small ESRD facilities. Even if the system (or 
components of the system) are approved for the new technology add-on 
payment adjustment, CMS will only pay for 65 percent of the cost, 
leaving the remainder to be covered by the dialysis provider. They 
stated that this arrangement will be cost-prohibitive for most small 
and rural dialysis providers and will discourage the use of new 
technology. The health plan is also concerned that providing new 
technology add-on payment adjustments will discourage other companies 
from developing similar, less expensive alternatives until the add-on 
period has ended. They believe it is imperative for CMS to encourage 
both competition and innovation.
    Response: The intent of the TPNIES is to support ESRD facilities in 
the uptake of new and innovative equipment and supplies under the ESRD 
PPS that provide substantial clinical improvements to patients, which 
will facilitate beneficiary access to those renal dialysis equipment 
and supplies. Additionally, consistent with CMS's longstanding goals, 
our goal with the TPNIES policy is to support better care at lower 
costs. We expect ESRD facilities to be judicious in the selection of 
new machines, balancing the cost of the machine with the promised 
clinical

[[Page 71421]]

improvement the machine would provide. We also expect increased 
competition for market share through both lower acquisition costs and 
TPNIES dollars will enhance access to machines providing clinical 
improvement for ESRD patients. We disagree that improvements would not 
occur when the TPNIES is being paid for a particular home dialysis 
machine. We anticipate that manufacturers will continue to develop 
equipment that can compete for market share. While we do not control 
what manufacturers charge ESRD facilities, as new machines in the 
development pipeline come to market, there is likely to be significant 
competition among manufacturers which should lead to lower prices as 
the manufacturers compete for the home dialysis market.
    Comment: Another commenter strongly encouraged CMS to include the 
perspectives of current home dialysis patients in its evaluation of new 
home dialysis machines. The commenter stated that CMS staff, 
nephrologists, allied health care professionals, and epidemiologists 
cannot collectively evaluate whether machines are truly innovative and 
truly life-changing if patient perspectives are not solicited. The 
commenter stated that, while patients are often invited to submit 
letters during a public comment period following a proposed rule at the 
behest of manufacturers, these letters often involve formulaic content, 
not personal perspectives. The commenter asserted that most patients 
are unaware of rulemaking and do not submit comments. The commenter 
advised CMS to convene a TEP that includes patients to evaluate each 
application and encouraged town hall forums for active patient input.
    Response: We appreciate the commenter's input regarding patient 
perspective. The TPNIES payment was modeled after the IPPS NTAP system, 
which process includes a public meeting. We did not have a public 
meeting as part of the TPNIES this first year, but a public meeting for 
future TPNIES applications could draw the patient participation and 
perspective the commenter suggests and we will consider adding a 
patient representative to the workgroup that reviews TPNIES 
applications in future rulemaking.
    Final Rule Action: After consideration of public comments, we are 
finalizing the revision to 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 Sec.  413.236(b), as proposed. We are 
also finalizing the revision to the heading at Sec.  413.236(a) and the 
addition of the paragraphs (a)(1) and (2) to distinguish this paragraph 
as both the ``basis and definitions.'' We are finalizing the 
definitions for ``capital-related asset,'' ``depreciable assets,'' 
``particular calendar year,'' ``depreciation,'' ``straight-line 
depreciation method,'' and ``useful life,'' which are discussed in 
section II.B.3.b.(2) of this final rule, as proposed. With regard to 
the definition of ``home dialysis machines,'' we are revising the 
proposed definition to include parentheses to make the sentence more 
readable in the preamble and the regulation text.
    We are also finalizing the removal of ``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), as proposed, since we 
are finalizing a separate definition for ``capital-related asset'' at 
Sec.  413.236(a)(2) as discussed below.
(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).\11\ 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.
---------------------------------------------------------------------------

    \11\ 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.
    As we explained in the CY 2021 ESRD PPS proposed rule (85 FR 42148 
through 42149), 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 the TPNIES 
expansion. 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 
proposed 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,

[[Page 71422]]

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 proposed 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 proposed 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 proposed 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 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, we stated in the CY 2021 ESRD PPS proposed 
rule that 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 proposed certain additional steps that MACs would 
take after determining the price to develop the TPNIES per treatment 
payment amount. That is, we proposed 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 proposed 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 proposed 
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 noted, 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.
(a) Alternative To Offset the 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 the CY 2021 ESRD PPS proposed rule 
(85 FR 42150 through 42151), 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. As 
we discussed in the CY 2021 ESRD PPS proposed rule, 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 stated 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

[[Page 71423]]

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 considered an alternative to our proposal that would include an 
additional step to calculating the TPNIES. That is, we would apply an 
offset to the pre-adjusted per treatment amount. We noted in the CY 
2021 ESRD PPS proposed rule that 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.
(b) Methodology for Estimating Home Machine and Equipment Cost Per Home 
Treatment
    In order to establish the value of the offset, which would be an 
estimate of an average home dialysis machine and equipment cost per HD-
equivalent home dialysis treatment to use as the offset amount, we 
proposed the following methodology. 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 inflate the 2018 average home dialysis 
machine and equipment cost per home treatment to 2021 using the ESRDB 
market basket update less productivity for CY 2019, CY 2020, and CY 
2021, and scale the costs to ESRD PPS payments using the ratio of total 
cost per treatment for CY 2021, which is obtained by scaling the CY 
2018 cost per treatment to CY 2021 using the ESRDB market basket update 
less productivity for CY 2019, CY 2020, and CY 2021, to the total ESRD 
PPS payment per treatment projected for 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 \12\ 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.
---------------------------------------------------------------------------

    \12\ 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.
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    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 Continuous Ambulatory 
Peritoneal Dialysis and Continuous Cyclic Peritoneal Dialysis 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.
    We stated in the CY 2021 ESRD PPS proposed rule that using this 
methodology for both freestanding and hospital-based ESRD facilities 
would result in an offset of $9.23. We noted that 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 stated that we 
believe this methodology would provide an approximation of the cost of 
the home dialysis machine in the base rate. Further, we noted that we 
believe deducting this amount 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.
    We solicited comments on this alternative approach to apply an 
offset to the proposed pre-adjusted per treatment amount and 
specifically solicited comments on the methodology we would use to 
compute the value of the offset.
    Finally, consistent with the policies finalized last year in Sec.  
413.236(d) for the TPNIES, we proposed 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 proposed 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 
noted that, currently, 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 previously in this section 
with regard to the use of the AHA

[[Page 71424]]

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. Under the alternative 
proposal, we would reduce the pre-adjusted per treatment add-on payment 
amount ($32.05) by $9.23 to offset the amount for a dialysis machine 
included in the base rate ($32.05-$9.23 = $22.82). Then 65 percent of 
that amount would equal a TPNIES per treatment add-on payment amount of 
$14.83 ($22.82 x .65).
    We explained in the CY 2021 ESRD PPS proposed rule that 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.
    For a PD cycler that is used 7 times per week, 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. 
Under the alternative proposal, we would reduce the pre-adjusted per 
treatment add-on payment amount ($13.74) by an offset to reflect the 
amount for a dialysis machine included in the base rate. We would apply 
the HD-equivalency calculation, that is used to convert PD treatments 
for payment purposes, to the offset since the per treatment amount in 
this example is a daily modality. Therefore, the offset would be $3.96 
($9.23*(3/7) = $27.69/7 = $3.96). Then the pre-adjusted per treatment 
add-on payment amount would be $9.51 ($13.47-$3.96 = $9.51). Then 65 
percent of that amount would equal a TPNIES per treatment add-on 
payment amount of $6.18 ($9.51 x .65 = $6.18).
    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 invited public comment on using the proposed and alternative 
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 
revisions discussed in section II.B.3.b.(1) of this final rule.
    Consistent with the TPNIES policy and in accordance with Sec.  
413.236(d)(1), we proposed that 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 with the effective date of a 
future 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.
    As we stated in the CY 2021 ESRD PPS proposed rule, 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, we noted that 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 stated that we believe that 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, we believe that the TPNIES would help remove barriers to 
market penetration and foster competition with other dialysis machines 
that are already on the market. In the CY 2021 ESRD PPS proposed rule, 
we noted 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 stated that 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.
    We noted that 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. We stated that, 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, 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 proposed 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 proposed 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 proposed 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 proposed 
minor editorial changes to paragraph (a)(1)(i) to remove the semicolon 
at the end of the sentence and add a period in its place; and in 
paragraph (a)(1)(iv) to remove ``; and'' and add a period in its place.
    With regard to the TPNIES application, we would post any final

[[Page 71425]]

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.
    The comments we received and our responses to the comments on our 
proposed and alternative pricing methodology are set forth below:
    Comment: A group of organizations, representing the kidney and 
medical technology communities recommended that CMS extend the TPNIES 
period from 2 years to at least 3 years. They stated that 2 years is an 
inadequate amount of time after taking into account the scale of 
resources and time necessary to build a responsible support and 
distribution infrastructure nationwide. This is especially true for 
companies in their earlier stages, for example, small manufacturers 
that tend to lack the type of distribution and support infrastructure 
that their larger, more established counterparts may feature. 
Furthermore, staffing constraints could mean the technology would take 
too long to come to market, causing the ESRD facility to be unable to 
get the TPNIES for 2 years. Accordingly, the commenter stated that a 2-
year TPNIES period creates a level of risk that would discourage 
smaller start-up companies from pursuing the development of new and 
innovative equipment and supplies. These commenters stated that 
extending the TPNIES period would help level the playing field between 
small innovators and large, global manufacturers with an existing 
support and distribution footprint. They pointed out that the new 
technology add-on payment that applies under the hospital inpatient 
setting allows for technologies to qualify for the add-on payment up to 
three years to account for the lag time in data collection to be 
reflected in updated MS-DRGs. Given that it takes significantly longer 
for devices, particularly home dialysis machines, to achieve 
significant adoption, they stated that CMS should align with the 
hospital inpatient policy and allow for an additional year of TPNIES.
    Many commenters urged CMS to reconsider the proposed policy to 
limit the TPNIES to only 2 years and not adjust the base rate when 
truly innovative renal equipment and supplies are added to the ESRD PPS 
bundled payment. They noted that, experience with the TDAPA for 
calcimimetics demonstrates that having a three-year transition period 
is important for data collection purposes, giving CMS adequate time to 
review claims and determine whether the base rate should be adjusted. 
Commenters reported that small, independent and low-volume ESRD 
facilities continue to experience low to negative Medicare margins and 
that, while TDAPA and TPNIES can provide helpful transitional add-on 
payment adjustments for limited periods of time, they do not account 
for incorporating innovative renal drugs, equipment and supplies into 
high-quality clinical care over the long term. Commenters suggested 
that CMS could increase the base rate by the difference between the 
cost of the TPNIES-eligible device and the amount to dollars already in 
the base rate for similar devices and that this methodology would 
recognize the dollars already in the base rate, but still establish a 
fair, yet competitive, playing field allowing for long-term stability.
    Other commenters pointed out that if a new home dialysis machine is 
eligible for the TPNIES in 2022 and 2023, only a machine that is used 
continuously between January 2022 and December 2023 will be reimbursed 
at an amount equivalent to 26 percent of the MAC-determined price. In 
contrast, a machine that is used continuously between January 2023 and 
December 2023 will be reimbursed at an amount equivalent to only 13 
percent of the MAC-determined price. The commenter encouraged CMS to 
consider the following adaptation: If a home dialysis machine is 
eligible for the TPNIES in 2022 and 2023, then an ESRD facility may 
collect TPNIES payments for two years after the first use of the 
machine among all patients in the facility. In other words, an ESRD 
facility that collects its first TPNIES payment for a home dialysis 
machine in October 2022 will be eligible for continued payments through 
September 2024. Nevertheless, that ESRD facility must collect its first 
TPNIES payment no later than December 2023. The commenter stated that 
this adaptation would allow all ESRD facilities to have an opportunity 
to collect 26 percent of the MAC-determined price.
    Response: We believe the commenter is requesting that we pay the 
TPNIES for 3 years, similar to the length of time we paid the TDAPA for 
calcimimetics, and that like calcimimetics we then adjust the base rate 
to account for the cost of such products. Since we are not adjusting 
the base rate for the equipment and supplies eligible for the TPNIES, 
the collection of data for a 3-year period of time is not necessary. We 
believe the payment of the TPNIES for 2 years is adequate time for ESRD 
facilities to incorporate new products into their business model. With 
regard to the commenters' concern with the duration of the TPNIES and 
when it would begin for ESRD facilities that are unable to obtain and 
report the equipment or supply on the claim beginning January 1, we 
understand the commenters' concern and will consider refinements to the 
TPNIES to address this issue in future rulemaking. We continue to 
believe that 2 years is adequate since the purpose of TPNIES is to 
support facility uptake of these items and that this policy strikes an 
appropriate balance between supporting ESRD facilities and limiting the 
financial burden that increased payments place on beneficiaries and 
Medicare expenditures. In addition, we note that this is the first year 
of implementing the TPNIES for capital related assets that are home 
dialysis machines and we intend to monitor the use and payments for the 
TPNIES to assess whether new and innovative machines are adopted by the 
ESRD facilities.
    With regard to small manufacturers that may take longer to have 
their equipment or supply come to market, we note that the purpose of 
the TPNIES is to facilitate ESRD facility uptake of the new and 
innovative equipment and supplies. Unlike the IPPS NTAP that will end 
in an adjustment to the MS-DRG, there will be no change in the ESRD PPS 
base rate when TPNIES ends, therefore, the data collection needs are 
not the same. We believe providing 2 years of an add-on payment 
adjustment for supplies and equipment is sufficient time for market 
uptake if the manufacturers prepare in advance of the TPNIES 
application. Doing so will allow ESRD facilities to align their 
business plan to obtain 2 full years of TPNIES payments.
    Comment: A commenter expressed concern that home dialysis machines 
were being defined as in their entirety, meaning that one new part of a 
machine does not make the entire capital-related asset new. The 
commenter explained that PD patients often have issues related to 
handling and storage of PD solution and if an innovator develops a 
machine that generates PD solution that interfaces with an existing 
cycler, the machine could not be considered for TPNIES eligibility. The 
commenter recommended that CMS finalize a TPNIES expansion that will 
offer a clear pathway to approval of machines that

[[Page 71426]]

produce on-demand PD solution. The commenter also questioned the 
disqualification of water purification systems, but recognized that the 
application of such systems to the home setting is unclear.
    Response: The commenter is correct that a piece of equipment that 
is used along with a PD cycler or HD machine would not meet our 
definition of a home dialysis machine, however, such equipment could be 
considered for the TPNIES as renal dialysis equipment (which was 
finalized in the CY 2020 ESRD PPS final rule (84 FR 60691 through 
60692) and implemented January 1, 2020). We note that the exclusion of 
other capital-related assets, such as water purification systems, 
applies to the systems used in ESRD facilities for in-center dialysis 
and benefits all in-center patients. Our payment methodology for 
capital-related assets that are home dialysis machines addresses 
individual patient use in the home and is not geared to assets that 
benefit all patients.
    Comment: A group of organizations representing the kidney and 
medical technology communities requested that CMS instruct MACs to 
provide public, timely, and consistent payment determinations. They 
recommended that CMS exclude the language in the regulation that gives 
MACs flexibility to determine the pricing of any TPNIES supply, 
equipment or capital-related asset that meets the TPNIES eligibility 
criteria based on charges and payment amounts for other equipment and 
supplies that may be comparable or otherwise relevant. They stated that 
the regulatory language undermines CMS approvals for applicants of the 
TPNIES as, by definition, approved products have achieved SCI over 
existing products. They also recommended that CMS more clearly define 
the payment parameters and instruct the MACs to publish a database 
online that provides a discrete TPNIES payment amount no later than 
March 31 of the first year of TPNIES eligibility.
    MedPAC supported the proposal to base the TPNIES amount on the 
price established by the MACs (using information from invoices and 
other relevant sources of information) but only for the first two 
calendar quarters after CMS begins applying the TPNIES. Thereafter, 
they recommended that CMS set the price of new equipment and supplies 
using a method based on pricing data collected directly from each 
manufacturer, similar to how the agency establishes the ASP for Part B 
drugs. They explained that the ASP for a Part B drug reflects the 
average price realized by the manufacturer for its sales broadly across 
different types of purchasers, for patients with different types of 
insurance coverage, and based on the manufacturer's sales to all 
purchasers (with certain exceptions) net of manufacturer rebates, 
discounts, and price concessions. They stated that an approach similar 
to how CMS collects ASP data would increase the consistency of pricing 
data and should lead to more accurate payment rates for items paid 
under the TPNIES. They further recommended that CMS link payment of the 
TPNIES to a requirement that equipment and supply manufacturers submit 
ASP-like data to the agency, similar to the TDAPA policy.
    Response: We continue to believe that the payment amounts for other 
equipment and supplies that may be comparable or otherwise relevant, as 
described at Sec.  413.236(e)(1)(iv) of this final rule, as an 
important consideration for the MACs to determine the price of any 
TPNIES supply, equipment or capital-related asset that meets the TPNIES 
eligibility criteria. While we recognize that TPNIES items will have 
demonstrated SCI over existing items, we seek to avoid Medicare paying 
65 percent of an excessively inflated price, for example, a dialysis 
machine that is 3 times the cost of current machines. Since the 
manufacturer will determine the price to be paid by the provider, the 
MACs' consideration of charges and payment for comparable equipment and 
supplies serves as a guard rail for the use of invoice pricing. With 
regard to the suggestion that we instruct the MACs to publish an online 
database with TPNIES payment amounts, we are working with MACs on 
mechanisms for pricing transparency. We will consider the suggestion 
for future rulemaking. With regard to the suggestion for an ASP-like 
reporting system, we think the idea has merit and will take it into 
consideration for future rulemaking.
    Comment: An organization of LDOs stated they are supportive of CMS 
fixing the expected number of treatments at 156 for the purpose of 
calculating the TPNIES value, however, they expressed significant 
concerns about any policy changes that would undermine the ability of 
treating physicians to prescribe the frequency of dialysis that is 
clinically appropriate for their patients. They suggested that CMS may 
be interested in capping the TPNIES payment for a device. They proposed 
that CMS adopt a modification to the methodology that would respect 
both the TPNIES cap and the importance of physician prescribing with 
regard to frequency of dialysis. For example, CMS could cap total 
TPNIES payments for a specific device at the maximum allowable TPNIES 
payment pursuant to the adopted methodology, even if that amount is 
achieved prior to the end of the 2-year TPNIES period.
    Response: The purpose of the 156 treatments is to compute a per 
treatment amount. An ESRD patient's nephrologist may order additional 
reasonable and necessary dialysis treatments beyond 3 per week. When a 
MAC has determined that the additional treatments are reasonable and 
necessary, we would pay the TPNIES on each covered treatment that is 
furnished. At this time, we do not believe it is necessary to adopt the 
commenter's suggested modification to the proposed methodology that 
takes into account both the TPNIES cap and the prescribed frequency of 
dialysis; however, we will monitor use of the TPNIES and consider if 
such a policy is necessary for future rulemaking.
    Comment: A group of organizations, representing the kidney and 
medical technology communities recommended that we establish a formal 
appeals process for the manufacturers whose applications for the TPNIES 
are denied. They expressed concern that, without an opportunity to 
review CMS' initial determination, situations may arise in which new 
technologies fail to obtain a favorable TPNIES determination due to 
technical errors or insufficient information necessary in the initial 
TPNIES application. They asserted that a formal appeals process would 
ensure that TPNIES applicants would have an opportunity to seek 
additional, independent review as necessary. They noted that the 
standard process for seeking review of Medicare Part A/B claims under 
42 CFR part 405, subpart I, may not apply, and encouraged CMS to allow 
for administrative appeals of TPNIES determinations to be conducted 
within the Office of Medicare Hearings and Appeals (that is, a hearing 
before the Departmental Appeals Board).
    Response: We did not propose a formal appeals process for the 
manufacturers whose applications for TPNIES are denied for CY 2021 and 
therefore we are not adopting the suggestion. However, we thank the 
commenters for this suggestion and will consider it for future 
rulemaking. We note that applicants may reapply for the TPNIES if their 
application is denied as long as they reapply within 3 years of the 
date of FDA marketing authorization or approval.
    Comment: A commenter expressed confusion about the discussion in 
the proposed rule on treatment frequency insofar as it is determinative 
of TPNIES payment. The commenter stated that, while the discussion is 
easier to

[[Page 71427]]

contemplate for PD, as most patients undergo treatment 6 or 7 days per 
week, it does not make sense for HD. The commenter noted that HD 
prescriptions can be written for as few as 2 days or as many as 7 days 
per week, and there is no concept of an ``ordinary'' treatment 
frequency for a HD machine, whether it is used in a facility or at 
home. The commenter recommended that CMS simply issue a TPNIES payment 
on a monthly basis according to whether the ESRD facility claim 
includes a condition code that indicates that a qualifying home 
dialysis machine has been used.
    Response: We disagree with the commenter's assertion that there is 
no ordinary treatment frequency for HD machines. In-center HD machines 
are designed to be used 3 times per week to achieve adequate dialysis. 
Our intention of providing examples in the CY 2021 ESRD PPS proposed 
rule using various annual treatments was to clarify that the 
methodology for calculating the TPNIES per treatment payment can also 
be used if a new home dialysis machine was designed to achieve adequate 
dialysis in fewer treatments per week. We note that, when questioned 
specifically about frequency, a home dialysis machine manufacturer 
confirmed that adequate dialysis can be achieved in 3 treatments per 
week, however, the treatments may take longer to administer.
    Comment: An LDO recommended that we set the useful life for home 
dialysis machines at 7 years rather than the 5 years we proposed. The 
organization noted that standard accounting practice is to depreciate 
dialysis equipment, for the center or the home, over a period of at 
least 7 years.
    Response: Medicare policies \13\ hold providers to strict AHA 
guidelines with respect to the useful life. Under AHA guidelines, 
useful life for dialysis machines is 5 years. ESRD facilities are 
allowed to use more or less than the AHA guidelines for business 
financial reporting but they must use the AHA guidelines for Medicare.
---------------------------------------------------------------------------

    \13\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.
---------------------------------------------------------------------------

    Comment: MedPAC did not support expanding the TPNIES to include 
home dialysis equipment, but stated that, if CMS finalizes its 
proposal, it should remove the portion of payment attributable to home 
dialysis machines from the base rate for those cases receiving the 
TPNIES because paying for new home dialysis machines under the TPNIES 
for two years is duplicative of payment for items with a similar 
purpose or use that are already paid under the ESRD PPS base rate. 
MedPAC stated that it supported the proposal if CMS subtracted the 
amount for capital-related machines already included in the ESRD PPS 
base rate for those cases receiving the TPNIES.
    While some commenters expressed support for the offset, an 
organization of renal professionals, providers and manufacturers, an 
organization of LDOs, and an individual objected to offsetting the 
TPNIES with the cost of the home dialysis machine already included in 
the base rate, stating that the purpose of a transitional add-on 
payment is to incentivize the adoption of innovative products. These 
commenters stated that the purpose of the TPNIES is not to reimburse 
providers dollar for dollar for their costs. In their view, the 
government assumes the risk of making an additional payment during the 
TPNIES period with the presumed reward of beneficiaries experiencing 
clinical improvement, as claimed by the applicant. Following the end of 
the TPNIES period, the providers assume that risk. The commenters 
asserted that this is true of the inpatient and outpatient hospital 
payment systems, as well as the TPNIES. They stated, given that the 
proposed TPNIES amount is only a portion of the cost providers incur 
when using the device, further reducing the TPNIES amount with the 
offset would only further reduce the likelihood of adoption of the 
machine.
    Response: We agree with MedPAC that the TPNIES payment is 
duplicative of payment for items with a similar purpose or use that are 
already paid under the ESRD PPS base rate. For this reason, we are 
finalizing an offset to the TPNIES payment, which we discussed in the 
CY 2021 ESRD PPS rule, to reflect the value of the dialysis machine 
included in the ESRD PPS base rate.
    We disagree with the commenters who stated that applying an offset 
to reflect the amount for a dialysis machine in the base rate would 
reduce the likelihood the new machine will be purchased by ESRD 
facilities. We believe that ESRD facilities will need to buy additional 
dialysis machines to support the goals of the Executive order and the 
ETC model and that the TPNIES payment will help support ESRD facility 
uptake of new home dialysis machines.
    Final Rule Action: After careful consideration of the comments we 
received, we are finalizing our proposed pricing methodology for 
capital-related assets that are home dialysis machines when used in the 
home for a single patient and the proposed changes to Sec.  413.236(f) 
requiring MACs to calculate the annual allowance and the pre-adjusted 
per treatment amount with revisions.
    Since we are finalizing an offset to the TPNIES payment to reflect 
the value of a dialysis machine in the ESRD PPS base rate, we revised 
the proposed changes to Sec.  413.236(f) to reflect the additional step 
of calculating a per treatment amount for use in calculating the pre-
adjusted per treatment amount. We also revised paragraph (f) to reflect 
that the pre-adjusted per treatment amount is reduced by an estimated 
average per treatment offset amount to account for the costs already 
paid through the ESRD PPS base rate.
    In the CY 2021 ESRD PPS proposed rule, we stated our intention to 
further amend Sec.  413.236(f) if we finalized the offset. Since we are 
finalizing the offset, we are adding the data sources and 
methodological steps for computing the offset in paragraph (f). In the 
proposed rule the $9.23 offset was based on the proposed CY 2021 ESRDB 
market basket less the multifactor productivity adjustment. For this 
final rule, we have recomputed the offset to reflect the final CY 2021 
payment rate update factor (1.6 percent). The final offset for CY 2021 
is $9.32. We will continue to update the offset amount on an annual 
basis so that it is consistent with how the ESRD PPS base rate is 
updated.
    We are also finalizing the revision to Sec.  413.236(d) to reflect 
that we would pay 65 percent of the pre-adjusted per treatment amount 
minus the offset for capital-related assets that are home dialysis 
machines when used in the home for a single patient.
4. CY 2021 ESRD PPS Update
a. 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

[[Page 71428]]

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 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 proposed 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 proposed to estimate the ESRDB market basket update based 
on IHS Global Inc.'s (IGI's), 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 IGI's 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 was 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 growth in 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 IGI's first quarter 2020 forecast, the proposed 
MFP adjustment for CY 2021 (the 10-year moving average of MFP for the 
period ending CY 2021) was projected to be 0.4 percent.
    As a result of these provisions, the proposed CY 2021 ESRD market 
basket adjusted for MFP was 1.8 percent. The proposed 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 percentage point. We also proposed 
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 (85 FR 42152).
    The comments and our responses to the comments on the proposed ESRD 
market basket update and MFP adjustment for CY 2021 are set forth 
below.
    Comment: Several commenters stated that with new drugs being added 
to the ESRD PPS bundled payment, it is more important than ever to use 
the most appropriate price proxies for determining the base rate and 
update each year. The commenters urged the adoption of a better price 
proxy for non-ESAs that are not over-the-counter (OTC) vitamins and 
recommended that CMS use the BLS Series ID: WPS063 Series Title: PPI 
Commodity Data for Chemicals and Allied Products-Drugs and 
Pharmaceuticals, seasonally adjusted. One commenter stated that the 
timing of addressing the price proxy used for non-ESA drugs in the ESRD 
market basket is relevant since new drugs in the pipeline could be 
added to the ESRD PPS bundled payment during the next few years because 
of the TDAPA provisions.
    Response: We appreciate the commenters' suggestion that we use the 
most appropriate price proxy for non-ESA drugs in the ESRD market 
basket. We did not propose changes to the price proxies in the ESRD 
market basket for CY 2021, so we will not be adopting such changes in 
this final rule. However, as described in the CY 2019 ESRD PPS final 
rule (83 FR 56960 through 56961), we believe the PPI for Vitamins, 
Nutrients, and Hematinic Preparation (VNHP) is the most appropriate 
price proxy for non-ESA drugs and analysis of the ASP data for Non-ESA 
drugs in the bundle suggests the trends in the PPI VNHP trends are 
reasonable. We appreciate the commenters' concern for the potential 
shifts in the mix of drugs within the ESRD PPS bundled payment amount 
as a result of the TDAPA provisions. We will continue to monitor the 
impact that these changes have on the relative cost share weights and 
the mix of non-ESA drugs included in the bundled payment in the ESRDB 
market basket.
    Comment: One commenter expressed support for the annual update to 
the ESRD PPS base rate for CY 2021 and recognized that CMS does not 
have the authority to eliminate the productivity adjustment, but wanted 
to highlight their continued concern about the overall negative 
Medicare margins. The commenter stated that the experience of ESRD 
facilities disputes the idea that productivity in ESRD facilities can 
be improved year over year at the rate of economy-wide productivity.
    Response: Section 1881(b)(14)(F)(i) of the Act requires the 
application of the MFP adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act to the ESRD PPS market basket update 
for 2012 and subsequent years. We will continue to monitor the impact 
of the payment updates, including the effects of the MFP adjustment, on 
ESRD provider margins as well as beneficiary access to care as reported 
by MedPAC. However, any changes to the productivity adjustment would 
require a change to current law.
    In the March 2020 Report to Congress, MedPAC found most indicators 
of payment adequacy to be positive, and recommend that for 2021, the 
ESRD PPS base rate should be updated by the amount determined under 
current law.
    Final Rule Action: Consistent with our historical practice and our 
proposal, we are estimating the market basket increase and the MFP 
adjustment based on IGI's forecast using the most recent available 
data. Based on IGI's third quarter 2020 forecast with historical data 
through the second quarter of 2020, the 2016-based ESRDB market basket 
percentage increase for CY 2021 is 1.9 percent. We note that the first 
quarter 2020 forecast used for the proposed market basket update was 
developed prior to the economic impacts of the COVID-19 pandemic. This 
lower update (1.9 percent) for CY 2021 relative to the CY 2021 ESRD PPS 
proposed rule (2.2 percent) is primarily driven by slower anticipated 
compensation growth for both health-related and other occupations as 
labor markets are expected to be significantly impacted during the 
recession that started in February 2020 and throughout the anticipated 
recovery.
    Based on the more recent data available for this CY 2021 ESRD PPS 
final rule, the current estimate of the 10-year moving average growth 
of MFP for CY 2021 is projected to be 0.3 percent.

[[Page 71429]]

This MFP estimate is based on the most recent macroeconomic outlook 
from IGI at the time of rulemaking (released September 2020) in order 
to reflect more current historical economic data. IGI produces monthly 
macroeconomic forecasts, which include projections of all of the 
economic series used to derive MFP. In contrast, IGI only produces 
forecasts of the more detailed price proxies used in the 2016-based 
ESRDB market basket on a quarterly basis. Therefore, IGI's third 
quarter 2020 forecast is the most recent forecast of the 2016-based 
ESRD market basket percentage increase factor.
    We note that it has typically been our practice to base the 
projection of the market basket price proxies and MFP in the final rule 
on the third quarter IGI forecast. For this CY 2021 ESRD PPS final 
rule, we are using the IGI September macroeconomic forecast for MFP 
because it is a more recent forecast, and it is important to use more 
recent data during this period when economic trends, particularly 
employment and labor productivity, are notably uncertain because of the 
COVID-19 pandemic. However, we also note that the 10-year moving 
average of MFP based on the third quarter 2020 forecast is also 0.3 
percent.
    Therefore, the final CY 2021 ESRD PPS payment rate update is 1.6 
percent. That is, the CY 2021 ESRD market basket percentage increase 
factor of 1.9 percent less the 0.3 percentage point MFP adjustment (the 
10-year moving average of MFP for the period ending CY 2021).
    For the CY 2021 ESRD payment update, we proposed 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). We did 
not receive any public comments on this proposal and therefore, we are 
finalizing the continued use of a 52.3 percent labor-related share for 
CY 2021.
b. The 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 updated the wage indices to account for updated 
wage levels in areas in which ESRD facilities are located using our 
existing methodology. We used 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). In the CY 2021 ESRD PPS proposed rule (85 FR 42152), we 
noted that for the CY 2020 ESRD PPS final rule, we did not apply the 
statewide urban average to Carson City, Nevada as we did in the CY 2020 
ESRD PPS proposed rule (84 FR 38359) 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 updating the ESRD PPS wage index to use 
more recent hospital wage data, we also proposed to adopt newer OMB 
delineations and a transition policy in a budget-neutral manner as 
discussed in the CY 2021 ESRD PPS proposed rule and sections 
II.B.4.b.(2) and II.B.4.b.(3), respectively, of this final rule.
(2) Implementation of 2018 OMB Labor Market Delineations
    As discussed previously in the CY 2021 ESRD PPS proposed rule and 
this final 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.

[[Page 71430]]

    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 \14\ 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).
---------------------------------------------------------------------------

    \14\ 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,\15\ 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.
---------------------------------------------------------------------------

    \15\ 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,\16\ 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).
---------------------------------------------------------------------------

    \16\ 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 \17\ 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,\18\ 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.
---------------------------------------------------------------------------

    \17\ https://www.whitehouse.gov/wp-content/uploads/2018/04/OMB-BULLETIN-NO.-18-03-Final.pdf.
    \18\ https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf.
---------------------------------------------------------------------------

    As we discussed in the CY 2021 ESRD PPS proposed rule (85 FR 
42153), 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 2018 OMB delineations. For example, some new 
CBSAs and urban counties would become rural, rural counties would 
become urban, and existing CBSAs would be split apart. We explained 
that we believe that the 2018 OMB delineations accurately reflect the 
local economies and wage levels of the areas where ESRD facilities are 
located. We also explained that we believe it is important for the ESRD 
PPS to use the most recent OMB delineations practicable 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 newer 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 proposed to adopt the newer OMB delineations 
established in OMB Bulletin No. 18-04 effective for CY 2021 under the 
ESRD PPS. We also proposed a wage index transition applicable to all 
ESRD facilities that experience negative impacts due to the proposed 
implementation of the 2018 OMB delineations. This transition policy is 
discussed in section II.B.4.b.(3) of the CY 2021 ESRD PPS proposed rule 
and section II.B.4.b.(3) of this final rule.
    In the CY 2021 ESRD PPS proposed rule (85 FR 42153), we noted 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 the proposed rule, we were able to review the updates it 
provides and have determined that they were minor. We stated that while 
we do not believe the minor updates included in OMB Bulletin 20-01 
would impact our CY 2021 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.
    As we stated in the CY 2021 ESRD PPS proposed rule (85 FR 42153), 
to implement the newer OMB delineations established in OMB Bulletin No. 
18-04 under the ESRD PPS beginning in CY 2021, 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 2018 OMB 
Delineations
    In the CY 2021 ESRD PPS proposed rule (85 FR 42153 through 42155), 
we proposed to implement the 2018 OMB labor market area delineations 
(based upon the 2010 Decennial Census data) beginning in CY 2021. Our 
analysis of the 2018 OMB delineations showed 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. In the CY 2021 ESRD PPS proposed rule (85 FR 42154), we listed 
the 34 urban counties as set forth in Table 1, which would be rural if 
we finalized our proposal to adopt the 2018 OMB delineations beginning 
in CY 2021.

                             Table 1--CY 2021 Proposed Urban to Rural CBSA Crosswalk
----------------------------------------------------------------------------------------------------------------
                               County/county
    FIPS county code            equivalent                 State           Current CBSA         CBSA title
----------------------------------------------------------------------------------------------------------------
01127                     WALKER................  AL....................           13820  Birmingham-Hoover, AL.
12045                     GULF..................  FL....................           37460  Panama City, FL.
13007                     BAKER.................  GA....................           10500  Albany, GA.

[[Page 71431]]

 
13235                     PULASKI...............  GA....................           47580  Warner Robins, GA.
15005                     KALAWAO...............  HI....................           27980  Kahului-Wailuku-
                                                                                           Lahaina, HI.
17039                     DE WITT...............  IL....................           14010  Bloomington, IL.
17053                     FORD..................  IL....................           16580  Champaign-Urbana, IL.
18143                     SCOTT.................  IN....................           31140  Louisville/Jefferson
                                                                                           County, KY-IN.
18179                     WELLS.................  IN....................           23060  Fort Wayne, IN.
19149                     PLYMOUTH..............  IA....................           43580  Sioux City, IA-NE-SD.
20095                     KINGMAN...............  KS....................           48620  Wichita, KS.
21223                     TRIMBLE...............  KY....................           31140  Louisville/Jefferson
                                                                                           County, KY-IN.
22119                     WEBSTER...............  LA....................           43340  Shreveport-Bossier
                                                                                           City, LA.
26015                     BARRY.................  MI....................           24340  Grand Rapids-Wyoming,
                                                                                           MI.
26159                     VAN BUREN.............  MI....................           28020  Kalamazoo-Portage, MI.
27143                     SIBLEY................  MN....................           33460  Minneapolis-St. Paul-
                                                                                           Bloomington, MN-WI.
28009                     BENTON................  MS....................           32820  Memphis, TN-MS-AR.
29119                     MC DONALD.............  MO....................           22220  Fayetteville-
                                                                                           Springdale-Rogers, AR-
                                                                                           MO.
30037                     GOLDEN VALLEY.........  MT....................           13740  Billings, MT.
31081                     HAMILTON..............  NE....................           24260  Grand Island, NE.
38085                     SIOUX.................  ND....................           13900  Bismarck, ND.
40079                     LE FLORE..............  OK....................           22900  Fort Smith, AR-OK.
45087                     UNION.................  SC....................           43900  Spartanburg, SC.
46033                     CUSTER................  SD....................           39660  Rapid City, SD.
47081                     HICKMAN...............  TN....................           34980  Nashville-Davidson--
                                                                                           Murfreesboro--Frankli
                                                                                           n, TN.
48007                     ARANSAS...............  TX....................           18580  Corpus Christi, TX.
48221                     HOOD..................  TX....................           23104  Fort Worth-Arlington,
                                                                                           TX.
48351                     NEWTON................  TX....................           13140  Beaumont-Port Arthur,
                                                                                           TX.
48425                     SOMERVELL.............  TX....................           23104  Fort Worth-Arlington,
                                                                                           TX.
51029                     BUCKINGHAM............  VA....................           16820  Charlottesville, VA.
51033                     CAROLINE..............  VA....................           40060  Richmond, VA.
51063                     FLOYD.................  VA....................           13980  Blacksburg-
                                                                                           Christiansburg-
                                                                                           Radford, VA.
53013                     COLUMBIA..............  WA....................           47460  Walla Walla, WA.
53051                     PEND OREILLE..........  WA....................           44060  Spokane-Spokane
                                                                                           Valley, WA.
----------------------------------------------------------------------------------------------------------------

    We proposed that the wage data for all ESRD facilities located in 
the counties listed above would be considered rural, beginning in CY 
2021, when calculating their respective state's rural wage index. We 
stated in the CY 2021 ESRD PPS proposed rule (85 FR 42155) that 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 2018 OMB delineations. A discussion of the 
proposed wage index transition policy is available in section 
II.B.4.b.(3) of the CY 2021 ESRD PPS proposed rule and section 
II.B.4.b.(3) of this final rule.
(b) Rural Counties That Would Become Urban Under the 2018 OMB 
Delineations
    In the CY 2021 ESRD PPS proposed rule (85 FR 42155 through 42157), 
we proposed to implement the 2018 OMB labor market area delineations 
(based upon the 2010 Decennial Census data) beginning in CY 2021. Our 
analysis of the 2018 OMB delineations showed 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. In the CY 2021 ESRD PPS proposed rule (85 FR 42156), we listed 
the 47 rural counties that would be urban, as set forth in Table 2, if 
we finalized our proposal to adopt the 2018 OMB delineations beginning 
in CY 2021.

                             Table 2--CY 2021 Proposed Rural to Urban CBSA Crosswalk
----------------------------------------------------------------------------------------------------------------
                               County/county
    FIPS county code            equivalent              State name         Proposed CBSA    Proposed CBSA title
----------------------------------------------------------------------------------------------------------------
01063                     GREENE................  AL....................           46220  Tuscaloosa, AL.
01129                     WASHINGTON............  AL....................           33660  Mobile, AL.
05047                     FRANKLIN..............  AR....................           22900  Fort Smith, AR-OK.
12075                     LEVY..................  FL....................           23540  Gainesville, FL.
13259                     STEWART...............  GA....................           17980  Columbus, GA-AL.
13263                     TALBOT................  GA....................           17980  Columbus, GA-AL.
16077                     POWER.................  ID....................           38540  Pocatello, ID.
17057                     FULTON................  IL....................           37900  Peoria, IL.
17087                     JOHNSON...............  IL....................           16060  Carbondale-Marion, IL.
18047                     FRANKLIN..............  IN....................           17140  Cincinnati, OH-KY-IN.
18121                     PARKE.................  IN....................           45460  Terre Haute, IN.
18171                     WARREN................  IN....................           29200  Lafayette-West
                                                                                           Lafayette, IN.
19015                     BOONE.................  IA....................           11180  Ames, IA.
19099                     JASPER................  IA....................           19780  Des Moines-West Des
                                                                                           Moines, IA.
20061                     GEARY.................  KS....................           31740  Manhattan, KS.
21043                     CARTER................  KY....................           26580  Huntington-Ashland, WV-
                                                                                           KY-OH.

[[Page 71432]]

 
22007                     ASSUMPTION............  LA....................           12940  Baton Rouge, LA.
22067                     MOREHOUSE.............  LA....................           33740  Monroe, LA.
25011                     FRANKLIN..............  MA....................           44140  Springfield, MA.
26067                     IONIA.................  MI....................           24340  Grand Rapids-Kentwood,
                                                                                           MI.
26155                     SHIAWASSEE............  MI....................           29620  Lansing-East Lansing,
                                                                                           MI.
27075                     LAKE..................  MN....................           20260  Duluth, MN-WI.
28031                     COVINGTON.............  MS....................           25620  Hattiesburg, MS.
28051                     HOLMES................  MS....................           27140  Jackson, MS.
28131                     STONE.................  MS....................           25060  Gulfport-Biloxi, MS.
29053                     COOPER................  MO....................           17860  Columbia, MO.
29089                     HOWARD................  MO....................           17860  Columbia, MO.
30095                     STILLWATER............  MT....................           13740  Billings, MT.
37007                     ANSON.................  NC....................           16740  Charlotte-Concord-
                                                                                           Gastonia, NC-SC.
37029                     CAMDEN................  NC....................           47260  Virginia Beach-Norfolk-
                                                                                           Newport News, VA-NC.
37077                     GRANVILLE.............  NC....................           20500  Durham-Chapel Hill,
                                                                                           NC.
37085                     HARNETT...............  NC....................           22180  Fayetteville, NC.
39123                     OTTAWA................  OH....................           45780  Toledo, OH.
45027                     CLARENDON.............  SC....................           44940  Sumter, SC.
47053                     GIBSON................  TN....................           27180  Jackson, TN.
47161                     STEWART...............  TN....................           17300  Clarksville, TN-KY.
48203                     HARRISON..............  TX....................           30980  Longview, TX.
48431                     STERLING..............  TX....................           41660  San Angelo, TX.
51097                     KING AND QUEEN........  VA....................           40060  Richmond, VA.
51113                     MADISON...............  VA....................           47894  Washington-Arlington-
                                                                                           Alexandria, DC-VA-MD-
                                                                                           WV
51175                     SOUTHAMPTON...........  VA....................           47260  Virginia Beach-Norfolk-
                                                                                           Newport News, VA-NC.
51620                     FRANKLIN CITY.........  VA....................           47260  Virginia Beach-Norfolk-
                                                                                           Newport News, VA-NC.
54035                     JACKSON...............  WV....................           16620  Charleston, WV.
54065                     MORGAN................  WV....................           25180  Hagerstown-
                                                                                           Martinsburg, MD-WV.
55069                     LINCOLN...............  WI....................           48140  Wausau-Weston, WI.
72001                     ADJUNTAS..............  PR....................           38660  Ponce, PR.
72083                     LAS MARIAS............  PR....................           32420  Mayag[uuml]ez, PR.
----------------------------------------------------------------------------------------------------------------

    We proposed 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. We 
stated in the CY 2021 ESRD PPS proposed rule (85 FR 42157) that 
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 is available in section II.B.4.b.(3) of the CY 
2021 ESRD PPS proposed rule and section II.B.4.b.(3) of this final 
rule.
(c) Urban Counties That Would Move to a Different Urban CBSA Under the 
2018 OMB Delineations
    In the CY 2021 ESRD PPS proposed rule (85 FR 42157 through 42158), 
we stated that in certain cases, adopting the 2018 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, we 
noted that 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. We 
also stated that 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. In the CY 2021 ESRD PPS proposed 
rule (85 FR 42158), we listed the CBSAs where there would be a change 
either in CBSA name or CBSA number, as set forth in Table 3, if we 
finalized our proposal to adopt the 2018 OMB delineations beginning in 
CY 2021.

  Table 3--CY 2021 Proposed Change in CBSA Name and/or Number Crosswalk
------------------------------------------------------------------------
                       Current CBSA     Proposed CBSA    Proposed CBSA
 Current CBSA code        title             code             title
------------------------------------------------------------------------
10540               Albany, OR.......           10540  Albany-Lebanon,
                                                        OR.
11500               Anniston-Oxford-            11500  Anniston-Oxford,
                     Jacksonville, AL.                  AL.
12060               Atlanta-Sandy               12060  Atlanta-Sandy
                     Springs-Roswell,                   Springs-
                     GA.                                Alpharetta, GA.
12420               Austin-Round                12420  Austin-Round Rock-
                     Rock, TX.                          Georgetown, TX.
13460               Bend-Redmond, OR.           13460  Bend, OR.
13980               Blacksburg-                 13980  Blacksburg-
                     Christiansburg-                    Christiansburg,
                     Radford, VA.                       VA.
14740               Bremerton-                  14740  Bremerton-
                     Silverdale, WA.                    Silverdale-Port
                                                        Orchard, WA.
15380               Buffalo-                    15380  Buffalo-
                     Cheektowaga-                       Cheektowaga, NY.
                     Niagara Falls,
                     NY.
19430               Dayton-Kettering,           19380  Dayton, OH.
                     OH.
24340               Grand Rapids-               24340  Grand Rapids-
                     Wyoming, MI.                       Kentwood, MI.
24860               Greenville-                 24860  Greenville-
                     Anderson-                          Anderson, SC.
                     Mauldin, SC.
25060               Gulfport-Biloxi-            25060  Gulfport-Biloxi,
                     Pascagoula, MS.                    MS.
25540               Hartford-West               25540  Hartford-East
                     Hartford-East                      Hartford-
                     Hartford, CT.                      Middletown, CT.
25940               Hilton Head                 25940  Hilton Head
                     Island-Bluffton-                   Island-Bluffton,
                     Beaufort, SC.                      SC.

[[Page 71433]]

 
28700               Kingsport-Bristol-          28700  Kingsport-
                     Bristol, TN-VA.                    Bristol, TN-VA.
31860               Mankato-North               31860  Mankato, MN.
                     Mankato, MN.
33340               Milwaukee-                  33340  Milwaukee-
                     Waukesha-West                      Waukesha, WI.
                     Allis, WI.
34940               Naples-Immokalee-           34940  Naples-Marco
                     Marco Island, FL.                  Island, FL.
35660               Niles-Benton                35660  Niles, MI.
                     Harbor, MI.
36084               Oakland-Hayward-            36084  Oakland-Berkeley-
                     Berkeley, CA.                      Livermore, CA.
36500               Olympia-Tumwater,           36500  Olympia-Lacey-
                     WA.                                Tumwater, WA.
38060               Phoenix-Mesa-               38060  Phoenix-Mesa-
                     Scottsdale, AZ.                    Chandler, AZ.
39150               Prescott Valley-            39140  Prescott, AZ.
                     Prescott, AZ.
23224               Frederick-                  43524  Silver Spring-
                     Gaithersburg-                      Frederick-
                     Rockville, MD.                     Rockville, MD.
44420               Staunton-                   44420  Staunton, VA.
                     Waynesboro, VA.
44700               Stockton-Lodi, CA           44700  Stockton, CA.
45940               Trenton, NJ......           45940  Trenton-
                                                        Princeton, NJ.
46700               Vallejo-                    46700  Vallejo, CA.
                     Fairfield, CA.
47300               Visalia-                    47300  Visalia, CA.
                     Porterville, CA.
48140               Wausau, WI.......           48140  Wausau-Weston,
                                                        WI.
48424               West Palm Beach-            48424  West Palm Beach-
                     Boca Raton-                        Boca Raton-
                     Delray Beach, FL.                  Boynton Beach,
                                                        FL.
------------------------------------------------------------------------

    In the CY 2021 ESRD PPS proposed rule (85 FR 42159), we explained 
that ESRD facilities located in an urban area that, due to the 2018 OMB 
delineations, involves a change only in the CBSA name or number would 
not experience a consequential change in their wage index value.
    However, we also stated that in other cases, if we adopted the 2018 
OMB delineations, counties would shift between existing and new CBSAs, 
changing the constituent makeup of the CBSAs. We considered 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.
    In the CY 2021 ESRD PPS proposed rule (85 FR 42160), we listed the 
urban counties that would move from one urban CBSA to another a newly 
proposed or modified CBSA, as set forth in Table 4, if we finalized our 
proposal to adopt the 2018 OMB delineations beginning in CY 2021.

                                           Table 4--CY 2021 Proposed Urban to a Different Urban CBSA Crosswalk
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               County/county                                                                       Proposed CBSA
    FIPS county code            equivalent                 State           Current CBSA      Current CBSA name         code         Proposed CBSA name
--------------------------------------------------------------------------------------------------------------------------------------------------------
17031                     COOK..................  IL....................           16974  Chicago-Naperville-              16984  Chicago-Naperville-
                                                                                           Arlington Heights, IL.                  Evanston, IL.
17043                     DU PAGE...............  IL....................           16974  Chicago-Naperville-              16984  Chicago-Naperville-
                                                                                           Arlington Heights, IL.                  Evanston, IL.
17063                     GRUNDY................  IL....................           16974  Chicago-Naperville-              16984  Chicago-Naperville-
                                                                                           Arlington Heights, IL.                  Evanston, IL.
17093                     KENDALL...............  IL....................           16974  Chicago-Naperville-              20994  Elgin, IL.
                                                                                           Arlington Heights, IL.
17111                     MC HENRY..............  IL....................           16974  Chicago-Naperville-              16984  Chicago-Naperville-
                                                                                           Arlington Heights, IL.                  Evanston, IL.
17197                     WILL..................  IL....................           16974  Chicago-Naperville-              16984  Chicago-Naperville-
                                                                                           Arlington Heights, IL.                  Evanston, IL.
34023                     MIDDLESEX.............  NJ....................           35614  New York-Jersey City-            35154  New Brunswick-
                                                                                           White Plains, NY-NJ.                    Lakewood, NJ.
34025                     MONMOUTH..............  NJ....................           35614  New York-Jersey City-            35154  New Brunswick-
                                                                                           White Plains, NY-NJ.                    Lakewood, NJ.
34029                     OCEAN.................  NJ....................           35614  New York-Jersey City-            35154  New Brunswick-
                                                                                           White Plains, NY-NJ.                    Lakewood, NJ.
34035                     SOMERSET..............  NJ....................           35084  Newark, NJ-PA.........           35154  New Brunswick-
                                                                                                                                   Lakewood, NJ.
36027                     DUTCHESS..............  NY....................           20524  Dutchess County-Putnam           39100  Poughkeepsie-Newburgh-
                                                                                           County, NY.                             Middletown, NY.
36071                     ORANGE................  NY....................           35614  New York-Jersey City-            39100  Poughkeepsie-Newburgh-
                                                                                           White Plains, NY-NJ.                    Middletown, NY.
36079                     PUTNAM................  NY....................           20524  Dutchess County-Putnam           35614  New York-Jersey City-
                                                                                           County, NY.                             White Plains, NY-NJ.
47057                     GRAINGER..............  TN....................           28940  Knoxville, TN.........           34100  Morristown, TN.
54043                     LINCOLN...............  WV....................           26580  Huntington-Ashland, WV-          16620  Charleston, WV.
                                                                                           KY-OH.
72055                     GUANICA...............  PR....................           38660  Ponce, PR.............           49500  Yauco, PR.
72059                     GUAYANILLA............  PR....................           38660  Ponce, PR.............           49500  Yauco, PR.
72111                     PENUELAS..............  PR....................           38660  Ponce, PR.............           49500  Yauco, PR.
72153                     YAUCO.................  PR....................           38660  Ponce, PR.............           49500  Yauco, PR.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 71434]]

    We stated in the CY 2021 ESRD PPS proposed rule (85 FR 42160), that 
if ESRD facilities located in these counties move from one CBSA to 
another under the 2018 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 is available in 
II.B.4.b.(3) of the CY 2021 ESRD PPS proposed rule and section 
II.B.4.b.(3) of this final rule.
(d) Changes to the Statewide Rural Wage Index
    In the CY 2021 ESRD PPS proposed rule (85 FR 42160), we stated that 
ESRD facilities currently located in a rural area may remain rural 
under the 2018 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 2018 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 is available in section 
II.B.4.b.(3) of the CY 2021 ESRD PPS proposed rule and section 
II.B.4.b.(3) of this final rule.
    We explained that 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 proposed to adopt 
the 2018 OMB delineations under the ESRD PPS, effective January 1, 2021 
and invited public comment on this proposal.
(3) Transition for ESRD Facilities Negatively Impacted
    In the CY 2021 ESRD PPS proposed rule (85 FR 42160 through 42161), 
we stated that in the past we provided for transition periods when 
adopting changes that have significant payment implications, 
particularly large negative impacts, in order to mitigate the potential 
impacts of proposed policies on ESRD facilities. For example, we have 
proposed and finalized budget-neutral transition policies to help 
mitigate negative impacts on ESRD facilities following the adoption of 
the 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 newer 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 newer OMB delineations.
    As we stated in the CY 2021 ESRD PPS proposed rule (85 FR 42161), 
we considered having no transition period and fully implementing the 
2018 OMB delineations beginning in CY 2021, which would mean that all 
ESRD facilities would have payments based on updated hospital wage data 
and the 2018 OMB delineations starting on January 1, 2021. However, 
because the overall amount of ESRD PPS payments would increase slightly 
due to the 2018 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 2018 OMB delineations. Thus, we explained that 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 proposed a transition 
policy to help mitigate any significant, negative impacts that ESRD 
facilities may experience due to our proposal to adopt the 2018 OMB 
delineations under the ESRD PPS. Specifically, as a transition for CY 
2021, we proposed 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 2018 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 
explained that 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 further explained that 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 
solicited 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) Budget Neutrality Adjustments for Changes to the ESRD PPS Wage 
Index
    In the CY 2021 ESRD PPS proposed rule (85 FR 42161), we stated that 
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 proposed that the proposed adoption of the 2018 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 noted budget neutrality 
was also applied to the adoption of newer OMB delineations and 
transition policy in the CY 2015 ESRD PPS final rule (79 FR 66128 
through 66129). Our methodology for calculating this budget neutrality 
factor is discussed in section II.B.4.d.(2) of the CY 2021 ESRD PPS 
proposed rule and section II.B.4.d.(2) of this final rule.
    The comments and our responses to the comments on our proposed 
adoption of the 2018 OMB delineations are set forth below.
    Comment: Several commenters supported the adoption of the 2018 OMB 
delineations under the ESRD PPS, effective January 1, 2021.
    Response: We appreciate the comments supporting the adoption of the 
2018 OMB delineations.
    Comment: A national non-profit dialysis organization expressed 
concern that its analysis of the proposal indicates that it will have 
multiple facilities negatively impacted by the adoption of the 2018 OMB 
delineations, which is worsened by the current COVID-19 pandemic.
    Response: We appreciate the detailed concerns described by the 
commenter

[[Page 71435]]

regarding the impact that the 2018 OMB delineations would have on its 
specific facilities. While we understand the commenter's concern 
regarding the potential financial impact, we believe that implementing 
the 2018 OMB delineations will result in a more accurate representation 
of labor market areas nationally and in ESRD facility wage index values 
being more representative of the actual costs of labor in a given area. 
We believe that the OMB standards for delineating Metropolitan and 
Micropolitan Statistical Areas are appropriate for determining area 
wage differences and that the values computed under the revised 
delineations will result in more appropriate payments to ESRD 
facilities by more accurately accounting for and reflecting the 
differences in area wage levels.
    We recognize that using the updated OMB delineations will mean 
there are areas that will experience a decrease in their wage index. As 
such, it is our longstanding policy to provide a temporary transition 
to mitigate negative impacts from the adoption of new policies or 
procedures. In the CY 2021 ESRD PPS proposed rule, we proposed a 2-year 
transition in order to mitigate the resulting short-term instability 
and negative impacts on certain ESRD facilities and to provide time for 
facilities to adjust to their new labor market delineations. We 
continue to believe that the 1-year 5-percent cap transitional policy 
provides an adequate safeguard against any significant payment 
reductions, allows for sufficient time for facilities to make 
operational changes for future CYs, and provides a reasonable balance 
between mitigating some short-term instability in ESRD PPS payments and 
improving the accuracy of the payment adjustment for differences in 
area wage levels.
    We also recognize the impact that the COVID-19 PHE is having on all 
health care providers, which is why we have issued waivers and 
flexibilities 19 20 to ease burden and allow providers to 
respond effectively during the COVID-19 PHE.
---------------------------------------------------------------------------

    \19\ https://www.cms.gov/files/document/qso-20-19-esrd-revised.pdf.
    \20\ https://www.cms.gov/files/document/covid-19-esrd-facilities.pdf.
---------------------------------------------------------------------------

    Comment: Several commenters supported the use of a transition 
policy to mitigate the impact of changes to the wage index values and 
the proposed transition methodology. Some of these commenters, 
including MedPAC, suggested alternatives to the methodology. MedPAC 
suggested that the 5 percent cap limit should apply to both increases 
and decreases in the wage index so that no ESRD facility would have its 
wage index value increase or decrease by more than 5 percent for CY 
2021.
    A patient organization acknowledged the reasoning of CMS proposing 
a less administratively complex methodology of managing the transition 
given the relatively small proportion of ESRD facilities that will be 
affected. The commenter noted that if the total change in payment is 10 
percent or less for all facilities, a methodology that caps the 
decrease in a facility's wage index at 5 percent in the first year 
makes sense. However, the commenter expressed concern that at least one 
facility will see a 17 percent decrease in the wage index, which would 
defer the burden of the transition to the second year. The commenter 
noted that while providing an extra year for the facility to adjust to 
the change is helpful, for ESRD facilities that see a drop in wage 
index payments in the second year and that are located in states 
without staffing requirements, the negative implications for hiring and 
retention of staff will be significant. The commenter indicated that it 
would prefer for CMS to apply the 50/50 blended wage index to manage 
the transition, but could support the 5 percent cap approach if staff 
time saved by using a less complex methodology is redirected to 
addressing higher priority issues, such as securing staff assistance 
for home dialysis patients or developing a flexible approach to 
interpretation of the SCI criteria for the TPNIES.
    Finally, a national non-profit dialysis organization recommended 
that CMS provide an extended transition period, beyond the proposed 5 
percent limit for 2021, for at least 3 years.
    Response: We appreciate the comments supporting the proposed 
transition methodology. Further, we appreciate MedPAC's suggestion that 
the 5 percent cap should also be applied to increases in the wage 
index. However, as we discussed in the CY 2021 ESRD PPS proposed rule 
(85 FR 42161), the purpose of the proposed transition policy, as well 
as those we have implemented in the past, is to help mitigate the 
significant negative impacts of certain wage index changes, not to 
curtail the positive impacts of such changes, and thus we do not 
believe it would be appropriate to apply the 5 percent cap on wage 
index increases as well. To the extent that an ESRD facility's wage 
index would increase under the 2018 OMB delineations, this means that 
the ESRD facility is currently being paid less than their reported wage 
data suggests is appropriate. We believe the transition policy, as 
proposed, would help ensure these ESRD facilities do not receive a wage 
index adjustment that is lower than appropriate and that payments are 
as accurate as possible.
    With regard to recommendation that we apply the 50/50 blended wage 
index to manage the transition since some facilities will see a wage 
index decrease greater than 10 percent, we believe that this approach 
would not be appropriate for the proportion of ESRD facilities that 
will be impacted. The use of a 50/50 blended wage index transition 
would affect all ESRD facilities. We believe it would be more 
appropriate to allow ESRD facilities that would experience an increase 
in their wage index value to receive the full benefit of their 
increased wage index value, which is intended to reflect accurately the 
higher labor costs in that area. The utilization of a cap on negative 
impacts restricts the transition to only those with negative impacts 
and allows ESRD facilities who would experience positive impacts to 
receive the full amount of their wage index increase. As such, we 
believe a 5 percent cap on the overall decrease in an ESRD facility's 
wage index value is an appropriate transition as it would effectively 
mitigate any significant decreases in an ESRD facility's wage index for 
CY 2021. With regard to the comment suggesting staff time be used to 
address higher priority issues, we believe that the comment was 
referring to CMS staff. We appreciate the commenter's recommendation 
for polices that impact home dialysis and innovation.
    With regard to the suggestion that we extend the transition period, 
beyond the proposed 5 percent limit for CY 2021, for at least 3 years, 
we believe this would undermine the goal of the wage index policy, 
which is to improve the accuracy of payments under the ESRD PPS. 
Extending the transition period and applying a cap would serve to 
further delay improving the accuracy of the ESRD PPS by continuing to 
pay certain ESRD facilities more than their wage data suggest is 
appropriate. Therefore, while we believe that a transition policy is 
necessary to help mitigate some initial significant negative impacts 
from the revised OMB delineations, we also believe this mitigation must 
be balanced against the importance of ensuring accurate payments.
    The general comments received on the CY 2021 ESRD PPS wage index 
and our responses to the comments are set forth below.
    Comment: Two health insurance organizations in Puerto Rico 
commented on the wage index for Puerto Rico. One health insurance 
organization in Puerto

[[Page 71436]]

Rico expressed appreciation for the wage index floor of 0.5000 and 
explained that it represents an important acknowledgment of the many 
complexities associated with providing dialysis in Puerto Rico. The 
commenter noted that in the post-hurricane environment particularly, 
infrastructure challenges lead to high costs of dialysis care. The 
commenter strongly encouraged CMS to continue to look closely at the 
wage index as it relates to Puerto Rico.
    One of the health insurance organizations asserted that a wage 
index floor of 0.70 would result in rates that more accurately reflect 
actual cost per treatment based on costs after multiple natural 
disasters and the disruptions in 2020 due to COVID-19. The commenter 
expressed concern that the financial viability of dialysis providers in 
Puerto Rico is under stress and that it is in the interest of 
beneficiaries, the Medicare program, and the fragile healthcare 
infrastructure in Puerto Rico to have available multiple competing 
dialysis services providers. The commenter stated that the average in-
center HD costs for independent facilities in Puerto Rico is $232.25 
per treatment using CMS data from 2017. The commenter asserted that 
this number is significantly higher than the average FFS payment rate 
for Puerto Rico and significantly lower than the rates contracted by 
Medicare Advantage companies for the same service. The commenter noted 
that in-center HD represents the majority of the treatments for Puerto 
Rico ESRD patients. The commenter suggested that CMS consider basing 
the ESRD wage index on a new survey of ESRD outpatient facility wage 
costs as a means for wage index reform.
    Both health insurance organizations referred to the wage index 
policy changes included in the FY 2020 IPPS/LTCH PPS final rule (84 FR 
42326 through 42332). Specifically, the commenters urged that the FFS 
ESRD PPS wage index system for Puerto Rico should use the recently 
adjusted inpatient facility (Part A) wage index values to reverse the 
wage index ``downward spiral'' consistently across all Medicare payment 
systems. Finally, they recommended that CMS assure that the 
corresponding adjustment in Medicare Advantage benchmarks for ESRD is 
made to reflect any adjustments in ESRD PPS payments.
    Response: We did not propose specific policies relating to the wage 
index floor. We thank the commenters for sharing their concerns 
regarding Puerto Rico's wage index and their suggestions for wage index 
reform, along with the recommendation of a wage index for Puerto Rico 
of 0.70 and their concern regarding the Medicare Advantage benchmarks 
for ESRD. We will take these thoughtful suggestions into consideration 
when considering future rulemaking.
    Final Rule Action: After considering the comments received, for the 
reasons set forth in this final rule and in the CY 2021 ESRD PPS 
proposed rule, we are finalizing our proposal to adopt the newer OMB 
delineations contained in OMB Bulletin 18-04 as proposed. We are also 
finalizing our 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) as proposed. We did not 
receive comments on our proposal regarding wage index budget 
neutrality, therefore we are finalizing the application of a budget 
neutrality factor to the ESRD PPS base rate to ensure that the adoption 
of the 2018 OMB delineations and the transition policy will not result 
in any change of estimated aggregate ESRD PPS payments.
    We are finalizing the CY 2021 ESRD PPS wage indices based on the 
latest hospital wage data as proposed. For CY 2021, the labor-related 
share to which a facility's wage index is applied is 52.3 percent.
    The final 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 final 2018 OMB delineations. Addendum B 
provides an ESRD facility-level impact analysis. Addendum B includes 
the final transition wage index values that will be in effect in CY 
2021. 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. 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 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

[[Page 71437]]

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 would be $21.03 (84 FR 60704).
    For CY 2021, we proposed that the outlier services MAP amounts and 
FDL amounts would be derived from claims data from CY 2019. As we 
stated in the CY 2021 ESRD PPS proposed rule (85 FR 42162), 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 proposed that 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 noted 
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 final rule, for CY 2021 we modified the ESRD PPS base rate by 
adding $9.93 to account for calcimimetics in the ESRD PPS bundled 
payment and will no longer pay for these drugs using the TDAPA. In 
addition, we are finalizing that beginning January 1, 2021, 
calcimimetics will be eligible outlier services.
    As discussed in section II.B.4.c.(2) of this final rule, CY 2019 
claims data show outlier payments represented approximately 0.5 percent 
of total payments. As we stated in the CY 2021 ESRD PPS proposed rule, 
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. We 
stated that, for CY 2021, the adult predicted outlier services MAP 
amounts and FDL amounts have increased as a result of our incorporation 
of oral and injectable calcimimetics into the outlier policy.
(1) CY 2021 Update to the Outlier Services MAP Amounts and FDL Amounts
    For this final 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 
estimates for this final rule. The estimates for the CY 2021 outlier 
policy, which are included in Column II of Table 5, were inflation 
adjusted to reflect projected 2021 prices for outlier services.

               TABLE 5--Outlier Policy: Impact of Using Updated Data To Define the Outlier Policy
----------------------------------------------------------------------------------------------------------------
                                                   Column I final outlier policy  Column II final outlier policy
                                                    for CY 2020 (based on 2018      for CY 2021 (based on 2019
                                                   data, price inflated to 2020)   data, price inflated to 2021)
                                                                 *               -------------------------------
                                                 --------------------------------
                                                     Age < 18        Age >= 18       Age < 18        Age >= 18
----------------------------------------------------------------------------------------------------------------
Average outlier services MAP amount per                   $30.95          $37.33          $30.33          $53.08
 treatment......................................
----------------------------------------------------------------------------------------------------------------
                                                   Adjustments
----------------------------------------------------------------------------------------------------------------
Standardization for outlier services............          1.0655          0.9781          1.0390          0.9789
MIPPA reduction.................................            0.98            0.98            0.98            0.98
Adjusted average outlier services MAP amount....          $32.32          $35.78          $30.88          $50.92
FDL amount that is added to the predicted MAP to          $41.04          $48.33          $44.78         $122.49
 determine the outlier threshold................
Patient-months qualifying for outlier payment...          11.35%          10.38%           8.80%           5.15%
----------------------------------------------------------------------------------------------------------------
Note: Column I was obtained from Column II of Table 2 from the CY 2020 ESRD PPS final rule (84 FR 60705).


[[Page 71438]]

    As demonstrated in Table 5, the estimated FDL amount per treatment 
that determines the CY 2021 outlier threshold amount for adults (Column 
II; $122.49) 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 $50.92. 
For pediatric patients, there is an increase in the FDL amount from 
$41.04 to $44.78 and a decrease in the adjusted average MAP for outlier 
services, from $32.32 to $30.88.
    As we stated previously, the predicted outlier services MAP amounts 
and FDL amounts have increased as a result of the incorporation of 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 will increase due to 
calcimimetics being eligible ESRD outlier services, the outlier FDL 
will 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 will be 5.15percent for adult patients and 
8.80 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 will 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 inclusion of calcimimetics as ESRD outlier 
services in CY 2021 will 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 final rule will result in no change in payments 
to ESRD facilities for beneficiaries with renal dialysis services that 
are not eligible for outlier payments.
    The comments and our responses to the comments on our proposed 
updates to the outlier policy are set forth below.
    Comment: Although we did not propose changes to the outlier target 
percentage or methodology for computing the MAP or FDL amounts, we 
received many comments from MedPAC, national dialysis associations, 
large dialysis organizations, non-profit dialysis associations, a 
patient advocacy organization, and an academy of nutrition and 
dietetics expressing concern that the outlier policy has not been 
effective. Most of the commenters opposed the proposed changes to the 
MAP and FDL along with suggestions that ranged in complexity for the 
policy's reform, which are described in detail below. We also received 
data from the commenters' analysis that studied the impact of outlier 
payments once calcimimetics become ESRD outlier services.
    All commenters noted that since the beginning of the ESRD PPS, the 
outlier pool has not paid out the full amount withheld each year. 
MedPAC noted that every year the outlier threshold has been reduced and 
yet still turns out to have been set too high. MedPAC stated that this 
phenomenon suggests a declining trend in the use of outlier-eligible 
services (that is, drugs and laboratory services that were separately 
billable under the prior payment system) for ESRD beneficiaries with 
very high estimated spending on those services. MedPAC asserted that 
CMS' strategy of updating the base year of data used to calculate the 
outlier threshold to bring the outlier payments closer to the targeted 
1 percent, has not been effective.
    Many commenters recommended that CMS adjust the outlier percentage 
to more accurately represent the percentage of total payments that have 
been historically paid under the outlier policy. For example, 
commenters suggested that CMS reduce the outlier pool withheld to less 
than 1 percent, indicating that they believe this approach to be 
consistent with the intent of Congress since a minimum percentage was 
not set in the legislation. One non-profit dialysis organization 
recommended removing the outlier provision from the bundled payment 
system but recognized that the provision is required by statute and 
suggested that the percentage be decreased from 1 percent to 0.5 
percent. A few other commenters agreed with reducing the percentage to 
0.5 and recommended that CMS finalize this change for CY 2021.
    An LDO recommended that CMS establish a mechanism to return unpaid 
amounts withheld from ESRD facilities as part of the target percentage 
when it does not achieve the 1 percent outlier policy in a given year. 
An academy of nutrition and dietetics made a similar comment and stated 
when these dollars are paid back to ESRD facilities they would be 
invested in patient care.
    A national dialysis association stated that CMS is correctly adding 
resources to the ESRD PPS bundled payment to help continued patient 
access to calcimimetics after the end of the TDAPA period, but this 
correct policy decision creates adverse, unintended consequences for 
the outlier pool that must be mitigated in the final rule.
    Several commenters opposed the proposal to increase the adult FDL 
and MAP outlier amounts accounting for the calcimimetics. Some 
commenters, including MedPAC, stated that this action could further 
exacerbate the longstanding issue of the outlier pool being underpaid. 
MedPAC identified two problems that are additive; meaning the outlier 
payments may be too low because (1) the outlier threshold calculation 
does not account for the trend of decreasing spending for services 
previously eligible for an outlier payment; and (2) in making 
calcimimetics eligible for outlier payments in CY 2021, the outlier 
threshold calculation does not account for the likelihood that 
calcimimetic use will be lower after payment for calcimimetics is added 
to the ESRD PPS bundled payment. MedPAC indicated that the fact that 
CMS is proposing to increase the outlier threshold by 126 percent in 
2021, rather than decrease the threshold as the agency has done in 
every other year, corroborates the reliance on high calcimimetic use 
for receiving an outlier payment in 2021. MedPAC further stated that, 
if calcimimetic use decreases between

[[Page 71439]]

2019 (when the products were paid using the TDAPA) and 2021 (when the 
products will be paid as part of the ESRD PPS base rate), the outlier 
threshold will be set too high and outlier payments will be lower than 
the 1 percent of total 2021 payments.
    Several commenters urged CMS to lower the thresholds proposed for 
2021. The commenters expressed concern that increases to the outlier 
threshold would cause a shift in the cases qualifying for an outlier 
payment. They stated that the increases to the thresholds would limit 
most outlier payments to those patients who use IV calcimimetics, 
largely excluding outlier payments for the care of patients using other 
relatively high-cost items and services that otherwise would be 
eligible for outliers absent adoption of the proposed substantial 
increases to the outlier thresholds. Many commenters referred to a 
study performed by the Moran Company which was submitted in a comment 
letter from a national dialysis organization. The study demonstrated 
that as a result of the proposed policy changes to increase the outlier 
thresholds, 76.3 percent of the outlier pool will be dedicated solely 
to patients that utilize calcimimetics, leaving few resources for other 
high-cost patients.
    Several commenters expressed concern that the dynamic shift of the 
allocation of outlier payments seen in the Moran Company's analyses for 
calcimimetics would continue to happen in the future when new therapies 
become ESRD outlier services. One commenter explained that any new 
product that qualifies for the outlier policy and has a significant 
cost associated with it will lead to higher threshold amounts. Several 
commenters referred to MedPAC's public comment for the CY 2020 ESRD PPS 
rulemaking, in which MedPAC recommended that CMS exclude payments 
during a TDAPA--or TPNIES--period from outlier pool calculations given 
that CMS policy makes a drug or equipment or supply ineligible for 
outlier payments during the add-on period. The commenters described 
this as a policy misalignment that causes outlier payments to be less 
than the outlier target percentage.
    Two commenters suggested comprehensive refinement of the outlier 
policy methodology. MedPAC recommended that CMS consider an approach 
that reflects the trend in separately billable spending over time. 
MedPAC noted that other CMS payment systems use trend information when 
establishing similar payment policies. For example, in establishing 
county benchmark rates, MedPAC stated that the Medicare Advantage 
program uses a prediction method that accounts for utilization trends 
for specific services combined with the most recent available prices. 
MedPAC asserted that such an approach could produce a more reliable 
outlier threshold estimate and may result in the outlier payment 
amounts that, on average, are closer to the target.
    Several commenters recommended that CMS explore reserving a portion 
of the outlier pool to be in proportion to the share of new ESRD 
outlier services, in this case calcimimetics, compared to the current 
spending on all other ESRD outlier services in the ESRD PPS. Under this 
type of policy, CMS could establish a MAP and fixed-loss amount for 
each sub-pool. The total value of the outlier pool could remain at 1 
percent (or less as noted above) of the ESRD PPS. CMS could recalculate 
the size of the sub-pool based on the most recently available claims 
data. Over time, CMS could evaluate whether additional functional 
categories (in addition to bone and mineral metabolism) would merit the 
creation of additional sub-pools. One national kidney dialysis 
organization explained that in addition to allowing the outlier pool to 
address higher-costs patients outside of the calcimimetic costs, the 
distributed nature of the sub-pools would decrease the risk of dollars 
being removed from the payment system unintentionally.
    A national dialysis association provided a simulation of the 
calculation of outlier payments performed by the Moran Company testing 
two sub-pools of the outlier withhold: One for patients using 
calcimimetics and another for other, high cost patients who do not use 
calcimimetics. The Moran Company found that use of sub-pools would 
improve the distribution of outlier payments for all high cost 
patients, but indicated that it is not likely to eliminate all leakage 
from the ESRD PPS due to the outlier pool. The commenter stated that 
this finding underscores the need to reduce the withhold amount to 0.5 
percent and correct the misalignment between CMS's policies that 
withhold dollars during an add-on payment period when the treatment is 
not eligible for outlier payments. The commenter urged CMS to include 
its recommended approach to bifurcate the outlier policy in the CY 2021 
ESRD PPS final rule. The commenter suggested that CMS could publish an 
interim final rule with comment period, if needed, to ensure that the 
public can comment on these proposals prior to implementation. However, 
the commenter emphasized that these policies should take effect for CY 
2021 to ensure that the outlier pool continues to support high cost 
patients under the ESRD PPS.
    Many commenters expressed interest in working with CMS to refine 
the outlier policy methodology to make sure that it addresses the needs 
of all types of high costs patients. The commenters suggested that a 
larger discussion of a solution to the outlier pool being dominated by 
a single product is warranted, perhaps through a TEP or in another 
forum.
    Response: We appreciate all of the thoughtful suggestions provided 
by commenters. We acknowledge that, even with annually adjusting the 
MAP and FDL to reflect the most recent utilization and costs of ESRD 
PPS eligible outlier services, total outlier payments have not yet 
reached the 1 percent target. However, it is also true that use of 
eligible ESRD outlier services declined each year. That is, ESRD 
facilities incurred lower costs than anticipated, and those savings 
accrued to facilities more than offsetting the extent to which the 
consequent outlier payments fell short of the 1.0 percent target.
    We appreciate the comments suggesting solutions for refining the 
outlier policy methodology, for example, reducing the outlier 
percentage pool withhold to less than 1 percent or establishing a 
mechanism that pays back ESRD facilities those allocated outlier 
amounts that did not pay out in the year projected. We also appreciate 
the comments suggesting more complex solutions, such as the approach 
provided by MedPAC, that uses trend information for establishing 
thresholds or the approach from other commenters that bifurcates the 
outlier pool into sub-pools. We did not propose any changes to the 
outlier policy methodology in the CY 2021 ESRD PPS proposed rule. Our 
proposal was limited to updating the outlier services MAP amounts and 
FDL amounts to reflect the utilization of outlier services reported on 
2019 claims. Therefore, we are not finalizing these significant 
methodological changes the commenters suggested.
    However, we recognize that the incorporation of calcimimetics into 
the ESRD PPS bundled payment system, and of which effective January 1, 
2021 are ESRD PPS eligible outlier services, brings with them a unique 
dynamic. As the commenters have indicated, these products are expensive 
and these high costs have been loaded into the projections for the 
outlier payments. We also agree with the commenters that as new 
therapies become eligible ESRD outlier services, they too will bring 
significant costs that could further

[[Page 71440]]

complicate the allocation of outlier payments to beneficiaries that may 
not be using the particular new therapy. As we noted in the previous 
paragraph, we do not believe it is appropriate to finalize significant 
methodological changes, such as bifurcating the outlier pool into sub-
pools, without performing detailed analyses to inform us on the 
implications of the changes. Similarly, we do not agree with the 
suggestion that CMS publish an interim final rule with comment period 
to finalize complex changes to the outlier policy methodology so that 
they can take effect in CY 2021; doing so would be premature since we 
would not have carefully studied and considered the potential 
consequences.
    We appreciate the commenters' expressed interest in working with 
CMS to refine the outlier policy methodology to make sure that it 
addresses the needs of all types of high costs patients. While 
commenters suggested a TEP or another forum to develop a solution to 
the outlier pool being dominated by a single product, we had already 
indicated in the CY 2020 ESRD PPS final rule (84 FR 60607) that a TEP 
would address the outlier policy as part of the efforts to refine the 
ESRD PPS. Following publication of the CY 2020 ESRD PPS final rule, a 
TEP was held in December 2019. The outlier policy was on the agenda and 
our data contractor discussed: The current approach to outlier 
payments, stakeholder concerns regarding the current outlier payment, 
an alternative methodology to achieve the 1 percent outlier target, and 
feedback on the proposed approach.
    Under the alternative approach discussed at the TEP, the underlying 
basis of the alternative methodology is to relax the assumption of 
constant utilization of eligible outlier services over time, which 
allows for the modeling of the MAP amounts as they change over time. It 
also allows for the use of data from a greater number of years to 
inform trends. Details regarding the session dedicated to the outlier 
policy are available on the CMS website: https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-december.pdf.
    We believe that the information gathered at the TEP and the 
thoughtful suggestions provided in the public comments submitted in 
response to the CY 2021 ESRD PPS proposed rule can be taken into 
consideration in the future as we explore ways to refine the outlier 
policy methodology.
    Final Rule Action: After considering the public comments, we are 
finalizing the updated outlier thresholds for CY 2021 displayed in 
Column II of Table 5 of this final rule and based on CY 2019 data.
d. Final 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 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 finalizing an ESRD PPS base rate for CY 2021 of $253.13. 
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 final rule, the 
final ESRD PPS wage index for CY 2021 includes an update to the most 
recent hospital wage data, the adoption of the 2018 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 final CY 2021 wage index budget-neutrality 
adjustment factor is .999485. This application would yield a CY 2021 
ESRD PPS base rate of $239.21, ($239.33 x .999485 = $239.21), prior to 
the addition to the ESRD PPS base rate to include calcimimetics and the 
application of the final market basket increase.
     Addition to the ESRD PPS Base Rate to Include 
Calcimimetics: As discussed in section II.B.1 of this final rule, for 
CY 2021 we are modifying the ESRD PPS base rate by adding $9.93 to 
account for calcimimetics in the ESRD PPS bundled payment. This 
application would yield a CY 2021 ESRD PPS base rate of $249.14 
($239.21 + $9.93 = $249.14), prior to the application of the final 
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 projection of the ESRDB market 
basket percentage increase factor for CY 2021 is 1.9 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 
final MFP adjustment for CY 2021 is 0.3 percentage point, thus yielding 
an update to the base rate of 1.6 percent for CY 2021. Therefore, the 
final CY 2021

[[Page 71441]]

ESRD PPS base rate is $253.13 ($249.14 x 1.016 = $253.13).
    In summary, we are finalizing a CY 2021 ESRD PPS base rate of 
$253.13. This amount reflects a CY 2021 wage index budget-neutrality 
adjustment factor of .999485, an addition of $9.93 to the ESRD PPS base 
rate to include calcimimetics, and the CY 2021 ESRD PPS payment update 
of 1.6 percent.
    The comments and our responses to the comments on our updates to 
the CY 2021 ESRD PPS base rate are set forth below.
    Comment: Commenters were supportive of the updates to the ESRD PPS 
base rate for CY 2021.
    Response: We appreciate the comments in support of the updates.
    Comment: An academy of nutrition and dietetics urged CMS to 
consider access to care in rural areas when setting the rates under the 
ESRD PPS. The commenter referred to MedPAC's March 2020 Report to 
Congress,\21\ and noted MedPAC's concern about the gap in the Medicare 
margin between rural and urban facilities. The commenter believes that 
the proposal to cap any decrease in an ESRD facility's wage index is 
one way to address these access to care concerns, including access to 
registered dietitian nutritionists (RDNs). The commenter explained that 
RDNs perform many roles in ESRD facilities aimed at improving outcomes 
and promoting therapy adherence, including dialysis treatments, dietary 
recommendations, and medication regimes. The commenter expressed 
concern that there are significant challenges to the hiring and 
retention of RDNs in rural area ESRD facilities, therefore rates for 
the rural facilities require an adequate margin to support recruitment 
and retention of qualified RDNs to address the needs of this 
nutritionally high-risk population.
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    Response: We appreciate the commenter's recommendation for CMS to 
consider access to care in rural areas when setting the rates under the 
ESRD PPS, specifically with regard to hiring and retaining specialized 
staff that provide quality care to ESRD beneficiaries. As we stated in 
the CY 2020 ESRD PPS final rule (84 FR 60701), the annual update factor 
is intended to account for the overall increase in cost of care at the 
national level. The patient case-mix payment adjustments and the 
facility level adjustments, such as the rural adjustment and low-volume 
payment adjustment account for differences in both patient and facility 
characteristics. These payment adjustments are provided to address the 
variation of costs of a particular facility relative to the national 
standard. The CY 2016 ESRD PPS final rule discusses the methodology for 
calculating the patient and facility-level adjustments (80 FR 68972 
through 69004). In addition, the ESRD PPS base rate is adjusted for any 
applicable outlier payment, training add-on payment, the TDAPA, and the 
TPNIES to arrive at the per treatment payment amount.
    For these reasons, we believe that the CY 2021 ESRD PPS base rate 
is appropriate despite the challenges some ESRD facilities experience. 
We also continue to believe that the payment adjustments, such as the 
rural adjustment and the low volume payment adjustment help mitigate 
the challenges faced by those facilities that are eligible for the 
adjustments.
    Final Rule Action: We are finalizing a CY 2021 ESRD PPS base rate 
of $253.13.
5. 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 HD-equivalent treatments (Medicare and non-
Medicare as well as ESRD and non-ESRD). For PD patients, 1 week of PD 
is considered equivalent to 3 HD treatments. As noted previously, 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 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 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),\22\ 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.
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    Further information regarding the administration of the LVPA is 
provided

[[Page 71442]]

in the Medicare Benefit Policy Manual, chapter 11, section 60.B.1.\23\
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b. Revisions to the LVPA Requirements and Regulations
    As we discussed in the CY 2019 ESRD PPS final rule (83 FR 56949) 
and the CY 2021 ESRD PPS proposed rule (85 FR 42165), we have heard 
from stakeholders that low-volume facilities rely on the LVPA 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 the CY 2021 ESRD PPS proposed rule (85 FR 42165), 
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 expressed concern 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 noted that in CY 2020, 338 ESRD facilities receive the LVPA. 
We also noted 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 
proposed 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 proposed 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 proposed 
that 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.
    We proposed 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 
proposed 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 proposed 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 payment 
year 2021, the attestation must be provided by December 31, 2020.
    We proposed 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.\24\
---------------------------------------------------------------------------

    \24\ Document Drafting Handbook, chapter 2, section 2.10, page 
2-18: https://www.archives.gov/files/federal-register/write/handbook/ddh.pdf.
---------------------------------------------------------------------------

    We also proposed a technical change at Sec.  413.232(e) and (g). We 
proposed to add ``MAC'' in Sec.  413.232(e) to establish the acronym 
for Medicare Administrative Contractor. We proposed 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 discussed in the CY 2021 ESRD PPS proposed rule (85 FR 
42166), 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,

[[Page 71443]]

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 proposed 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.
    The comments and our responses to the comments on our LVPA 
proposals are set forth below.
    Comment: Several commenters expressed support for the proposal to 
hold harmless ESRD facilities that would otherwise qualify for the LVPA 
but for a temporary increase in dialysis treatments due to the PHE for 
the COVID-19 pandemic. Two of the commenters indicated that holding 
these ESRD facilities harmless will better ensure ESRD patients' access 
to life-sustaining dialysis.
    Response: We appreciate the support of the commenters as we strive 
to ensure access to care during this unprecedented time.
    Comment: One commenter expressed concern that the intent of the 
proposal would not be met as the length of the PHE for COVID-19 remains 
uncertain.
    Response: We thank the commenter for its support for the proposed 
LVPA modifications while appreciating this concern. While the end of 
the PHE for COVID-19 remains uncertain, we believe that the 
modification adequately address the current and foreseen impact of 
COVID-19 on low volume ESRD facilities. We will consider the COVID-19 
PHE during rulemaking in the future, if warranted.
    Comment: One commenter expressed confusion over the proposed 
methodology, indicating that LVPA attestation data can be pulled from 
any six-month period in the preceding three years. The commenter 
expressed concern that facilities who would have exceeded the 
threshold, even in the absence of COVID-19, can `mask' their 
disqualification.
    Response: We acknowledge the commenter's confusion over the 
proposal. For purposes of determining LVPA eligibility for payment 
years 2021, 2022, and 2023, the facility would attest that its 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 throughout the entire year otherwise exceeded 
the LVPA threshold of 4,000, the excess treatments are a direct result 
of patient shifting from the COVID-19 PHE. ESRD facilities would select 
6 months (consecutive or non-consecutive) of total dialysis treatments 
furnished for purposes of the LVPA determination and, if eligible, will 
receive the benefit for the entire payment year. If the ESRD facility 
would have not qualified for the LVPA in the absence of COVID-19, the 
facility cannot attest that the COVID-19 PHE caused its excess 
treatments. The policy is intended to directly address the burden 
placed on ESRD facilities in 2020 due to the COVID-19 PHE. Future 
rulemaking will address the PHE's impact on the LVPA, if the impact 
continues into following years.
    Comment: We received comments that suggested we adopt a methodology 
including a combination of the rural and LVPA adjusters to create a 
tiered LVPA, targeting facilities providing less than 4,000 treatments 
per year, and expanding the adjuster to include a second tier that 
includes facilities providing less than 6,000 treatments per year.
    Response: We appreciate commenters' suggestions for an alternative 
methodology and will take their suggestions into consideration for 
future rulemaking.
    Final Rule Action: After consideration of public comments, for CY 
2021, we are finalizing the revisions to the LVPA, as proposed. We are 
finalizing the revision to Sec.  413.232(g) by adding paragraph (g)(4) 
to codify the process. We are also finalizing the proposal to reformat 
Sec.  413.232(e) 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 payment year 2021, the 
attestation must be provided by December 31, 2020. We are finalizing a 
technical change at Sec.  413.232(b) to remove the heading ``Definition 
of low-volume facility.'' We are also finalizing technical changes at 
Sec.  413.232(e) and (g), whereby ``MAC'' would be added in Sec.  
413.232(e) to establish the acronym for Medicare Administrative 
Contractor and ``MAC'' would replace ``Medicare Administrative 
Contractor (MAC)'' in Sec.  413.232(g). Lastly, we are finalizing the 
revision of 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.

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

1. Background
    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 that in section II.B.2.b of this final 
rule, we are refining the newness criterion (year in which the product 
was granted FDA marketing

[[Page 71444]]

authorization) 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 for a single 
patient, the 3 years would begin from the date of FDA marketing 
authorization for home use. We note that the changes to the newness 
criteria and the other changes discussed in section II.B.2.b are 
effective beginning January 1, 2021, that is, applicable for the TPNIES 
applications received in 2021.
    As we stated in the CY 2021 ESRD PPS proposed rule (85 FR 42166), 
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 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 the CY 2021 ESRD PPS 
proposed rule as well as section II.B.2.a of this final rule, we 
provide a detailed discussion of the SCI criteria. In addition, in 
section II.B.2.b of this final rule we are revising 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 discussed in the CY 2021 ESRD PPS proposed rule and in 
section II.B.2.a of this final rule, 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 final rule, we are revising 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. Applications for TPNIES Payment for CY 2021
    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 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.25 26 27 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 25 kDa 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 that the Theranova dialyzer replaces other dialyzers.
---------------------------------------------------------------------------

    \25\ 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.
    \26\ Krause, B., et al., ``Highly selective membranes for Blood 
purification,'' Gambro Dialysatoren GmbH, Hechingen/Germany, 
Presentation abstract March 26, 2015.
    \27\ 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

[[Page 71445]]

additional convective transport.\28\ The Theranova dialyzer enables the 
efficient removal of uremic toxins (up to 45 kDa).29 30 The 
applicant included an adapted figure from a book titled, ``Modelling 
and Control of Dialysis Systems \31\ 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 microglobulin (33 
kDa); and, HDx removes Chitinase-3-like protein 1 (40 kDa), lambda 
free-light-chains (45 kDa) and albumin (67 kDa).
---------------------------------------------------------------------------

    \28\ Lorenzin, A., et al., ``Quantification of Internal 
Filtration in Hollow Fiber Hemodialyzers with Medium Cut-Off 
Membrane,'' Blood Purif, 2018, 46, pp. 196-204.
    \29\ 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.
    \30\ 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).
    \31\ 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 32 33 giving it 
expanded clearance of uremic toxins.
---------------------------------------------------------------------------

    \32\ Krause, B., et al., ``Highly selective membranes for Blood 
purification,'' Gambro Dialysatoren GmbH, Hechingen/Germany, 
Presentation abstract March 26, 2015.
    \33\ 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 G170157.\34\ 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 marketing 
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.
---------------------------------------------------------------------------

    \34\ 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.\35\
---------------------------------------------------------------------------

    \35\ 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).\36\ 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)).\37\ 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).\38\ 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.39 40 41 One study also found a substantial 
reduction in the need for iron usage.42 43 Two studies saw 
an improvement in EPO resistance index (ERI) and one study showed a 
statistically significant decrease in phosphate binder (calcium 
carbonate) usage.44 45
---------------------------------------------------------------------------

    \36\ 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.
    \37\ Sanabria, R.M., et al. ``Expanded Hemodialysis and its 
effects on hospitalizations and medication usage,'' Submitted for 
publication.
    \38\ 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.
    \39\ 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.
    \40\ Sanabria, R.M., et al., Ibid.
    \41\ 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.
    \42\ Sanabria, R.M., et al., Ibid.
    \43\ Lim, J-H., et al., Ibid.
    \44\ Sanabria, R.M., et al., Ibid.
    \45\ 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).\46\
---------------------------------------------------------------------------

    \46\ 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

[[Page 71446]]

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 12 kDa to 45 kDa 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 60 
kDa), 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.\47\ 
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.\48\ The 
applicant asserted that Theranova, in effectively targeting the 
spectrum of uremic toxins, that this spectrum encompasses the totality 
of these inflammation-modulating molecules.
---------------------------------------------------------------------------

    \47\ 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.
    \48\ Kirsch AH, Lyko R, Nilsson LG., et al. Performance of 
hemodialysis with novel medium cut-off dialyzers. Nephrol Dial 
Transplant 2017; 32: 165-172.
---------------------------------------------------------------------------

    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,49 50 51 52 
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.
---------------------------------------------------------------------------

    \49\ 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.
    \50\ 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.
    \51\ 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.
    \52\ 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,53 54 and a reduction of endothelial dysfunction and 
Albumin and C-Reactive Protein (CRP) levels.55 56 57 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.\58\ 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.59 60 61
---------------------------------------------------------------------------

    \53\ 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.
    \54\ 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.
    \55\ Kharbanda, K., et al. 2019, Ibid.
    \56\ Cantaluppi, V., et al., Ibid.
    \57\ 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.
    \58\ Cantaluppi, V., et al., Ibid.
    \59\ 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.
    \60\ 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.
    \61\ 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; \62\ increased 
endothelial damage; 63 64 increased CRP and decreased 
albumin production.\65\ 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 that concluded that when compared to HD using 
high flux membrane, HD using a medium cut-off (MCO) membrane may not be 
inferior in albumin loss.\66\
---------------------------------------------------------------------------

    \62\ Caramelo, C., et al., ``Anemia: Pathophysiology, 
pathogenesis, treatment, incognitate,'' Rev Esp Cardiol., 2007, 60, 
pp. 848-60.
    \63\ 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.
    \64\ 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.
    \65\ Gillerot, G., et al. ``Genetic and Clinical Factors 
Influence the Baseline Permeability of the Peritoneal Membrane,'' 
Kidney Int. 2005, 67, pp. 2477-2487.
    \66\ 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.\67\ 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 US IDE Study (NCT03257410), nor was the study 
sufficiently powered to statistically prove a change in IL-6 level, the 
analysis of the US IDE Study (NCT032574 l 0), 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

[[Page 71447]]

positive trend for Theranova (p=0.2).\68\ 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.
---------------------------------------------------------------------------

    \67\ Cozzolino, C., et al., 2019, Ibid.
    \68\ 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-P.O. 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.\69\ The applicant 
also stated that there was improved reported mental health component 
and statistically significant reduced Restless Leg Syndrome 
diagnosis.70 71 72 73 Regarding improved physical 
functioning and decreased pruritus, 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.\74\ In another study (single cohort, N=14), Theranova was 
associated with statistically significant improvement in the physical 
and mental component quality of life measures.\75\ The applicant also 
submitted a case report of a HD patient with pruritus who responded to 
the initiation of HDx using a MCO dialysis membrane.\76\
---------------------------------------------------------------------------

    \69\ 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.
    \70\ Alarcon, J.C., Manuscript submitted for publication, Ibid.
    \71\ 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.
    \72\ Florens, N and Juillard, L., ``Expanded haemodialysis: News 
from the field,'' Nephrol Dial Transplant, 2018, 33, pp. iii48-
iii52.
    \73\ 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.
    \74\ 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.
    \75\ 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.
    \76\ Penny, J., et al. ``Pruritus: ls there a salty truth?'' 
Submitted for publication.
---------------------------------------------------------------------------

(2) CMS Analysis
(a) Summary of Submitted Evidence of the Theranova Dialyzer by CMS
    CMS evaluated the claims and assertions made by Baxter with regard 
to the articles submitted by them for the Theranova Dialyzer.
    Patients with ESRD requiring dialysis are at high risk of mortality 
due to the presence of uremic toxins.\77\ 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.\78\ 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).79 80 81 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) 82 83 are 
associated with increased mortality.\84\ 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.\85\
---------------------------------------------------------------------------

    \77\ 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.
    \78\ 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.
    \79\ 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.
    \80\ 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.
    \81\ Dobre, M., et al., ``Searching for Uremic Toxins'' Clinical 
Journal of American Society of Nephrology. February 2013, 8 (2) 322-
327.
    \82\ 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.
    \83\ 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.
    \84\ 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.
    \85\ 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.86 87 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 \88\ and may explain why even a small amount of ``residual'' 
kidney function is strongly associated with increased survival 
89 90 and higher quality of life.91 92
---------------------------------------------------------------------------

    \86\ Tanaka H, Sirich TL, Plummer NS, Weaver DS, Meyer TW. An 
Enlarged Profile of Uremic Solutes. PLoS One. 2015; 10(8): e0135657.
    \87\ 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.
    \88\ 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.
    \89\ 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.
    \90\ 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.
    \91\ Dobre, M., et al., ``Searching for Uremic Toxins'' Clinical 
Journal of American Society of Nephrology. February 2013, 8 (2) 322-
327.
    \92\ 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.

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

[[Page 71448]]

    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.\93\ 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,\94\ randomized 
controlled trials have been less consistent.95 96 97 98 
Online HDF has become more widely used in Europe, but it not commonly 
used in the U.S. due to costs associated with the need for ultrapure 
water.\99\
---------------------------------------------------------------------------

    \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.
    \94\ 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.
    \95\ 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.
    \96\ 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.
    \97\ 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.
    \98\ 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.
    \99\ Zweigart, C., 2017. Ibid.
---------------------------------------------------------------------------

    Newer dialysis membranes aimed at improved middle molecule 
clearance are an active area of research.\100\ 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.\101\ This is significant because low albumin levels are 
associated with higher mortality rates in patients with ESRD.\102\
---------------------------------------------------------------------------

    \100\ Zweigart, C., 2017. Ibid.
    \101\ Krause, B., et al., ``Highly selective membranes for Blood 
purification,'' Gambro Dialysatoren GmbH, Hechingen/Germany, 
Presentation abstract March 26, 2015.
    \102\ 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.\103\ 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.\104\ No trials have examined the potential 
benefit of removing larger quantities of middle molecules than is 
typically achieved from high-flux membranes.
---------------------------------------------------------------------------

    \103\ Amyot, S.L, et al., ``Myoglobin clearance and removal 
during continuous venovenous hemofiltration,'' Intensive Care 
Medicine, 1999 (25), PP. 1169-1172.
    \104\ 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.\105\ Theoretically, intensive, long-duration 
dialysis should improve the clearance of these difficult to remove 
substances.\106\ In practice, large, randomized trials have not shown 
any difference in the level of substances like indoxyl sulfate and p-
cresol sulfate.107 108 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.
---------------------------------------------------------------------------

    \105\ Vanholder, R., et al., ``Protein-bound uremic solutes: The 
forgotten toxin,'' Kidney International. Feb 2001, 59 (78), S266-
S270.
    \106\ 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.
    \107\ 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.
    \108\ 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
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42171), 
with regard to the criterion as to whether Theranova uses the same or a 
similar mechanism of action to achieve a therapeutic outcome, CMS 
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, CMS noted 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)) by CMS
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42171), 
with regard to the SCI criteria, we noted 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 noted 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. CMS 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 additional references submitted by

[[Page 71449]]

the applicant following the publication of the proposed rule.
    There is significant literature on the topic of MCO membranes and 
high retention onset dialyzers. To evaluate this specific technology, 
CMS 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.\109\ 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.
---------------------------------------------------------------------------

    \109\ 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.\110\ 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-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.
---------------------------------------------------------------------------

    \110\ 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.\111\ 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 
noted 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.
---------------------------------------------------------------------------

    \111\ 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.\112\ 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.
---------------------------------------------------------------------------

    \112\ 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.\113\ 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.
---------------------------------------------------------------------------

    \113\ 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.\114\ 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.
---------------------------------------------------------------------------

    \114\ 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.\115\ is a research paper submitted by 
the applicant in which the investigators tested the role of IL-6 gene 
expression on 156 PD patients and its putative role in inflammation. 
They tested a homogeneous population of 152 from Belgium and the North 
of France. The investigators stated 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 noted 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.
---------------------------------------------------------------------------

    \115\ 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.\116\ is a performed mathematical 
modeling, and through it, the authors calculated that the HRO membranes 
allowed for internal filtration and high convective volumes.
---------------------------------------------------------------------------

    \116\ 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.\117\ is a paper in which the authors 
used semi-empirical

[[Page 71450]]

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.
---------------------------------------------------------------------------

    \117\ 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.\118\ 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.
---------------------------------------------------------------------------

    \118\ 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.\119\ 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 tests were those routinely used in the 
dialysis unit.
---------------------------------------------------------------------------

    \119\ 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.\120\ 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.
---------------------------------------------------------------------------

    \120\ 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.\121\ 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.
---------------------------------------------------------------------------

    \121\ 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.\122\ is a review article included in 
Baxter's 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 discussed 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 required more anti-
coagulation using the Theranova membrane. In addition, patients were 
aware of the use of the Theranova device because of lack of logo 
removal. The authors noted 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.
---------------------------------------------------------------------------

    \122\ Florens N, Juillard L. ``Expanded Haemodialysis: News from 
the Field,'' Nephrol Dial Transplant, 2018; 33: iii48-iii52.
---------------------------------------------------------------------------

     Wolley M, et al.\123\ 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 noted 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.
---------------------------------------------------------------------------

    \123\ 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.\124\ 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.
---------------------------------------------------------------------------

    \124\ 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.\125\ 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

[[Page 71451]]

loss compared to HF-HD. The authors received funding support by Baxter.
---------------------------------------------------------------------------

    \125\ 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.\126\ 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.
---------------------------------------------------------------------------

    \126\ 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.\127\ 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.
---------------------------------------------------------------------------

    \127\ 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.\128\ 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. The 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 
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.
---------------------------------------------------------------------------

    \128\ 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.\129\ 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.
---------------------------------------------------------------------------

    \129\ 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.\130\ 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.
---------------------------------------------------------------------------

    \130\ 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.\131\ 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.
---------------------------------------------------------------------------

    \131\ 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.\132\ 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 claimed 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.
---------------------------------------------------------------------------

    \132\ ``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.\133\ 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.
---------------------------------------------------------------------------

    \133\ 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.\134\ 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.
---------------------------------------------------------------------------

    \134\ 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.\135\ 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.
---------------------------------------------------------------------------

    \135\ 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.\136\ is an abstract 
submitted by the

[[Page 71452]]

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 CMS. The investigator noted that future 
randomized controlled trials should assess the impact of the MCO 
dialyzer on clinical and long-term patient-centered outcomes.
---------------------------------------------------------------------------

    \136\ 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.\137\ is a description of membrane 
manufacturing utilizing hollow fiber technology.
---------------------------------------------------------------------------

    \137\ 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.\138\ 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 improvements in clinical outcomes, including vascular 
disease, quality of life, and mortality. The authors received 
commercial support from Baxter.
---------------------------------------------------------------------------

    \138\ 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-PO 488, ASN 2019.
---------------------------------------------------------------------------

     Alarcon J, et al.\139\ 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. Notably, 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.
---------------------------------------------------------------------------

    \139\ 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.\140\ 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.
---------------------------------------------------------------------------

    \140\ 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.\141\ 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 acknowledged that 
further robust clinical exploration is required.
---------------------------------------------------------------------------

    \141\ 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.\142\ 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.
---------------------------------------------------------------------------

    \142\ 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.\143\ 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.
---------------------------------------------------------------------------

    \143\ 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.\144\ 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.
---------------------------------------------------------------------------

    \144\ 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.\145\ is a manuscript provided by the 
applicant, reporting a

[[Page 71453]]

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.
---------------------------------------------------------------------------

    \145\ 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) CMS Comments on the Baxter Application
    In the CY 2021 ESRD PPS proposed rule (85 FR 42175), CMS discussed 
the specific concerns regarding the evidence submitted for proof of 
eligibility via the SCI criteria. While Theranova represents a unique 
technology, CMS noted that the current evidence supporting SCI is 
lacking but that other evidence may be forthcoming during the comment 
period. CMS believes it's 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 laboratory results should be correlated with patient-
reported results. In the submitted articles, the studies are all open-
label and observational, with tenuous findings; alternative approaches 
could include larger studies focused on the U.S. dialysis population's 
patient health outcomes with patients blinded in these studies.
    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 Columbia, France, Belgium, England, 
Ireland, Australia, New Zealand, and Korea. CMS 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.
    In the CY 2021 ESRD PPS proposed rule (85 FR 42176), CMS stated 
that while HDX appears to be a promising technology, the 
current state of evidence insufficiently demonstrates SCI in Medicare 
patients undergoing dialysis, but that additional evidence may be 
forthcoming in the comment period. 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.
    In the CY 2021 ESRD PPS proposed rule (85 FR 42176), CMS provided a 
summary of the current body of evidence:
     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 did not 
demonstrate clinical benefits from removing larger solutes, including 
middle molecules, but the study did not examine newer technologies such 
as hemodiafiltration which are more efficient in removing those. 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.
    As stated previously, at the time of the CY 2021 ESRD PPS proposed 
rule there was concern about the sufficiency of the evidence available 
for Theranova demonstrating a clear clinical benefit for Medicare 
dialysis patients. However, we noted that additional evidence could be 
forthcoming in the comment period, and invited public comment as to 
whether Theranova meets the TPNIES SCI criteria.
    The collective comments and our response are set forth below.
    Comment: The applicant provided information and a meta-analysis 
that duplicated information provided in the CY 2021 ESRD PPS proposed 
rule. Several physician commenters provided comments in support of the 
research. The commenters' disclosures in their publications noted 
financial support from the applicant. The commenters stated that they 
believed that Theranova meets the criteria set forth in TPNIES for SCI 
over the existing standard of care. The commenters urged CMS to 
reconsider the data, and review such data in its combined totality 
rather than focusing on each study in isolation. The commenters 
asserted that existing data supported improved clinical outcomes with 
the removal of large middle molecules, including Interleukin-6, YKL-40, 
Alpha-1 microglobulin, and Lambda Free Light Chains (FLC), which have 
been associated with inflammation, cardiovascular events, and other 
dialysis-related comorbidities.
    A physician commenter stated that changing over to Theranova-based 
HD from conventional high-flux HD might partially restore some of the 
benefits of residual renal function to patients. The commenter stated 
that these larger molecules are removed poorly, if at all, by 
conventional high-flux HD, resulting in plasma levels that are many 
times above the normal value. The commenter stated that it is known 
that clinical outcomes are improved in dialysis patients with even 
small amounts of residual renal function, and that there

[[Page 71454]]

are multiple reasons for this, one likely being the failure of current 
methods of dialysis to remove large middle molecules. The commenter 
also stated that high plasma levels of these and similar molecules have 
been associated with increased mortality, inflammation and 
cardiovascular disease.
    Another physician commenter stated that based on the clinical data 
presented in the CY 2021 ESRD PPS proposed rule, the commenter believed 
that Theranova therapy represented a substantial clinical improvement 
in treatment for Medicare beneficiaries on dialysis. The commenter 
studied the impact of Theranova on endothelial cells and noted that it 
had a positive impact on the process of atherosclerosis formation. The 
commenter also found that the effects of Theranova on vascular 
calcification in vitro was significantly reduced after Theranova 
therapy, compared to other high-flux dialyzers, and that cell death was 
significantly lower in the Theranova group.
    A physician commenter asserted that accumulated or increased levels 
of Interleukin-6 may contribute to the chronic inflammation state of 
ESRD patients, thereby increasing the risk of chronic vascular disease 
and bacterial infections. Another physician commenter stated that 
accumulated or increased levels of Interleukin-6 increased the risk of 
protein energy wasting, has been associated with anemia in HD patients, 
and has been identified as a principal driver of early vascular aging 
with calcification. The commenters asserted that YKL-40 has been linked 
to atherosclerosis, rheumatologic diseases, arterial stiffness, stroke, 
mortality in type 2 diabetes, that it adds to vascular inflammation 
risk prediction for all-cause and cardiovascular mortality, and is 
associated with cardiovascular events in HD patients. The commenters 
also noted that the removal of large middle molecules like Alpha-
1microglobulin, may alleviate insomnia, pruritus, irritability, 
restless leg syndrome, anemia, and osteoarticular pain. Further, the 
commenters noted that removal of FLCs, which is associated with non-
traditional cardiovascular risk factors, including markers of 
inflammation, could reduce mortality risk in persons with ESRD.
    The commenters noted that current dialytic therapies, due to 
current design and limited by membrane permeability, have limited 
capacity to remove the expanded range of uremic toxins, including the 
spectrum of large middle molecules that Theranova, as demonstrated by 
the collective evidence to date, removes. The commenters therefore 
stated treatment with Theranova results in substantial clinical 
improvement over current HD therapies treating renal failure.
    Several physician commenters asserted, in reliance on research 
cited as part of the primary TPNIES application, that important 
clinical data has been accumulated internationally during the past 5 
years demonstrating that use of the Theranova dialysis system results 
in clinically meaningful improvement outcomes, including patient 
quality of life measures, such as reduced symptom burden, decreased 
restless leg syndrome, decreased itching, and improved physical 
function. In addition, the commenters noted more rapid recovery after a 
dialysis session, with preliminary data suggesting that all-cause 
hospitalization length of stay might be reduced with Theranova versus 
conventional HD, and that the need for ESA therapy might be reduced.
    Another physician commenter stated that the Theranova dialyzer 
offers the improved spectrum of larger molecule clearance associated 
with hemodiafiltration, but only requires a standard HD machine, and 
represents the type of innovation and improvement long lacking for 
Medicare beneficiaries on HD and potentially meeting the standard for 
substantial clinical improvement under TPNIES.
    One commenter, a nephrologist, noted that they conducted a 
randomized controlled trial of Theranova versus high-flux dialyzer in 
maintenance HD patients to investigate the effect of Theranova on the 
removal of middle molecules, utilizing a total of 50 patients 
randomized to either Theranova or a high flux group, and stated that 
the Theranova dialyzer displayed better removal of [kappa]FLC and 
[lambda]FLC compared with the high-flux dialyzer. The commenter 
indicated that the results were consistent with those of other studies 
and asserted that taken together, Theranova dialyzer showed a greater 
removal of larger middle molecules than high-flux dialyzer and could 
decrease their blood concentrations.
    The study also evaluated improved quality of life in those 
patients, and noted that the Theranova group showed better scores in 
physical functioning and role physical domains in physical component 
domain at 12 weeks. The commenter stated that this suggested that the 
Theranova dialyzer may improve patient-reported outcomes, particularly 
physical components and uremic pruritus in HD patients.
    The study also evaluated the effect of improving ESA resistance, 
and the commenter hypothesized that Theranova could improve the ESA 
resistance because it has better removal of large middle molecules than 
hemodiafiltration. The commenter stated that the changes might be 
associated with a greater reduction in TNF-[alpha] and lower serum TNF-
[alpha] level in Theranova compared to the high-flux group, and that 
Theranova has potential to reduce ESA dose with further study possibly 
proving the cost-effectiveness of Theranova for ESA use. The commenter 
concluded that Theranova achieved more improvement in ESA resistance 
than the high-flux dialyzer, removed more quantity of the inflammatory 
cytokine such as TNF-[alpha] than the high-flux dialyzer, potentially 
influencing the iron metabolism.
    The commenter stated that although they did not yet have evidence 
that Theranova could improve the survival rate of HD patients, they 
noted that ongoing multicenter trials might reveal the effect of 
Theranova on the survival of HD patients, and expressed hope that 
before this, U.S. patients could have a chance to use Theranova, which 
has proven benefits without any serious side effects.
    Another physician commenter stated that Theranova offers SCI 
because the commenter is able to switch patients progressively from 
hemodiafiltration to HD. The commenter has also observed clinical 
improvement in their patients, especially the impact in recovery time 
and nutrition, even those treated for a long period by 
hemodiafiltration. The commenter stated that evidence for improved 
removal of large uremic toxins, without the burden of external fluid 
reinjection such as in hemodiafiltration may occur immediately without 
the burden of extensive training for physicians and staff.
    Two commenters reiterated the CY 2021 ESRD PPS proposed rule's 
explanation that, 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, are at increased infection risk, and dialyze with 
standard high-flux dialyzers that focus entirely on removing smaller 
uremic toxins. The commenters stated that the removal of large middle 
molecules will address many of these concerns and is associated with 
decreased hospitalization length and the number of hospitalizations, a 
reduced need for certain medications, reduced inflammation and 
infection, improved recovery times, and improved quality of life. The 
commenters urged CMS to consider the totality of the evidence

[[Page 71455]]

combined, rather than focusing on each study in isolation, and stated 
their belief that the clinical data supports Theranova's application 
and claims of SCI.
    Several beneficiary commenters commended CMS's efforts in promoting 
dialysis innovation through the TPNIES policy. We also received 
comments from other stakeholders that commended CMS on promoting 
dialysis innovation. Those commenters and others, including several 
physicians, stated that approval of applications for the TPNIES would 
improve treatment choices for patients and address systemic barriers 
that may limit access to Medicare beneficiaries suffering with kidney 
failure.
    Physician commenters expressed concern that CMS did not address the 
COVID-19 pandemic, and strongly support efforts to expand access to new 
dialysis products, particularly during the pandemic. The physician 
commenters stated that COVID-19 may provoke a ``cytokine storm,'' with 
cytokines leading to complications, and that Theranova may reduce the 
presence of cytokines. The commenters noted that, as a result, a 
clinical guideline in Italy recommends Theranova in managing COVID-19 
positive patients undergoing HD to reduce the severity of a cytokine 
storm. One physician commenter stated that since increased persistent 
inflammation inhibits immunity and affects responses to infections, it 
is logical to aim for a reduction of inflammatory drivers during HD in 
a patient group at high risk of adverse outcome during COVID-19 
infection. The commenters urged CMS to consider this information in 
light of the COVID-19 pandemic.
    Another commenter stated that as we learn more about COVID-19, 
there are indications that Theranova may offer a unique clinical 
benefit to COVID-19-positive patients, and urged CMS to take into 
account the challenging environment and expand access to new dialysis 
products, especially during the pandemic.
    Several physician commenters noted that the Theranova system allows 
for removal of large uremic toxins, without spilling clinically 
important amounts of albumin, because the membrane pores vary less in 
size than many other membranes, and because of relatively high internal 
resistance, leading to increased within-dialyzer convective removal. 
One physician commented that one of the major concerns with Theranova 
is the risk of albumin loss and the removal of essential proteins by a 
more permeable membrane. The commenter stated they compared laboratory 
data including serum albumin, and as a result, laboratory data such as 
hemoglobin, creatinine, phosphate, and lipid, and dialysis adequacy 
were not different at baseline and 12 weeks between the two groups. The 
commenter found that the serum albumin concentration after 3 months of 
using Theranova dialyzer decreased by a mean of 0.13  0.23 
mg/dL from baseline, and that the serum albumin concentrations did not 
differ between Theranova and high flux dialyzers. The commenter 
concluded that the Theranova dialyzer has a non-significant effect on 
the serum albumin concentration over 12 weeks of treatment. The 
commenter asserted that their conclusion was supported by long-term 
studies. In their opinion, the decrease in serum albumin is more 
prominent in the early period of Theranova dialyzer use. However, when 
examined within the 1-year period, the change is minor and without 
significance. The commenter added that regarding other adverse events 
in their study, there were no serious adverse events including 
cardiovascular events, patient death, or a decline of blood pressure 
that required dialyzer changes throughout the 12 weeks.
    One physician commenter claimed that, in their experience, albumin 
levels stay stable over many months with Theranova. The commenter 
further noted that during their trials, patients tolerated Theranova 
very well, many reported an improved quality of life, and the commenter 
indicated no knowledge of relevant side effects.
    Several patient commenters expressed varied sentiments regarding 
the TPNIES policy. One commenter stated that home dialysis permitted 
the commenter to work until retirement. Another commenter, self-
identified as having been on dialysis for nearly a decade, encouraged 
support for dialysis patients. Other commenters, both recent dialysis 
patients and those with kidney failure and other related illness, 
expressed general support for innovations, options and services to 
support treatment. One commenter, a decade's long beneficiary, stated 
the commenter had been diagnosed with ESRD since early childhood, has 
had numerous kidney transplants and has been on home and in-center 
dialysis. This commenter indicated that they proactively sought out the 
best care, machines and innovations the market offered, since they felt 
most dialysis patients are not offered such options as they are not 
promoted or known. The commenter stated that they supported 
advancements to information, technology and innovations to improve the 
care of dialysis beneficiaries, as in their view the current system 
minimally offered adequate care, which was not enough, and which 
commenter stated ESRD patients needed to offer them a higher quality of 
life care. One commenter, whose significant other is on PD dialysis at 
home, asked for continued support of new innovations for the thousands 
of dialysis beneficiaries who rely on dialysis to live, and stated that 
the cycler machines were old, refurbished multiple times and that they 
had to replace machines several due to noise or other issues.
    An LDO commenter indicated that they performed a systematic review 
of published literature in preparation for a potential meta-analysis on 
hospital admissions and patient-reported outcomes, including quality of 
life, comparing patients dialyzed with Theranova and high flux 
dialyzers. The commenter stated that 45 relevant publications were 
identified for potential inclusion in the meta-analysis, but 40 of 
those publications were excluded due to the following reasons: No 
availability in English or not conducted in HD patients (n=5); Review 
only/not original study data (n=12); Study was performed in vitro, or 
no clinical outcomes measured (n=11); and, No data on hospitalization 
or patient-reported outcomes (n=12).
    The commenter further stated that out of the remaining five 
publications, two were disqualified because they mentioned the outcomes 
of interest but did not provide information on comparator rates, with 
three publications ultimately identified as potentially eligible for 
inclusion in commenter's meta-analysis. The commenter noted that, out 
of those three, one showed null findings for hospital data, one showed 
null findings for patient reported outcomes, and the final study showed 
imbalance in study groups that was larger than the difference after use 
of the dialyzer and used inappropriate statistical analysis. The 
commenter stated that its analysis therefore found there were not 
enough robustly conducted studies for a meta-analysis to be performed, 
and the few that were available showed insignificant results.
    The commenter opined that the potential impact of replacing the use 
of high-flux membranes with Theranova to increase removal of middle 
molecules remains inconclusive and under-studied, since to date, no 
strong evidence supports a survival benefit associated with increasing 
removal of middle molecules. The commenter is unaware of studies 
devoted to studying the effects of different dialyzers for

[[Page 71456]]

patients who are at particularly high risk for derangements in albumin 
synthesis. The commenter also added that, similarly, the results of 
studies of short duration may not adequately capture long-term trends 
or reflect changes in compensatory mechanisms, nutritional state over 
time, or worsening underlying health status. The commenter stated that 
given the insufficient clinical evidence to support a finding of SCI 
and specific concerns regarding the impact of Theranova's albumin-
leaking properties, the commenter supported CMS's evaluation in the CY 
2021 ESRD PPS proposed rule and strongly recommended that CMS not 
provide a TPNIES payment for the Theranova dialyzer.
    Renal dieticians and an LDO commenters expressed their concerns 
about albumin loss in the dialysis patients and the risk of infection, 
along with it being a predictor of mortality and hospitalizations and 
other comorbidities. One commenter stated that a low serum albumin 
level complicates the fluid removal process as it causes excess fluid 
to shift out of the blood space, making treatment ineffective at fluid 
and toxin removal. Another commenter believed it was important for the 
applicant to generate and establish Theranova's safety data via well-
controlled, randomized clinical trials of adequate duration on albumin 
loss in U.S. dialysis patients. The dieticians also expressed concern 
over the removal of other biological materials, aside from uremic 
toxins, such as electrolytes, insulin, sodium and potassium.
    Another commenter noted that a 2019 study, which concluded that an 
increase of 0.25mg/dL/year in albumin decreased all-cause mortality, 
and more significantly a decline in albumin of 0.5 mg/dL/year or 
greater was associated with a 55 percent higher risk of mortality, did 
not provide sufficient evidence in long-term consequences to serum 
albumin levels to make a sound decision of approval, as it was only 
conducted for a short three-month span.
    An organization of LDOs commented that CMS correctly applied the 
TPNIES SCI criteria in its analysis of the Theranova Dialyzers. The 
commenter noted that many of the studies presented were of a small 
number of patients, not conducted for an extended period of time, were 
not representative of the Medicare population in the U.S., and pointed 
out that given the Theranova dialyzers are available in Europe, they 
were surprised that there were no long term studies with a larger 
number of patients to offer insight into the relative benefit compared 
with other devices. The commenter also had a stated preference for 
seeing studies conducted in the U.S. and among the Medicare population 
to ensure that products are compatible with our systems of care and 
that devices are tested in a relevant population that is reflective of 
the diversity of America's Medicare beneficiaries who are reliant upon 
dialysis. A physician commenter agreed with the need for a randomized 
controlled study done in the U.S., and asserted that said study would 
need to ensure the diversity of participants arriving at an accurate 
representation of the total under care.
    Several dietician commenters noted that patients in different 
countries had dietary habits that clearly were not reflective of the 
U.S., and there was no accounting for differing diet habits, which may 
be markedly different from the U.S. ESRD patient population. 
Additionally, dialysis practice differed greatly from the U.S., and 
thus, data gathered in small sample sizes from substantially different 
patient populations should not be extrapolated to U.S. Medicare 
patients, as the data from other countries possibly varied greatly from 
this specific population. One dietician commented that the sample size 
of the research conducted included a mere 50 individuals in 2017, 
making it impossible to conclude the benefit of Theranova outweighs the 
risks that could incur from its use.
    A dialysis company commenter stated that products eligible for 
TPNIES should first be evaluated through research, demonstrating 
significant improvement in quality of life, mortality, facilitation of 
home therapy, or some other measurable quality metric, and that such 
studies should show a direct benefit or an effect on a well-established 
clinical parameter associated with beneficial outcome. The commenter 
stated that this scientifically-based standard, when applied to 
Theranova, made it inappropriate for the TPNIES process.
    An LDO commenter identified and assessed three studies that were 
not included in Theranova's application or the CY 2021 ESRD PPS 
proposed rule. The commenter found the studies lacking in a number of 
critical areas, and thus not providing any additional basis for 
approving Theranova.
    A dialysis company commenter recounted past experiences with other 
dialysis membrane products, namely high flux polysulphone dialysis 
membranes in the 1990's touted as an improvement in dialysis with 
enhanced clearance of beta-2-microglobulin. The commenter stated that, 
while their use was widely adopted and paid for by Medicare through the 
composite rate, when the HEMO study in 2002 finally investigated the 
effect of this membrane in an article published in the New England 
Journal of Medicine, no benefit was found. The commenter believed that 
this experience did not need to be duplicated with Theranova.
    Response: We thank all of the commenters for their informative 
comments regarding the Baxter application for TPNIES for the Theranova 
Dialyzer. CMS evaluated the application, accompanying articles, meta-
analysis and all the comments submitted. CMS evaluated all the criteria 
at Sec.  413.236(b)(5) and 412.87(b)(1) to evaluate SCI for purposes of 
the TPNIES. In doing so, we applied the following eligibility criterion 
from Sec.  412.87(b)(1)(i): ``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.''
    CMS identified two major concerns with the information presented to 
CMS: (1) Studies and data presented were either low powered, did not 
provide statistical significance in their results, and/or did not 
include a control population; (2) Studies provided signals that albumin 
might be filtered by the product, resulting in low levels of albumin 
for some patients. Albumin is a critical protein that carries vitamins 
and other proteins through the bloodstream, as well as performing other 
functions. While there are some signals in the information provided by 
the applicant that it may be possible for some patients to have albumin 
levels rebound over a certain period of time, the data are considered 
nascent in identifying the subpopulations whose albumin levels may be 
able to respond appropriately to the filtering. Additionally, 
commenters, including a major dialysis organization noted similarities 
to a product that entered the market in the 1990s where the clinical 
data was nascent upon entry and that ultimately clinicians considered 
the product clinically similar to other products on the market.
    Further, CMS clinicians involved in the review of the product were 
unable to identify subpopulations for which they believed the evidence 
demonstrated a substantial clinical improvement at this time. The 
clinicians indicated that without additional evidence they would 
consider this product similar to other products on the market and would 
need

[[Page 71457]]

to closely monitor albumin levels of their patients. In other words, 
they would consider using this product in a more observational manner 
rather than adopting it based on any expected outcomes. As previously 
noted, we did not find the submitted evidence and public comments 
sufficient in meeting the ``totality of the circumstances'' regulatory 
criterion.
    Although CMS did not find the submitted evidence and public 
comments sufficient in meeting the ``totality of the circumstances'' 
criterion to qualify the Theranova Dialyzer for the TPNIES adjustment 
for CY 2021, we anticipate that the applicant may submit additional 
evidence for the Theranova Dialyzer in support of the claim of 
substantial clinical improvement for CY 2022. We note that the 
applicant is eligible to apply for the TPNIES adjustment for the 
Theranova Dialyzer for CY 2022 and CY 2023, and CMS would review any 
new information provided for the CY 2022 rulemaking cycle. A product 
that is determined to meet the criteria to receive the TPNIES would 
receive the adjustment for 2-calendar years.
b. Tablo[supreg] Cartridge for Exclusive Use With the Tablo[supreg] 
Hemodialysis System
(1) Outset Medical Application
    For CY 2021, Outset Medical submitted an application for the TPNIES 
for the Tablo[supreg] Cartridge for exclusive 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 
stated 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.\146\ 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.147 148 A recent prospective, multicenter, open-
label, crossover trial comparing in-center and in-home HD using 
Tablo[supreg] Hemodialysis System further supported the clinical 
efficacy, safety, and ease of use of the system.\149\
---------------------------------------------------------------------------

    \146\ 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.
    \147\ 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.
    \148\ 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.
    \149\ 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; \150\ (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; \151\ (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; \152\ and (4) 
electronic data capture and automatic wireless transmission to 
eliminate the need for manual record keeping by the patient, care 
partner, or nurse.\153\
---------------------------------------------------------------------------

    \150\ Outset Medical, ``Safety Reference Guide.'' DOC-0004336 
Rev 04, 2019.
    \151\ Outset Medical, ``Tablo Preconfigured System White 
Paper.'' DOC-0004252 Rev 01, 2019.
    \152\ 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.
    \153\ 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[supreg] 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 
clearance of Tablo[supreg]. Previous 510(k) clearances for

[[Page 71458]]

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: Tablo[supreg] 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 authorization 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 cleared 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, the first patient started training on June 1, 2020.
    The applicant had an Investigational Device Exemption (IDE) to 
study the Tablo[supreg] Hemodialysis System's safety and efficacy for 
use in the home, which had 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 was granted. The IDE study reference 
number was G140098. The Tablo[supreg] Cartridge was classified as a 
Class II device.
    The applicant stated that it submitted 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 stated 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 stated 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 noted 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.\154\ 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.155 156 The applicant asserted 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.\157\ The applicant stated that 
this goal will require a multi-faceted solution, inclusive of less 
burdensome technology, to address the key barriers to home dialysis.
---------------------------------------------------------------------------

    \154\ Sehasi, Rebecca et al. Factors Associated With 
Discontinuation of Home Hemodialysis, American Journal of Kidney 
Disease, Volume 67, Issue 4, 2016, Pages 629-637.
    \155\ 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.
    \156\ 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.
    \157\ 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 stated that the Tablo[supreg] Hemodialysis System has 
the potential to significantly increase home dialysis. 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 claimed 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).158 159
---------------------------------------------------------------------------

    \158\ 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.
    \159\ 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 asserted that the Tablo[supreg] Hemodialysis System 
significantly reduced training time for both patients and their 
caregivers, improving training completion and reducing patient 
technique failure and care partner burden. The applicant stated 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.\160\ 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.\161\ The applicant asserted that 
reduced training time increases likelihood of successful completion, 
reduces patient technique failure, and decreases caregiver burden. The 
applicant noted the following: (1) The graphical user interface guides 
users through the treatment and

[[Page 71459]]

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.
---------------------------------------------------------------------------

    \160\ 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
    \161\ 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 stated 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.\162\ With the average number of treatments of 
3.6 per week for an average duration of 3.4 hours,\163\ 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.164 165 The applicant stated 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.
---------------------------------------------------------------------------

    \162\ Outset Medical subset analysis of Home IDE Trial data on 
set up time for Tablo Cartridge and concentrates.
    \163\ 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.
    \164\ NxStage Medical, Transitional Dialysis Care Operational 
Guidance, June 2019, https://www.nxstage.com/wpcontent/uploads/2019/06/APM2548-Rev-B-TDC-Operational-Guidance.pdf.
    \165\ 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 stated 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.\166\ This is a significant improvement in the standard of 
care, which can take approximately 45 minutes.\167\ The applicant 
asserted 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.
---------------------------------------------------------------------------

    \166\ Outset Medical subset analysis of Home IDE Trial data on 
set up time for Tablo Cartridge and concentrates.
    \167\ Informal interviews with NxStage patients.
---------------------------------------------------------------------------

    The applicant stated 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 noted 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 said 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 increase in treatment adherence and 
high rate of study completion compared to the current standard.
    The applicant further stated 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 asserted that this data 
underscores a significant decrease in patients needing assistance with 
treatment at home.
    The applicant stated that Tablo[supreg] Hemodialysis System's 
unique features increase patient safety and satisfaction. The applicant 
noted 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 asserted 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.\168\ The applicant asserted that 
rapid resolution of alarms and enhanced communication improve safety by 
facilitating rapid correction of any treatment related events, limiting

[[Page 71460]]

treatment interruptions and improving communication between the patient 
and provider.
---------------------------------------------------------------------------

    \168\ 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 stated 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.\169\ The 
applicant stated 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.
---------------------------------------------------------------------------

    \169\ 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.\170\ 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.\171\ 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 90 kg. 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.172 173 The applicant concluded that in this way, 
the Tablo[supreg] Hemodialysis System has the potential to reduce 
Medicare expenditures on the billing of additional dialysis treatments.
---------------------------------------------------------------------------

    \170\ Wilk, Adam S. et al., Persistent Variation in Medicare 
Payment Authorization for Home Hemodialysis Treatments Health 
services research vol. 53,2 (2018): 649-670.
    \171\ 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.
    \172\ 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.
    \173\ 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 stated 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.\174\
---------------------------------------------------------------------------

    \174\ 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.
---------------------------------------------------------------------------

    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.\175\ 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.
---------------------------------------------------------------------------

    \175\ 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.\176\ 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.\177\ 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.
---------------------------------------------------------------------------

    \176\ Ibid.
    \177\ 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.\178\ 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.\179\
---------------------------------------------------------------------------

    \178\ 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.
    \179\ 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

[[Page 71461]]

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.\180\
---------------------------------------------------------------------------

    \180\ 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.\181\ 
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.\182\ 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.\183\
---------------------------------------------------------------------------

    \181\ 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.
    \182\ 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.
    \183\ 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 Analysis
(a) Summary of Current Technology
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42180), 
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.\184\ Patients and caregivers cite 
concerns with self-cannulation, fears of needle disconnect and 
complications.\185\ Home dialysis use is lower than many other rich 
countries.\186\
---------------------------------------------------------------------------

    \184\ United States Renal Data System (USRDS). 2019 Annual Data 
Report: Reference Tables. https://www.usrds.org/reference.aspx. Last 
Access Date Feb 20, 2020.
    \185\ 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.
    \186\ 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 
PD, 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.\187\
---------------------------------------------------------------------------

    \187\ 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.\188\ Yet, 
there are some potential benefits to home-based dialysis. Prior 
analyses have noted that home-based dialysis affords greater patient 
flexibility, improved quality of life,\189\ increased likelihood of 
employment,\190\ and improved cost.\191\ However, regarding cost 
comparisons, it is important to note that many cost analyses of home-
based dialysis include estimates from PD. 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 PD 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.\192\
---------------------------------------------------------------------------

    \188\ 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.
    \189\ 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.
    \190\ 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.
    \191\ 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.
    \192\ 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
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42181), 
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.\193\ 
Eventually, the manufacturer shut down operations after difficulties in 
securing financing.\194\ In addition to these issues, it was a large 
machine that required significant patient utility resources and 
specialized maintenance.\195\ Around this time, development of the 
Allient dialysis system began, which utilizes a sorbent column to 
regenerate dialysate from tap water.\196\ It is still in development 
for potential home based therapy.
---------------------------------------------------------------------------

    \193\ 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.
    \194\ 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.
    \195\ Mailloux LU, Blagg CR. Berns JS (ed.) Home Hemodialysis. 
Uptodate. Nov 18, 2016.
    \196\ 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.\197\ It has a smaller profile 
than the Aksys machine

[[Page 71462]]

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.
---------------------------------------------------------------------------

    \197\ 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.\198\ 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).199 200 201 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.
---------------------------------------------------------------------------

    \198\ 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.
    \199\ 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.
    \200\ 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.
    \201\ 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
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42181), 
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 marketing 
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 granting of marketing 
authorization. It is classified as a Class II device.
(d) Assessment of Substantial Similarity to Currently Available 
Technology
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42182), 
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))
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42182), 
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
    As stated in the CY 2021 ESRD PPS proposed rule (85 FR 42182 
through 42183), 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 summarized 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.\202\ 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).

[[Page 71463]]

Authors evaluated efficacy in effective removal of uremic toxins, as 
measured by a weekly standard Kt/Vurea [gteqt]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.
---------------------------------------------------------------------------

    \202\ 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.\203\ 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.
---------------------------------------------------------------------------

    \203\ 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.\204\ 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.
---------------------------------------------------------------------------

    \204\ Alvarez L, Spry L. Mulhern J, Prichard 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.\205\ 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.
---------------------------------------------------------------------------

    \205\ 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 \206\ 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.
---------------------------------------------------------------------------

    \206\ 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.
---------------------------------------------------------------------------

Unpublished Data
     Outset Medical Data \207\ 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.
---------------------------------------------------------------------------

    \207\ Outset Medical Data from Home IDE Trial, page 33 of 
clinical report submitted to the FDA, data Table 43, 2019.
---------------------------------------------------------------------------

(g) CMS Comments
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42183), 
only the Tablo[supreg] Cartridge portion of the Tablo[supreg] 
Hemodialysis System was 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.
    In the CY 2021 ESRD PPS proposed rule (85 FR 42183), we stated that 
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.
    We stated that 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, we believe there are some 
irregularities and misalignments in the current application, and we are 
concerned that the stand-alone cartridge cannot be evaluated for 
meeting the criteria for SCI.

[[Page 71464]]

    The Outset Medical application was submitted only for the 
Tablo[supreg] Cartridge, which can only be used with the Tablo[supreg] 
Hemodialysis System. As background, the Tablo[supreg] Hemodialysis 
System originally received FDA marketing authorization for hospital and 
outpatient use on November 15, 2016. Without any additional studies 
being required, an FDA marketing authorization was issued for just the 
cartridge on December 19, 2019. An application was submitted by Outset 
Medical to the FDA for home use of only the Tablo[supreg] Hemodialysis 
System, not the cartridge. FDA marketing authorization was issued for 
the Tablo[supreg] Hemodialysis System on March 31, 2020. Therefore, 
with regard to the application for TPNIES for the Tablo[supreg] 
Cartridge, it does not meet the newness requirement at Sec.  
413.236(b)(2), which specifies that the item is granted FDA marketing 
authorization on or after January 1, 2020.
    We invited public comment as to whether the stand-alone cartridge 
of the Tablo[supreg] Hemodialysis System meets the SCI criteria for the 
TPNIES.
    The collective comments and our response to them are set forth 
below.
    Comment: The applicant suggested that because a HD system received 
approval for home use, the system and cartridge can be marketed in the 
same home setting. Additionally, the applicant stated, because the 
system and cartridge must operate together, the SCI should be linked. 
The applicant disagrees with the idea of only the cartridge being 
relevant.
    Another commenter stated that according to the TPNIES policy CMS 
finalized for payment in CY 2021, the equipment or supply being 
considered for an add-on payment must represent an advance that 
substantially improves, relative to technologies previously available, 
the diagnosis or treatment of Medicare beneficiaries. The commenter 
stated that the evidence submitted by the applicant describes the 
features of the Tablo[supreg] Hemodialysis System and only the system. 
They noted that the applicant does not offer support for its assertion 
that the Tablo[supreg] Cartridge substantially improves the diagnosis 
or treatment of Medicare beneficiaries relative to dialysis services 
previously available. The commenter stated that because the application 
offers no clinical evidence on the cartridge itself, the subject of the 
application, it does not meet the eligibility requirements and CMS 
should not approve the TPNIES for this product for CY 2021.
    A commenter noted that the studies that were performed were only on 
the Tablo[supreg] Hemodialysis System and not on the cartridge, which 
is the subject of the TPNIES application.
    Response: CMS is supportive of new and innovative supplies and 
equipment for renal dialysis services. However, the Tablo[supreg] 
Cartridge does not meet the newness eligibility criteria of Sec.  
413.236(b)(2). Since the publication of the CY 2021 ESRD PPS proposed 
rule, we have learned that the Tablo[supreg] Cartridge and 
Tablo[supreg] Hemodialysis System have two different dates for FDA 
marketing authorizations. The FDA marketing authorization was issued 
for just the cartridge on December 19, 2019, which pre-dates the 
eligibility date for the TPNIES of January 1, 2020. Therefore, the 
cartridge does not meet the newness criterion.
    In addition, CMS agrees with the commenters that the application 
for the cartridge only included studies applicable to the Tablo[supreg] 
Hemodialysis System as a whole and the cartridge by itself does not 
show evidence of SCI. Therefore, we are not approving the Tablo[supreg] 
Cartridge for as eligible for the TPNIES for CY 2021.

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. Summary of the Proposed Provisions, Public Comments, and Responses 
to Comments on the CY 2021 Payment for Renal Dialysis Services 
Furnished to Individuals With AKI

    The proposed rule, titled ``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'' (85 FR 42132 through 42208), 
hereinafter referred to as the ``CY 2021 ESRD PPS proposed rule,'' was 
published in the Federal Register on July 13, 2020, with a comment 
period that ended on September 4, 2020. In that proposed rule, we 
proposed to update the AKI dialysis payment rate. We received 4 public 
comments on our proposal, including comments from ESRD facilities, 
national renal groups, transplant organizations, and nurses.
    We also received several comments related to issues that we either 
did not discuss in the proposed rule or that we discussed for the 
purpose of background or context, but for which we did not propose 
changes. These include, for example, AKI dialysis in the home, 
modifications to claims and cost reports to monitor AKI dialysis, and 
Conditions of Coverage specific to AKI dialysis. While we are not 
addressing those comments in this final rule because they are either 
out of scope of the proposed rule or concern topics for which we did 
not propose changes, we thank the commenters for their input and will 
consider the recommendations in future rulemaking.
    In this final rule, we provide a summary of the proposed 
provisions, a summary of the public comments received and our responses 
to them, and the policies we are finalizing for CY 2021 payment for 
renal dialysis services furnished to individuals with AKI.

[[Page 71465]]

C. 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 the CY 2021 ESRD PPS proposed 
rule and section II.B.4.d of this final rule, the CY 2021 ESRD PPS base 
rate is $253.13, which reflects the application of the CY 2021 wage 
index budget-neutrality adjustment factor of .999485, a final addition 
to the ESRD PPS base rate to include calcimimetics, and the CY 2021 
ESRDB market basket increase of 1.9 percent reduced by the multifactor 
productivity adjustment of 0.3 percentage point, that is, 1.6 percent. 
Accordingly, we are finalizing a CY 2021 per treatment payment rate of 
$253.13 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 increase that is 
reduced by the 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 final rule. The AKI dialysis payment rate 
is adjusted by the wage index for a 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 finalizing a CY 2021 AKI 
dialysis payment rate of $253.13, adjusted by the ESRD facility's wage 
index.
    The comments and our responses to the comments on our AKI dialysis 
payment proposal are set forth below.
    Comment: Commenters were supportive of the updates to the AKI 
dialysis payment rate for CY 2021.
    Response: We appreciate the comments in support of the update.
    Final Rule Action: We are finalizing the AKI payment rate as 
proposed, that is, the AKI payment rate is based on the finalized ESRD 
PPS base rate. Specifically, the final CY 2021 ESRD PPS base rate is 
$253.13. Accordingly, we are finalizing a CY 2021 payment rate of 
$253.13 for renal dialysis services furnished by ESRD facilities to 
individuals with AKI.

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. Summary of the Proposed Provisions, Public Comments, Responses to 
Comments, and Finalized Policies for the ESRD QIP

    The proposed rule, titled ``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'' (85 FR 42132 through 42208), 
referred to as the ``CY 2021 ESRD PPS proposed rule,'' was published in 
the Federal Register on July 13, 2020, with a comment period that ended 
on September 4, 2020. In that proposed rule, we proposed updates to the 
ESRD QIP for PY 2023, and included policies continuing for PY 2024. We 
received a diverse range of public comments on our proposals, including 
comments from large dialysis organizations, renal dialysis facilities, 
national renal groups, nephrologists, patient organizations, patients 
and care partners, health care systems, nurses, renal dietitians, and 
other stakeholders.
    In this final rule, we provide a summary of each proposed 
provision, a summary of the public comments received and our responses 
to them, and the policies we are finalizing for the ESRD QIP.

C. 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 of this final 
rule. For the most recent information on each measure's technical 
specifications for PY 2023, we refer readers to the CMS ESRD Measures 
Manual for the 2021 Performance Period.\208\
---------------------------------------------------------------------------

    \208\ https://www.cms.gov/files/document/esrd-measures-manual-v60.pdf.

[[Page 71466]]



                  Table 6--PY 2023 ESRD QIP Measure Set
------------------------------------------------------------------------
  National quality forum (NQF) #        Measure title and description
------------------------------------------------------------------------
0258..............................  In-Center Hemodialysis Consumer
                                     Assessment of Healthcare Providers
                                     and Systems (ICH CAHPS) Survey
                                     Administration, a clinical measure.
                                    Measure assesses patients' self-
                                     reported experience of care through
                                     percentage of patient responses to
                                     multiple testing tools.
2496..............................  Standardized Readmission Ratio
                                     (SRR), a clinical measure.
                                    Ratio of the number of observed
                                     unplanned 30-day hospital
                                     readmissions to the number of
                                     expected unplanned 30-day
                                     readmissions.
Based on NQF #2979................  Standardized Transfusion Ratio
                                     (STrR), a reporting measure.
                                    Ratio of the number of observed
                                     eligible red blood cell transfusion
                                     events occurring in patients
                                     dialyzing at a facility to the
                                     number of eligible transfusions
                                     that would be expected.
N/A...............................  (Kt/V) Dialysis Adequacy
                                     Comprehensive, a clinical measure.
                                    A measure of dialysis adequacy where
                                     K is dialyzer clearance, t is
                                     dialysis time, and V is total body
                                     water volume. Percentage of all
                                     patient months for patients whose
                                     delivered dose of dialysis (either
                                     hemodialysis or peritoneal
                                     dialysis) met the specified
                                     threshold during the reporting
                                     period.
2977..............................  Hemodialysis Vascular Access:
                                     Standardized Fistula Rate clinical
                                     measure.
                                    Measures the use of an arteriovenous
                                     (AV) fistula as the sole means of
                                     vascular access as of the last
                                     hemodialysis treatment session of
                                     the month.
2978..............................  Hemodialysis Vascular Access: Long-
                                     Term Catheter Rate clinical
                                     measure.
                                    Measures the use of a catheter
                                     continuously for 3 months or longer
                                     as of the last hemodialysis
                                     treatment session of the month.
1454..............................  Hypercalcemia, a clinical measure.
                                    Proportion of patient-months with 3-
                                     month rolling average of total
                                     uncorrected serum or plasma calcium
                                     greater than 10.2 mg/dL.
1463..............................  Standardized Hospitalization Ratio
                                     (SHR), a clinical measure.
                                    Risk-adjusted SHR of the number of
                                     observed hospitalizations to the
                                     number of expected
                                     hospitalizations.
Based on NQF #0418................  Clinical Depression Screening and
                                     Follow-Up, a reporting measure.
                                    Facility reports in CROWNWeb one of
                                     six conditions for each qualifying
                                     patient treated during performance
                                     period.
N/A...............................  Ultrafiltration Rate (UFR), a
                                     reporting measure.*
                                    Number of months for which a
                                     facility reports elements required
                                     for ultrafiltration rates for each
                                     qualifying patient.
Based on NQF #1460................  National Healthcare Safety Network
                                     (NHSN) Bloodstream Infection (BSI)
                                     in Hemodialysis Patients, a
                                     clinical measure.
                                    The Standardized Infection Ratio
                                     (SIR) of BSIs will be calculated
                                     among patients receiving
                                     hemodialysis at outpatient
                                     hemodialysis centers.
N/A...............................  NHSN Dialysis Event reporting
                                     measure.
                                    Number of months for which facility
                                     reports NHSN Dialysis Event data to
                                     the Centers for Disease Control and
                                     Prevention (CDC).
N/A...............................  Percentage of Prevalent Patients
                                     Waitlisted (PPPW), a clinical
                                     measure.
                                    Percentage of patients at each
                                     dialysis facility who were on the
                                     kidney or kidney-pancreas
                                     transplant waitlist averaged across
                                     patients prevalent on the last day
                                     of each month during the
                                     performance period.
2988..............................  Medication Reconciliation for
                                     Patients Receiving Care at Dialysis
                                     Facilities (MedRec), a reporting
                                     measure.
                                    Percentage of patient-months for
                                     which medication reconciliation was
                                     performed and documented by an
                                     eligible professional.
------------------------------------------------------------------------
Note: *After consideration of the comments, we are finalizing our
  proposal 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 refer readers to section IV.C.3 of this final rule for a
  discussion of this new scoring methodology.

    We did not propose to adopt any new measures for the PY 2023 ESRD 
QIP measure set.
2. 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 2019. In the CY 2021 ESRD PPS proposed rule (85 FR 42185 
through 42186), we estimated the achievement thresholds, 50th 
percentiles of the national performance, and benchmarks for the PY 2023 
clinical measures in Table 7 using data from 2018.

[[Page 71467]]



   Table 7--Estimated Performance Standards for the PY 2023 ESRD QIP Clinical Measures Using the Most Recently
                                                 Available Data
----------------------------------------------------------------------------------------------------------------
                                        Achievement threshold   Median (50th percentile      Benchmark (90th
               Measure                   (15th percentile of          of national         percentile of national
                                       national performance) *       performance) *           performance) *
----------------------------------------------------------------------------------------------------------------
Vascular access type (VAT):
    Standardized Fistula Rate........                   53.72%                   64.96%                   77.31%
    Catheter Rate....................                   17.70%                   10.50%                    4.32%
Kt/V Comprehensive...................                   93.56%                   97.13%                   99.24%
Hypercalcemia........................                    1.77%            0.58% (0.59%)                    0.00%
Standardized Readmission Ratio.......            1.268 (1.269)                    0.998            0.629 (0.641)
Standardized Transfusion Ratio \209\.                    1.675                    0.830                    0.173
NHSN BSI.............................                    1.365                    0.604                        0
Standardized Hospitalization Ratio...                    1.248            0.967 (0.976)            0.670 (0.677)
PPPW.................................                    8.12%                   16.73%                   33.90%
ICH CAHPS: Nephrologists'                               58.12%                   67.89%          78.52% (78.35%)
 Communication and Caring............
ICH CAHPS: Quality of Dialysis Center           54.16 (53.87%)                   62.47%                   72.11%
 Care and Operations.................
ICH CAHPS: Providing Information to                     74.09%                   80.48%                   87.14%
 Patients............................
ICH CAHPS: Overall Rating of                   49.33% (47.92%)          62.22% (60.59%)          76.57% (75.16%)
 Nephrologists.......................
ICH CAHPS: Overall Rating of Dialysis          49.12% (48.59%)          63.04% (62.99%)                   77.49%
 Center Staff........................
ICH CAHPS: Overall Rating of the               53.98% (53.46%)                   68.59%                   83.03%
 Dialysis Facility...................
----------------------------------------------------------------------------------------------------------------
Note: We stated in the CY 2021 ESRD QIP proposed rule that if the PY 2023 final numerical value is worse than
  the PY 2022 finalized value, we will substitute the PY 2023 final numerical value for the PY 2022 finalized
  value. We also provided the PY 2023 finalized value as a reference in parentheses for clinical measures whose
  PY 2023 estimated value is worse than the PY 2022 finalized value.
Data sources: VAT measures: 2018 CROWNWeb; SRR, SHR: 2018 Medicare claims; Kt/V: 2018 CROWNWeb; Hypercalcemia:
  2018 CROWNWeb; NHSN: 2018 CDC; ICH CAHPS: CMS 2018; PPPW: 2018 CROWNWeb and 2018 OPTN.

    We are now updating the achievement thresholds, 50th percentiles of 
the national performance, and benchmarks for the PY 2023 clinical 
measures as shown in Table 8, using the most recently available data, 
which includes CY 2019 data.
---------------------------------------------------------------------------

    \209\ The STrR measure was included in our table in the CY 2021 
ESRD PPS proposed rule (84 FR 60728), however these thresholds do 
not apply because this is a reporting measure, as is more fully 
addressed in response to comment below.

   Table 8--Finalized Performance Standards for the PY 2023 ESRD QIP Clinical Measures Using the Most Recently
                                                 Available Data
----------------------------------------------------------------------------------------------------------------
                                        Achievement threshold   Median (50th percentile      Benchmark (90th
               Measure                   (15th percentile of          of national         percentile of national
                                        national performance)         performance)             performance)
----------------------------------------------------------------------------------------------------------------
Vascular access type (VAT):
    Standardized Fistula Rate........                   53.29%                   64.36%                   76.77%
    Catheter Rate....................                   18.35%                   11.04%                    4.69%
Kt/V Comprehensive...................                   94.33%                   97.61%                   99.42%
Hypercalcemia........................                    1.54%                    0.49%                  * 0.00%
Standardized Readmission Ratio.......                  * 1.268                  * 0.998                  * 0.629
NHSN BSI.............................                    1.193                    0.516                      * 0
Standardized Hospitalization Ratio...                  * 1.248                  * 0.967                  * 0.670
PPPW.................................                  * 8.12%                 * 16.73%                 * 33.90%
ICH CAHPS: Nephrologists'                               58.20%                   67.90%                   79.15%
 Communication and Caring............
ICH CAHPS: Quality of Dialysis Center                   54.64%                   63.08%                   72.66%
 Care and Operations.................
ICH CAHPS: Providing Information to                     74.49%                   81.09%                   87.80%
 Patients............................
ICH CAHPS: Overall Rating of                          * 49.33%                 * 62.22%                 * 76.57%
 Nephrologists.......................
ICH CAHPS: Overall Rating of Dialysis                   50.02%                   63.37%                   78.30%
 Center Staff........................
ICH CAHPS: Overall Rating of the                        54.51%                   69.04%                   83.72%
 Dialysis Facility...................
----------------------------------------------------------------------------------------------------------------
Note: Values marked with an asterisk (*) are also the final performance standards for those measures for PY
  2022. In accordance with our longstanding policy, we are finalizing those numerical values for those measures
  for PY 2023 because they are higher standards than the PY 2023 numerical values for those measures.
Data sources: VAT measures: 2019 CROWNWeb; SRR, SHR: 2019 Medicare claims; Kt/V: 2019 CROWNWeb; Hypercalcemia:
  2019 CROWNWeb; NHSN: 2019 CDC; ICH CAHPS: CMS 2019; PPPW: 2019 CROWNWeb and 2019 OPTN.

    In addition, we have summarized in Table 9 existing requirements 
for successful reporting on reporting measures in the PY 2023 ESRD QIP.

[[Page 71468]]



 Table 9--Requirements for Successful Reporting on the PY 2023 ESRD QIP
                           Reporting Measures
------------------------------------------------------------------------
           Measure             Reporting frequency      Data elements
------------------------------------------------------------------------
Ultrafiltration.............  4 data elements are    In-Center
                               reported for every    Hemodialysis (ICHD)
                               HD Kt/V session       Kt/V Date.
                               during the week of    Post-
                               the monthly Kt/V      Dialysis Weight.
                               draw, and Kt/V date   Pre-
                               is reported monthly.  Dialysis Weight.
                                                     Delivered
                                                     Minutes of BUN
                                                     Hemodialysis.
                                                     Number of
                                                     sessions of
                                                     dialysis delivered
                                                     by the dialysis
                                                     unit to the patient
                                                     in the reporting
                                                     Month.
MedRec......................  Monthly.............   Date of the
                                                     medication
                                                     reconciliation.
                                                     Type of
                                                     eligible
                                                     professional who
                                                     completed the
                                                     medication
                                                     reconciliation:
                                                    [cir] Physician,
                                                    [cir] nurse,
                                                    [cir] ARNP,
                                                    [cir] PA,
                                                    [cir] pharmacist, or
                                                    [cir] pharmacy
                                                     technician
                                                     personnel.
                                                     Name of
                                                     eligible
                                                     professional.
Clinical Depression           1 of 6 conditions      Screening
 Screening and Follow-Up.      reported annually.    for clinical
                                                     depression is
                                                     documented as being
                                                     positive and a
                                                     follow-up plan is
                                                     documented.
                                                     Screening
                                                     for clinical
                                                     depression
                                                     documented as
                                                     positive, a follow-
                                                     up plan is not
                                                     documented, and the
                                                     facility possesses
                                                     documentation that
                                                     the patient is not
                                                     eligible.
                                                     Screening
                                                     for clinical
                                                     depression
                                                     documented as
                                                     positive, the
                                                     facility possesses
                                                     no documentation of
                                                     a follow-up plan,
                                                     and no reason is
                                                     given.
                                                     Screening
                                                     for clinical
                                                     depression
                                                     documented as
                                                     negative and no
                                                     follow-up plan
                                                     required.
                                                     Screening
                                                     for clinical
                                                     depression not
                                                     documented, but the
                                                     facility possesses
                                                     documentation
                                                     stating the patient
                                                     is not eligible.
                                                     Clinical
                                                     depression
                                                     screening not
                                                     documented, and no
                                                     reason is given.
NHSN Dialysis Event.........  Monthly data          Three types of
                               reported quarterly.   dialysis events
                                                     reported:
                                                     IV
                                                     antimicrobial
                                                     start;
                                                     positive
                                                     blood culture; and
                                                     pus,
                                                     redness, or
                                                     increased swelling
                                                     at the vascular
                                                     access site.
STrR........................  ....................  At least 10 patient-
                                                     years at risk
                                                     during the
                                                     performance period.
------------------------------------------------------------------------

    We received a few comments on the PY 2023 ESRD QIP measure set.
    Comment: One commenter expressed general agreement with CMS's 
policy to maintain current structural ESRD QIP policies. The commenter 
also expressed support for the proposed updates to the performance 
standards applicable to PY 2023.
    Response: We thank the commenter for its support.
    Comment: One commenter requested clarification that the 
Standardized Transfusion Ratio (STrR) measure will be a reporting 
measure. The commenter noted that the measure was listed in the CY 2021 
ESRD PPS proposed rule as a reporting measure in the PY 2023 measure 
set but was included in the Estimated Performance Standards for PY 2023 
Clinical Measures table.
    Response: We appreciate the commenter bringing this issue to our 
attention. We inadvertently included clinical performance standards for 
the STrR measure in Table 7 of the CY 2021 ESRD PPS proposed rule. In 
the CY 2020 ESRD PPS final rule (84 FR 60720 through 60723), we 
finalized that beginning with the PY 2022 ESRD QIP, we would convert 
the STrR clinical measure to a reporting measure and would score the 
measure based on the performance standards listed in Table 6 of that 
final rule, which provided that the applicable reporting performance 
standard for the STrR reporting measure is calculated annually and 
requires a facility to have at least 10 eligible patient-years at risk 
over the course of the performance period (84 FR 60718). The reporting 
requirements for the STrR measure are also included in Table 9 of this 
final rule.
3. 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 71469]]

[GRAPHIC] [TIFF OMITTED] TR09NO20.000

    In the CY 2021 ESRD PPS proposed rule (85 FR 42186 through 42187), 
we proposed to replace the current Ultrafiltration Rate reporting 
measure scoring equation with the following equation, beginning with PY 
2023:
[GRAPHIC] [TIFF OMITTED] TR09NO20.001

    We stated this proposed update 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. We explained that 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. We stated that 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. We 
stated that if the facility only reports the required UFR data elements 
for 9 of those 10 patients, the facility receives a zero for January. 
In the CY 2021 ESRD PPS proposed rule, we stated that 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 (85 FR 42187). 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, we stated that coordinating with hospitals to obtain 
relevant data continues to be a stakeholder concern in reporting UFR 
data. In the CY 2021 ESRD PPS proposed rule, we stated our belief 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 (85 FR 42187). 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, we stated that 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.
    In the CY 2021 ESRD PPS proposed rule, we stated that 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 hemodialysis 
(HD), because of indications that high ultrafiltration is an 
independent predictor of mortality. We stated that 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 stated that 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 (85 FR 
42187).
    We also stated our belief 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 stated that 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 stated that 
we recognize that both the Anemia Management reporting measure and the 
Serum Phosphorus reporting measure are also calculated using a 
facility-month construction, we stated that we were 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). We stated that 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 stated that we also 
believed 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 sought comment on this proposal.
    The comments on our proposal to update the scoring methodology for 
the Ultrafiltration Rate reporting measure and our responses to those 
comments are set forth below.
    Comment: Several commenters expressed support for the proposal to 
change the Ultrafiltration Rate reporting measure's scoring methodology 
from facility-months to patient-months. Several commenters expressed 
appreciation that the ``patient-months'' construction aligns with the 
NQF's Ultrafiltration Rate measure specifications. A few commenters 
expressed support for the proposed

[[Page 71470]]

update to the Ultrafiltration Rate reporting measure to use patient-
months because it would ensure the reliability of measure score 
calculations and thus enable CMS to better evaluate facility 
performance. A few commenters expressed support for the proposed update 
to the Ultrafiltration Rate reporting measure, believing that it would 
help address difficulties with measure requirements where all data on 
all patients had to be included in order to receive credit for 
reporting each month. One commenter stated that the proposed update 
would score facilities based on actions that impact patient care and 
appreciated the move away from ``all or nothing'' requirements.
    Response: We thank the commenters for their support. We agree that 
the proposed methodology is more outcomes focused, and 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 agree that the proposed 
update will give facilities more flexibility to receive credit for UFR 
reporting throughout the 12-month performance period.
    Comment: One commenter expressed support for the proposed update to 
the Ultrafiltration Rate reporting measure, but also stated that it 
would like to work with CMS on developing an outcome measure that 
better assesses quality of care for ultrafiltration.
    Response: We thank the commenter for its support and continue to 
welcome feedback on ways to improve measures in the program.
    Comment: A few commenters expressed concern that the 
Ultrafiltration Rate reporting measure may penalize facilities that are 
unable to comply with reporting requirements due to circumstances 
beyond their control, such as patient non-compliance due to 
hospitalization or missed treatments.
    Response: We thank the commenters for their feedback. Under the 
current facility-month scoring methodology, a facility is required 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. We 
believe the update to the Ultrafiltration Rate reporting measure's 
scoring methodology addresses situations in which facilities may 
experience challenges collecting data when patients are hospitalized or 
miss treatments because it does not require 100 percent reporting for 
all patients. We believe that the patient-months construction gives 
facilities more flexibility to receive credit for UFR reporting 
throughout the performance period because it scores a facility based on 
the facility reporting all UFR data elements for eligible patients 
across the entire performance period, and does not require reporting 
for all eligible patients each month in order to receive the maximum 
score on the measure.
    Final Rule Action: After considering the comments we received, we 
are finalizing our proposal to update the scoring methodology for the 
Ultrafiltration Rate reporting measure as proposed, beginning with PY 
2023.
4. Eligibility Requirements for the PY 2023 ESRD QIP
    Our current minimum eligibility requirements for scoring the ESRD 
QIP measures are described in Table 10. We did not propose any changes 
to these eligibility requirements for the PY 2023 ESRD QIP.

                       Table 10--Eligibility Requirements for Scoring on ESRD QIP Measures
----------------------------------------------------------------------------------------------------------------
                                             Minimum data
               Measure                       requirements            CCN open date       Small facility adjuster
----------------------------------------------------------------------------------------------------------------
Kt/V Comprehensive (Clinical)........  11 qualifying patients.  N/A....................  11-25 qualifying
                                                                                          patients.
VAT: Long-term Catheter Rate           11 qualifying patients.  N/A....................  11-25 qualifying
 (Clinical).                                                                              patients.
VAT: Standardized Fistula Rate         11 qualifying patients.  N/A....................  11-25 qualifying
 (Clinical).                                                                              patients.
Hypercalcemia (Clinical).............  11 qualifying patients.  N/A....................  11-25 qualifying
                                                                                          patients.
NHSN BSI (Clinical)..................  11 qualifying patients.  Before October 1 prior   11-25 qualifying
                                                                 to the performance       patients.
                                                                 period that applies to
                                                                 the program year.
NHSN Dialysis Event (Reporting)......  11 qualifying patients.  N/A....................  11-25 qualifying
                                                                                          patients.
SRR (Clinical).......................  11 index discharges....  N/A....................  11-41 index discharges.
STrR (Reporting).....................  10 patient-years at      N/A....................  10-21 patient-years at
                                        risk.                                             risk.
SHR (Clinical).......................  5 patient-years at risk  N/A....................  5-14 patient-years at
                                                                                          risk.
ICH CAHPS (Clinical).................  Facilities with 30 or    Before October 1 prior   N/A.
                                        more survey-eligible     to the performance
                                        patients during the      period that applies to
                                        calendar year            the program year.
                                        preceding the
                                        performance period
                                        must submit survey
                                        results. Facilities
                                        will not receive a
                                        score if they do not
                                        obtain a total of at
                                        least 30 completed
                                        surveys during the
                                        performance period.
Depression Screening and Follow-Up     11 qualifying patients.  Before April 1 of the    N/A.
 (Reporting).                                                    performance period
                                                                 that applies to the
                                                                 program year.
Ultrafiltration (Reporting)..........  11 qualifying patients.  Before April 1 of the    N/A.
                                                                 performance period
                                                                 that applies to the
                                                                 program year.
MedRec (Reporting)...................  11 qualifying patients.  Before October 1 prior   N/A.
                                                                 to the performance
                                                                 period that applies to
                                                                 the program year.
PPPW (Clinical)......................  11 qualifying patients.  N/A....................  11-25 qualifying
                                                                                          patients.
----------------------------------------------------------------------------------------------------------------


[[Page 71471]]

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
    In the CY 2021 ESRD PPS proposed rule (85 FR 42188), we stated that 
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). As an 
example, we stated that 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. We further noted that 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. We also noted that 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 (85 FR 42188).
    In the CY 2021 ESRD PPS proposed rule (85 FR 42188), we stated that 
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. 
We also clarified 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. 
As we noted in the proposed rule, 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.
    We received a few comments on this clarification.
    Comment: A few commenters expressed support for the clarification 
of the timeline for facilities to make changes to NHSN Dialysis Event 
and the NHSN BSI measure data. One commenter expressed support for the 
clarification, noting the importance of providing accurate information 
about bloodstream infections to patients and caregivers.
    Response: We thank the commenters for their support.
6. Payment Reduction Scale 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 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).
    In the CY 2021 ESRD PPS proposed rule (85 FR 42189), for PY 2023 we 
estimated based on available data that a facility must meet or exceed a 
mTPS of 57 in order to avoid a payment reduction. We noted that the 
mTPS estimated in the CY 2021 ESRD PPS proposed rule was based on data 
from CY 2018 instead of the PY 2023 baseline period (CY 2019) because 
CY 2019 data were not yet available.
    We refer readers to Table 8 of this final rule for the PY 2023 
finalized performance standards for each clinical measure. We stated in 
the CY 2021 ESRD PPS proposed rule that 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 (85 FR 42189). Table 11 of 
this final rule, is a reproduction of Table 9 from the CY 2021 ESRD PPS 
proposed rule.

  Table 11--Estimated Payment Reduction Scale for PY 2023 Based on the
                      Most Recently Available Data
------------------------------------------------------------------------
                 Total performance score                   Reduction (%)
------------------------------------------------------------------------
100-57..................................................               0
56-47...................................................             0.5
46-37...................................................             1.0
36-27...................................................             1.5
26-0....................................................             2.0
------------------------------------------------------------------------

    We stated our intention 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.
    We have now finalized the payment reductions that will apply to the 
PY 2023 ESRD QIP using updated CY 2019 data. The mTPS for PY 2023 will 
be 57, and the finalized payment reduction scale is shown in Table 12.

  Table 12--Finalized Payment Reduction Scale for PY 2023 Based on the
                      Most Recently Available Data
------------------------------------------------------------------------
                 Total performance score                   Reduction (%)
------------------------------------------------------------------------
100-57..................................................               0
56-47...................................................             0.5
46-37...................................................             1.0
36-27...................................................             1.5
26-0....................................................             2.0
------------------------------------------------------------------------

7. Reduction of the Number of Records That a Facility Selected for NHSN 
Validation Must Submit
    In the CY 2021 ESRD PPS proposed rule (85 FR 42189), we stated that 
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

[[Page 71472]]

validation by identifying facilities that are at risk for under-
reporting. For additional information on this methodology, we referred 
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 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 stated that we continued 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 that we believed 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 the CY 2021 ESRD PPS 
proposed rule (85 FR 42189 through 42190), we proposed 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 also proposed 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, 
we stated that a facility could choose to submit two records from Q1 
and 18 records from Q4, or six records from Q2 and 14 records from Q3, 
but it could not submit four records from Q1, eight records from Q2, 
and eight records from Q3.
    We stated that we had concluded 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 stated that we 
had been informed by the CDC's recommendations. We stated that based on 
the sample estimation analysis, the CDC recommended the following 
factors to 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 
stated that 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 had previously finalized 
(83 FR 57001). Because a total of 20 records would achieve the 6,000 
chart threshold necessary for an accurate review, we stated that we had 
concluded that we could reduce the sample size from 40 records to 20 
records. We stated that we believed 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.
    In the CY 2021 ESRD PPS proposed rule, we stated our belief that 
the reduction in patient records still provides an adequate sample size 
for the validation and reduces overall facility burden (85 FR 42190). 
We also stated that 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. We stated that 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 sought comments on this proposal.
    The comments on our proposal to reduce the number of records that a 
facility selected for NHSN validation must submit and our responses to 
those comments are set forth below. We did not propose any changes to 
the CROWNWeb validation study methodology.
    Comment: Several commenters expressed support for the proposal to 
reduce the number of patient records required for submission for the 
NHSN validation study. Several commenters noted that the proposed 
update will reduce provider burden. A few commenters noted that the 
proposed 20 patient records requirement is an adequate sample size for 
validation.
    Response: We thank the commenters for their support.
    Final Rule Action: After considering public comments, we are 
finalizing our proposal to update the records submission requirements 
for the NHSN data validation study as proposed, beginning with PY 2023.

D. Updates for the PY 2024 ESRD QIP

1. Continuing Measures for the PY 2024 ESRD QIP
    In the CY 2021 ESRD PPS proposed rule (85 FR 42190), we stated 
that, under our previously adopted policy, the PY 2023 ESRD QIP measure 
set will also be used for PY 2024. We did not propose to adopt any new 
measures beginning with the PY 2024 ESRD QIP.
2. Performance Period for the PY 2024 ESRD QIP
    In the CY 2021 ESRD PPS proposed rule (85 FR 42190), we stated our 
continued belief 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. Under this policy, CY 2022 will be the performance period 
and CY 2020 will be the baseline period for the PY 2024 ESRD QIP.
3. Performance Standards for the PY 2024 ESRD QIP
    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish

[[Page 71473]]

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. In the CY 2021 ESRD PPS proposed rule, we stated our 
intent to publish these numerical values, using CY 2020 data, in the CY 
2022 ESRD PPS final rule (85 FR 42190). However, we acknowledge that CY 
2020 data may be impacted by the nationwide Extraordinary Circumstances 
Exception (ECE) we granted to facilities in response to the COVID-19 
PHE, which excluded data from the first and second quarter of CY 2020. 
We are considering ways to address this and will provide further 
guidance in the CY 2022 ESRD PPS proposed 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). In the CY 2021 
ESRD PPS proposed rule (85 FR 42190), we stated that 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).
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). 
In section IV.C.3 of this final rule, we finalized our proposal to use 
patient-months instead of facility-months when scoring 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 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 did not propose 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. We 
solicited comments in the proposed rule, which published in the Federal 
Register on July 13, 2020 (85 FR 42132 through 42208). For the purpose 
of transparency, we are republishing the discussion of the information 
collection requirements. All of the requirements discussed in this 
section are already accounted for in OMB approved information requests.

B. Additional Information Collection Requirements

    This final rule does not impose any new information collection 
requirements in the regulation text. However, this final rule does make 
reference to several associated information collections that are not 
discussed in the regulation text contained in this document. 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. We stated that the median hourly 
wage of a Medical Records and Health Information Technician is $20.50 
per hour.\210\ We also stated that fringe benefit and overhead are 
calculated at 100 percent. Therefore, using these assumptions, we 
estimated an hourly labor cost of $41.00 as the basis of the wage 
estimates for all collections of information calculations in the ESRD

[[Page 71474]]

QIP. We 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. We stated that 
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, we stated that there is no practical alternative 
and we believe that these are reasonable estimation methods.
---------------------------------------------------------------------------

    \210\ 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 provided 
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.D.2 and IV.D.3 of 
this final 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 final 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 finalized in this 
final rule. The burden associated with these requirements is captured 
in an information collection request (OMB control number 0938-1289).
    In section IV.C.7 of this final rule, we finalized our proposal 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 this finalized policy, a facility is 
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 policy is the time and effort 
necessary to submit the requested records to a CMS contractor. Applying 
our policy to reduce the 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 (84 FR 60651).
    We did not propose 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. We note that the burden estimate for PY 2023 has been 
updated from the estimates in the CY 2021 ESRD PPS proposed rule due to 
updated information about the total number of facilities participating 
in the ESRD QIP and the total number of patients. 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 (84 FR 60788). In this 
final 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 532,931 patients across 7,610 facilities. At 2.5 minutes per 
element, this yields approximately 668.21 hours per facility. 
Therefore, the PY 2023 burden is 5,085,050 hours (668.21 hours x 7,610 
facilities). (Using the wage estimate of a Medical Records and Health 
Information Technician, we estimate that the PY 2023 total burden cost 
is approximately $208 million (5,085,050 hours x $41). There is no net 
incremental burden change from PY 2023 to PY 2024 because we are not 
changing the reporting requirements for PY 2024.

VI. 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

[[Page 71475]]

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). This rule has been designated by the Office of Information and 
Regulatory Affairs as an economically significant rule as measured by 
the $100 million threshold, and hence also been designated as 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 solicited comments on the regulatory impact analysis provided. 
With regard to the ESRD PPS, we did not receive any comments on the 
RIA.
2. Statement of Need
a. ESRD PPS
    This rule finalizes a number of routine updates and several policy 
changes to the ESRD PPS for CY 2021. The 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 
final 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 finalizes routine updates to the payment for renal 
dialysis services furnished by ESRD facilities to individuals with AKI. 
Failure to publish this final 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 final rule finalizes updates to the ESRD QIP beginning with PY 
2023, including a modification to the scoring methodology for the 
Ultrafiltration Rate reporting measure and an update to the reporting 
requirements for facilities selected for NHSN data validation. This 
final 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 final revisions to the ESRD PPS will result in 
an increase of approximately $250 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, adoption of the 2018 OMB delineations with a transition 
period, and including calcimimetics in the ESRD PPS base rate. These 
figures do not reflect estimated increases or decreases in expenditures 
based on our expansion of eligibility for the TPNIES to certain new and 
innovative home dialysis machines when used in the home for a single 
patient. The fiscal impact of this policy cannot be determined due to 
the uniqueness of each new and innovative home dialysis machine and its 
cost.
b. AKI
    We estimate that the updates to the AKI payment rate would result 
in an increase of approximately $4 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 note that the estimated costs have been updated from the estimates 
in the CY 2021 ESRD PPS proposed rule due to updated information about 
the total number of facilities participating in the ESRD QIP and the 
total number of patients. 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 new policy to reduce the total number 
of records collected. The finalized updates will 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 finalized the payment reduction scale using more recent 
data for the measures in the ESRD QIP measure set and applying our 
finalized proposal to modify the scoring methodology for the 
Ultrafiltration Rate reporting measure beginning with the PY 2023 ESRD 
QIP. We estimate approximately $208 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 finalized revisions to the ESRD 
QIP would result in $208 million in information collection burden, and 
$16 million in estimated payment reductions across all facilities, for 
an impact of $224 million as a result of the policies we have 
previously finalized and the policies we have finalized in this final 
rule.
4. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final 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 the CY 2021 ESRD PPS proposed rule will be the number of 
reviewers of this final rule. We acknowledge that this assumption may 
understate or overstate the costs of reviewing this rule. It is 
possible that

[[Page 71476]]

not all commenters reviewed CY 2021 ESRD PPS proposed rule in detail, 
and it is also possible that some reviewers chose not to comment on the 
CY 2021 ESRD PPS 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 also recognize that different types of entities are in many 
cases affected by mutually exclusive sections of this final rule, and 
therefore, for the purposes of our estimate we assume that each 
reviewer reads approximately 50 percent of the rule. We sought comments 
on this assumption in the CY 2021 ESRD PPS proposed rule but did not 
receive comments.
    Using the wage information from the Bureau of Labor Statistics 
(BLS) for medical and health services managers (Code 11-9111), we 
estimate that the cost of reviewing this rule is $110.74 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 final. For each entity that reviews the rule, the estimated cost 
is $692.13 (6.25 hours x $110.74). Therefore, we estimate that the 
total cost of reviewing this regulation rounds to $81,671. ($692.13 x 
118 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 final rule, we used CY 2019 data from the Part A and Part 
B Common Working Files as of July 31, 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 final 
rule. Table 13 shows the impact of the estimated CY 2021 ESRD PPS 
payments compared to estimated payments to ESRD facilities in CY 2020.

                                     Table 13--Impact of Finalized Changes in Payment to ESRD Facilities for CY 2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Effect of
                                                              Number of       2021      Effect of    Effect of     Effect of     Effect of    Effect of
                                                 Number of    treatments   changes in   changes in  CBSA change     bundling     change for   total 2021
                 Facility type                   facilities      (in        outlier     wage index    & 5% cap   calcimimetics    payment      proposed
                                                    (A)       millions)    policy (C)   data (D) %   policy (E)    into base    rate update  changes (H)
                                                                 (B)           %                         %         rate (F) %      (G) %          %
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Facilities................................        7,659         45.3          0.4          0.0          0.0          -0.1           1.6          2.0
Type:
    Freestanding..............................        7,270         43.5          0.4          0.0          0.0           0.0           1.6          2.0
    Hospital based............................          389          1.8          0.9          0.1          0.1          -2.9           1.6         -0.2
Ownership Type:
    Large dialysis organization...............        5,890         35.3          0.4          0.0          0.0           0.9           1.6          2.9
    Regional chain............................          956          5.8          0.3         -0.1         -0.1          -3.7           1.6         -1.9
    Independent...............................          509          2.9          0.5          0.3          0.3          -2.6           1.6          0.0
    Hospital based \1\........................          302          1.4          0.9          0.1          0.2          -2.6           1.6          0.2
    Unknown...................................            2          0.0          1.5          0.0         -0.1           1.3           1.6          4.4
Geographic Location: 2 3
    Rural.....................................        1,292          6.5          0.4          0.1         -1.2           0.1           1.6          1.0
    Urban.....................................        6,367         38.8          0.4          0.0          0.2          -0.1           1.6          2.1
Census Region:
    East North Central........................        1,223          6.0          0.5          0.1         -0.1           0.5           1.6          2.6
    East South Central........................          606          3.3          0.4          0.0          0.0          -0.8           1.6          1.1
    Middle Atlantic...........................          852          5.4          0.5          0.5          0.2          -0.7           1.6          2.1
    Mountain..................................          423          2.4          0.3         -0.5         -0.1           1.0           1.6          2.4
    New England...............................          203          1.4          0.4         -0.7         -0.1           0.2           1.6          1.4
    Pacific \4\...............................          922          6.5          0.4         -0.1          0.1           0.6           1.6          2.5
    Puerto Rico and Virgin Islands............           52          0.3          0.3          0.1         -0.1           1.1           1.6          2.9
    South Atlantic............................        1,758         10.8          0.5          0.0          0.0          -0.6           1.6          1.4
    West North Central........................          514          2.3          0.6         -0.4         -0.1           0.5           1.6          2.2
    West South Central........................        1,106          6.7          0.4          0.0          0.0          -0.4           1.6          1.6
Facility Size:
    Less than 4,000 treatments................        1,377          2.2          0.5          0.0          0.0           0.5           1.6          2.7
    4,000 to 9,999 treatments.................        2,999         12.8          0.5          0.0         -0.1           0.0           1.6          2.1
    10,000 or more treatments.................        3,261         30.2          0.4          0.0          0.0          -0.2           1.6          1.9
    Unknown...................................           22          0.1          0.5          0.1         -0.1          -3.4           1.6         -1.3
Percentage of Pediatric Patients:
    Less than 2%..............................        7,551         45.0          0.4          0.0          0.0          -0.1           1.6          1.9
    Between 2% and 19%........................           37          0.3          0.4          0.2         -0.1          -0.5           1.6          1.6
    Between 20% and 49%.......................           16          0.0          0.4         -0.3          0.0           3.1           1.6          4.9
    More than 50%.............................           55          0.0          0.3          0.0         -0.1           3.8           1.6          5.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes hospital-based ESRD facilities not reported to have large dialysis organization or regional chain ownership.
\2\ Facility counts for Urban/Rural uses 2021 CBSA delineation. Under 2020 and previous CBSA delineation, facility counts for urban and rural are 6,355
  and 1,304 respectively. For payment percent change columns, appropriate definition of Urban/Rural is used.
\3\ The 1.2 percent drop in total payments among rural facilities (and increase in total payments among urban facilities) is mostly due facilities
  shifting from rural to urban status under new CBSA delineation. Controlling for old-CBSA urban/rural status, the change in payment is close to 0
  percent.
\4\ Includes ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands.

    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 final 
changes to the outlier payment policy described in section II.B.4.c of 
this final rule is shown in column C. For CY 2021, the impact on

[[Page 71477]]

all ESRD facilities as a result of the changes to the outlier payment 
policy would be a 0.4 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 final 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 final rule. That is, this 
column reflects the update from the CY 2020 ESRD PPS wage index using 
older 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 0.7 percent decrease 
to a 0.5 percent increase due to the annual update to the ESRD PPS wage 
index.
    Column E shows the effect of adopting the 2018 OMB delineations and 
the transition policy as described in sections II.B.4.b.(2) and 
II.B.4.b.(3), respectively, of this final rule. That is, the impact 
represented in this column reflects the change from using the older 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 2018 
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 updates to the ESRD PPS wage index.
    Column F shows the effect of the final addition to the ESRD PPS 
base rate to include calcimimetics as described in section II.B.1 of 
this final rule. That is, the impact represented in this column 
reflects the change, under the ESRD PPS, 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 final policy, beginning January 1, 2021, we 
will modify the ESRD PPS base rate by adding $9.93 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 3.7 percent 
decrease to a 3.8percent increase due to these policy modifications.
    Column G shows the effect of the final CY 2021 ESRD PPS payment 
rate update as described in section II.B.4.a of this final rule. The 
final ESRD PPS payment rate update is 1.6 percent, which reflects the 
ESRDB market basket percentage increase factor for CY 2021 of 1.9 
percent and the final MFP adjustment of 0.3 percentage point.
    Column H reflects the overall impact, that is, the effects of the 
final outlier policy changes, the final updated wage index and 
transition policy, the payment rate update, and the addition to the 
ESRD PPS base rate to include calcimimetics. We expect that overall 
ESRD facilities would experience a 2.0 percent increase in estimated 
payments in CY 2021. The categories of types of facilities in the 
impact table show impacts ranging from a 1.9 percent decrease to a 5.6 
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 final 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 
2.0 percent overall increase in the final CY 2021 ESRD PPS payment 
amounts, we estimate that there would be an increase in beneficiary co-
insurance payments of 2.0percent in CY 2021, which translates to 
approximately $60 million.
e. Alternatives Considered
(1) Inclusion of Calcimimetics Into the ESRD PPS Bundled Payment
    In section II.B.1 of this final rule, we established that beginning 
January 1, 2021, we will modify the ESRD PPS base rate by adding $9.93 
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 utilized to calculate the amount to be added the ESRD PPS 
base rate, for the CY 2021 ESRD PPS proposed rule, 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 
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.
    For the final rule, we considered several alternative approaches: 
(1) Using the most recent 12 months of claims data, which would result 
in a base rate increase of $11.85; (2) using only 2019 claims data, 
which would result in a base rate increase of $11.10; and (3) using 
both CYs 2018 and 2019 claims data, which would result in a base rate 
increase of $8.52. We believe a robust data set should reflect both the 
slow uptake of the injectable calcimimetic and the ramping up of 
utilization of generic oral calcimimetics. We view the use of 18 months 
as a mid-point between the proposal to use both CYs 2018 and 2019 and 
the most recent 12 months of claims data, as requested by commenters. 
Accordingly, we have concluded that using 18 months of claims data 
resulting in an increase of $9.93 to the base rate is the most 
appropriate approach.
(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 final rule, we expanded the TPNIES policy 
to 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. 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

[[Page 71478]]

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 
expansion 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 final rule, we adopted the 2018 OMB 
delineations with a transition policy. That is, we are adopting the OMB 
delineations based on the September 14, 2018 OMB Bulletin No. 18-04 
and, to mitigate any potential negative impacts, we applied 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 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. Final 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 final rule, we used CY 2019 data from the Part A and Part 
B Common Working Files as of July 31, 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 final 
rule. Table 14 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.

                 Table 14--Impact of Final Changes in Payment for Renal Dialysis Services Furnished to Individuals With AKI for CY 2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Effect of
                                                                                                             bundling        Effect of       Effect of
                                                             Number of       Number of     Effect of all   calcimimetics    changes in      total 2021
                      Facility type                       facilities (A)  treatments (in    wage index      in the ESRD    payment rate    final changes
                                                                          thousands) (B)   changes (C) %   PPS base rate   update (E) %        (F) %
                                                                                                               (D) %
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Facilities..........................................           5,141           296.4            -0.1             4.2             1.6             5.7
Type:
    Freestanding........................................           5,013           290.7            -0.1             4.2             1.6             5.7
    Hospital based......................................             128             5.7            -0.1             4.2             1.6             5.8
Ownership Type:
    Large dialysis organization.........................           4,280           250.7            -0.1             4.2             1.6             5.7
    Regional chain......................................             596            30.0            -0.1             4.2             1.6             5.7
    Independent.........................................             185            12.1             0.1             4.2             1.6             6.0
    Hospital based \1\..................................              80             3.6             0.0             4.2             1.6             5.9
    Unknown.............................................               0             0.0             0.0             0.0             0.0             0.0
Geographic Location: \2\
    Rural...............................................             885            46.3            -0.1             4.2             1.6             5.7
    Urban...............................................           4,256           250.0            -0.1             4.2             1.6             5.8
Census Region:
    East North Central..................................             892            54.3             0.0             4.2             1.6             5.8
    East South Central..................................             408            21.0            -0.2             4.2             1.6             5.6
    Middle Atlantic.....................................             535            33.1             0.4             4.2             1.6             6.2
    Mountain............................................             294            17.4            -0.5             4.2             1.6             5.3
    New England.........................................             159             8.6            -0.8             4.2             1.6             4.9
    Pacific \3\.........................................             607            45.8            -0.1             4.2             1.6             5.7
    Puerto Rico and Virgin Islands......................               2             0.0            -0.1             4.2             1.6             5.8
    South Atlantic......................................           1,211            68.6             0.0             4.2             1.6             5.8
    West North Central..................................             352            14.2            -0.5             4.2             1.6             5.3
    West South Central..................................             681            33.2             0.0             4.2             1.6             5.8
Facility Size:
    Less than 4,000 treatments..........................             606            23.2            -0.1             4.2             1.6             5.7
    4,000 to 9,999 treatments...........................           2,076           106.6            -0.1             4.2             1.6             5.8
    10,000 or more treatments...........................           2,455           166.4            -0.1             4.2             1.6             5.7
    Unknown.............................................               4             0.2            -0.5             4.2             1.6             5.3
Percentage of Pediatric Patients:
    Less than 2%........................................           5,141           296.4            -0.1             4.2             1.6             5.7

[[Page 71479]]

 
    Between 2% and 19%..................................               0             0.0             0.0             0.0             0.0             0.0
    Between 20% and 49%.................................               0             0.0             0.0             0.0             0.0             0.0
    More than 50%.......................................               0             0.0             0.0             0.0             0.0             0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes hospital-based ESRD facilities not reported to have large dialysis organization or regional chain ownership.
\2\ Facility counts for Urban/Rural uses 2021 CBSA delineation. Under 2020 and previous CBSA delineation, facility counts for urban and rural are 4,246
  and 895 respectively. For payment percent change columns, appropriate definition of Urban/Rural is used.
\3\Includes ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands.

    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 final CY 2021 wage indices.
    Column D shows the effect of the adjustment to the AKI dialysis 
payment rate that reciprocates the modification to the ESRD PPS base 
rate for CY 2021, consistent with Sec.  413.372. As discussed in 
section II.B.1 of this final rule, we modified the ESRD PPS base rate 
by adding $9.93 to include calcimimetics.
    Column E shows the effect of the final CY 2021 ESRD PPS payment 
rate update. The ESRD PPS payment rate update is 1.6 percent, which 
reflects the final ESRDB market basket percentage increase factor for 
CY 2021 of 1.9 percent and the final MFP adjustment of 0.3 percentage 
point.
    Column F reflects the overall impact, that is, the effects of the 
updated wage index, the final addition to the ESRD PPS base rate, and 
the payment rate update. We expect that overall ESRD facilities would 
experience a 5.7 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 6.2 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 updated 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 update 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 will 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 7,610 dialysis 
facilities (including those not receiving a TPS) enrolled in Medicare, 
approximately 24.3 percent or 1,790 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2023. After finalizing our proposal to update the scoring 
methodology for the Ultrafiltration Rate reporting measure, the total 
estimated payment reductions for all the 1,790 facilities expected to 
receive a payment reduction in PY 2023 would decrease from 
$18,247,083.76 to approximately $15,770,179.33. We note that the total 
estimated payment reductions for PY 2023 have been updated from the 
estimates in the CY 2021 ESRD PPS proposed rule due to updated 
information about the total number of facilities expected to receive a 
payment reduction. 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 2023 ESRD QIP.

[[Page 71480]]



 Table 15--Estimated Distribution of PY 2023 ESRD QIP Payment Reductions
------------------------------------------------------------------------
                                             Number of      Percent of
       Payment reduction (percent)          facilities     facilities *
------------------------------------------------------------------------
0.0.....................................           5,590           75.75
0.5.....................................           1,329           18.01
1.0.....................................             372            5.04
1.5.....................................              64            0.87
2.0.....................................              25            0.34
------------------------------------------------------------------------
* 230 facilities not scored due to insufficient data.

    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 16) in accordance with the policies finalized in 
this final rule. Measures used for the simulation are shown in Table 
16. These estimates also incorporate the finalized update to the 
scoring methodology for the Ultrafiltration Rate reporting measure.

                       Table 16--Data Used To Estimate PY 2023 ESRD QIP Payment Reductions
----------------------------------------------------------------------------------------------------------------
                                        Period of time used to
                                        calculate achievement
                                           thresholds, 50th
               Measure                    percentiles of the                   Performance period
                                        national performance,
                                           benchmarks, and
                                        improvement thresholds
----------------------------------------------------------------------------------------------------------------
ICH CAHPS Survey.....................  Jan 2018-Dec 2018......  Jan 2019-Dec 2019.
SRR..................................  Jan 2018-Dec 2018......  Jan 2019-Dec 2019.
SHR..................................  Jan 2018-Dec 2018......  Jan 2019-Dec 2019.
PPPW.................................  Jan 2018-Dec 2018......  Jan 2019-Dec 2019.
Kt/V Dialysis Adequacy Comprehensive.  Jan 2018-Dec 2018......  Jan 2019-Dec 2019.
VAT:
    Standardized Fistula Ratio.......  Jan 2018-Dec 2018......  Jan 2019-Dec 2019.
    % Catheter.......................  Jan 2018-Dec 2018......  Jan 2019-Dec 2019.
Hypercalcemia........................  Jan 2018-Dec 2018......  Jan 2019-Dec 2019.
----------------------------------------------------------------------------------------------------------------

    For all measures except Standardized Hospitalization Ratio (SHR) 
and Standardized Readmission Ratio (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.C and IV.D of 
this final rule. Facility reporting measure scores were estimated using 
available data from CY 2019. 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 final rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2019 and December 2019 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 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 
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.

               Table 17--Estimated Impact of QIP Payment Reductions to ESRD Facilities for PY 2023
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of        Payment
                                                     Number of                      facilities       reduction
                                     Number of      treatments       Number of      expected to      (percent
                                    facilities       2019 (in       facilities       receive a       change in
                                                     millions)    with QIP score      payment       total ESRD
                                                                                     reduction       payments)
----------------------------------------------------------------------------------------------------------------
All Facilities..................           7,610            44.8           7,380           1,790           -0.16
Facility Type:
    Freestanding................           7,224            43.1           7,035           1,684           -0.15
    Hospital-based..............             386             1.8             345             106           -0.25
Ownership Type:
    Large Dialysis..............           5,809            34.8           5,690           1,194           -0.12
    Regional Chain..............             944             5.7             923             280           -0.21
    Independent.................             534             2.9             491             227           -0.36
    Hospital-based (non-chain)..             299             1.3             264              85           -0.28
    Unknown.....................              24             0.0              12               4           -0.25
Facility Size:
    Large Entities..............           6,753            40.6           6,613           1,474           -0.13
    Small Entities \1\..........             833             4.3             755             312           -0.33
    Unknown.....................              24             0.0              12               4           -0.25

[[Page 71481]]

 
Rural Status:
    (1) Yes.....................           1,292             6.5           1,239             180           -0.09
    (2) No......................           6,318            38.4           6,141           1,610           -0.17
Census Region:
    Northeast...................           1,046             6.7           1,002             251           -0.15
    Midwest.....................           1,734             8.3           1,664             424           -0.17
    South.......................           3,452            20.6           3,370             877           -0.17
    West........................           1,318             8.7           1,285             199           -0.09
    U.S. Territories \2\........              60             0.4              59              39           -0.44
Census Division:
    Unknown.....................               8             0.1               8               3           -0.25
    East North Central..........           1,220             6.0           1,172             354           -0.21
    East South Central..........             604             3.3             593             142           -0.13
    Middle Atlantic.............             845             5.4             808             222           -0.17
    Mountain....................             419             2.4             406              61           -0.09
    New England.................             201             1.4             194              29           -0.09
    Pacific.....................             899             6.3             879             138           -0.09
    South Atlantic..............           1,746            10.7           1,703             454           -0.17
    West North Central..........           7,610            44.8           7,380           1,790           -0.16
    West South Central..........           7,224            43.1           7,035           1,684           -0.15
    U.S. Territories \2\........              47             0.3              47              46           -1.57
Facility Size (# of total                    386             1.8             345             106           -0.25
 treatments):
    Less than 4,000 treatments..           5,809            34.8           5,690           1,194           -0.12
    4,000-9,999 treatments......           2,644            11.9           2,620             488           -0.11
    Over 10,000 treatments......             944             5.7             923             280           -0.21
    Unknown.....................             534             2.9             491             227           -0.36
----------------------------------------------------------------------------------------------------------------
\1\ Small Entities include hospital-based and satellite facilities, and non-chain facilities based on DFC self-
  reported status.
\2\ Includes American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and Virgin Islands.

b. Effects of the PY 2024 ESRD QIP on ESRD Facilities
    For the PY 2024 ESRD QIP, we estimate that, of the 7,610 dialysis 
facilities (including those not receiving a TPS) enrolled in Medicare, 
approximately 24.3 percent or 1,790 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 1,790 facilities 
expected to receive a payment reduction is approximately 
$15,770,179.33. We note that the total payment reductions for PY 2024 
have been updated from the estimates in the CY 2021 ESRD PPS proposed 
rule due to updated information about the total number of facilities 
expected to receive a payment reduction. Facilities that do not receive 
a TPS do not receive a payment reduction.
    Table 18 shows the overall estimated distribution of payment 
reductions resulting from the PY 2024 ESRD QIP.

 Table 18--Estimated Distribution of PY 2024 ESRD QIP Payment Reductions
------------------------------------------------------------------------
                                             Number of      Percent of
       Payment reduction (percent)          facilities     facilities *
------------------------------------------------------------------------
0.0.....................................           5,590           75.75
0.5.....................................           1,329           18.01
1.0.....................................             372            5.04
1.5.....................................              64            0.87
2.0.....................................              25            0.34
------------------------------------------------------------------------
* Note: 230 facilities not scored due to insufficient data.

    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 18) in accordance with the policies 
finalized in this final rule. Measures used for the simulation are 
shown in Table 19.

                       Table 19--Data Used To Estimate PY 2024 ESRD QIP Payment Reductions
----------------------------------------------------------------------------------------------------------------
                                           Period of time used to
                                            calculate achievement
                                              thresholds, 50th
                Measure                      percentiles of the                   Performance period
                                            national performance,
                                               benchmarks, and
                                           improvement thresholds
----------------------------------------------------------------------------------------------------------------
ICH CAHPS Survey.......................  Jan 2018-Dec 2018.........  Jan 2019-Dec 2019.
SRR....................................  Jan 2018-Dec 2018.........  Jan 2019-Dec 2019.
SHR....................................  Jan 2018-Dec 2018.........  Jan 2019-Dec 2019.
PPPW...................................  Jan 2018-Dec 2018.........  Jan 2019-Dec 2019.
Kt/V Dialysis Adequacy Comprehensive...  Jan 2018-Dec 2018.........  Jan 2019-Dec 2019.
VAT:
    Standardized Fistula Ratio.........  Jan 2018-Dec 2018.........  Jan 2019-Dec 2019

[[Page 71482]]

 
    % Catheter.........................  Jan 2018-Dec 2018.........  Jan 2019-Dec 2019.
Hypercalcemia..........................  Jan 2018-Dec 2018.........  Jan 2019-Dec 2019.
----------------------------------------------------------------------------------------------------------------

    For all measures except SHR, SRR, and the STrR reporting measure, 
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 policies outlined in section IV.C and IV.D 
of this final rule. Facility reporting measure scores were estimated 
using available data from CY 2019. 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 final rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2019 and December 2019 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 20 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 urban and by region), and 
facility type (hospital based and freestanding facilities). Given that 
the performance period used for these calculations differs from the 
performance period we are finalizing 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.

               Table 20--Estimated Impact of QIP Payment Reductions to ESRD Facilities for PY 2024
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of        Payment
                                                     Number of                      facilities       reduction
                                     Number of      treatments       Number of      expected to      (percent
                                    facilities       2019 (in       facilities       receive a       change in
                                                     millions)    with QIP score      payment       total ESRD
                                                                                     reduction       payments)
----------------------------------------------------------------------------------------------------------------
All Facilities..................           7,610            44.8           7,380           1,790           -0.16
Facility Type:
    Freestanding................           7,224            43.1           7,035           1,684           -0.15
    Hospital-based..............             386             1.8             345             106           -0.25
Ownership Type:
    Large Dialysis..............           5,809            34.8           5,690           1,194           -0.12
    Regional Chain..............             944             5.7             923             280           -0.21
    Independent.................             534             2.9             491             227           -0.36
    Hospital-based (non-chain)..             299             1.3             264              85           -0.28
    Unknown.....................              24             0.0              12               4           -0.25
Facility Size:
    Large Entities..............           6,753            40.6           6,613           1,474           -0.13
    Small Entities \1\..........             833             4.3             755             312           -0.33
    Unknown.....................              24             0.0              12               4           -0.25
Rural Status:
    (1) Yes.....................           1,292             6.5           1,239             180           -0.09
    (2) No......................           6,318            38.4           6,141           1,610           -0.17
Census Region:
    Northeast...................           1,046             6.7           1,002             251           -0.15
    Midwest.....................           1,734             8.3           1,664             424           -0.17
    South.......................           3,452            20.6           3,370             877           -0.17
    West........................           1,318             8.7           1,285             199           -0.09
    U.S. Territories \2\........              60             0.4              59              39           -0.44
Census Division:
    Unknown.....................               8             0.1               8               3           -0.25
    East North Central..........           1,220             6.0           1,172             354           -0.21
    East South Central..........             604             3.3             593             142           -0.13
    Middle Atlantic.............             845             5.4             808             222           -0.17
    Mountain....................             419             2.4             406              61           -0.09
    New England.................             201             1.4             194              29           -0.09
    Pacific.....................             899             6.3             879             138           -0.09
    South Atlantic..............           1,746            10.7           1,703             454           -0.17
    West North Central..........             514             2.3             492              70           -0.09
    West South Central..........           1,102             6.7           1,074             281           -0.17
    U.S. Territories \2\........              52             0.3              51              36           -0.48
Facility Size (# of total
 treatments):
    Less than 4,000 treatments..           1,315             2.6           1,195             265           -0.18

[[Page 71483]]

 
    4,000-9,999 treatments......           2,803            12.2           2,771             530           -0.12
    Over 10,000 treatments......           3,246            29.7           3,240             961           -0.18
    Unknown.....................             246             0.3             174              34           -0.16
----------------------------------------------------------------------------------------------------------------
\1\ Small Entities include hospital-based and satellite facilities, and non-chain facilities based on DFC self-
  reported status.
\2\ Includes American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and Virgin Islands.

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 
Readmissions Reduction Program and the Hospital-Acquired Condition 
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 $15,770,179.33 in Medicare savings. For comparison, Table 
21 shows the payment reductions that we estimate will be applied by the 
ESRD QIP from PY 2018 through PY 2024.

 Table 21--Estimated Payment Reductions Payment Years 2018 Through 2024
------------------------------------------------------------------------
               Payment year                 Estimated payment reductions
------------------------------------------------------------------------
PY 2024...................................  $15,770,179.33.
PY 2023...................................  15,770,179.33.
PY 2022...................................  18,247,083.76 (84 FR 60794).
PY 2021...................................  32,196,724 (83 FR 57062).
PY 2020...................................  31,581,441 (81 FR 77960).
PY 2019...................................  15,470,309 (80 FR 69074).
PY 2018...................................  11,576,214 (79 FR 66257).
------------------------------------------------------------------------

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.C.7 of this final rule, we finalized our policy that 
facilities selected to participate in the NHSN data validation study 
can submit a total of 20 records across two quarters. In the CY 2021 
ESRD PPS proposed rule, we stated that 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 (85 FR 42204). However, we concluded that the 
reduction in patient records provides an adequate sample size for the 
validation. After considering public comments, we finalized this 
approach in this final rule because we believe that it will lower 
administrative costs and will 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 22, we have prepared an accounting statement showing 
the classification of the transfers and costs associated with the 
various provisions of this final rule.

  Table 22--Accounting Statement: Classification of Estimated Transfers
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
                       ESRD PPS and AKI (CY 2021)
------------------------------------------------------------------------
Annualized Monetized Transfers............  $190 million.
From Whom to Whom.........................  Federal Government to ESRD
                                             providers.
Increased Beneficiary Co-insurance          $60 million.
 Payments.
From Whom to Whom.........................  Beneficiaries to ESRD
                                             providers.
------------------------------------------------------------------------
                          ESRD QIP for PY 2023
------------------------------------------------------------------------
Annualized Monetized Transfers............  -$16 million.
From Whom to Whom.........................  Federal Government to ESRD
                                             providers.
------------------------------------------------------------------------
                          ESRD QIP for PY 2024
------------------------------------------------------------------------
Annualized Monetized Transfers............  -$16 million.
From Whom to Whom.........................  Federal Government to ESRD
                                             providers.
------------------------------------------------------------------------

    In accordance with the provisions of Executive Order 12866, this 
final 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

[[Page 71484]]

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 13. Using the 
definitions in this ownership category, we consider 509 facilities that 
are independent and 302 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 finalized 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 0.2 percent increase in payments 
for CY 2021. An independent facility (as defined by ownership type) is 
estimated to receive no update 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 1,790 ESRD facilities 
expected to receive a payment reduction as a result of their 
performance on the PY 2024 ESRD QIP, 267 are ESRD small entity 
facilities. We present these findings in Table 18 (``Estimated 
Distribution of PY 2024 ESRD QIP Payment Reductions'') and Table 20 
(``Estimated Impact of QIP Payment Reductions to ESRD Facilities for PY 
2024''). We note that these estimates have been updated from the CY 
2021 ESRD PPS proposed rule due to updated information about both the 
total number of facilities and the total number of small entity 
facilities expected to receive a payment reduction. We estimate that 
the payment reductions would average approximately $9,770.87 per 
facility across the 1,790 facilities receiving a payment reduction, and 
$10,748.02 for each small entity facility. We also estimate that there 
are 833 small entity facilities in total, and that the aggregate ESRD 
PPS payments to these facilities would decrease 0.33 percent in CY 
2024.
    Therefore, the Secretary has determined that this final 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 solicited comment on the RFA analysis 
provided. We received no comments on this section.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis 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 604 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 
final rule would have a significant impact on operations of a 
substantial number of small rural hospitals because most dialysis 
facilities are freestanding. While there are 126 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 126 rural 
hospital-based dialysis facilities would experience an estimated 0.2 
percent decrease in payments.
    Therefore, the Secretary has determined that this final rule will 
not have a significant impact on the operations of a substantial number 
of small rural hospitals.

E. Unfunded Mandates Reform Act (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 final 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 final rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
it will not have substantial direct effects on the rights, roles, and 
responsibilities of states, local or tribal governments.

G. Regulatory Reform Under Executive Order 13771

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs 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.

H. Congressional Review Act

    This final rule is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress 
and the Comptroller General for review.

[[Page 71485]]

VII. 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 amends 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-month period by 2.
    (h) When an ESRD facility provides an attestation in accordance 
with paragraph (e) of this section, for the 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 is 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 the third and fourth 
quarters of calendar year 2018 and for the full calendar year 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.

[[Page 71486]]

    (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 the third and fourth 
quarter of calendar year 2018 and the full calendar year 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) items 
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 
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, using the 
straight-line depreciation method, by dividing the MAC-determined price 
by its useful life of 5 years.
    (ii) Calculate a per treatment amount for use in calculating the 
pre-adjusted per treatment amount by dividing the annual allowance, as 
determined in paragraph (f)(1)(i) of this section, by the expected 
number of treatments.
    (iii) 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 subtracting the average per treatment offset amount 
(as determined using the data sources and methodology specified in 
paragraphs (f)(2) and (3) of this section, respectively, of this 
section) from the per treatment amount (as determined in paragraph 
(f)(1)(ii) of this section) to account for the costs already paid 
through the ESRD PPS base rate for current home dialysis machines that 
ESRD facilities already own.
    (2) The methodology specified in paragraph (f)(3) of this section 
for determining the average per treatment offset amount uses the 
following data sources:
    (i) Dialysis machine and equipment cost, total cost across all 
dialysis modalities, the number of hemodialysis-equivalent home 
dialysis treatment counts, and the number of hemodialysis-equivalent 
total treatment

[[Page 71487]]

counts are obtained from renal facility cost reports (CMS form 265-11) 
and hospital cost reports (CMS form 2552-10) using calendar years 2017-
2019 cost reports.
    (A) Dialysis machine and equipment costs are obtained by summing 
lines 8.01 through 17.02 from Worksheet B, Column 4 for renal facility 
cost reports, and by summing lines 2 through 11 from Worksheet I-2 for 
hospital cost reports.
    (B) Total cost across all dialysis modalities are obtained by 
summing lines 8.01 through 17.02 from Worksheet C, Column 2 for renal 
facility cost reports, and by summing lines 1 through 10 from Worksheet 
I-4, Column 2 for the hospital cost reports.
    (C) Hemodialysis-equivalent total treatment counts are obtained by 
summing lines 8.01 through 17.02 from Worksheet C, Column 1 for renal 
facility cost reports, and by summing lines 1 through 10 from Worksheet 
I-4, Column 1 for the hospital cost reports.
    (D) Hemodialysis-equivalent home dialysis treatment counts are 
obtained by summing lines 14.01 through 17.02 from Worksheet C, Column 
1 for renal facility cost reports, and by summing lines 7 through 10 
from Worksheet I-4, Column 1 for the hospital cost reports. In both 
renal facility and hospital cost reports, home Continuous Ambulatory 
Peritoneal Dialysis and home Continuous Cyclic Peritoneal Dialysis are 
reported as patient weeks, so a conversion factor of 3 is applied to 
obtain hemodialysis-equivalent treatment counts.
    (ii) [Reserved]
    (3) CMS uses the following methodology to calculate the average per 
treatment offset amount for home dialysis machines that is subtracted 
from the per treatment amount as determined in paragraph (f)(1)(ii) of 
this section to determine the pre-adjusted per treatment amount 
specified in paragraph (f)(1)(iii) of this section:
    (i) Calculates annualized values for calendar year 2018 at the ESRD 
facility level for the metrics specified in paragraph (f)(2)(i) of this 
section by dividing the numbers of days the cost report spanned to 
compute a per-day metric, then multiplying the resulting value by the 
number of days in 2018 the cost report covered to compute the metrics 
attributable to the period covered by the cost report in 2018. Next, 
for ESRD facilities with multiple cost reports covering 2018 the 
resulting metrics are aggregated. Finally, each ESRD facility's 
aggregated metrics are annualized to cover the full calendar year 2018. 
The annualization factor for an ESRD facility is the total number of 
days in 2018 divided by the total days in 2018 covered by the ESRD 
facility's cost report(s).
    (ii) Calculates an estimated home dialysis machine and equipment 
cost for each ESRD facility by multiplying the annualized dialysis 
machine and equipment cost determined in paragraph (f)(3)(i) of this 
section by the ESRD facility's hemodialysis-equivalent home dialysis 
treatment percentage. The hemodialysis-equivalent home dialysis 
treatment percentage for each facility is calculated by dividing 
annualized hemodialysis-equivalent home treatment count determined in 
paragraph (f)(3)(i) of this section by annualized hemodialysis-
equivalent treatment count across all modalities determined in 
paragraph (f)(3)(i) of this section.
    (iii) Calculates an average home dialysis machine and equipment 
cost per home dialysis treatment for calendar year 2018 by dividing the 
sum of the estimated home dialysis machine and equipment cost in 
paragraph (f)(3)(ii) of this section across all ESRD facilities by the 
sum of annualized hemodialysis-equivalent home treatment counts 
determined in paragraph (f)(3)(i) of this section across all 
facilities.
    (iv) Calculates the amount subtracted from the pre-adjusted 
treatment amount determined in paragraph (f)(1)(iii) of this section by 
inflating the average home dialysis machine and equipment cost per home 
dialysis treatment for calendar year 2018 determined in paragraph 
(f)(3)(iii) to calendar year 2021. The average home dialysis machine 
and equipment cost per home dialysis treatment for calendar year 2018 
is inflated to calendar year 2021 by multiplying this value by the 
payment rate update factor required under section 1881(b)(14)(F)(i) of 
the Social Security Act for calendar years 2019, 2020, and 2021. This 
value is then divided by a scaling factor to be converted to the ESRD 
PPS payment scale. The scaling factor is calculated by dividing the 
calendar year 2018 total cost per treatment inflated to calendar year 
2021 by the average ESRD PPS payment per treatment projected for 
calendar year 2021.
    (v) Effective January 1, 2022, CMS annually updates the amount 
determined in paragraph (f)(3)(iv) of this section by the ESRD bundled 
market basket percentage increase factor minus the productivity 
adjustment factor.

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: October 28, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 28, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-24485 Filed 11-2-20; 4:15 pm]
BILLING CODE 4120-01-P