[Federal Register Volume 88, Number 125 (Friday, June 30, 2023)]
[Proposed Rules]
[Pages 42430-42544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13748]



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Vol. 88

Friday,

No. 125

June 30, 2023

Part II





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services





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42 CFR Parts 413 and 512





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, and 
End-Stage Renal Disease Treatment Choices Model; Proposed Rule

  Federal Register / Vol. 88 , No. 125 / Friday, June 30, 2023 / 
Proposed Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413 and 512

[CMS-1782-P]
RIN 0938-AV05


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, and End-Stage Renal Disease Treatment Choices Model

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update and revise the End-Stage Renal 
Disease (ESRD) Prospective Payment System (PPS) for calendar year 2024. 
This rule also proposes to update the payment rate for renal dialysis 
services furnished by an ESRD facility to individuals with acute kidney 
injury. This rule also includes requests for information regarding 
potential changes to the low-volume payment adjustment under the ESRD 
PPS. In addition, this proposed rule would update requirements for the 
ESRD Quality Incentive Program and the ESRD Treatment Choices Model.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, by August 25, 2023.

ADDRESSES: In commenting, please refer to file code CMS-1782-P. 
Comments, including mass comment submissions, must be submitted in one 
of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1782-P, P.O. Box 8010, 
Baltimore, MD 21244-8010. Please allow sufficient time for mailed 
comments to be received before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1782-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    [email protected], for issues related to the ESRD PPS and 
coverage and payment for renal dialysis services furnished to 
individuals with acute kidney injury (AKI).
    [email protected], for issues related to applications 
for the Transitional Drug Add-on Payment Adjustment (TDAPA) or 
Transitional Add-On Payment Adjustment for New and Innovative Equipment 
and Supplies (TPNIES).
    Delia Houseal, (410) 786-2724, for issues related to the ESRD 
Quality Incentive Program (QIP). [email protected], for issues 
related to the ESRD Treatment Choices (ETC) Model.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the individual will take actions to harm the individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.
    Current Procedural Terminology (CPT) Copyright Notice: Throughout 
this proposed rule, we use CPT[supreg] codes and descriptions to refer 
to a variety of services. We note that CPT[supreg] codes and 
descriptions are copyright 2020 American Medical Association (AMA). All 
Rights Reserved. CPT[supreg] is a registered trademark of the AMA. 
Applicable Federal Acquisition Regulations (FAR) and Defense Federal 
Acquisition Regulations (DFAR) apply.

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) 2024 End-Stage Renal Disease (ESRD) 
Prospective Payment System (PPS)
    A. Background
    B. Provisions of the Proposed Rule
    C. Transitional Add-On Payment Adjustment for New and Innovative 
Equipment and Supplies (TPNIES) Proposals and Application for CY 
2024 Payment
    D. Continuation of Approved Transitional Add-On Payment 
Adjustments for New and Innovative Equipment and Supplies for CY 
2024
    E. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments for New Renal Dialysis Drugs or Biological Products for 
CY 2024
III. Calendar Year (CY) 2024 Payment for Renal Dialysis Services 
Furnished to Individuals With Acute Kidney Injury (AKI)
    A. Background
    B. Proposed Annual Payment Rate Update for CY 2024
IV. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
    A. Background
    B. Proposals To Update the Regulation Text for the ESRD QIP
    C. Proposed Updates to Requirements Beginning With the PY 2026 
ESRD QIP
    D. Proposed Updates to the Requirements Beginning With the PY 
2027 ESRD QIP
V. End-Stage Renal Disease Treatment Choices (ETC) Model
    A. Background
    B. Summary of the Proposed Provisions to the ETC Model
VI. Collection of Information Requirements
VII. Response to Comments
VIII. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Impact Analysis
    D. Detailed Economic Analysis
    E. Accounting Statement
    F. Regulatory Flexibility Act Analysis (RFA)
    G. Unfunded Mandates Reform Act Analysis (UMRA)
    H. Federalism
IX. Files Available to the Public

I. Executive Summary

A. Purpose

    This proposed rule proposes updates to the End-Stage Renal Disease 
(ESRD) Prospective Payment System (PPS), payment for renal dialysis 
services furnished to individuals with acute kidney injury (AKI), the 
ESRD Quality Incentive Program (QIP), and the ESRD Treatment Choices 
(ETC) Model. Additionally, this proposed rule proposes policies that 
reflect our commitment to achieving equity in health care for our 
beneficiaries by supporting our ability to assess whether, and to what 
extent, our programs and

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policies perpetuate or exacerbate systemic barriers to opportunities 
and benefits for underserved communities. Our policy objectives include 
its commitment to advancing health equity, which stands as the first 
pillar of the CMS Strategic Plan,\1\ and reflect the goals of the 
Biden-Harris Administration, as stated in Executive Order 13985.\2\ We 
define health equity as the attainment of the highest level of health 
for all people, where everyone has a fair and just opportunity to 
attain their optimal health regardless of race, ethnicity, disability, 
sexual orientation, gender identity, socioeconomic status, geography, 
preferred language, or other factors that affect access to care and 
health outcomes.'' \3\ In our CY 2023 ESRD PPS final rule, we noted 
that, when compared with all Medicare fee-for-service (FFS) 
beneficiaries, Medicare FFS beneficiaries receiving dialysis are 
disproportionately young, male, and African-American, have disabilities 
and low income as measured by eligibility for both Medicare and 
Medicaid (dual eligible status), and reside in an urban setting (87 FR 
67183). In this proposed rule, we continue to address health equity for 
beneficiaries with ESRD who are also members of underserved 
communities, including but not limited to those living in rural 
communities, those who have disabilities, and racial and ethnic 
minorities. The term underserved communities refers to populations 
sharing a particular characteristic, including geographic communities 
that have been systematically denied a full opportunity to participate 
in aspects of economic, social, and civic life.\4\ Specifically, in 
this proposed rule, we are requesting information regarding a potential 
payment adjustment for geographically isolated and rural ESRD 
facilities, proposing additional payment for the subgroup of Pediatric 
ESRD Patients (as defined in 42 CFR 413.171), and furthering our 
efforts to determine if payment to ESRD facilities treating patients 
with co-morbidities such as sickle cell anemia is aligned with resource 
use by such ESRD facilities. Additionally, we are proposing to add 
three new measures to the ESRD QIP measure set that are aimed at 
promoting health equity for ESRD patients, including by enabling ESRD 
facilities to identify gaps experienced by their patient populations.
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    \1\ Centers for Medicare & Medicaid Services (2022). Health 
Equity. Available at: https://www.cms.gov/pillar/health-equity.
    \2\ 86 FR 7009 (January 25, 2021). https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
    \3\ Centers for Medicare & Medicaid Services (2022). Health 
Equity. Available at: https://www.cms.gov/pillar/health-equity.
    \4\ 86 FR 7009 (January 25, 2021). https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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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 percentage increase, reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. This proposed 
rule would update the ESRD PPS for CY 2024.
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 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 proposed rule would update the AKI 
payment rate for CY 2024.
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 establishes 
incentives for facilities to achieve high quality performance on 
measures with the goal of improving outcomes for ESRD beneficiaries. 
This proposed rule proposes several updates for the ESRD QIP, 
including: a revision to the regulatory definition of ``minimum total 
performance score'' that more accurately captures how we calculate the 
median of national ESRD facility performance on reporting measures; the 
codification of our previously finalized measure selection, retention, 
and removal policies; updates that would begin with Payment Year (PY) 
2026, including one new measure, modifications to two current measures, 
and the removal of two measures; and the addition of two new measures 
beginning with PY 2027.
4. End-Stage Renal Disease Treatment Choices (ETC) Model
    The ETC Model is a mandatory Medicare payment model tested under 
section 1115A of the Act. The ETC Model is operated by the Center for 
Medicare and Medicaid Innovation (Innovation Center), and tests the use 
of payment adjustments to encourage greater utilization of home 
dialysis and kidney transplants, to preserve or enhance the quality of 
care furnished to Medicare beneficiaries while reducing Medicare 
expenditures.
    The ETC Model was finalized as part of a final rule published in 
the Federal Register on September 29, 2020, titled ``Medicare Program: 
Specialty Care Models to Improve Quality of Care and Reduce 
Expenditures'' (85 FR 61114), referred to herein as the ``Specialty 
Care Models final rule.'' We revised and updated certain ETC Model 
policies in the CY 2022 ESRD PPS final rule (86 FR 61874), and the CY 
2023 ESRD PPS final rule (87 FR 67136). In this rule, we are proposing 
to revise our regulations at 42 CFR 512.390 to acknowledge the 
availability of administrative review of targeted review requests. This 
change would provide ETC Participants with information about the 
availability of administrative review if an ETC Participant wishes to 
seek additional review of its targeted review request.

B. Summary of the Major Provisions

1. ESRD PPS
     Proposed update to the ESRD PPS base rate for CY 2024: The 
proposed CY 2024 ESRD PPS base rate is $269.99, an increase from the CY 
2023 ESRD PPS base rate of $265.57. This proposed amount reflects the 
application of the proposed combined wage index and transitional 
pediatric ESRD add-on payment adjustment (TPEAPA) budget-neutrality 
adjustment factor (0.999652)

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and a proposed productivity-adjusted market basket percentage increase 
of 1.7 percent as required by section 1881(b)(14)(F)(i)(I) of the Act, 
equaling $269.99 (($265.57 x 0.999652) x 1.017 = $269.99).
     Proposed 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 2024, we are proposing to update the wage index values 
based on the latest available data.
     Proposed annual update to the outlier policy: We are 
proposing to update the outlier policy based on the most current data. 
Accordingly, we are proposing to update the Medicare allowable payment 
(MAP) amounts for adult and pediatric patients for CY 2024 using the 
latest available CY 2022 claims data. We are proposing to update the 
ESRD outlier services fixed dollar loss (FDL) amount for pediatric 
patients using the latest available CY 2022 claims data, and update the 
FDL amount for adult patients using the latest available claims data 
from CY 2020, CY 2021, and CY 2022. For pediatric beneficiaries, the 
proposed FDL amount would decrease from $23.29 to $13.71, and the 
proposed MAP amount would decrease from $25.59 to $24.53, as compared 
to CY 2023 values. For adult beneficiaries, the proposed FDL amount 
would increase from $73.19 to $78.21, and the proposed MAP amount would 
decrease from $39.62 to $38.58. The 1.0 percent target for outlier 
payments was not achieved in CY 2022. Outlier payments represented 
approximately 0.9 percent of total Medicare payments rather than 1.0 
percent.
     Proposed update to the offset amount for the transitional 
add-on payment adjustment for new and innovative equipment and supplies 
(TPNIES) for CY 2024: The proposed CY 2024 average per treatment offset 
amount for the TPNIES for capital-related assets that are home dialysis 
machines is $9.96. This offset amount would reflect the application of 
the proposed ESRD Bundled (ESRDB) market basket update of 1.7 percent 
($9.79 x 1.017 = $9.96). There are no capital-related assets set to 
receive the TPNIES in CY 2024 for which this offset would apply.
     Proposed clarifications to the TPNIES eligibility 
criteria: We are proposing certain clarifications regarding our 
evaluation of the TPNIES eligibility criteria under Sec.  413.236(b).
     TPNIES application received for CY 2024: This proposed 
rule presents a summary of the one CY 2024 TPNIES application that we 
received by the February 1, 2023 deadline. This rule also presents our 
preliminary analysis of the applicant's claims related to substantial 
clinical improvement (SCI) and other eligibility criteria for the 
TPNIES.
     Proposed modifications to the administrative process for 
the low-volume payment adjustment (LVPA): We are proposing to create an 
exception to the current LVPA attestation process for ESRD facilities 
that are affected by disasters and other emergencies. This exception 
would allow ESRD facilities to close and reopen in response to a 
disaster or other emergency and still receive the LVPA. Additionally, 
it would allow an ESRD facility to receive the LVPA even if it exceeds 
the LVPA threshold if its treatment counts increase due to treating 
additional patients displaced by a disaster or emergency.
     Proposed policy to measure patient-level utilization: We 
are proposing to require ESRD facilities to report the time on machine 
(that is, the amount of time that a beneficiary spends receiving an in-
center hemodialysis treatment) on claims. We are seeking comment on the 
proposed effective date of January 1, 2025, given the operational 
changes needed.
     Proposed Transitional Pediatric ESRD Add-on Payment 
Adjustment (TPEAPA): We are proposing to establish and apply a new add-
on payment adjustment of 30 percent of the per treatment payment amount 
to all renal dialysis services furnished to Pediatric ESRD Patients 
effective January 1, 2024, for CYs 2024, 2025, and 2026. This would 
serve to bring Medicare payments for renal dialysis services furnished 
to pediatric patients more in line with their estimated relative costs 
for the next three years until further collection and analysis of cost 
report data can be conducted.
     Proposed add-on payment adjustment for after the end of 
the transitional drug add-on payment adjustment (TDAPA) period: We are 
proposing a new add-on payment adjustment for certain new renal 
dialysis drugs and biological products in existing ESRD PPS functional 
categories after the end of the TDAPA period, which we would call the 
post-TDAPA payment adjustment. This payment adjustment would be case-
mix adjusted and set at 65 percent of expenditure levels for the given 
renal dialysis drug or biological product. The post-TDAPA payment 
adjustment would be applied to all ESRD PPS payments and paid for 3 
years.
     Proposed policy to require reporting of discarded billing 
units of certain renal dialysis drugs and biological products paid for 
under the ESRD PPS: We are proposing a new policy to require the use of 
the JW or JZ modifier on claims to track discarded amounts of single-
vial and single-package renal dialysis drugs and biological products 
paid for under the ESRD PPS.
2. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
    We are proposing to update the AKI payment rate for CY 2024. The 
proposed CY 2024 payment rate is $269.99, which is the same as the ESRD 
PPS base rate proposed for CY 2024.
3. ESRD QIP
    We are proposing several updates for the ESRD QIP. We are proposing 
to codified the definition of ``minimum total performance score'' and 
to codify our previously finalized measure selection, retention, and 
removal policies. Beginning with PY 2026, we are proposing to add the 
Facility Commitment to Health Equity reporting measure to the ESRD QIP 
measure set, modify the COVID-19 Vaccination Coverage Among Healthcare 
Personnel (HCP) reporting measure to align with updated measure 
specifications developed by the Centers for Disease Control and 
Prevention (CDC), remove the Ultrafiltration Rate reporting measure and 
the Standardized Fistula Rate clinical measure, and update the Clinical 
Depression Screening and Follow-Up measure's scoring methodology and 
convert that measure to a clinical measure. Beginning with PY 2027, we 
are proposing to add the Social Drivers of Health reporting measure and 
the Screen Positive Rate for Social Drivers of Health reporting measure 
to the ESRD QIP measure set.
4. ETC Model
    We are proposing to revise our regulations at Sec.  512.390 to 
acknowledge the ability of the CMS Administrator to review the results 
of ETC Participants' targeted review requests.

C. Summary of Costs and Benefits

    In section VIII.D.5 of this proposed rule, we set forth a detailed 
analysis of the impacts that the proposed changes would have on 
affected entities and beneficiaries. The impacts include the following:
1. Impacts of the Proposed ESRD PPS
    The impact table in section VIII.D.5.a of this proposed rule 
displays the estimated change in Medicare payments to ESRD facilities 
in CY 2024 compared

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to estimated Medicare payments in CY 2023. The overall impact of the CY 
2024 changes is projected to be a 1.6 percent increase in Medicare 
payments. Hospital-based ESRD facilities have an estimated 2.6 percent 
increase in Medicare payments compared with freestanding ESRD 
facilities with an estimated 1.6 percent increase. We estimate that the 
aggregate ESRD PPS expenditures would increase by approximately $130 
million in CY 2024 compared to CY 2023. This reflects a $140 million 
increase from the proposed payment rate update, including approximately 
$1.7 million in estimated TDAPA payment amounts, as further described 
in the next paragraph, as well as the proposed post-TDAPA payment 
amount. We estimate a $10 million decrease from the proposed outlier 
payment update. Because of the projected 1.6 percent overall payment 
increase, we estimate there would be an increase in beneficiary 
coinsurance payments of 1.6 percent in CY 2024, which translates to 
approximately $30 million.
    Section 1881(b)(14)(D)(iv) of the Act provides that the ESRD PPS 
may include such other payment adjustments as the Secretary determines 
appropriate. Under this authority, CMS implemented Sec.  413.234 to 
establish the TDAPA, a transitional drug add-on payment adjustment for 
certain new renal dialysis drugs and biological products and Sec.  
413.236 to establish the TPNIES, a transitional add-on payment 
adjustment for certain new and innovative equipment and supplies. The 
TDAPA and the TPNIES are not budget neutral.
    As discussed in section II.D of this proposed rule, the TPNIES 
payment period for the Tablo[supreg] System ends on December 31, 2023. 
As discussed in section II.E of this proposed rule, the TDAPA payment 
period for KORSUVATM (difelikefalin) would continue in CY 
2024. We estimate that the overall TDAPA payment amounts in CY 2024 
would be approximately $1.7 million, of which, approximately $345,000 
would be attributed to beneficiary coinsurance amounts.
2. Impacts of the Proposed Payment for Renal Dialysis Services 
Furnished to Individuals With AKI
    The impact table in section VIII.D.5.c of this proposed rule 
displays the estimated CY 2024 Medicare payments for renal dialysis 
services furnished to individuals with AKI compared to estimated 
Medicare payments for renal dialysis services furnished to individuals 
with AKI in CY 2023. The overall impact of the CY 2024 changes is 
projected to be a 1.6 percent increase in Medicare payments for 
individuals with AKI. Hospital-based ESRD facilities would have an 
estimated 1.8 percent increase in Medicare payments compared with 
freestanding ESRD facilities that would have an estimated 1.6 percent 
increase. The overall impact reflects the effects of the proposed 
Medicare payment rate update and proposed CY 2024 wage index. We 
estimate that the aggregate Medicare payments made to ESRD facilities 
for renal dialysis services furnished to patients with AKI, at the 
proposed CY 2024 ESRD PPS base rate, would increase by $1 million in CY 
2024 compared to CY 2023.
3. Impacts of the Proposed Changes to the ESRD QIP
    We estimate that the overall economic impact of the PY 2026 ESRD 
QIP would be approximately $141.1 million as a result of the policies 
we have previously finalized and the proposals in this proposed rule. 
The $141.1 million estimate for PY 2026 includes $121.1 million in 
costs associated with the collection of information requirements and 
approximately $20 million in payment reductions across all facilities. 
We also estimate that the overall economic impact of the PY 2027 ESRD 
QIP would be approximately $148 million as a result of the policies we 
have previously finalized and the proposals in this proposed rule. The 
$148 million estimate for PY 2027 includes $130.7 million in costs 
associated with the collection of information requirements and 
approximately $17.3 million in payment reductions across all 
facilities.
4. Impacts of the Proposed Changes to the ETC Model
    The impact estimate in section VIII.D.5.d of this proposed rule 
describes the estimated change in anticipated Medicare program savings 
arising from the ETC Model over the duration of the ETC Model as a 
result of the changes in this proposed rule. We estimate that the ETC 
Model would result in $28 million in net savings over the 6.5 year 
duration of the ETC Model. We also estimate that the changes proposed 
in this proposed rule would produce no change in net savings for the 
ETC Model. As the ETC Model targeted review process has already been 
finalized in the Specialty Care Models final rule and ETC Participants 
are not required to seek administrative review of targeted review 
determinations, we believe there would be minimal additional burden 
associated with our proposal.

II. Calendar Year (CY) 2024 End Stage Renal Disease (ESRD) Prospective 
Payment System (PPS)

A. Background

1. Statutory Background
    On January 1, 2011, CMS 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 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 shall annually increase payment amounts by an ESRD market 
basket percentage increase 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. 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

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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 percentage increase 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.
    Section 204 of the Stephen Beck, Jr., Achieving a Better Life 
Experience Act of 2014 (ABLE) (Pub. L. 113-295) 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 drugs and biological products 
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 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 definition 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, and four comorbidity categories (that is, pericarditis, 
gastrointestinal tract bleeding, hereditary hemolytic or sickle cell 
anemia, myelodysplastic syndrome). A different set of case-mix 
adjusters are applied for the pediatric population. Pediatric patient-
level adjusters include two age categories (under age 13, or age 13 to 
17) and two dialysis modalities (that is, peritoneal or hemodialysis) 
(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 payment 
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).
    There are four additional payment adjustments under the ESRD PPS. 
The ESRD PPS provides adjustments, when applicable, for: (1) a training 
add-on for home and self-dialysis modalities (Sec.  413.235(c)); (2) an 
additional payment for high cost outliers due to unusual variations in 
the type or amount of medically necessary care (Sec.  413.237); (3) a 
TDAPA for certain new renal dialysis drugs and biological products 
(Sec.  413.234(c)); and (4) a TPNIES for certain 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.
    We published a final rule, which appeared in the November 7, 2022, 
issue of 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, and End-
Stage Renal Disease Quality Incentive Program, and End-Stage Renal 
Disease Treatment Choices Model,'' referred to herein as the ``CY 2023 
ESRD PPS final rule.'' In that rule, we updated the ESRD PPS base rate, 
wage index, and outlier policy for CY 2023. We also finalized changes 
that included rebasing and revising the ESRDB market basket to reflect 
a 2020 base year, refining the methodology for outlier calculations, 
implementing a wage index floor of 0.600, implementing a permanent 5 
percent cap on year-over-year wage index decreases for ESRD facilities, 
and modifying the definition of ``oral-only drug.'' For further 
detailed information regarding these updates, see 87 FR 67136.

B. Provisions of the Proposed Rule

1. Proposed CY 2024 ESRD PPS Update
a. Proposed CY 2024 ESRD Bundled (ESRDB) Market Basket Percentage 
Increase; Productivity Adjustment; and Labor-Related Share
(1) Background
    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 
percentage increase 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. Section 
1881(b)(14)(F)(i) of the Act 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 included in renal dialysis 
services.
    As required under section 1881(b)(14)(F)(i) of the Act, CMS 
developed an all-inclusive ESRD Bundled (ESRDB) input price index using 
CY 2008 as the base year (75 FR 49151 through 49162). We subsequently 
revised and rebased the ESRDB input price index to a base year of CY 
2012 in the CY 2015 ESRD PPS final rule (79 FR 66129 through 66136). In 
the CY 2019 ESRD PPS final rule (83 FR 56951 through 56964), we 
finalized a rebased ESRDB input price index to reflect a CY 2016 base 
year. In the CY 2023 ESRD PPS final rule (87 FR 67141 through 67154), 
we finalized a revised and rebased ESRDB input price index to reflect a 
CY 2020 base year.
    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.
    The ESRDB market basket is a fixed-weight, Laspeyres-type price 
index. A Laspeyres-type price index measures the change in price, over 
time, of the same mix of goods and services purchased in the base 
period. Any changes in the

[[Page 42435]]

quantity or mix of goods and services (that is, intensity) purchased 
over time are not measured.
(2) Proposed CY 2024 ESRD Market Basket Update
    We propose to use the 2020-based ESRDB market basket as finalized 
in the CY 2023 ESRD PPS final rule (87 FR 67141 through 67154) to 
compute the proposed CY 2024 ESRDB market basket percentage increase 
based on the best available data. Consistent with historical practice, 
we propose to estimate the ESRDB market basket percentage increase 
based on IHS Global Inc.'s (IGI) forecast using the most recently 
available data at the time of rulemaking. IGI is a nationally 
recognized economic and financial forecasting firm with which CMS 
contracts to forecast the components of the market baskets. As 
discussed in section II.B.1.a.(2)(c), we are proposing to calculate the 
market basket update for CY 2024 based on the proposed market basket 
percentage increase and the proposed productivity adjustment, following 
our longstanding methodology.
(a) Proposed CY 2024 Market Basket Percentage Increase
    Based on IGI's first quarter 2023 forecast of the 2020-based ESRDB 
market basket, the proposed CY 2024 market basket percentage increase 
is 2.0 percent. We also propose 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 percentage increase), we would use such data, if 
appropriate, to determine the CY 2024 market basket percentage increase 
in the final rule.
(b) Proposed Productivity Adjustment
    Under section 1881(b)(14)(F)(i) of the Act, as amended by section 
3401(h) of the Affordable Care Act, for CY 2012 and each subsequent 
year, the ESRDB market basket percentage increase shall be reduced by 
the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) 
of the Act. The statute defines the productivity adjustment to be equal 
to the 10-year moving average of changes in annual economy-wide, 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable FY, 
year, cost reporting period, or other annual period) (the 
``productivity adjustment'').
    The Bureau of Labor Statistics (BLS) publishes the official 
measures of productivity for the U.S. economy. As we noted in the CY 
2023 ESRD PPS final rule (87 FR 67155), the productivity measure 
referenced in section 1886(b)(3)(B)(xi)(II) of the Act previously was 
published by BLS as private nonfarm business MFP. Beginning with the 
November 18, 2021, release of productivity data, BLS replaced the term 
``multifactor productivity'' with ``total factor productivity'' (TFP). 
BLS noted that this is a change in terminology only and will not affect 
the data or methodology.\5\ As a result of the BLS name change, the 
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the 
Act is now published by BLS as private nonfarm business TFP; however, 
as mentioned previously, the data and methods are unchanged. We 
referred readers to https://www.bls.gov/productivity/ for the BLS 
historical published TFP data. A complete description of IGI's TFP 
projection methodology is available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. In addition, in 
the CY 2022 ESRD PPS final rule (86 FR 61879), we noted that effective 
for CY 2022 and future years, we will be changing the name of this 
adjustment to refer to it as the productivity adjustment rather than 
the MFP adjustment. We stated this was not a change in policy, as we 
will continue to use the same methodology for deriving the adjustment 
and rely on the same underlying data.
---------------------------------------------------------------------------

    \5\ Total Factor Productivity in Major Industries--2020. 
Available at: https://www.bls.gov/news.release/prod5.nr0.htm.
---------------------------------------------------------------------------

    Based on IGI's first quarter 2023 forecast, the proposed 
productivity adjustment for CY 2024 (the 10-year moving average of TFP 
for the period ending CY 2024) is 0.3 percentage point. Furthermore, we 
propose 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 productivity adjustment), we 
would use such data, if appropriate, to determine the CY 2024 
productivity adjustment in the final rule.
(c) Proposed CY 2024 Market Basket Update
    In accordance with section 1881(b)(14)(F)(i) of the Act, we propose 
to base the CY 2024 market basket percentage increase on IGI's first 
quarter 2023 forecast of the 2020-based ESRDB market basket. We propose 
to then reduce this percentage increase by the estimated productivity 
adjustment for CY 2024 based on IGI's first quarter 2023 forecast. 
Therefore, the proposed CY 2024 ESRDB market basket update is equal to 
1.7 percent (2.0 percent market basket percentage increase reduced by a 
0.3 percentage point productivity adjustment). Furthermore, as noted 
previously, we propose 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 
and/or productivity adjustment), we would use such data, if 
appropriate, to determine the CY 2024 market basket percentage increase 
and productivity adjustment in the final rule.
    We note that, as discussed in the CY 2023 ESRD PPS final rule (87 
FR 67157), many commenters requested that CMS apply a forecast error 
payment adjustment to the ESRD PPS base rate to support ESRD facilities 
during the inflationary period occurring at that time, particularly 
accounting for what commenters stated was an error in the forecasted 
payment updates for CYs 2021 and 2022. In response to those comments, 
we reminded readers that ESRDB market basket updates are set 
prospectively, which means that the update relies on a mix of both 
historical data for part of the period for which the update is 
calculated, and forecasted data for the remainder. We explained that 
while there is no precedent to adjust for market basket forecast error 
in the annual ESRD PPS update, the forecast error for a market basket 
update is calculated as the actual market basket increase for a given 
year less the forecasted market basket increase.\6\ We also explained 
that due to the uncertainty regarding future price trends, forecast 
errors can be both positive and negative. For example, the CY 2017 
ESRDB forecast error was -0.8 percentage point, while the CY 2021 ESRDB 
forecast error was +1.2 percentage point. At the time of the CY 2023 
ESRD PPS final rule, CY 2022 historical data was not yet available to 
calculate a forecast error for CY 2022; however, based on the latest 
available historical data for CY 2022, we calculate that the CY 2022 
ESRDB forecast error was +2.7 percentage point.
---------------------------------------------------------------------------

    \6\ FAQ--Market Basket Definitions and General Information. 
Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/StatisticsTrends-and-Reports/MedicareProgramRatesStats/Downloads/info.pdf.
---------------------------------------------------------------------------

    As we discussed in the CY 2023 ESRD PPS final rule (87 FR 67156), 
we recognized that recent higher inflationary trends impacted the 
outlook for price growth over the next several

[[Page 42436]]

quarters. For that CY 2023 ESRD PPS final rule, we used an updated 
forecast of the price proxies underlying the market basket that 
incorporated more recent historical data and reflected a revised 
outlook regarding the U.S. economy and expected price inflation for CY 
2023 for ESRD facilities. We explained that predictability in Medicare 
payments is important to enable ESRD facilities to budget and plan 
their operations, and that forecast error calculations are 
unpredictable (87 FR 67517). Historically, the positive differences 
between the actual and forecasted market basket increase in prior years 
have offset negative differences over time. Therefore, in accordance 
with our longstanding ESRDB market basket update methodology, we are 
not proposing to apply a forecast error adjustment to the ESRDB market 
basket update for CY 2024.
(d) Labor-Related Share
    We define the labor-related share as those expenses that are labor-
intensive and vary with, or are influenced by, the local labor market. 
The labor-related share of a market basket is determined by identifying 
the national average proportion of operating costs that are related to, 
influenced by, or vary with the local labor market. For the CY 2024 
ESRD PPS payment update, we are proposing to continue using a labor-
related share of 55.2 percent, which was finalized in the CY 2023 ESRD 
PPS final rule (87 FR 67153 through 67154).
b. Proposed CY 2024 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 
ESRD PPS 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) 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/.
    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 the 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 applied 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 applied the wage 
index for Guam to American Samoa and the Northern Mariana Islands (78 
FR 72172).
    Under Sec.  413.231(d), a wage index floor value of 0.6000 is 
applied under the ESRD PPS as a substitute wage index for areas with 
very low wage index values, as finalized in the CY 2023 ESRD PPS final 
rule (87 FR 67161). Currently, all areas with wage index values that 
fall below the floor are located in Puerto Rico and the US Virgin 
Islands. However, the wage index floor value is applicable for any area 
that may fall below the floor. A further 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) and the CY 2023 ESRD 
PPS final rule (87 FR 67161).
    An ESRD facility's wage index is applied to the labor-related share 
of the ESRD PPS base rate. In the CY 2023 ESRD PPS final rule (87 FR 
67153), we finalized a labor-related share of 55.2 percent. In the CY 
2021 ESRD PPS final rule (85 FR 71436), we updated the OMB delineations 
as described in the September 14, 2018 OMB Bulletin No. 18-04, 
beginning with the CY 2021 ESRD PPS wage index. In that same rule, we 
finalized 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. We finalized that the transition would be phased in over 2 
years, such that the 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. In the CY 
2023 ESRD PPS final rule (87 FR 67161), we finalized a permanent policy 
under Sec.  413.231(c) 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 CY. For CY 2024, as discussed in section II.B.1.a.(2)(d) of this 
proposed rule, the labor-related share to which the wage index would be 
applied is 55.2 percent.
(2) Proposed CY 2024 ESRD PPS Wage Index
    For CY 2024, we propose to update the wage indices to account for 
updated wage levels in areas in which ESRD facilities are located using 
our existing methodology. We propose to use the most recent pre-floor, 
pre-reclassified hospital wage data collected annually under the 
inpatient PPS. The ESRD PPS wage index values are calculated without 
regard to geographic reclassifications authorized under sections 
1886(d)(8) and (d)(10) of the Act and utilize pre-floor hospital data 
that are unadjusted for occupational mix. For CY 2024, the updated wage 
data are for hospital cost reporting periods beginning on or after 
October 1, 2019, and before October 1, 2020 (Fiscal Year (FY) 2020 cost 
report data).
    For CY 2024, we propose to update the ESRD PPS wage index to use 
the most recent hospital wage data. We propose 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 wage index), we would use such data, if appropriate, to 
determine the CY 2024 ESRD PPS wage index in the final rule. The 
proposed CY 2024 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. Addendum A provides a crosswalk 
between the CY 2023 wage index and the proposed CY 2024 wage index. 
Addendum B provides an ESRD facility level impact analysis. 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.

[[Page 42437]]

c. Proposed CY 2024 Update to the Outlier Policy
(1) Background
    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 erythropoiesis stimulating agents (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 and obesity. A patient's 
specific medical condition, such as secondary hyperparathyroidism, may 
result in higher per treatment costs. The ESRD PPS recognizes that some 
patients require high cost care, and we have codified the outlier 
policy and our methodology for calculating outlier payments at Sec.  
413.237.
    Section 413.237(a)(1) enumerates the following items and services 
that are eligible for outlier payments as ESRD outlier services: (i) 
Renal dialysis drugs and biological products that were or would have 
been, prior to January 1, 2011, separately billable under Medicare Part 
B; (ii) renal dialysis laboratory tests that were or would have been, 
prior to January 1, 2011, separately billable under Medicare Part B; 
(iii) 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; (iv) 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 (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.\7\
---------------------------------------------------------------------------

    \7\ Under Sec.  413.237(a)(1)(vi), as of January 1, 2012, the 
laboratory tests that comprise the Automated Multi-Channel Chemistry 
panel are excluded from the definition of outlier services.
---------------------------------------------------------------------------

    In the CY 2011 ESRD PPS final rule (75 FR 49142), CMS stated that 
for purposes of determining whether an ESRD facility would be eligible 
for an outlier payment, it would be necessary for the ESRD 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 ESRD outlier services were specified in Transmittal 
2134, dated January 14, 2011.\8\ 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. For example, we use these issuances to 
identify renal dialysis oral drugs that were or would have been covered 
under Part D prior to 2011 to provide unit prices for determining the 
imputed MAP amounts. In addition, we use these issuances to update the 
list of ESRD outlier services by adding or removing items and services 
that we determined, based our monitoring efforts, are either 
incorrectly included or missing from the list.
---------------------------------------------------------------------------

    \8\ Transmittal 2033 issued August 20, 2010, was 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. https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/R2134CP.pdf.
---------------------------------------------------------------------------

    Under Sec.  413.237, an ESRD facility is eligible for an outlier 
payment if its imputed (that is, calculated) MAP amount per treatment 
for ESRD outlier services exceeds a threshold. The MAP amount 
represents the average estimated expenditure 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 MAP amount per treatment plus the FDL amount. As described in 
the following paragraphs, the ESRD facility's predicted MAP amount is 
the national adjusted average ESRD outlier services MAP amount per 
treatment, further adjusted for case-mix and facility characteristics 
applicable to the claim. We use the term ``national adjusted average'' 
in this section of this proposed rule to more clearly distinguish the 
calculation of the average ESRD outlier services MAP amount per 
treatment from the calculation of the predicted MAP amount for a claim. 
The average ESRD outlier services MAP amount per treatment is based on 
utilization from all ESRD facilities, whereas the calculation of the 
predicted MAP amount for a claim is based on the individual ESRD 
facility and patient characteristics of the monthly claim. In 
accordance with Sec.  413.237(c), ESRD 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 codified in Sec.  
413.220(b)(4), using 2007 data, we established the outlier percentage, 
which is used to reduce the per treatment ESRD PPS base rate to account 
for the proportion of the estimated total Medicare 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 2023 ESRD PPS final rule, we finalized an update to the 
outlier methodology to better target 1.0 percent of total Medicare 
payments (87 FR 67170 through 67177). We finalized that we would 
continue to follow our established methodology for the calculation of 
the adult and pediatric MAP amounts, but we would prospectively 
calculate the adult FDL amounts based on the historical trend in FDL 
amounts that would have achieved the 1.0 percent outlier target in the 
3 most recent available data years.
(2) CY 2024 Update to the Outlier Services MAP Amounts and FDL Amounts
    For CY 2024, we are proposing to update the MAP amounts for adult 
and pediatric patients using the latest available CY 2022 claims data. 
We are proposing to update the ESRD outlier services FDL amount for 
pediatric patients using the latest available CY 2022 claims data, and 
to update the ESRD outlier services FDL amount for adult patients using 
the latest available claims data from CY 2020, CY 2021 and CY 2022, in 
accordance with the methodology finalized in the CY 2023 ESRD PPS final 
rule (87 FR 67170 through 67174). CY 2022 claims data showed outlier 
payments represented

[[Page 42438]]

approximately 0.9 percent of total Medicare payments (87 FR 67172).
    The impact of this proposed update is shown in Table 1, which 
compares the outlier services MAP amounts and FDL amounts used for the 
outlier policy in CY 2023 with the updated proposed estimates for this 
proposed rule. The estimates for the proposed CY 2024 MAP amounts, 
which are included in Column II of Table 1, were inflation adjusted to 
reflect projected 2024 prices for ESRD outlier services.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP30JN23.000

BILLING CODE 4120-01-C
    As demonstrated in Table 1, the estimated FDL per treatment that 
determines the CY 2024 outlier threshold amount for adults (Column II; 
$78.21) is higher than that used for the CY 2023 outlier policy (Column 
I; $73.19). The higher threshold is accompanied by a decrease in the 
adjusted average MAP for outlier services from $39.62 to $38.58. For 
pediatric patients, there is a decrease in the FDL amount from $23.29 
to $13.71. There is a corresponding decrease in the adjusted average 
MAP for outlier services among pediatric patients, from $25.59 to 
$24.53.
    We estimate that the percentage of patient months qualifying for 
outlier payments in CY 2024 would be 5.10 percent for adult patients 
and 20.20 percent for pediatric patients, based on the 2022 claims data 
and methodology finalized in the CY 2023 ESRD PPS final rule. 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 ESAs and other injectable drugs).
(3) 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. In 
the 2023 ESRD PPS final rule, we finalized a change to the outlier 
methodology to better achieve this 1 percent targeted (87 FR 67170 
through 67174). Based on the CY 2022 claims, outlier payments 
represented approximately 0.9 percent of total payments, which is below 
the 1 percent target due to declines in the use of outlier services. 
However, this is significantly closer to the 1 percent target than the 
outlier payments based on CY 2021 claims, which represented 
approximately 0.5 percent of total payments. We believe the update to 
the outlier MAP and FDL amounts for CY 2024 would increase payments for 
ESRD beneficiaries requiring higher resource utilization. This would 
move us even closer to meeting our 1 percent outlier policy goal, 
because we would be using more current data for computing the MAP and 
FDL amounts, which is more reflective of current outlier services 
utilization rates. We also note that the proposed recalibration of the 
FDL amounts would result in no change in payments to ESRD facilities 
for beneficiaries with renal dialysis items and services that are not 
eligible for outlier payments.
d. Proposed Impacts to the CY 2024 ESRD PPS Base Rate
(1) ESRD PPS Base Rate
    In the CY 2011 ESRD PPS final rule (75 FR 49071 through 49083), CMS 
established the methodology for calculating the ESRD PPS per-treatment 
base rate, that is, the ESRD PPS base rate, and calculating the per 
treatment payment amount, which are codified at Sec. Sec.  413.220 and 
413.230. The CY 2011

[[Page 42439]]

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, 
and any applicable outlier payment, training adjustment add-on, TDAPA, 
and TPNIES.
(2) Annual Payment Rate Update for CY 2024
    We are proposing an ESRD PPS base rate for CY 2024 of $269.99. This 
proposed 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 2024, 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 2024 wage index budget-neutrality adjustment factor using 
treatment counts from the 2022 claims and facility-specific CY 2023 
payment rates to estimate the total dollar amount that each ESRD 
facility would have received in CY 2023. The total of these payments 
became the target amount of expenditures for all ESRD facilities for CY 
2024. Next, we computed the estimated dollar amount that would have 
been paid for the same ESRD facilities using the proposed CY 2024 ESRD 
PPS wage index and proposed labor-related share for CY 2024. As 
discussed in section II.B.1.b of this proposed rule, the proposed ESRD 
PPS wage index for CY 2024 includes an update to the most recent 
hospital wage data and continued use of the 2018 OMB delineations. The 
total of these payments becomes the new CY 2024 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 2024 
amount. When we multiplied the wage index budget-neutrality factor by 
the applicable CY 2024 estimated payments, aggregate Medicare 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 proposed CY 2024 wage index budget-
neutrality adjustment factor is 1.000120. This CY 2024 proposed wage 
index budget-neutrality adjustment factor reflects the impact of all 
wage index policy changes, including the proposed CY 2024 ESRD PPS wage 
index and labor-related share.
    Proposed TPEAPA Budget-Neutrality Adjustment Factor: As explained 
in section II.B.1.g.(4) of this proposed rule, we are proposing a new, 
budget-neutral transitional add-on payment adjustment for pediatric 
ESRD renal dialysis services, which we would call the TPEAPA. The 
proposed CY 2024 budget-neutrality adjustment factor for the TPEAPA is 
0.999532. The proposed methodology for deriving the budget-neutrality 
adjustment factor for the TPEAPA is discussed in detail in section 
II.B.1.g.(4).
    Combined Wage Index and TPEAPA Budget-Neutrality Adjustment Factor: 
For purposes of calculating the ESRD PPS base rate for CY 2024, we are 
proposing to use one combined budget-neutrality adjustment factor that 
would include both the proposed wage index budget-neutrality adjustment 
factor and the proposed TPEAPA budget-neutrality adjustment factor. The 
proposed CY 2024 combined wage index and TPEAPA budget neutrality 
factor is 0.999652 (1.000120 x 0.999532). This application would yield 
a proposed CY 2024 ESRD PPS base rate of $265.48 prior to the 
application of the proposed CY 2024 market basket update percentage 
($265.57 x 0.999652 = $265.48).
    Market Basket Update: 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. As discussed previously in section II.B.1.a.(2)(a) of this 
proposed rule, the latest CY 2024 projection of the ESRDB market basket 
percentage increase is 2.0 percent. In CY 2024, 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 in section 
II.B.1.a.(2)(b) of this proposed rule, the latest CY 2024 projection of 
the proposed productivity adjustment is 0.3 percentage point, thus 
yielding a proposed CY 2024 ESRD market basket update of 1.7 percent 
for CY 2024. Therefore, the proposed CY 2024 ESRD PPS base rate is 
$269.99 (($265.57 x 0.999652) x 1.017 = $269.99).
e. Update to the Average per Treatment Offset Amount for Home Dialysis 
Machines
    In the CY 2021 ESRD PPS final rule (85 FR 71427), we expanded 
eligibility for the TPNIES under Sec.  413.236 to include certain 
capital-related assets that are home dialysis machines when used in the 
home for a single patient. To establish the TPNIES basis of payment for 
these items, we finalized the additional steps that the Medicare 
Administrative Contractors (MACs) must follow to calculate a pre-
adjusted per treatment amount, using the prices they establish under 
Sec.  413.236(e) for a capital-related asset that is a home dialysis 
machine, as well as the methodology that CMS uses to calculate the 
average per treatment offset amount for home dialysis machines that is 
used in the MACs' calculation, to account for the cost of the home 
dialysis machine that is already in the ESRD PPS base rate. For 
purposes of this proposed rule, we will refer to this as the ``TPNIES 
offset amount.''
    The methodology for calculating the TPNIES offset amount is set 
forth in Sec.  413.236(f)(3). Section 413.236(f)(3)(v) states that 
effective January 1, 2022, CMS annually updates the amount determined 
in Sec.  413.236(f)(3)(iv) by the ESRD bundled market basket percentage 
increase factor minus the productivity adjustment factor. The TPNIES 
for capital-related assets that are home dialysis machines is based on 
65 percent of the MAC-determined pre-adjusted per treatment amount, 
reduced by the TPNIES offset amount, and is paid for 2 calendar years.
    There are currently no capital-related assets that are home 
dialysis machines set to receive TPNIES for CY 2024 as the TPNIES 
payment period for the Tablo[supreg] System ends on December 31, 2023, 
and the only TPNIES application for CY 2024 is not for a home dialysis 
machine. However, as required by Sec.  413.236(f)(3)(v), we are 
proposing to update the TPNIES offset amount annually according to the 
methodology described above.
    The proposed CY 2024 TPNIES offset amount for capital-related 
assets that are home dialysis machines is $9.96. As

[[Page 42440]]

discussed previously in section II.B.1.a.(2)(c) of this proposed rule, 
the proposed CY 2024 ESRDB market basket update is 1.7 percent (2.0 
percent ESRDB market basket percentage increase reduced by 0.3 
percentage point productivity adjustment). Applying the proposed update 
factor of 1.017 to the CY 2023 TPNIES offset amount results in the 
proposed CY 2024 TPNIES offset amount of $9.96 ($9.79 x 1.017 = $9.96). 
We are proposing to update this calculation to use the most recent data 
available in the CY 2024 ESRD PPS final rule.
f. Proposed Refinement of the Low-Volume Payment Adjustment (LVPA)
(1) Background
    Section 1881(b)(14)(D)(iii) of the Act provides that the ESRD PPS 
shall include a payment adjustment that reflects the extent to which 
costs incurred by low-volume facilities (as defined by the Secretary) 
in furnishing renal dialysis services exceed the costs incurred by 
other facilities in furnishing such services, and for payment for renal 
dialysis services furnished on or after January 1, 2011, and before 
January 1, 2014, such payment adjustment shall not be less than 10 
percent. Therefore, the ESRD PPS provides a facility-level payment 
adjustment to ESRD facilities that meet the definition of a low-volume 
facility. In this section of the proposed rule, we discuss the low-
volume payment adjustment (LVPA) under the ESRD PPS, request 
information from the public regarding the potential changes to LVPA 
methodology and potentially creating a new geographic-based payment 
adjustment in the future, and propose certain changes to the existing 
administrative process for the LVPA.
    The current amount of the LVPA is 23.9 percent. In the CY 2011 ESRD 
PPS final rule (75 FR 49118 through 49125), we finalized the 
methodology used to target the appropriate population of ESRD 
facilities that were low-volume and to determine the treatment 
threshold for those ESRD facilities identified. After consideration of 
public comments, we established an 18.9 percent adjustment for ESRD 
facilities that furnish less than 4,000 treatments annually and 
indicated that this increase to the base rate would encourage small 
ESRD facilities to continue providing access to care.
    In the CY 2016 ESRD PPS proposed rule (80 FR 37819), we analyzed 
ESRD facilities that met the definition of a low-volume facility under 
Sec.  413.232(b) as part of the updated regression analysis and found 
that the ESRD facilities still had higher costs compared to other ESRD 
facilities. A regression analysis of CYs 2012 and 2013 low-volume 
facility claims, and cost report data indicated a multiplier of 1.239 
percent; therefore, we proposed an updated LVPA adjustment factor of 
23.9 percent in the CY 2016 ESRD PPS proposed rule (80 FR 37819) and 
finalized this policy in the CY 2016 ESRD PPS final rule (80 FR 69001). 
In CY 2021, 366 ESRD facilities received the LVPA. Using the most 
recent available data for CY 2022, the number of ESRD facilities 
receiving the LVPA was 353.
(a) Current LVPA Methodology
    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 costs reports, whichever is 
most recent, except as specified in paragraph (g)(4)) preceding the 
payment year; and (2) has not opened, closed, or received a new 
provider number due to a change in ownership (except where the change 
in ownership results in a change in facility type) in the 3 cost 
reporting years (based on as-filed or final settled 12-consectuive 
month cost reports, whichever is most recent) preceding the payment 
year.
    In addition, 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. In order to receive the LVPA, an ESRD facility 
must submit a written attestation statement to its Medicare 
Administrative Contractor (MAC) confirming that it meets all of the 
requirements specified in Sec.  413.232 and qualifies as a low-volume 
ESRD facility. For purposes of determining eligibility for the LVPA, 
``treatments'' mean total hemodialysis equivalent treatments (Medicare 
and non-Medicare). For peritoneal dialysis patients, one week of 
peritoneal dialysis is considered equivalent to three hemodialysis 
treatments (80 FR 68994). Section 413.232(e) generally imposes a yearly 
November 1 deadline for attestation submissions unless extraordinary 
circumstances justify an exception and specifies exceptions for certain 
years where the deadline is in December or January. The November 1st 
attestation timeframe provides 60 days for a MAC to verify that an ESRD 
facility meets the LVPA eligibility criteria (76 FR 70236). The ESRD 
facility would then receive the LVPA payment for all the Medicare-
eligible treatments in the payment year. Once an ESRD facility is 
determined to be eligible for the LVPA, a 23.9 percent increase is 
applied to the ESRD PPS base rate for all treatments furnished by the 
ESRD facility (80 FR 69001).
    In the CY 2021 ESRD PPS final rule (85 FR 71443), we finalized a 
policy to allow ESRD facilities flexibility for LVPA eligibility due to 
the COVID-19 Public Health Emergency (PHE). Under Sec.  413.232(g)(4), 
for purposes of determining ESRD facilities' eligibility for payment 
years 2021, 2022, and 2023, we will only consider total dialysis 
treatments for any 6 months of their cost-reporting period ending in 
2020. ESRD facilities that would not otherwise meet the number of 
treatments criterion because of the COVID-19 PHE may attest that their 
total dialysis treatments for those 6 months of their cost reporting 
period ending in 2020 are less than 2,000. The attestation must further 
include 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.
(b) Current Issues and Concerns From Interested Parties
    Interested parties, including the Medicare Payment Advisory 
Commission (MedPAC) and the Government Accountability Office (GAO),\9\ 
have recommended that we make refinements to the LVPA to better target 
ESRD facilities that are critical to beneficiary access to dialysis 
care in remote or isolated areas.\10\ These groups and other interested 
parties have also have expressed concern that the strict treatment 
count introduces a ``cliff-effect'' that may incentivize ESRD 
facilities to restrict their patient caseload to remain below the 4,000 
treatments per year for the LVPA threshold.\11\
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    \9\ https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun20_ch7_reporttocongress_sec.pdf.
    \10\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
    \11\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.

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[[Page 42441]]

    We considered several changes to the LVPA eligibility criteria to 
address the concerns that GAO and MedPAC raised about targeting LVPA 
payments to ESRD facilities that are necessary to protect access to 
care and are not located near other ESRD facilities. Specifically, 
these interested parties have requested that we take into consideration 
the geographic isolation of an ESRD facility within the LVPA 
methodology. Section 1881(b)(14)(D)(iii) of the Act requires that the 
LVPA must reflect the extent to which costs incurred by low-volume 
facilities (as defined by the Secretary) in furnishing renal dialysis 
services exceed the costs incurred by other facilities in furnishing 
such services. Our analysis has found that isolated low-volume 
facilities do not face higher costs than other low-volume facilities. 
Therefore, we do not believe that this requested change reconciles with 
the central statutory requirements and limitations for the LVPA, and we 
are considering alternative approaches, including potentially 
addressing this issue through a new payment adjustment separate from 
the LVPA based on section 1881(b)(14)(D)(iv) of the Act. Currently, we 
are analyzing claims and cost data regarding dialysis treatment levels 
and cost to inform options for potentially tailoring our methodology to 
meet the requirements of the statute, while simultaneously collecting 
additional data on geographic isolation of ESRD facilities. The ESRD 
PPS has separate facility-level payment adjustments for low-volume 
facilities, as set forth in 42 CFR 413.232, and facilities in rural 
areas, as set forth in 42 CFR 413.233. To avoid overlap with these 
existing facility-level adjustments, we are analyzing the impact of 
potentially creating a new payment adjustment and considering 
innovative methodological options, such as the local dialysis need 
methodology on which we are requesting information in section 
II.B.1.f.(2)(b) of this proposed rule.
    In addition, we have heard from interested parties that the 
eligibility criteria for the LVPA are very explicit and leave little 
room for flexibility in certain circumstances (85 FR 71442). Some also 
view the attestation process as burdensome to ESRD facilities and 
believe it may discourage participation by small ESRD facilities with 
limited resources that would otherwise qualify for the LVPA.\12\ Given 
these concerns, we have considered alternative approaches to the LVPA 
that would reduce burden, remove negative incentives that may result in 
gaming, and better target ESRD facilities that are critical for 
beneficiary access.
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    \12\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
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    CMS's contractor has held three Technical Expert Panels (TEPs) to 
discuss potential refinements to the ESRD PPS.\13\ During the 2018, 
2019, and 2020 TEPs, panelists, including representatives from ESRD 
facilities, independent researchers, patient advocates, and 
representatives from professional associations and industry groups (86 
FR 36397), discussed limitations of the current LVPA methodology and 
potential alternatives. In the CY 2022 ESRD PPS proposed rule, we 
included a request for information (RFI) to inform LVPA payment reform 
(86 FR 36398 through 36399). All fourteen responses to the CY 2022 ESRD 
PPS RFI for LVPA wrote in support of either eliminating or revising the 
current LVPA or rural adjustment.\14\ One small dialysis organization 
within a large non-profit health system responded that it is reliant 
upon the LVPA and the rural adjustment and supports both adjustments, 
albeit with modifications. MedPAC renewed its support for a new Low-
Volume and Isolated (LVI) adjustment with a three-tiered approach for 
treatment thresholds, which would incorporate geographic isolation into 
its methodology and may disincentivize gaming. MedPAC called upon CMS 
to provide clear and timely criteria for ESRD facility eligibility and 
ensure the LVPA methodology is transparent. In concurrence with MedPAC, 
a coalition of dialysis organizations, three large dialysis 
organizations (LDOs), a non-profit kidney organization, and a provider 
advocacy coalition commented that the rural adjustment should be 
eliminated and an LVI methodology should be adopted, as they considered 
a methodology based upon census tracts to be both complicated and 
lacking transparency. Numerous commenters wrote in support of a tiered 
adjustment to mitigate the cliff effect and gaming. Commenters raised 
concerns regarding the census tract methodology's reliance upon 
`driving time' as a data measure, noting this presents legitimate 
equity issues. Those who have relied upon both the LVPA and rural 
payment adjustments to remain operational expressed opposition to 
elimination of either adjustment. The materials from the TEPs and 
summary reports can be found at https://www.cms.gov/medicare/medicare-fee-for-service-payment/esrdpayment/educational_resources. For this 
proposed rule, we considered the above-referenced input from interested 
parties and subsequent data obtained to inform the RFIs below.
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    \13\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/esrdpayment/educational_resources.
    \14\ https://www.cms.gov/files/document/cy-2022-esrd-pps-rfi-summary-comments.pdf.
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(2) Requests for Information on Modification of LVPA Methodology and 
Development of a New Payment Adjustment Based on Geographic Isolation
    As discussed in the previous section, we recognize the importance 
of revising the ESRD PPS LVPA adjustment methodology to ensure that 
payments accurately reflect differences in cost and adequately target 
low-volume facilities, and to strive for healthcare equity for ESRD 
beneficiaries. The LVPA and rural adjusters currently result in 
increased payments to some geographically isolated ESRD facilities, but 
these adjusters do not specifically target geographically isolated ESRD 
facilities. We noted several points of concern that interested parties 
have raised in the past, as well as certain statutory limitations that 
could apply to some of the methodological approaches suggested in the 
past. We are seeking information from the public about potential 
approaches to refine the ESRD PPS methodology, which we would take into 
consideration for any potential changes to the LVPA in the future.
    This section addresses several RFIs regarding the LVPA and a 
potential new adjustment for geographically isolated ESRD facilities. 
Upon reviewing the RFIs, respondents are encouraged to provide 
complete, but concise responses. These RFIs are issued solely for 
information and planning purposes; RFIs do not constitute a Request for 
Proposal (RFP), application, proposal abstract, or quotation. The RFIs 
do not commit the United States (U.S.) Government to contract for any 
supplies or services or make a grant award. Further, we are not seeking 
proposals through these RFIs and will not accept unsolicited proposals. 
Responders are advised that the U.S. Government will not pay for any 
information or administrative costs incurred in response to this RFI; 
all costs associated with responding to these RFIs will be solely at 
the interested party's expense. Failing to respond to either RFI will 
not preclude participation in any future procurement, if conducted.
    Please note that we will not respond to questions about the policy 
issues raised in these RFIs. We may or may not choose to contact 
individual responders. Such communications would only serve

[[Page 42442]]

to further clarify written responses. Contractor support personnel may 
be used to review RFI responses. Responses to these RFIs are not offers 
and cannot be accepted by the U.S. Government to form a binding 
contract or issue a grant. Information obtained because of this RFI may 
be used by the U.S. Government for program planning on a non-
attribution basis. Respondents should not include any information that 
might be considered proprietary or confidential. All submissions become 
U.S. Government property and will not be returned. We may publicly post 
the comments received, or a summary thereof.
(a) Comment Solicitation for Modifications to LVPA Methodology
    We are soliciting comment on potential changes to the LVPA 
methodology, including maintaining a single threshold, establishing 
LVPA tiers, and/or utilizing a continuous function. Any potential 
refinements to the LVPA methodology that may result from our 
consideration of these comments would be proposed through notice-and-
comment rulemaking in the future. We request that commenters keep in 
mind that section 1881(b)(14)(D)(iii) of the Act requires the LVPA to 
reflect 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.
(i) Maintain a Single LVPA Threshold
    As discussions about modifying the existing treatment threshold or 
payment adjustment percentage have been ongoing since the beginning of 
the multi-year LVPA reform efforts, we are soliciting comments on 
maintaining a single threshold for the LVPA. ESRD facilities that fall 
below the treatment threshold would continue to receive payment, and 
payments would not be adjusted for those ESRD facilities above the 
threshold. We are engaged in continuing monitoring efforts to align 
resource use with payment. If we were to re-compute the LVPA percentage 
amount using the latest available claims and cost report data and the 
methodology established in the CY 2011 and CY 2016 ESRD PPS final rules 
(75 FR 49118 through 49125 and 80 FR 69001), the current treatment 
threshold of 4,000 treatments per year would correspond to a 17.6 
percent payment adjustment. The 4,000-treatment threshold could be 
maintained, or the treatment threshold could be recalibrated to 
maintain the 23.9 percent payment adjustment. Maintaining a single 
threshold would not address concerns regarding the potential for gaming 
or remove what commenters call the payment cliff. Potential approaches 
for a single LVPA threshold are outlined below in Table 2.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP30JN23.001

(ii) Establishment of Multiple LVPA Tiers
    We are soliciting comment on creating a tiered payment adjustment 
that would include multiple thresholds, with separate payment 
adjustments calibrated so that ESRD facilities in tiers with the lowest 
treatment volume would receive the highest payment adjustment, and vice 
versa. MedPAC has previously recommended setting LVPA treatment 
thresholds at fewer than 4,000 treatments, between 4,000 and 4,999 
treatments, and between 5,000 and 6,000 treatments, with payment 
adjustments calibrated so that ESRD facilities in tiers with the lowest 
volume would receive the highest payment adjustment, and vice 
versa.\15\ Establishing multiple thresholds, with a separate payment 
adjustment for ESRD facilities under each threshold level, would reduce 
the potential for gaming through reduction of the magnitude of the 
payment cliff. Additionally, LVPA eligibility would be expanded to more 
ESRD facilities. We are soliciting comments regarding establishment of 
multiple thresholds, including up to an eight-tiered structure for the 
LVPA. Tables 3 through 6 outline various methodological options. Tables 
3 through 4 would establish larger adjustment factors on average than 
the current methodology, but would require reductions to the ESRD PPS 
base rate to maintain budget neutrality. Tables 5 through 6 show 
adjustment factors which are scaled to maintain budget neutrality 
within the LVPA, keeping the LVPA's budget at the same amount that 
would occur under the current methodology without requiring reductions 
to the ESRD PPS base rate. As illustrated below, scaling the adjusters 
while maintaining budget neutrality within the LVPA results in lower 
LVPA adjusters. For example, Tier 1 (less than 5,000 treatments) in the 
Four-Tiered Model varies based on the approach to maintaining budget 
neutrality, as the LVPA adjuster is 13.7 percent where budget 
neutrality is maintained within the ESRD PPS (Table 3) and 5.8 percent 
where budget neutrality is maintained within the LVPA (Table 5). For 
comparison, the

[[Page 42443]]

Eight-Tiered Model shows that for Tier 1 (less than 1,000 treatments), 
ESRD facilities would receive a 123 percent LVPA adjuster where budget 
neutrality is maintained within the ESRD PPS (Table 4) and 40.5 percent 
LVPA adjuster where budget neutrality is maintained within the LVPA 
(Table 6).
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    \15\ https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun20_ch7_reporttocongress_sec.pdf.
[GRAPHIC] [TIFF OMITTED] TP30JN23.002

[GRAPHIC] [TIFF OMITTED] TP30JN23.003

[GRAPHIC] [TIFF OMITTED] TP30JN23.004


[[Page 42444]]


[GRAPHIC] [TIFF OMITTED] TP30JN23.005

BILLING CODE 4120-01-C
(iii) Continuous Function
    We are also soliciting comments on potentially establishing a 
continuous function to adjust LVPA payments. Under this approach, ESRD 
facilities with the lowest volume would receive the highest payment 
adjustment, and the payment adjustment would decrease continuously as 
volume increases. This could include calibration of the point at which 
the payment adjustment becomes zero to correspond with the existing 
4,000 treatment upper bound, or establishment of a new upper bound 
based on a regression analysis. Establishment of a continuous function 
has the potential to significantly reduce the potential for gaming by 
eliminating payment cliffs entirely. Additionally, this would increase 
payment for ESRD facilities with the lowest volume, therefore better 
aligning payment with resource use. Furthermore, a continuous function 
would potentially expand LVPA eligibility to the most ESRD facilities.
    CMS is considering several approaches to modifying the LVPA to 
address concerns about its incentive structure, treatment threshold, 
and administrative burden, as expressed by interested parties 
(including the GAO, MedPAC, and industry representatives). We are 
issuing this RFI to seek feedback on the suggested changes to the LVPA, 
as described above, and to solicit further input from interested 
parties to inform future modifications to the methodology used to 
determine the LVPA.
    In particular, CMS seeks input and responses to the following 
considerations, requests and questions:
     Regarding concerns about a payment cliff in the existing 
LVPA, we are considering implementing payment tiers or a continuous 
adjustment, based on treatment volume, in place of the current single 
tiered adjustment.
    ++ Please comment on which payment structure would be more 
appropriate: single threshold as currently employed, tiered structure, 
or continuous function, and provide the reasoning behind your 
recommendation.
    ++ Please also comment on which option would be most effective in 
removing gaming incentives and which option would bring greater 
congruency between cost of providing renal dialysis services and 
payment.
     Using the alternative methodology described above, under a 
tiered or continuous payment adjustment, the treatment threshold for 
eligibility would be determined based on the median treatment count 
among all ESRD facilities (approximately eight thousand treatments per 
year). The resulting tiers and incremental payment adjustments between 
tiers could follow several different configurations.
    ++ What factors should be evaluated to best determine the treatment 
count threshold, as well as the tiering structure? Specifically, 
comment on the treatment volume beneath which per-treatment costs begin 
to increase.
    ++ Please enumerate any concerns you might have should the 
implementation of a tiered or continuous adjustment result in an 
expanded set of eligible ESRD facilities, and payment redistribution.
     Interested parties have voiced concern regarding the 
administrative burden involved in the current LVPA attestation process. 
As such, we are considering potentially decreasing the number of years 
of attestation data needed to determine LVPA eligibility.
    ++ Please comment on the extent to which this change would 
alleviate burden, and if there are other administrative changes that 
could be made to simplify this process.
    ++ Please describe any anticipated effects of decreasing the amount 
of treatment volume data used to determine LVPA eligibility.
    ++ Please describe the ways that simplifying the attestation 
process could help ESRD facilities with fewer resources to promote 
health equity by improving their ability to serve vulnerable and 
underserved communities.
(b) Comment Solicitation on the Development of a New Payment Adjustment 
Based on Geographic Isolation
    CMS is striving to promote health equity by ensuring that ESRD 
facilities, including both rural and low-volume facilities, are being 
paid equitably for serving populations that are currently underserved. 
We are therefore soliciting comments on potentially assisting 
geographically isolated ESRD facilities and promoting access in these 
areas, including labor force hiring and retention. We are considering 
establishing a new payment adjustment that accounts for isolation, 
rurality, and other geographical factors. We are also requesting 
information on geographic isolation to determine if ESRD facilities 
that are currently considered rural would benefit from a geographic 
isolation adjustment. The new geographically based payment adjustment 
may consider local dialysis

[[Page 42445]]

need (LDN), as explained later in this section, instead of basing 
payment strictly upon a rural designation, as set forth in Sec. Sec.  
413.233 and 413.231(b)(2). We considered changes to the eligibility 
criteria to address the concerns that GAO and MedPAC raised about 
targeting LVPA payments to ESRD facilities that are not located near 
other ESRD facilities that are necessary to protect access to care. As 
noted above, under section 1881(b)(14)(D)(iii) of the Act, the LVPA 
must reflect the extent to which costs incurred by low-volume 
facilities (as defined by the Secretary) in furnishing renal dialysis 
services exceed the costs incurred by other facilities in furnishing 
such services. Our preliminary analysis found that, in general, low-
volume facilities that are rural, isolated, or located in low-demand 
areas did not have higher costs than low-volume ESRD facilities 
overall. Therefore, certain changes that interested parties have 
suggested would not comport with the statutory requirements and 
limitations for the LVPA. We are soliciting comments on potential 
methodologies for creating a separate payment adjustment that could 
potentially address GAO and MedPAC's concerns, relying upon the 
authority under section 1881(b)(14)(D)(iv) of the Act, which states 
that the ESRD PPS may include such other payment adjustments as the 
Secretary determines appropriate.
    During the 2020 ESRD PPS TEP, panelists discussed the alternatives 
to the current LVPA set forth below.\16\ One methodology involved 
utilization of census tracts to identify geographic areas with low 
demand, which suggested increased beneficiary access by incentivizing 
dialysis organizations to continue operating ESRD facilities in 
otherwise non-viable locations. An advantage to this approach would be 
identifying geographical areas, specifically census tracts, with low 
demand for dialysis. The TEP participants discussed that the 
identification of low demand for dialysis would improve targeting to 
ESRD facilities that are in isolated areas that ESRD beneficiaries 
travel far to access. Additionally, this would incentivize ESRD 
facilities to locate in underserved areas that are isolated and rural, 
promoting access to care for these disadvantaged populations. This 
methodology aligns with the methodology presented in the TEPs and in 
the CY 2022 ESRD PPS proposed rule (86 FR 36396 through 36399).
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    \16\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-presentation-december-2020.pdf.
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    CMS's preliminary analysis has shown that models based on this 
local dialysis need (LDN) methodology would often result in the ESRD 
facilities receiving the LDN payment adjustment (that is, ESRD 
facilities in geographic areas with low LDN) being the only dialysis 
provider for a number of miles. Additionally, our analysis shows that 
ESRD facilities receiving the LDN payment adjustment often would be 
located in a census tract that intersects with areas designated as 
Health Professional Shortage Areas (HPSAs). The methodology would 
involve dividing the U.S. into geographic areas based on a reasonable 
assessment of ESRD beneficiaries' ability or willingness to travel. 
Regarding interested parties' concerns that previous measures for 
travel time relied upon beneficiaries' access to a private vehicle 
(which many beneficiaries may lack), in collaboration with our data 
contractor, CMS has performed additional analysis regarding the travel 
time metric to include realized travel time between ESRD facilities and 
population centers of census tracts, instead of ESRD facilities and 
patient address. Sensitivity checks have shown that the exact location 
of patients with ESRD is not essential for accurately determining the 
LDN of census tracts. Latent demand is then calculated by counting the 
number of beneficiaries with ESRD near each ESRD facility. ``Near'' is 
defined by driving time to ESRD facilities. Latent demand is calculated 
by multiplying the number of beneficiaries near an ESRD facility by 
average number of treatments for ESRD beneficiaries. The threshold is 
then applied by determining the threshold of adjusted latent demand. 
That is, those ESRD facilities, which fall below the threshold are 
eligible.
    We are considering approaches to implementing an additional payment 
adjustment for ESRD facilities operating in areas with low LDN/demand. 
The purpose of this RFI is to seek feedback on the approach described 
above and to solicit information from interested parties to inform the 
approach taken to implement this adjustment. Any new payment adjustment 
of this nature would be proposed through future notice-and-comment 
rulemaking.
    In particular, we seek responses to the following questions.
     What factors should be considered in formulating a payment 
adjustment for ESRD facilities in isolated geographical areas or areas 
for which there is a low need for renal dialysis services?
     What are the best ways to incentivize renal dialysis 
service provision in isolated geographic areas?
     Our analysis of the LDN methodology has shown that low LDN 
census tracts intersect with areas designated as HPSAs. What impact 
would a payment adjustment based on geographic isolation have on the 
ability of ESRD facilities in isolated areas to recruit and retain 
health care professionals?
     Please comment on the appropriateness of maintaining the 
rural facility adjustment under Sec.  413.233, if we were to establish 
an LDN payment adjustment in conjunction with a modified LVPA.
     Please comment on the relationship between geographic 
isolation and cost. Please provide any data that could further inform 
CMS's understanding of the relationship between geographic isolation 
and cost for low volume facilities.
     Please comment on the appropriateness of utilizing driving 
time between current beneficiary address and treatment location as the 
appropriate metric for travel time.
     Are there ways in which the suggested methodology for this 
potential payment adjustment could fail in targeting isolated ESRD 
facilities, or ESRD facilities in areas with low LDN?
     Are there ways in which the determination of LDN might be 
subject to gaming?
     Would a payment adjustment for ESRD facilities in areas 
with low LDN improve health equity? Are there specific recommendations 
to change the LDN methodology described above to promote quality access 
to care for all ESRD beneficiaries?
     Please comment on the favorability of CMS's implementation 
of a new payment adjustment for ESRD facilities in areas with low LDN 
as described above.
     Are there any other considerations we should keep in mind 
when considering proposing a new payment adjustment based on an LDN 
methodology?
(3) Proposal for an Exception to the Current LVPA Attestation Process 
for Disasters and Other Emergencies
    Under our current regulations at 42 CFR 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, except as 
specified in Sec.  413.232(g)(4)) preceding

[[Page 42446]]

the payment year; and (2) has not opened, closed, or received a new 
provider number due to a change in ownership (except where the change 
in ownership results in a change in facility type) 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. When we first established these requirements in the CY 2011 ESRD 
PPS final rule, we explained that looking across data for three years 
provided us with a sufficient information to view consistency in 
business operations (79 FR 49123). In the CY 2019 ESRD PPS final rule 
(83 FR 56949) and the CY 2021 ESRD PPS proposed rule (85 FR 42165), we 
acknowledged commenters' concerns that the eligibility criteria in the 
LVPA regulations are very explicit and leave little room for 
flexibility during disasters or other emergency situations like the 
COVID-19 PHE. Commenters have emphasized that low-volume facilities 
rely on the LVPA, and that loss of the payment adjustment could result 
in beneficiary access issues.
    As discussed in the CY 2021 ESRD PPS proposed rule (85 FR 42165), 
the COVID-19 PHE caused ESRD facilities to have to shift patients among 
ESRD facilities in order to provide uninterrupted care to their 
Medicare ESRD population. In some cases, this patient shifting 
increased dialysis treatments at some low-volume ESRD facilities, 
putting the ESRD facility temporarily over the LVPA treatment 
threshold. This increase in dialysis treatments, resulting from the 
PHE, disqualified some ESRD facilities that would have otherwise 
received the LVPA of 23.9 percent per treatment. In the CY 2021 ESRD 
PPS final rule (85 FR 71485), we established a policy that ESRD 
facilities would be held harmless from increases in treatment counts 
due to temporary patient shifting because of the PHE. To be held 
harmless, ESRD facilities must follow the attestation process for the 
exception set forth in Sec.  413.232(g)(4) and are expected to provide 
supporting documentation to the MACs upon request. Interested parties 
have expressed support for CMS's swift response to the COVID-19 PHE's 
impact on ESRD facilities, with an association of dialysis providers 
stating that holding harmless LVPA status for these ESRD facilities 
will better ensure that ESRD patients can continue to access the life-
sustaining dialysis treatment they need, particularly in rural and 
underserved areas where low-volume facilities heavily depend on the 
LVPA to remain open and provide treatment for patients.
    We recognize there could be future circumstances, potentially 
similar to the circumstances of the COVID-19 PHE, in which it would be 
appropriate to provide flexibilities with respect to certain LVPA 
requirements. Commenters have previously expressed concerns about the 
strict attestation requirements for ESRD facilities to remain eligible 
for the LVPA, particularly when faced with a disaster or other 
emergency, such as a local or national emergency, natural disaster, 
catastrophic event, or public health emergency. We recognize that 
during disasters or other emergencies, low-volume facilities could be 
forced to close, or could experience increases in their treatment 
counts if they treat patients who are displaced from a nearby ESRD 
facility that is impacted by such an event. For example, in August of 
2021, an ESRD facility in Louisiana sustained significant damage as a 
result of Hurricane Ida, which required the ESRD facility to close for 
repairs and temporarily stop furnishing renal dialysis services. The 
ESRD facility served a rural community and for over 10 years received 
the LVPA due to the low number of dialysis treatments it furnished each 
year. This ESRD facility sought recourse to maintain its eligibility 
for the LVPA when it resumed operations following the required repairs 
to the ESRD facility, however, recourse was unavailable due to the 
limitations set forth in 42 CFR 413.232(b). When we established the 
LVPA in the CY 2011 ESRD PPS final rule, we stated that we believed the 
LVPA should encourage small ESRD facilities to continue to provide 
access to care to an ESRD patient population where providing that care 
would otherwise be problematic (75 FR 49118). Given that these 
requirements for low-volume facilities were created to protect access 
to care for the vulnerable patient population that these ESRD 
facilities serve, adding certain flexibilities during disasters or 
other emergencies would promote our commitment to ensuring access to 
care for ESRD patients.
(a) Proposed Changes to the LVPA
    We are proposing to make two changes to the LVPA regulation at 
Sec.  413.232 to allow for more administrative flexibilities during 
disasters or other emergencies. First, we are proposing to create a new 
exception to the attestation process for disasters and other 
emergencies. Second, we are proposing to establish a process that would 
allow low-volume facilities to close and reopen in response to a 
disaster or other emergency and still receive the LVPA. CMS would 
assess whether a particular situation is a disaster or other emergency 
based on the totality of the circumstances that could result in 
disruption of or inability to furnish renal dialysis services at one or 
more ESRD facilities, thus affecting the ESRD facility's or facilities' 
ability to qualify for the LVPA. For purposes of this proposal, 
disasters or other emergencies would include, but not be limited to, 
the below examples:
     A public health emergency declared by the Secretary due to 
a significant outbreak of infectious disease or bioterrorist attacks.
     Natural disasters including winter storms, floods, 
tornados, hurricanes, wildfires, earthquakes, or any combination 
thereof.\17\
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    \17\ https://www.dhs.gov/natural-disasters.
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     Catastrophic events outside of an ESRD facility's control 
that disrupt operations and result in an ESRD facility's closure, for 
example, loss of operations or patient shifting due to a local 
emergency such as fire, floods, earthquakes, or tornadoes, or
     Other disaster or emergency conditions under which a 
waiver could be granted pursuant to section 1135 of the Act.
    CMS believes these proposed policy changes could help displaced 
ESRD patients maintain access to renal dialysis services by preventing 
ESRD facilities from permanently closing due to the loss of their LVPA. 
It is important that ESRD facilities that are receiving the LVPA are 
able to maintain LVPA eligibility despite the impacts caused by a 
disaster or other emergency. The proposed policy could potentially 
protect other ESRD facilities that need to maintain the LVPA in order 
to remain open from potentially losing their LVPA by exceeding the 
treatment threshold because they accepted displaced patients. We do not 
want the fear of losing the LVPA due to increased treatments exceeding 
the threshold to disincentivize ESRD facilities from accepting patients 
from other ESRD facilities experiencing a disaster or other emergency. 
It is also important that ESRD facilities that are forced to close due 
to a disaster or other emergency are able to maintain their LVPA 
eligibility upon reopening to ensure continued access in areas that 
otherwise may lack sufficient ESRD facilities. The policy could also 
help those ESRD facilities affected by the disaster or other emergency 
potentially resume operations and avoid permanent closure if they would 
be allowed to receive the

[[Page 42447]]

LVPA upon reopening despite the closure or disruption of operations.
(i) Proposed Exception to the LVPA Treatment Threshold for ESRD 
Facilities That Accept Patients From an ESRD Facility Affected by a 
Disaster or Other Emergency
    We are proposing to create an exception to the LVPA treatment 
threshold requirements set forth in 42 CFR 413.232(b)(1) under a new 
provision in Sec.  413.232(g)(5), which would allow an ESRD facility to 
receive the LVPA even if it exceeds the LVPA threshold if its treatment 
counts increase due to treating additional patients displaced by a 
disaster or other emergency. Qualification for the proposed exception 
would require an ESRD facility to absorb those displaced patients from 
an outside or adjacent ESRD facility that experienced a temporary 
closure or operational disruption (such as a water shut off). If an 
ESRD facility accepts the patients of the ESRD facility affected by the 
disaster or other emergency, causing that ESRD facility to meet or 
exceed the 4,000-treatment count for all dialysis patients, it would 
attest to its MAC that it furnished treatments equal to or in excess of 
4,000 in the cost reporting year due to temporary patient-shifting as a 
result of the closure or operational disruption of an ESRD facility due 
to a disaster or other emergency. We are proposing to define temporary 
patient-shifting in the context of the LVPA in the ESRD PPS as 
providing renal dialysis services to one or more patient(s) at any time 
through the end of the calendar year following the 12-month period 
beginning when an ESRD facility first begins providing renal dialysis 
services to the displaced patient(s). The ESRD facility would be 
required to request this exception from CMS by writing to the ESRD 
Payment Mailbox [email protected] no later than the annual 
attestation deadline of November 1st. CMS would review the exception 
request within 30 days to determine if the ESRD facility qualifies for 
the exception. If approved by CMS, the ESRD facility would be paid the 
LVPA for Medicare beneficiaries for up to the first 4,000 dialysis 
treatments in the payment year in which the temporary patient-shifting 
occurred. Under this proposed exception, the ESRD facility would be 
held harmless for meeting or exceeding the 4,000 dialysis treatment 
threshold during one or more cost reporting years within the 3-year 
lookback for LVPA eligibility as long as their 4,000 dialysis treatment 
threshold was exceeded as a result of temporary patient-shifting from 
the ESRD facility that experienced the disaster or other emergency. If 
CMS does not approve the request, CMS would notify the ESRD facility 
and the MAC, and the ESRD facility would be disqualified from receiving 
the LVPA until it meets all the LVPA criteria (including the 3-year 
lookback). Under this proposal, the ESRD facility receiving this 
exception must maintain documentation of the number of displaced 
patients treated and information about the ESRD facility or facilities 
that previously treated those patients and closed or experienced an 
operational disruption due to a disaster or other emergency and must 
provide such documentation to CMS and the MAC upon request. The ESRD 
facility requesting this exception would have to repeat the process for 
requesting an exception for each cost reporting year in which its 
treatment volume meets or exceeds 4,000 due to temporary patient-
shifting from the ESRD facility that experienced the disaster or other 
emergency. Additionally, the ESRD facility requesting this exception 
would have to follow the attestation process as described at Sec.  
413.232(e) for the two payment years following the last cost reporting 
year in which its treatment volume meets or exceeds 4,000 due to 
treating displaced patients from the ESRD facility that experienced the 
disaster or other emergency and attest that the ESRD facility meets the 
criterion established at Sec.  413.232.
    As an example: If a disaster occurs on June 1, 2024, which results 
in ESRD facility X's closure or operational disruption resulting in 
ESRD facility Y (an existing low-volume facility) treating additional 
patients from ESRD facility X that puts ESRD facility Y's total renal 
dialysis treatments for cost reporting year 2024 over the 4,000 
treatment threshold, ESRD facility Y would be required to request an 
exception to Sec.  413.232(b)(1) from CMS by November 1, 2024 in order 
to continue receiving the LVPA. Since ESRD facility Y began treating 
the displaced patients in CY 2024, the window for temporary patient 
shifting would extend until December 31, 2025. To be approved for the 
exception under the new provision in Sec.  413.232(g)(5), CMS would 
determine that ESRD facility Y furnished treatments equal to or in 
excess of 4,000 in the cost reporting year due to temporary patient-
shifting as a result of the closure or operational disruption of ESRD 
facility X resulting from a disaster or other emergency. Should the 
exception be approved by CMS, ESRD facility Y would receive the LVPA 
for up to the first 4,000 treatments it furnished in 2024. 
Additionally, ESRD facility Y would not be disqualified from receiving 
the LVPA for PY 2025 and PY 2026 due to exceeding the treatment volume 
threshold in cost reporting year 2024, assuming the temporary patient-
shifting from ESRD facility X occurred only in cost reporting year 
2024. For PY 2025 and PY 2026 ESRD facility Y would have to attest that 
it meets all the criterion for the LVPA because it furnished treatments 
equal to or in excess of 4,000 in the cost reporting year due to 
temporary patient-shifting as a result of the closure or operational 
disruption of an ESRD facility resulting from a disaster or other 
emergency and received an exception for cost reporting year 2024. This 
would be the same attestation process as if ESRD facility Y did not 
furnish any excess treatments and was attesting that it continued to 
meet the criteria for the LVPA for those payment years. If the closure 
or operational disruption of ESRD facility X causes the treatment 
volume for ESRD facility Y to meet or exceed the 4,000 dialysis 
treatment threshold in cost reporting year 2025, ESRD facility Y would 
have to submit another request for an exception by November 1, 2025. 
Should this exception be approved, ESRD facility Y would receive the 
LVPA for up to the first 4,000 treatments it furnished in cost 
reporting year 2025 and would not be disqualified from receiving the 
LVPA for payment year 2026 and payment year 2027 due to exceeding the 
treatment volume threshold in cost reporting year 2024 and cost 
reporting year 2025. If ESRD facility Y continued to treat displaced 
patients from ESRD facility X in cost reporting year CY 2026, it would 
only be considered temporary patient-shifting if ESRD facility Y 
treated those patients before January 1 2026, and if patients treated 
after January 1 2026 cause ESRD facility Y to exceed the 4,000-
treatment volume threshold in cost reporting year 2026 then the ESRD 
facility would be disqualified from receiving the LVPA under Sec.  
413.232(b)(1). Under this example, ESRD facility Y would still have to 
meet the other eligibility requirements to receive the LVPA in any PY 
in which the ESRD facility would receive the LVPA.
(ii) Proposed Exception to the LVPA Closure Provision for ESRD 
Facilities Affected by a Disaster or Other Emergency
    In addition to proposing an exception to the treatment threshold 
requirement under Sec.  413.232(b)(1) and (g)(5), we are proposing an 
exception under

[[Page 42448]]

Sec.  413.232(g)(6) that would allow an ESRD facility to still receive 
the LVPA if it temporarily closes. That is, if an ESRD facility 
temporarily ceases to operate and the patients must go to another ESRD 
facility to receive renal dialysis services due to a disaster or other 
emergency, and the ESRD facility subsequently reopens, we are proposing 
to create an exception to the requirement in Sec.  413.232(b)(2) that 
an ESRD facility ``has not opened, closed, or received a new provider 
number'' in the 3 cost reporting years preceding the payment year. If 
an ESRD facility is affected by a disaster or other emergency and the 
ESRD facility is forced to close and re-open later, the ESRD facility 
would need to request an exception from CMS in writing at the ESRD 
Payment Mailbox at [email protected] within 60 days of the 
closure and inform the MAC of the request. CMS would review the request 
within 30 days of receipt and either approve the request based on a 
determination that the ESRD facility closed or experienced an 
operational disruption due to a disaster or other emergency, or deny 
the request, and would inform both the ESRD facility and the MAC of its 
decision.
    Upon reopening and providing renal dialysis services, the ESRD 
facility would be required notify CMS and the MAC in writing within 30 
days of its reopening. CMS would acknowledge receipt of the written 
notification within 30 days. If the exception is approved and CMS is 
duly informed of the ESRD facility's reopening, the ESRD facility would 
remain eligible for the LVPA and the MAC would process payment 
accordingly. In order to continue receiving the LVPA the ESRD facility 
would still have to meet all the other eligibility requirements for the 
LVPA. The exception to Sec.  413.232(b)(2) would be applicable for a 
period of 2 cost reporting years following the date of closure of the 
ESRD facility. After the 2 cost reporting year period the ESRD facility 
would follow the normal attestation process for the LVPA specified in 
paragraphs (e) and (g) of Sec.  413.232. The ESRD facility would be 
required to maintain documentation regarding its closure, and to 
provide such supporting documentation to CMS and/or the MAC upon 
request.
    For example, if a disaster occurs on June 1, 2024, which results in 
an ESRD facility experiencing a closure, the ESRD facility would 
request an exception to Sec.  413.232(b)(2) from CMS within 60 days of 
June 1, 2024 (that is, on or before July 31, 2024). CMS would review 
the request and notify the ESRD facility and the MAC within 30 days if 
the exception is approved or denied. If the ESRD facility then reopens 
on September 1, 2024, the ESRD facility would notify CMS and the MAC in 
writing within 30 days of reopening (that is, on or before October 1, 
2024). CMS would notify the ESRD facility and the MAC of its receipt of 
the reopening notification within 30 days. If the exception was 
approved by CMS, the ESRD facility would remain eligible for the LVPA 
for the rest of payment year 2024 and for the entirety of payment year 
2025 and payment year 2026, provided the ESRD facility continues to 
meet the other eligibility requirements for the LVPA.
(4) Proposed Technical Correction to 42 CFR 413.232(g)
    We are proposing a technical correction at Sec.  413.232(g) to 
replace ``their'' with ``its,'' to clarify the regulation language.
g. Proposed Transitional Pediatric ESRD Add-On Payment Adjustment for 
Pediatric Patients With ESRD Receiving Renal Dialysis Services
(1) Background
    Section 1881(b)(14)(D)(iv)(I) of the Act provides that the ESRD PPS 
may include such payment adjustments as the Secretary determines 
appropriate, including a payment adjustment for pediatric providers of 
services and renal dialysis facilities. Determining such a payment 
adjustment has been historically difficult due to the consistent lack 
of data. The Medicare pediatric ESRD patient population receiving 
dialysis is small compared to the adult ESRD population, representing 
approximately 0.14 percent of the total ESRD patient population in 
2022. In the past, CMS has considered various different payment 
adjustments for pediatric patients with ESRD, including different 
Medicare payments by sex or comorbidities (74 FR 49984 through 49986). 
However, many of these considered adjustments were not used as we were 
unable to get acceptable precision due to the small sample size of 
pediatric patients with ESRD.
    Prior to the establishment of the ESRD PPS, payment for pediatric 
ESRD dialysis services was generally the same rate as adult ESRD 
dialysis, unless the ESRD facility qualified for an exception to the 
composite rate. Section 1881(b)(7) of the Act stated that, subject to 
section 422(a)(2) of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (Pub. L. 106-554) (BIPA), the 
Secretary shall provide for exceptions as may be warranted by unusual 
circumstances (including the special circumstances of sole facilities 
located in isolated, rural areas and of pediatric facilities). During 
this time period, CMS received many comments and concerns regarding the 
payment rate for renal dialysis services furnished to pediatric 
patients with ESRD. Section 623(b) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Pub. L. 108-173) later 
amended section 422(a)(2) of BIPA to provide that any pediatric ESRD 
facility would be eligible for an exception to the composite rate, 
effective October 1, 2002. This statute defined pediatric ESRD 
facilities as facilities with at least 50 percent patients under the 
age of 18. This enabled pediatric ESRD facilities to obtain payments 
that specifically recognized the higher cost associated with treating 
these patients (69 FR 47530).
    We finalized a basic case-mix adjustment to the composite payment 
rate in the CY 2005 Physician Fee Schedule (PFS) final rule published 
on November 15, 2004 (69 FR 66327). This included a 62 percent 
pediatric payment increase (that is, an adjustment factor of 1.62) 
applied to the composite payment rate per treatment for any facility 
when furnishing outpatient dialysis services to pediatric patients with 
ESRD. This factor was derived from the average exception amounts for 20 
ESRD facilities that had received exceptions for pediatric patients. 
This was intended to be a temporary measure, which would be eliminated 
once we developed the case-mix methodology that would apply for the 
ESRD PPS bundled payment. The use of this methodology allowed CMS to 
provide additional payment for the pediatric ESRD population under the 
composite rate in a data-driven manner to account for the higher costs 
pediatric patients faced (69 FR 66327).
    Section 153(b) of MIPPA added section 1881(b)(14) of the Act, which 
required CMS to implement an ESRD bundled PPS beginning January 1, 
2011, under which a single payment for renal dialysis services is made 
in lieu of any other payment. Renal dialysis services generally include 
items and services included in the composite rate for renal dialysis 
services as of December 31, 2010 and services furnished to individuals 
for treatment of ESRD, which were formerly separately billable, 
including drugs and biological products and laboratory tests. In the CY 
2011 ESRD PPS proposed rule, we proposed a single composite rate 
modifier of 1.199 for all Pediatric ESRD Patients receiving dialysis 
(74 FR 49982 through 49983). A ``Pediatric ESRD Patient'' is defined as 
an individual less than 18 years of age

[[Page 42449]]

who is receiving renal dialysis services. 42 CFR 413.171. We also 
proposed an eight-group system for separately billable renal dialysis 
services furnished to Pediatric ESRD Patients with two subdivisions for 
each of the following factors: age (under 13, 13 to 17), modality 
(hemodialysis, peritoneal dialysis) and number of comorbidities (none, 
one or more) (74 FR 49983 through 49987). The CY 2011 ESRD PPS proposed 
rule then calculated an ``expanded bundle'' modifier, which combined 
the composite rate and separately billable modifiers for each of the 
eight groups (74 FR 44987). These expanded bundle modifiers were the 
proposed pediatric patient-specific case-mix adjustment factors that 
would be applied to the base rate under the ESRD PPS. These modifiers 
were based on a regression of costs for all renal dialysis services 
furnished to Pediatric ESRD Patients. Comments on this proposed rule 
indicated that many interested parties felt the expanded bundle 
modifier was insufficient (75 FR 49128). In the CY 2011 ESRD PPS final 
rule, we responded to those comments by implementing the first 
iteration of the current four-group system for both the expanded bundle 
and the separately billable services. This methodology was data driven, 
but unlike the simple regression for composite rate costs, allowed for 
different Medicare payment amounts based on two sets of two 
characteristics: age of the patient (under 13 or 13 to 17) and modality 
of the treatment (hemodialysis or peritoneal dialysis). Additionally, 
this methodology used the same groups for the expanded bundle and 
separately billable modifiers (75 FR 49134).
    We codified the Pediatric ESRD Patient payment adjustment in Sec.  
413.235(b), which states that CMS adjusts the per treatment base rate 
for pediatric patients in accordance with section 1881(b)(14)(D)(iv)(I) 
of the Act, to account for patient age and treatment modality. These 
multipliers were updated in the CY 2016 ESRD PPS final rule using the 
same methodology (80 FR 69001 through 69002). The current expanded 
bundle case mix adjusters are presented below in Table 7.
[GRAPHIC] [TIFF OMITTED] TP30JN23.006

    Despite these changes intended to improve payment accuracy for 
renal dialysis services furnished to Pediatric ESRD Patients, we 
continue to receive comments and concerns from interested parties that 
the payment amounts for renal dialysis services furnished to Pediatric 
ESRD Patients are too low. In addition to comments received through the 
annual ESRD PPS rulemaking, we have also solicited comments from 
interested parties on several occasions. During the December 2020 TEP, 
we queried a panel of experts on how to improve payment for pediatric 
dialysis care under the ESRD PPS. Panelists \18\ generally preferred 
creating more refined case-mix adjusters over creating an entirely new 
pediatric ESRD PPS, citing the costs of creating an entirely new system 
both on CMS and the ESRD facilities and the need for new legislation to 
be able to increase payment through a separate pediatric ESRD PPS. 
Panelists also pointed to labor costs as a major reason for higher 
costs among pediatric dialysis clinics, because these patients need 
more nursing attention and specialized pediatric nutritionists.
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    \18\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
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    In the CY 2023 ESRD PPS proposed rule (87 FR 38529), we issued a 
request for information regarding health equity for pediatric patients 
with ESRD. Many commenters asserted that Medicare payments for 
Pediatric ESRD Patients are too low and that the ESRD PPS bundled 
payment does not target the unique issues facing ESRD facilities 
furnishing renal dialysis services to Pediatric ESRD Patients.
    We are committed to improving health equity for Pediatric ESRD 
Patients receiving renal dialysis services by improving payment equity 
through more efficient Medicare payments. Ensuring Medicare payments 
are appropriate and reflect costs for renal dialysis services furnished 
to Pediatric ESRD Patients would allow more ESRD facilities to provide 
quality care to this vulnerable population. The main barrier to payment 
equity is the lack of sufficient data to determine the relative costs 
associated with furnishing renal dialysis services to Pediatric ESRD 
Patients. To improve payment rate accuracy for Pediatric ESRD Patients, 
CMS has issued changes to the cost reports for both freestanding ESRD 
facilities and hospital-based ESRD facilities effective January 1, 
2023.19 20 21 These changes include separate categories for 
labor and supplies used in furnishing renal dialysis services to 
Pediatric ESRD Patients. These updates are intended to provide data for 
CMS to more comprehensively estimate the additional costs associated 
with furnishing renal dialysis services to Pediatric ESRD Patients. 
However, we estimate it would take approximately 3 years to obtain and 
analyze the granular data provided by the stratified cost reports data 
from these changes that we need in order to consider proposing a more 
finely-tuned payment adjustment.
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    \19\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r7p242.
    \20\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r18p240i.
    \21\ 87 FR 26760 (May 5, 2022). https://www.federalregister.gov/documents/2022/05/05/2022-09581/agency-information-collection-activities-submission-for-omb-review-comment-request.
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(2) Proposed Alternative Methodology for Estimating Relative Costs for 
Furnishing Renal Dialysis Services to Pediatric ESRD Patients
    As noted previously, payment accuracy has been historically 
difficult for pediatric ESRD dialysis because of the small sample size 
of Pediatric ESRD Patients receiving renal dialysis services paid for 
under the ESRD PPS. Pediatric ESRD dialysis treatments are also 
furnished differently from adult ESRD dialysis treatments in several 
crucial ways. For example, pediatric ESRD facilities are more likely to 
be hospital-based and, on average, have lower treatment volume and are 
located in higher wage index areas. These

[[Page 42450]]

systematic differences in treatment, when combined with the small 
sample size, make it very difficult to obtain low variance estimates of 
the differences in costs between pediatric and adult ESRD dialysis 
patients. Even if simple cost models show statistically significant 
estimates, it is possible that the systematic differences between 
pediatric and adult ESRD facilities can bias these estimates. Obtaining 
a reliable estimate of the additional costs that Pediatric ESRD 
Patients incur would allow us to create a payment adjustment to bring 
relative Medicare payments more in line with relative costs.
    One can account for this bias by selecting a specific sample of 
ESRD facilities that have similar characteristics except for proportion 
of dialysis treatments furnished to Pediatric ESRD Patients. This would 
help to show the additional costs of furnishing dialysis to Pediatric 
ESRD Patients based on the variation in costs across the ESRD 
facilities. To achieve this, we would use propensity score matching 
(PSM).
    PSM is a technique that uses regression analysis to account for 
systematic differences between two populations to isolate the effects 
of a single variable, in this case percentage of Pediatric ESRD 
Patients. The PSM regression includes a wide range of ESRD facility-
level characteristics including facility type, size, geographic 
location, and the pediatric ESRD dialysis population nearby the ESRD 
facility in order to make a propensity score. This propensity score 
represents the probability that a given ESRD facility treats a high 
volume of Pediatric ESRD Patients given its facility-level 
characteristics.
    Once the propensity score for each ESRD facility is determined, 
each ESRD facility with a significant percentage of Pediatric ESRD 
Patients (high-pediatric) is matched with the ESRD facility without a 
significant percentage of Pediatric ESRD Patients (low-pediatric) with 
the most similar propensity score. We can then compare the relative 
per-treatment costs of those ESRD facilities to estimate the additional 
costs an ESRD facility faces when it furnishes renal dialysis services 
to a higher proportion of Pediatric ESRD Patients, controlling for some 
important facility-level characteristics. The dependent variable of 
this regression is the log of the cost per treatment for the ESRD 
facility. The independent variables are the percent of dialysis 
treatments that are furnished to Pediatric ESRD Patients, the log of 
the facility size, the type of ESRD facility (hospital based, 
children's hospital based or freestanding), the log of the wage index 
for the ESRD facility and the year for the cost report data. The 
regression equation for cost per treatment given a certain percentage 
of dialysis treatments furnished to Pediatric ESRD Patients is:
[GRAPHIC] [TIFF OMITTED] TP30JN23.007

    This cost regression should be unbiased due to the use of PSM. 
However, PSM also requires a reduction in sample size, because there 
are relatively few ESRD facilities with a significant number of 
treatments furnished to Pediatric ESRD Patients that could be matched 
using PSM. This smaller sample size inherently results in an increase 
in margin of error. We believe this is a necessary tradeoff because a 
biased estimate cannot be relied upon, but we must be cautious while 
using high-error estimates. The final result of this regression is that 
ESRD facilities that solely serve Pediatric ESRD Patients incur costs 
that are 40 percent higher per patient for furnishing renal dialysis 
services than similar ESRD facilities that serve no Pediatric ESRD 
Patients. The confidence interval of this estimate is 20 percent to 60 
percent. Therefore, on average, furnishing renal dialysis services to a 
Pediatric ESRD Patient costs 40 percent more than furnishing renal 
dialysis services to an adult patient with ESRD.
(3) Current Medicare Payments for Renal Dialysis Services Furnished to 
Pediatric ESRD Patients
    The ESRD PPS already accounts for some of the higher costs that 
ESRD facilities incur while furnishing renal dialysis services to 
Pediatric ESRD Patients through the case-mix adjusters. Because the 
analysis described above uses cost report data, it does not incorporate 
either the current case-mix adjusters or payment rates for Pediatric 
ESRD Patients receiving renal dialysis services. Our most recent 
estimates show that payments for dialysis treatments furnished to 
Pediatric ESRD Patients were approximately 10 percent higher than for 
adult patients with ESRD in CY 2022.
    We are striving for payment accuracy, which is achieved when 
relative Medicare payments are proportional to relative costs. There 
are several ways we could adjust ESRD PPS payments to achieve payment 
accuracy, including calculating the unaccounted-for cost differential, 
which is the amount by which ESRD PPS payments for pediatric ESRD renal 
dialysis services must be increased to achieve payment accuracy. We 
could do this by reducing the cost differential estimate of 40 percent 
by a factor 1.1 to account for the current payment differential of 10 
percent. This would yield an unaccounted-for cost differential of 
approximately 30 percent (1.4 divided by 1.1 is 1.27 which we are 
rounding to 1.3). This is a reasonable estimate of the additional labor 
and supply costs, which are not accounted for by the current case-mix 
adjusters, incurred by ESRD facilities furnishing renal dialysis 
services to Pediatric ESRD Patients.
(4) Proposed Transitional Pediatric ESRD Add-On Payment Adjustment
    Despite the high margin of error of the cost regression using PSM, 
we believe that 30 percent cost is the most reasonable estimate of the 
unaccounted-for costs incurred in treating Pediatric ESRD Patients 
compared to adult ESRD patients. Creating a new add-on payment 
adjustment using this figure would provide pediatric ESRD facilities 
with Medicare payments proportional to their estimated costs for a 
temporary period while we collect additional data. However, due to the 
high margin of error of the model, increasing Medicare payments to ESRD 
facilities such that payments are 40 percent higher for Pediatric ESRD 
Patients compared to all patients would risk making payments higher 
than appropriate. When we conduct the analysis with the more 
comprehensive cost report data provided by the cost report changes 
implemented for CY 2023, we might find that our analysis overestimated 
the cost of furnishing renal dialysis services to Pediatric ESRD 
Patients (that is, that the additional 30 percent payment adjustment 
was too large). If we finalize this transitional add-on payment 
adjustment for Pediatric ESRD Patients as proposed, pediatric ESRD 
facilities should be prepared for the possibility that the payment rate 
for Pediatric ESRD Patients could decrease in the future, should that 
be indicated by future data

[[Page 42451]]

analysis and finalized through notice-and-comment rulemaking. One 
alternative would be for CMS to propose a smaller, more cautious add-on 
payment adjustment based on the 20 percent lower bound of the 
confidence interval, leading to an additional 10 percent transitional 
add-on payment adjustment after accounting for the current payment 
rate. This option would still represent a significant increase in 
Medicare payments to ESRD facilities for Pediatric ESRD Patients 
without much risk of making payments higher than appropriate. However, 
this alternative option may lead to underpayment to ESRD facilities 
serving Pediatric ESRD Patients, which is contrary to our goal of 
aligning resource use with payment. We are seeking comment on the most 
appropriate amount for the proposed transitional add-on payment 
adjustment.
    We are proposing a new transitional add-on payment adjustment of 30 
percent (adjustment factor of 1.3) for dialysis treatments furnished to 
Pediatric ESRD Patients for 3 calendar years, effective January 1, 
2024. Based on the time lag for cost report data, 3 years should allow 
for enough time for CMS to get more detailed data from the changes to 
the cost reports described above. After that period, we would evaluate 
the more comprehensive cost report data from the first year of cost 
reporting periods beginning on or after January 1, 2023, to refine our 
methodology for determining the payment rate for pediatric ESRD 
dialysis. As proposed, this would be a separate, additional add-on 
payment adjustment of 30 percent of the per treatment payment amount 
under Sec.  413.230, which reflects the other patient and facility 
level adjustments. This adjustment would not be part of the case-mix 
adjusters. This payment adjustment would only apply to the ESRD bundled 
payment and not to any outlier adjustments. Due to the multiplicative 
nature of the case-mix adjusters it would function similarly to a 30 
percent increase to the expanded bundle case-mix adjusters. For the 
purpose of comparison, the effective case-mix adjusters are presented 
below in Table 8.
[GRAPHIC] [TIFF OMITTED] TP30JN23.008

    The exact magnitude of the increase in payment would vary based on 
the age of the patient and the wage index of a given area; we estimate 
approximately $80 for (hemodialysis-equivalent) peritoneal dialysis 
treatments and $100 for hemodialysis treatments. This would represent a 
substantial increase in payment for renal dialysis services furnished 
to Pediatric ESRD Patients, and would account for the extra costs that 
this population incurs temporarily until additional cost data is 
available. This payment adjustment would apply for all dialysis 
treatments furnished to ESRD patients under the age of 18, not solely 
treatments furnished in pediatric ESRD facilities. This is warranted 
because many of the additional costs related to the treatment of 
Pediatric ESRD Patients are not specific to treatments furnished in 
pediatric ESRD facilities.
    We are proposing to call this the Transitional Pediatric ESRD Add-
on Payment Adjustment (TPEAPA) and make this adjustment budget neutral. 
In general, add-on payment adjustments under section 1881(b)(14)(D)(iv) 
of the Act are not statutorily required to be budget neutral under the 
ESRD PPS, but we believe in this instance that budget neutrality is 
appropriate, due to the manner in which this adjustment is derived. 
Other non-budget neutral add-on payment adjustments that we have 
established under this authority generally account for costs that were 
not used for the construction of the ESRD PPS bundled payment, such as 
the TDAPA for calcimimetics (80 FR 69013 through 69027). We have also 
established certain non-budget neutral add-on payment adjustments for 
items or services that were not commonplace, and therefore not 
adequately represented in cost reports, such as home dialysis training 
(75 FR 49063). However, we have implemented other payment adjustments 
under this authority in a budget neutral manner; for example, the 
changes to the wage index in the CY 2023 ESRD PPS final rule were 
implemented in a budget neutral manner as they represented a shifting 
of cost allocations, rather than new costs not originally included in 
the ESRD PPS bundled payment (87 FR 67157). This proposed TPEAPA is 
primarily for costs that would have been included in the cost reports 
used in the analysis conducted when we created the ESRD PPS bundled 
payment in the CY 2011 ESRD PPS final rule. As explained above, the 
methodology used both in that analysis, and when updating the case-mix 
adjusters, attributed pediatric ESRD renal dialysis services costs to 
the general population. Therefore, we believe it would be appropriate 
to reduce the ESRD PPS base rate to account for the new allocation of 
costs. Furthermore, any changes to the case-mix adjustments are 
required by section 1881(b)(14)(A)(ii) of the Act to be budget neutral, 
which means that any future modifications to the pediatric case-mix 
adjusters would be budget neutral. The budget neutrality adjustment 
factor for this proposed TPEAPA consisting of 30 percent of the per 
treatment payment amount would be 0.999532. Applying this budget 
neutrality factor to the ESRD PPS base rate would reduce the ESRD PPS 
base rate by an estimated $0.12. Under the alternative proposed 10 
percent TPEAPA discussed previously in this section of the proposed 
rule, the budget neutrality factor adjustment would be 0.999847. 
Applying this

[[Page 42452]]

budget neutrality factor to the ESRD PPS base rate would reduce the 
ESRD PPS base rate by an estimated $0.04.
    To establish this new TPEAPA, we are proposing to amend Sec.  
413.235 by splitting current paragraph (b) into paragraphs (b)(1) and 
(2). Paragraph (b)(1) would set forth the established age and modality 
of treatment case mix adjustment methodology as currently stated in 
paragraph (b). Paragraph (b)(2) would state that beginning January 1, 
2024, we would provide a per-treatment transitional add-on payment 
adjustment of 30 percent of the per treatment payment amount under 
Sec.  413.230 for renal dialysis services furnished to Pediatric ESRD 
Patients during calendar years 2024, 2025, and 2026. We are also 
proposing to revise the current language of Sec.  413.235(b) to use the 
term ``Pediatric ESRD Patients,'' which is defined at Sec.  413.171, to 
improve clarity for this section.
(5) Costs and Benefits for a Proposed Transitional Pediatric ESRD Add-
On Payment Adjustment (TPEAPA)
    We believe that CMS could better align the resource use of 
pediatric ESRD renal dialysis services with payment. Our analysis using 
the methodology outlined above has found that Pediatric ESRD Patients 
receiving renal dialysis services have an estimated 40 percent higher 
costs than adult patients and that the current payment adjusters 
account for 10 percent higher costs. Implementing a transitional 30 
percent add-on payment adjustment for renal dialysis services furnished 
to Pediatric ESRD Patients would improve payment equity for these 
patients by increasing payments to more closely align with the 
estimated costs of treatment. A 30 percent increase in ESRD PPS 
payments for pediatric ESRD renal dialysis services would represent 
approximately $80 to $100 per pediatric ESRD dialysis treatment, 
although the exact magnitude of the increase would depend on age, 
modality and the wage index of the area. This payment increase would 
have beneficial health equity impacts on this population by improving 
access to care and quality of care. Some ESRD facilities may not be 
able to absorb the additional expense of the Pediatric ESRD Patient 
population. Patients may need to travel to a limited number of 
primarily hospital-based ESRD facilities where pediatric ESRD dialysis 
is performed. As a result, this population may be underserved and 
disadvantaged with respect to access to ESRD care. Additional payment 
to those ESRD facilities treating Pediatric ESRD Patients would thereby 
benefit this potentially underserved and disadvantaged population of 
Pediatric ESRD patients. Additionally, this would have a beneficial 
financial impact on the ESRD facilities, both pediatric and non-
pediatric, that serve this pediatric population.
    We are proposing that this payment adjustment be budget neutral, 
which would lead to an estimated decrease of $0.12 to the ESRD PPS base 
rate, corresponding to a budget neutrality factor of 0.99954. This 
relatively small adjustment would represent less than a twentieth of a 
percent of the total ESRD PPS base rate. However, we recognize that any 
decrease in the base rate would represent a monetary loss to ESRD 
facilities. As stated above, our analysis indicates that this proposed 
transfer would be reasonable given the likelihood that the methodology 
used in the case-mix adjusters attributed some pediatric costs to the 
general population. However, should future analysis of the stratified 
pediatric cost data indicate that pediatric ESRD renal dialysis 
services costs are less than 40 percent higher than adult costs, this 
proposed budget neutral decrease (if finalized as proposed) would mean 
that the treatments for adult patients with ESRD were slightly 
underpaid during this proposed 3-year period. In either case there 
would be a risk of underpayment for one group of patients. We believe 
that using the mean estimate of the analysis would provide us with the 
best approach for achieving payment accuracy while we collect 
additional data. Additionally, the health equity implications of 
potentially underpaying for Pediatric ESRD Patients receiving dialysis 
by 20 percent would be significantly higher than the implications of 
potentially underpaying for adult patients by a less than 0.1 percent. 
In CY 2021 there were 116 ESRD facilities that furnished more than 2 
percent of their dialysis treatments to Pediatric ESRD Patients, out of 
7882 total ESRD facilities. These ESRD facilities are a relatively 
small group, but they are critical for the care of Pediatric ESRD 
Patients. For these reasons, we believe that the expected benefits for 
the proposed TPEAPA would outweigh the costs.
(6) Request for Comments on This Proposal
    We believe that providing this proposed 30 percent TPEAPA for 
calendar years 2024, 2025, and 2026 would be the best approach for 
improving payment accuracy until more precise data is available. 
However, we acknowledge that in any case there is a risk of making 
payments which are higher or lower than appropriate. We are seeking 
comment on this proposal for an additional 30 percent payment 
adjustment for renal dialysis services furnished to Pediatric ESRD 
Patients for 3 calendar years, effective January 1, 2024, and on any 
alternative add-on payment adjustment amounts, including the 10 percent 
payment adjustment discussed earlier in this section of the proposed 
rule.
h. Proposed Reporting Policy for Unused and Discarded Amounts of Renal 
Dialysis Drugs and Biological Products Paid for Under the ESRD PPS
(1) Background
    As discussed in the CY 2023 PFS final rule (87 FR 69710), many 
drugs and biological products that are payable under Medicare Part B 
are dosed in a variable manner such that the entire amount identified 
on the vial or package is not administered to the patient. For example, 
many drugs are dosed based on the patient's body weight or body surface 
area (BSA). Often, these drugs are available only in single-dose 
containers. As stated in U.S. Food and Drug Administration (FDA) 
guidance for industry,\22\ a single-dose container is designed for use 
with a single patient as a single injection or infusion. The labeling 
for a drug packaged in a single-dose container typically includes 
statements instructing users to discard unused portions. When the 
labeling instructs a health care provider to discard the amount of drug 
that was unused (that is, the discarded amount) from a single-dose 
container or other single-use package of a drug after administering a 
dose to a Medicare beneficiary, the program provides payment for the 
unused and discarded amount, as well as the dose administered, up to 
the amount of the drug indicated on the vial or package labeling. On a 
Medicare Part B claim, the JW modifier (drug amount discarded/not 
administered to any patient) is a Healthcare Common Procedure Coding 
System (HCPCS) Level II modifier used to report the amount of a drug 
that is discarded and eligible for payment.
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    \22\ https://www.fda.gov/media/117883/download.
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    Beginning on January 1, 2017, CMS revised the Medicare Part B JW 
modifier policy to require the uniform use of the modifier for all 
claims for separately payable drugs with discarded drug amounts from 
single-dose containers or single-use packages payable under Part B, in 
order to more effectively identify and monitor billing and payment for

[[Page 42453]]

discarded amounts of drugs.23 24 The policy does not apply 
to drugs that are not separately payable, such as packaged hospital 
outpatient prospective payment system (OPPS) drugs or those 
administered in federally qualified health centers (FQHCs) or rural 
health clinics (RHCs).
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    \23\ CR6603: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R3538CP.pdf.
    \24\ MLN Matters[supreg] Number MM9603: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9603.pdf.
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    In the CY 2023 PFS final rule (87 FR 69718 through 69719), we 
codified our existing policy as discussed in the prior paragraph in 
Chapter 17 of the Medicare Claims Processing Manual, and required that 
billing providers report the JW modifier for all separately payable 
drugs with discarded drug amounts from single-dose containers or 
single-use packages payable under Part B, beginning January 1, 2023. 
These changes were promulgated in connection with the implementation of 
the discarded drug refund program under section 90004 of the 
Infrastructure Investment and Jobs Act (Pub. L. 117-9, November 15, 
2021). In that same CY 2023 PFS final rule (87 FR 69722), we responded 
to commenters who requested we exempt drugs paid for under the ESRD PPS 
bundled payment from the discarded drug refund policy. One commenter 
expressed concern regarding how implementation of the discarded drug 
refund might inadvertently impact ESRD products, including those used 
by home dialysis patients (for example, Extraneal, a peritoneal 
dialysis solution). In response to those comments, we clarified that 
units for drugs that are packaged under the Medicare ESRD PPS were not 
subject to the JW modifier policy or the discarded drug refund.
    In the same CY 2023 PFS final rule, CMS also finalized a proposal 
to require billing providers to report the JZ modifier for all such 
drugs with no discarded drug amounts, beginning no later than July 1, 
2023. Specifically, as discussed in the CY 2023 PFS proposed rule (87 
FR 46058), we proposed to require the use of a separate modifier, the 
JZ modifier, to attest that there were no discarded amounts. We stated 
that to align with the JW modifier policy, the JZ modifier would be 
required when there are no discarded amounts from single-dose 
containers or single-use packages payable under Part B for which the JW 
modifier would be required if there were discarded amounts. Table 9 
below provides additional information about these modifiers.
[GRAPHIC] [TIFF OMITTED] TP30JN23.009

    We explained that on all claims for single-dose containers or 
single-use packages payable under Part B, either the JW modifier would 
be used (on a separate line) to identify any discarded amounts or the 
JZ modifier (on the claim line with the administered amount) would be 
present to attest that there were no discarded amounts. We noted that 
we believed the JZ modifier requirement would not increase burden on 
the provider, because under the current JW modifier policy, the 
provider already needs to determine whether or not there are any 
discarded units from a single-dose container or single-use package, 
record discarded amounts in the patient medical record, and specify 
administered and discarded amounts on the claim form. We finalized the 
JZ modifier requirement in the CY 2023 PFS final rule. Lastly, we noted 
in the CY 2023 PFS final rule that we would begin claims edits for both 
the JW and JZ modifier beginning October 1, 2023 (87 FR 69179). 
Additional details can be found in Chapter 17 of the Medicare Claims 
Processing Manual and the JW/JZ modifier frequently asked questions 
(FAQ) document.\25\
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    \25\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/JW-Modifier-FAQs.pdf.
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(2) Current Reporting of the JW Modifier Under the ESRD PPS
    As discussed in the previous section, the Medicare Part B JW 
modifier policy generally does not apply to drugs that are not 
separately payable. The ESRD PPS statute generally requires a single 
bundled payment for renal dialysis services. Specifically, section 
1881(b)(14)(A)(i) 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. The only exception is for oral-only drugs, as defined at 
Sec.  413.234(a), which are currently paid separately under Medicare 
Part D. 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 drugs and biological products cannot be made under 
the ESRD PPS bundled payment prior to January 1, 2025. We note that 
although the ESRD PPS includes certain add-on payment adjustments such 
as the TDAPA and TPNIES, these are adjustments to the ESRD PPS base 
rate and therefore part of the single payment made under the ESRD PPS; 
these payment adjustments are not separate payments. For example, as 
described in our TDAPA implementation guidance issued August 4, 2017, 
and updated January 10, 2018, available on the CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2018Downloads/R1999OTN.pdf, the methodology used to calculate the per 
treatment payment amount incorporates the cost of the drugs that are 
paid for using the TDAPA.
    Although renal dialysis drugs and biological products paid for 
under the ESRD PPS are not considered ``separately billable'' and are 
not subject to the general Part B JW modifier policy discussed in the 
prior paragraph, CMS has previously issued guidance on the use of the 
JW modifier on ESRD PPS claims for certain circumstances. Chapter 8, 
section 60.4.5.1 of the

[[Page 42454]]

Medicare Claims Processing Manual pertains to self-administered 
supplies of ESAs.\26\ Under current guidance, when billing for 
discarded amounts of drugs in accordance with the policy in chapter 17 
of this manual, section 40.1, the provider must bill for discarded 
amounts on a separate line item with the modifier JW. The line item 
date of service should be the date of the last covered administration 
according to the plan of care or, if the patient dies, use the date of 
death. More specifically, in Chapter 17, section 40.1 of the Medicare 
Claims Processing Manual,\27\ we state that multi-use vials are not 
subject to payment for discarded amounts of drug or biological 
products, with the exception of self-administered ESAs by Method I home 
dialysis patients, for whom an ESRD facility furnishes and bills for 
renal dialysis services.\28\ Current guidance in Chapter 17, section 
40.1 of the Medicare Claims Processing Manual states that the ESRD 
facility must bill the program using the JW modifier for the amount of 
ESAs appropriately discarded if the home dialysis patient must discard 
a portion of the ESA supply due to expiration of a vial, because of 
interruption in the patient's plan of care, or unused ESAs on hand 
after a patient's death. We note that separate payment is not made for 
ESAs under the ESRD PPS; however, ESAs are eligible for outlier 
payments when the criteria in Sec.  413.237 are met.
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    \26\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c08.pdf.
    \27\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c17.pdf.
    \28\ Prior to the ESRD PPS, a Medicare ESRD beneficiary could 
elect to obtain home dialysis equipment and supplies from a supplier 
that was not a Medicare approved dialysis facility. This was 
referred to as Method II home dialysis. In the CY 2011 ESRD PPS 
final rule (75 FR 49061), we stated that all costs associated with 
home dialysis services (both Method I and Method II) are included in 
the composite portion of the two equation model, and we stated that 
effective January 1, 2011, all home ESRD patients would be 
considered Method I home patients and all Medicare payments for home 
dialysis services would be made to the ESRD facility.
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    Most recently, the March 15, 2022 Change Request \29\ that 
established the TDAPA for Korsuva\TM\ (difelikefalin), instructs 
facilities to use the JW modifier to report the amount of difelikefalin 
that is discarded and eligible for payment under the ESRD PPS. We note 
that based on the latest available data, nearly 40 percent of the TDAPA 
expenditures for those drugs that were reported in 2022 represented 
discarded amounts reported using the JW modifier. This represents 
approximately $1.3 million in TDAPA expenditures for discarded amounts 
of difelikefalin. Overall, our analysis of Medicare claims data from 
2017 to 2021 finds that approximately 2 percent of ESRD PPS claims 
indicate discarded or unused portions of drugs or biological products 
through use of the JW modifier. From 2017 to 2021, we estimate that the 
total amount of unused product billed from 2017 to 2021 and paid for 
under the ESRD PPS is approximately $22 million.
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    \29\ https://www.cms.gov/files/document/r11295CP.pdf.
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    Under our current policy, we do not reduce the single payment under 
the ESRD PPS for any discarded amounts of renal dialysis drugs or 
biological products that are reported with the JW modifier. 
Furthermore, when calculating any adjustments to the ESRD PPS base rate 
for the TDAPA or outlier payments, we include all units of renal 
dialysis drugs and biological products billed on the claim for which an 
adjustment is made, including any discarded amounts of such drugs and 
biological products. Additionally, we have previously established in 
the CY 2012 ESRD PPS final rule (76 FR 70243 through 70244) that ESRD 
facilities may only report units and charges for drugs and biological 
products actually purchased and may not bill for overfill units of 
drugs and biological products which exceed the amount indicated on the 
vial or package labeling. Additionally, we explained that consistent 
with prior rulemaking, under our authority in section 
1881(b)(14)(D)(ii) of the Act, we were adopting the average sales price 
(ASP) policy on overfill for purposes of calculating the outlier 
payment. That is, we adopted a policy to exclude overfill units of 
drugs and biological products which exceed the amount indicated on the 
vial or package labeling from consideration for the purposes of 
calculating outlier payments. We stated we believe the use of the ASP 
policy for purposes of calculating the outlier payment is appropriate 
because we believe overfill does not represent a cost to the ESRD 
facility; thus, overfill should not factor into our determination of 
outlier payments.
    In summary, our longstanding policy for payment under the ESRD PPS, 
including the calculation of the TDAPA and outlier payment adjustments, 
includes payment for units of renal dialysis drugs and biological 
products billed with the JW modifier, but does not allow payment for 
overfill units. That is, the current ESRD PPS payment policy is 
consistent with the broader Medicare Part B policy to pay for the 
unused and discarded amount, as well as the dose administered, up to 
the amount of the drug indicated on the vial or package labeling.
(3) Proposed ESRD PPS Policy for Reporting of Discarded Amounts of 
Renal Dialysis Drugs and Biological Products
    As discussed in section II.B.1.j of this proposed rule, we are 
undertaking analysis of ESRD PPS claims and cost report data in order 
to better understand the patient-specific costs associated with 
furnishing renal dialysis services to Medicare beneficiaries. We 
believe that in order to most appropriately consider potential 
refinements to the ESRD PPS case-mix adjustments in the future, it is 
important to understand and have consistent data about the costs 
associated with the quantities of the renal dialysis drugs and 
biological products that are actually used by ESRD beneficiaries. This 
is consistent with our longstanding policy principles, which are 
reflected by our policy for billing for unused amounts of renal 
dialysis drugs and biological products under the ESRD PPS. In the CY 
2016 ESRD PPS final rule (80 FR 69033), we discussed our existing 
policy since the inception of the ESRD PPS that all renal dialysis 
service drugs and biological products prescribed for ESRD patients, 
including the oral forms of renal dialysis injectable drugs, must be 
reported by ESRD facilities, and the units reported on the monthly 
claim must reflect the amount expected to be taken during that month. 
We stated that ESRD facilities should use the best information they 
have in determining the amount expected to be taken in a given month, 
including fill information from the pharmacy and the patient's plan of 
care. We noted that any billing system changes to effectuate this 
change needed to be made as soon as possible, as this requirement had 
been in effect since the ESRD PPS began in 2011. This policy is also 
discussed in the Medicare Benefits Policy Manual, Pub. 100-02, Chapter 
11, section 20.3.C.
    Consistent with our longstanding billing policies for unused 
amounts of drugs and biological products and consistent with the 
requirements for the uniform use of the JW modifier for all claims for 
separately payable drugs under Part B since 2017, in order to more 
effectively identify and monitor billing and payment for discarded 
amounts of drugs, we are proposing to require ESRD facilities to report 
accurate and consistent data about discarded amounts of single-dose 
renal dialysis drugs and biological products paid under the ESRD PPS. 
Further, section 1881(b)(2)(B) of the Act requires the Secretary to 
prescribe in regulations

[[Page 42455]]

any methods and procedures to determine the costs incurred by ESRD 
facilities in furnishing renal dialysis services to beneficiaries with 
ESRD, and to determine payment amounts for part B services furnished by 
such ESRD facilities.
    Under our longstanding policy, payment is made under the ESRD PPS 
bundled payment for discarded amounts of renal dialysis drugs and 
biological products, and such discarded amounts are included in the 
calculation of the ESRD PPS base rate and any applicable adjustments, 
such as the TDAPA and the outlier adjustment. Therefore, consistent 
with the current JW and JZ reporting requirements that were finalized 
in the CY 2023 PFS final rule for separately payable Part B drugs, we 
are proposing to require that beginning no later than January 1, 2024, 
ESRD facilities must report information on ESRD PPS claims about the 
total number of billing units of any discarded amount of a renal 
dialysis drug or biological product from a single-dose container or 
single-use package that is paid for under the ESRD PPS, using the JW 
modifier (or any successor modifier that includes the same data). We 
are also proposing that ESRD facilities must document any discarded 
amounts in the beneficiary's medical record. Additionally, we are 
proposing to require ESRD facilities to report the JZ modifier for all 
such renal dialysis drugs and biological products with no discarded 
amounts, beginning no later than January 1, 2024. We are proposing to 
codify these reporting requirements in regulation at Sec.  
413.198(b)(5) and (6).
    Under this proposal, the amount of a renal dialysis drug or 
biological product from a single-dose container or single-use package 
that is administered would be billed on one line (reflected as billing 
units in the unit field) and any discarded amounts would be billed on a 
separate line with the JW modifier (reflected as billing units in the 
unit field). If a renal dialysis drug or biological product from a 
single-dose container or single-use package is administered and there 
are no discarded amounts, then we are proposing that a single line 
would be billed on the claim form with the JZ modifier and the billing 
units in the unit field. Therefore, on all claims for renal dialysis 
drugs and biological products from single-dose containers or single-use 
packages payable under the ESRD PPS, we are proposing that either the 
JW modifier would be used (on a separate line) to identify any 
discarded amounts or the JZ modifier (on the claim line with the 
administered amount) would be present to attest that there were no 
discarded amounts. We are proposing that claims for renal dialysis 
drugs and biological products from single-dose containers or single-use 
packages that do not report either the JW or JZ modifier may be 
returned as un-processable until claims are properly resubmitted.\30\ 
If this proposal is finalized, CMS would publish information about 
which HCPCS codes would be identified as single-dose containers or 
single-use package renal dialysis drugs and biological products subject 
to required reporting of the JW or JZ modifier. We also would plan to 
issue guidance regarding additional operational considerations and 
billing instructions specific to the proposed reporting requirements 
for these products, if finalized.
---------------------------------------------------------------------------

    \30\ Under the basic requirements for all claims at Sec.  
424.32(a)(1), a claim must be filed with the appropriate 
intermediary or carrier on a form prescribed by CMS in accordance 
with CMS instructions. Chapter 1 of the Medicare Claims Processing 
Manual, section 70.2.3.1 states that submissions that are found to 
be incomplete or invalid are returned to the provider (RTP).
---------------------------------------------------------------------------

    We are clarifying that, under our proposal, ESRD facilities would 
not be required to document in the beneficiary's medical record when 
there are no discarded amounts. Lastly, we are reiterating that, as 
discussed in the CY 2023 PFS final rule (87 FR 69722), units for renal 
dialysis drugs and biological products that are bundled under the 
Medicare ESRD PPS are not subject to the Medicare Part B discarded drug 
refund program and would continue to be exempted from the Medicare Part 
B discarded drug refund. We are also clarifying that for any oral-only 
drugs, as defined in Sec.  413.234(a), to the extent that any such 
drugs are produced in single-dose containers or single-use packaging, 
this proposed reporting requirement would not apply until such drugs 
are paid for under the ESRD PPS.
    We believe that this proposed reporting requirement would enable 
CMS to obtain more reliable information about the extent to which the 
costs of providing renal dialysis drugs and biological products 
represent amounts that beneficiaries use as well as amounts that are 
discarded. We believe this is particularly important because under 
Medicare Part B, beneficiaries are responsible for paying a 20 percent 
coinsurance. As noted above, nearly 40 percent of TDAPA expenditures in 
CY 2022 represented discarded amounts of renal dialysis drugs and 
biological products. Medicare beneficiaries, therefore, paid 
approximately $260,000 in copayments for these discarded amounts. While 
this currently represents a small amount of payments overall, the cost 
for discarded renal dialysis drugs and biological products is borne by 
a very small population of beneficiaries. It is important for CMS to 
understand the full scope of expenditures, including expenditures that 
may be incurred by beneficiaries, for discarded amounts of renal 
dialysis drugs and biological products in the future, which may be more 
expensive or more widely used than the current drug that is being paid 
for using the TDAPA under the ESRD PPS. Thus, we are not proposing in 
this rule to alter payments to ESRD facilities based on the amounts of 
discarded renal dialysis drugs and biological products reported, but 
data collected through adoption of the JW and JZ modifier reporting 
requirements discussed in this section may inform future payment 
policies, which would be proposed through future notice and comment 
rulemaking if appropriate.
    Based on our analysis of ESRD PPS claims, as well as the billing 
guidance in sections 8 and 17 of the Medicare Claims Processing Manual, 
we believe the proposed JW modifier requirement reflects current 
practices for ESRD facilities, and would not significantly increase 
burden for ESRD facilities. Additionally, we believe the proposed JZ 
modifier requirement would not increase burden on ESRD facilities, 
because under the current guidance provided regarding use of the JW 
modifier, the ESRD facility should already have processes in place in 
order to determine, in the case of certain drugs and biological 
products, whether or not there are any discarded units from a single-
dose container or single-use package, record discarded amounts in the 
patient medical record, and specify administered and discarded amounts 
on the claim form. Furthermore, we note that while renal dialysis drugs 
and biological products that are paid under the ESRD PPS are not 
considered separately payable, ESRD facilities are permitted to bill 
and receive separate payment using the AY modifier for drugs and 
biological products that are not related to the treatment of ESRD. 
Although we have noted that renal dialysis drugs and biological 
products paid under the ESRD PPS are not subject to the Medicare Part B 
drug refund program or the current JW or JZ reporting requirements, any 
separately payable drugs or biological products that ESRD facilities 
bill for using the AY modifier would be subject to such policies under 
Medicare Part B. Therefore, we believe that most ESRD facilities should 
already be reporting the JW and JZ modifiers in

[[Page 42456]]

such circumstances, and would reasonably be able to report these 
modifiers for renal dialysis drugs and biological products as well. We 
welcome comments on this assumption and on these proposed JW and JZ 
reporting requirements for the ESRD PPS.
i. Proposed New Add-On Payment Adjustment for Certain New Renal 
Dialysis Drugs and Biological Products After the TDAPA Period Ends
(1) Background on the TDAPA
    Section 217(c) of PAMA required the Secretary to establish a 
process for including new injectable and intravenous (IV) products into 
the ESRD PPS bundled payment as part of the CY 2016 ESRD PPS 
rulemaking. Therefore, in the CY 2016 ESRD PPS final rule (80 FR 69013 
through 69027), we finalized a process based on our longstanding drug 
designation process that allowed us to include new injectable and 
intravenous products into the ESRD PPS bundled payment and, when 
appropriate, modify the ESRD PPS payment amount. We codified this 
process in our regulations at 42 CFR 413.234. We finalized that the 
process is dependent upon the ESRD PPS functional categories, 
consistent with the drug designation process we have followed since the 
implementation of the ESRD PPS in 2011. As we explained in the CY 2016 
ESRD PPS final rule (80 FR 69014), when we implemented the ESRD PPS, 
drugs and biological products were grouped into functional categories 
based on their action. This was done to add new drugs or biological 
products with the same functions to the ESRD PPS bundled payment as 
expeditiously as possible after the drugs are commercially available so 
beneficiaries have access to them. As we stated in the CY 2011 ESRD PPS 
final rule, we did not specify all the drugs and biological products 
within these categories, because we did not want to inadvertently 
exclude drugs that may be substitutes for drugs we identified, and we 
wanted the ability to reflect new drugs and biological products 
developed or changes in standards of practice (75 FR 49052).
    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 that if a new renal dialysis injectable 
or IV product falls within an existing functional category, the new 
injectable drug 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. We noted in 
that rule that the ESRD bundled market basket update is used to 
increase the ESRD PPS base rate annually and accounts for price changes 
of the drugs and biological products. We also finalized in the CY 2016 
ESRD PPS final rule that, if the new renal dialysis injectable or IV 
product does not fall within an existing 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 codified 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 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. The new injectable or IV product is not 
eligible as an outlier service during the TDAPA period. We established 
that following the TDAPA period, 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.
    In the 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, we revised the 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. In addition, we 
revised Sec.  413.234(b) and (c) to expand the TDAPA to all new renal 
dialysis drugs and biological products, rather than just those in new 
ESRD PPS functional categories. In the CY 2020 ESRD PPS final rule, we 
revised Sec.  413.234(b) and added paragraph (e) to exclude from TDAPA 
eligibility generic drugs approved by FDA under section 505(j) of the 
Federal Food, Drug, and Cosmetic Act and drugs for which the new drug 
application 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, effective 
January 1, 2020.
    Under our current TDAPA policy at Sec.  413.234(c), a new renal 
dialysis drug or biological product that falls within an existing ESRD 
PPS functional category is considered included in the ESRD PPS base 
rate and is paid the TDAPA for 2 years. After the TDAPA period, the 
ESRD PPS base rate will not be modified. If the new renal dialysis drug 
or biological product does not fall within an existing ESRD PPS 
functional category, it is not considered included in the ESRD PPS base 
rate, and it will be paid the TDAPA until sufficient claims data for 
rate setting analysis is available, but not for less than 2 years. 
After the TDAPA period, the ESRD PPS base rate will be modified, if 
appropriate, to account for the new renal dialysis drug or biological 
product in the ESRD PPS bundled payment.
    As discussed in the CY 2019 and CY 2020 ESRD PPS final rules, for 
new renal dialysis drugs and biological products that fall into an 
existing ESRD PPS functional category, the TDAPA helps ESRD facilities 
to incorporate new drugs and biological products and make appropriate 
changes in their businesses to adopt such products, provides additional 
payments for such associated costs, and promotes competition among the 
products within the ESRD PPS functional categories, while focusing 
Medicare resources on products that are innovative (83 FR 56935; 84 FR 
60654). For new renal dialysis drugs and biological products that do 
not fall within an existing ESRD PPS functional category, the TDAPA is 
a potential pathway toward a potential ESRD PPS base rate modification 
(83 FR 56935). For the complete history of the TDAPA policy, including 
the pricing methodology, please see the CY 2016 ESRD PPS final rule (80 
FR 69023 through 69024), CY 2019 ESRD PPS final rule (83 FR 56932 
through 56948), and CY 2020 ESRD PPS final rule (84 FR 60653 through 
60681).
(2) Request for Information in the CY 2023 ESRD PPS Proposed Rule
    In the CY 2023 ESRD PPS proposed rule (87 FR 38522 through 38523), 
we summarized the concerns of interested parties and issued a request 
for information about methods that could be used to develop an add-on 
payment adjustment for certain new renal dialysis drugs and biological 
products after the end of the TDAPA. We explained that since 2019, 
dialysis associations and pharmaceutical

[[Page 42457]]

representatives have expressed concerns to CMS about payment following 
the TDAPA period for new renal dialysis drugs and biological products 
that are paid for using the TDAPA. We noted that these interested 
parties have asserted that unless money is added to the ESRD PPS base 
rate for these drugs and biological products, similar to what occurred 
with calcimimetics (85 FR 71406 through 71410), then it is unlikely 
that ESRD facilities would be able to sustain the expense of these 
drugs and biological products when the TDAPA period ends. Further, 
these interested parties cautioned that uncertainty about payment could 
affect ESRD facility adoption of these drugs and biological products 
during the TDAPA period. We noted that to date, calcimimetics are the 
only renal dialysis drugs or biological products that have been paid 
for using the TDAPA and incorporated into the ESRD PPS bundled payment 
following the TDAPA payment period. We stated that there have been no 
other renal dialysis drugs or biological products that have completed 
their TDAPA payment period, and as a result, CMS does not yet have data 
on other drugs or biological products in order to evaluate the specific 
risks and access challenges that interested parties have raised.
    We also discussed that, as mentioned in the CY 2019 (83 FR 56941) 
and CY 2020 (84 FR 60672 and 60693) ESRD PPS final rules, many 
commenters have suggested a rate-setting exercise at the end of the 
TDAPA period for all new renal dialysis drugs and biological products. 
We responded to those comments by noting that we do not believe adding 
dollars to the ESRD PPS base rate would be appropriate for new drugs 
that fall into the ESRD PPS functional categories, given that the 
purpose of the TDAPA for these drugs is to help ESRD facilities 
incorporate new drugs and biological products and make appropriate 
changes in their businesses to adopt such products, provide additional 
payments for such associated costs, and promote competition among the 
products within the ESRD PPS functional categories. In addition, we 
explained that the ESRD PPS base rate already includes money for renal 
dialysis drugs and biological products that fall within an existing 
ESRD PPS functional category. We stated that under a PPS, Medicare 
makes payments based on a predetermined, fixed amount that reflects the 
average patient, and that there would be patients whose treatment costs 
at an ESRD facility would be more or less than the ESRD PPS payment 
amount. We noted that a central objective of the ESRD PPS and of 
prospective payment systems in general is for ESRD facilities to be 
efficient in their resource use.
    We also noted that price changes to the ESRD PPS bundled payment 
are updated annually by the ESRDB market basket update, which includes 
a pharmaceutical cost category weight. In addition, we explained that 
our analysis of renal dialysis drugs and biological products paid for 
under the ESRD PPS has found costs and utilization to have decreased 
over time for some high volume formerly separately billable renal 
dialysis drugs, relative to overall market basket growth. Therefore, we 
stated that we believe that any potential methodology for an add-on 
payment adjustment in these circumstances should adapt to changes in 
price and utilization over time.
    We noted that section 1881(b)(14)(D)(iv) of the Act provides that 
the ESRD PPS may include such other payment adjustments as the 
Secretary determines appropriate, such as a payment adjustment--(I) for 
pediatric providers of services and renal dialysis facilities; (II) by 
a geographic index, such as the index referred to in section 
1881(b)(12)(D), as the Secretary determines to be appropriate; and 
(III) for providers of services or renal dialysis facilities located in 
rural areas. Regarding the patient access concerns that we discussed in 
the CY 2023 ESRD PPS proposed rule, we stated that we were considering 
whether it would be appropriate to establish an add-on payment 
adjustment for certain renal dialysis drugs and biological products in 
existing ESRD PPS functional categories after their TDAPA period ends. 
We noted that any add-on payment adjustment would be subject to the 
Medicare Part B beneficiary co-insurance payment under ESRD PPS.
    In the CY 2023 ESRD PPS proposed rule, we presented four potential 
methods that we were considering, which we noted could be used to 
develop an add-on payment adjustment for these drugs and biological 
products. We noted that the methods presented differed in terms of 
which formerly separately billable renal dialysis drugs and biological 
products would be considered for a potential add-on payment adjustment. 
We further noted that under these potential options, we would apply a 
reconciliation methodology only when an add-on payment adjustment would 
align resource use with payment for a renal dialysis drug or biological 
product in an existing ESRD PPS functional category. The four options 
are summarized as follows:
     Reconcile the average expenditure per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in the expenditure per treatment across all 
other formerly separately billable renal dialysis drugs and biological 
products. For example, if the reduction in the cost of all formerly 
separately billable renal dialysis drugs and biological products per 
treatment excluding the renal dialysis drug or biological product that 
was paid for using the TDAPA is $5 and the cost per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA is $10, the add-on payment adjustment per treatment would be $10 
minus $5, which is $5. The reductions in formerly separately billable 
renal dialysis drug and biological products expenditures per treatment 
would be calculated by using the difference between these expenditures 
in the most recent year with claims data available and these 
expenditures in the current base year for the ESRDB market basket, 
which is CY 2020. We provided the following example: If the rule year 
for which we are calculating the add-on payment adjustment is CY 2023 
and the base year for the ESRDB market basket is CY 2020, the reduction 
in formerly separately billable renal dialysis drugs and biological 
products expenditures would be the difference between these 
expenditures in CY 2021 (the year with the most recent claims data) and 
those in CY 2020.
     Reconcile the average expenditure per treatment for the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in expenditures for other formerly separately 
billable renal dialysis drugs or biological products, where such 
reduction can be empirically attributed to the renal dialysis drug or 
biological product that was paid for using the TDAPA. For example, if 
the utilization of the renal dialysis drug or biological product that 
was paid for using the TDAPA was found to be statistically associated 
with reduction in expenditure of one drug in an ESRD PPS functional 
category amounting to $1 per treatment, and the cost per treatment of 
the renal dialysis drug or biological product that was paid for using 
the TDAPA is $10, the add-on payment adjustment per treatment would be 
$10 minus $1, which is $9.
     Reconcile the average expenditure per treatment for the 
renal dialysis drug or biological product that was paid for using the 
TDAPA with any reduction in expenditures for other formerly separately 
billable renal dialysis drugs that fall into one or more ESRD PPS

[[Page 42458]]

functional categories, where such expenditure reduction is data-driven, 
based on end action effect, to be attributable to the renal dialysis 
drug or biological product that was paid for using the TDAPA. Such a 
data-driven determination would be made by CMS. For example, if the 
cost per treatment of the renal dialysis drug or biological product 
that was paid for using the TDAPA is $10 and the reduction in the 
expenditure for other clinically related formerly separately billable 
renal dialysis drugs is $0.50 per treatment, the add-on payment 
adjustment would be $10 minus $0.50, which is $9.50.
     Only use the average expenditure per treatment of the 
renal dialysis drug or biological product that was paid for using the 
TDAPA. For example, if the per treatment cost of the renal dialysis 
drug or biological product that was paid for using the TDAPA is $10, 
this would be the amount of the add-on payment adjustment.
    Following the discussion in the CY 2023 ESRD PPS proposed rule 
about these potential methodologies, we issued a request for 
information within that proposed rule (87 FR 38523) to seek feedback 
from the public on the following questions.
     Is an add-on payment adjustment for certain renal dialysis 
drugs and biological products in existing ESRD PPS functional 
categories after the TDAPA period ends needed? If so, why? What 
criteria should CMS establish to determine which renal dialysis drugs 
or biological products would be included in the calculation for an add-
on payment adjustment after the TDAPA period ends?
     If an add-on payment adjustment for certain renal dialysis 
drugs and biological products in existing ESRD PPS functional 
categories after the TDAPA period is needed, are the methods discussed 
in section II.D.4 of the CY 2023 ESRD PPS proposed rule sufficient to 
address the add-on payment adjustment?
    ++ Which method would be most appropriate?
    ++ Are there changes to the methodologies that CMS should consider 
to improve our ability to align payment for renal dialysis services 
with resource utilization? Please provide as much detail as possible.
    ++ Are there other methodologies that CMS should consider? Please 
provide as much detail as possible.
    We noted that while we would not be responding to specific comments 
submitted in response to this RFI, we intended to use this input to 
inform future policy development. We stated that any potential payment 
policies related to this RFI would be proposed through a separate 
notice and comment rulemaking.
    We provided a high-level summary of responses to this RFI in the CY 
2023 ESRD PPS final rule (87 FR 67219 through 67220) and noted that we 
would publish more detailed information about the commenters' 
recommendations in a future posting on the CMS website located at the 
following link: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/ESRDpayment/Educational_Resources. We noted that we received 27 
public comments regarding our RFI, including from large, small, and 
non-profit dialysis organizations; an advocacy organization; a 
coalition of dialysis organizations; a large, non-profit health system; 
and MedPAC.
    In the CY 2023 ESRD PPS final rule, we stated that most commenters 
expressed their belief that an add-on payment adjustment of this nature 
is necessary to support the adoption of new renal dialysis drugs and 
biological products, and that most commenters stated that they 
supported CMS allowing all new renal dialysis drugs and biological 
products to be eligible to receive an add-on payment adjustment after 
the TDAPA period ends. However, we noted that MedPAC opposed this type 
of add-on payment adjustment by stating that it would undermine 
competition with existing drugs in the ESRD PPS bundled payment and 
encourage higher launch prices. We also noted that MedPAC recommended 
that CMS limit the add-on payment adjustment to new renal dialysis 
drugs and biological products that show a substantial clinical 
improvement compared with existing products reflected in the ESRD PPS 
bundled payment.
    We further noted in the CY 2023 ESRD PPS final rule that several 
commenters stated they supported reconciling the expenditure of the new 
renal dialysis drug or biological product with any reduction in 
expenditures for other formerly separately billable renal dialysis 
drugs that are clinically or statistically related to the introduction 
of the new renal dialysis drug in the bundle. Several commenters 
expressed their belief that the FDA-approved label should be used to 
determine the primary indication and clinical association, rather than 
end-action effect. MedPAC expressed opposition to calculating any add-
on payment adjustment for new renal dialysis drugs and biological 
products in existing ESRD PPS functional categories after the TDAPA 
period ends, but noted that if an add-on payment adjustment were 
applied, it would be appropriate to use an offset, similar to the 
approach used with the TPNIES, to avoid duplicative payment for renal 
dialysis services already included in the ESRD PPS base rate.
(3) Proposed Add-On Payment Adjustment for Certain New Renal Dialysis 
Drugs and Biological Products After the TDAPA Period Ends
    As discussed previously, section 1881(b)(14)(D)(iv) of the Act 
provides that the ESRD PPS may include such other payment adjustments 
as the Secretary determines appropriate. Based on the public comments 
received regarding the RFI in the CY 2023 ESRD PPS proposed rule,\31\ 
we believe it is appropriate to propose, beginning January 1, 2024, an 
add-on payment adjustment for new renal dialysis drugs and biological 
products in existing ESRD PPS functional categories after the end of 
the TDAPA period. We note that this proposed post-TDAPA payment 
adjustment would not apply to new renal dialysis drug or biological 
products used to treat or manage a condition for which there is not an 
ESRD PPS functional category, because we have already established a 
policy to modify the ESRD PPS base rate for such products, if 
appropriate, after the TDAPA period ends, to account for the products 
in the ESRD PPS bundled payment (Sec.  413.234(c)(2)(i)).
---------------------------------------------------------------------------

    \31\ https://www.cms.gov/files/document/cy-2023-esrd-pps-payment-after-tdapa-rfi-summary-comments.pdf.
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    We agree with commenters who expressed concerns that the ESRD PPS' 
current mechanisms may not fully account for the costs of these new 
drugs. Several commenters asserted that the outlier adjustment and the 
market basket updates cannot adequately account for these costs, and 
several organizations noted that if renal dialysis drugs and biological 
products with significant costs were adopted under the outlier policy, 
the threshold to qualify for outlier payments would increase 
dramatically, thus adversely affecting access to products traditionally 
eligible for the outlier payment adjustment. Commenters expressed that 
this increase in the outlier threshold may also raise health equity 
concerns because, as we noted in the CY 2023 ESRD PPS final rule (87 FR 
67170 through 67171), the outlier adjustment protects access for 
beneficiaries whose care is unusually costly. We recognize that if the 
outlier threshold were to increase significantly due to significant use 
of a new renal dialysis drug or biological product after the end of the

[[Page 42459]]

TDAPA, then ESRD facilities might be incentivized to avoid treating 
costlier beneficiaries. Additionally, several commenters raised 
concerns about the ability of the market basket to account for the cost 
of new renal dialysis drugs and biological products. These commenters 
referred to a Moran study \32\ suggesting that the drug proxies 
historically used in updating the ESRD PPS base rate have not 
adequately accounted for the costs of non-ESA drugs under existing 
functional categories. While we continue to believe that the market 
basket price proxies are the best available information for projecting 
the future costs of renal dialysis drugs and biological products, and 
that they provide an adequate mechanism for projecting future ESRD PPS 
cost growth, we recognize that there is additional uncertainty about 
future trends in the expenditures for new renal dialysis drugs and 
biological products, including trends in pricing and utilization of 
such drugs and any equal substitutes such as generic drugs.\33\ We 
believe these trends could be more effectively analyzed by collecting 
additional ESRD facility cost data following the 2-year TDAPA period. 
We recognize that although the TDAPA for drugs and biological products 
in existing ESRD PPS functional categories enables ESRD facilities to 
incorporate new renal dialysis drugs and biological products into their 
businesses, additional support may be needed to assure continued access 
to such drugs and biological products for Medicare beneficiaries and to 
support ESRD facilities' long-term planning and budgeting. We also 
recognize the importance of providing an appropriate pathway for ESRD 
facilities to incorporate new renal dialysis drugs and biological 
products into their business operations. In the CY 2019 ESRD PPS final 
rule in which we first established the 2-year TDAPA period for new 
renal dialysis drugs and biological products in an existing ESRD PPS 
functional category (83 FR 56934), we acknowledged that ESRD facilities 
have unique circumstances with regard to implementing new drugs and 
biological products into their standards of care. For example, we 
stated that when new drugs are introduced to the market, ESRD 
facilities need to analyze their budget and engage in contractual 
agreements to accommodate the new therapies in their care plans. We 
noted that newly launched drugs and biological products can be 
unpredictable with regard to their uptake and pricing, which makes 
these decisions challenging for ESRD facilities. Furthermore, we stated 
that practitioners should have the ability to evaluate the appropriate 
use of a new product and its effect on patient outcomes. We noted that 
we agreed this uptake period would be best supported by the TDAPA 
pathway because it would help ESRD facilities transition or test new 
drugs and biological products in their businesses under the ESRD PPS. 
We continue to believe that the 2-year TDAPA period is appropriate and 
achieves its stated goals. However, we also recognize that continuity 
and predictability is an integral part of ESRD facilities' ongoing 
business operations. We agree with commenters' concerns that a sudden 
decrease in payments after the end of the TDAPA for these products 
could result in a decrease in access for these new renal dialysis drugs 
and biological products. We are therefore proposing to establish a new 
transitional add-on payment adjustment that would provide an 
appropriate transition of the level of payment following the TDAPA 
period for these drugs. For ease of reference, we are proposing to 
refer to this proposed add-on payment adjustment as the post-TDAPA add-
on payment adjustment. Our goals for the post-TDAPA add-on payment 
adjustment are to ensure that in circumstances when the ESRD PPS base 
rate is not modified because a new renal dialysis drug or biological 
product is used to treat or manage a condition for which there is an 
ESRD PPS functional category and is therefore considered included in 
the ESRD PPS bundled payment, payment after the TDAPA is not a barrier 
to Medicare beneficiaries' access to such new products. We also want to 
support ESRD facilities' long-term planning with respect to continuing 
to budget and plan for new renal dialysis drugs and biological products 
that ESRD facilities have incorporated into their businesses during the 
TDAPA period. In addition, in accordance with the goals of prospective 
payment under the ESRD PPS, our goal for the post-TDAPA add-on payment 
adjustment is to incentivize ESRD facilities to be efficient in the use 
of resources.
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    \32\ Kidney Care Partners. August 4, 2022. Comment Letter. 
https://kidneycarepartners.org/wp-content/uploads/2022/08/KCP-PPS-Comment-Letter-Part-1-Final.pdf. Accessed May 16, 2023.
    \33\ https://www.fda.gov/drugs/frequently-asked-questions-popular-topics/generic-drugs-questions-answers.
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    We do not agree with MedPAC's statement that a post-TDAPA add-on 
payment adjustment would undermine competition with existing drugs in 
the ESRD PPS bundled payment and encourage higher launch prices. As 
discussed in the following section, we are proposing to apply the post-
TDAPA add-on payment adjustment to all ESRD PPS payments following the 
end of the TDAPA period and would not limit the adjustment to claims 
that include the new renal dialysis drug or biological product. We 
believe that this proposed methodology would appropriately align 
incentives for ESRD facilities and would support competition with 
existing drugs, because payment for an individual claim would not be 
dependent on individual utilization of the new renal dialysis drug or 
biological product. Thus, we anticipate that the proposed methodology 
would create incentives for ESRD facilities to efficiently allocate 
resources in a way that would be consistent with the principles of 
prospective payment. We note that when Erythropoietin (EPO) switched 
from being separately payable to being paid for under the ESRD PPS 
beginning in CY 2011, these incentives to efficiently allocate 
resources resulted in decreases in expenditures for these drugs while 
also providing increased payment to ESRD facilities that supported 
beneficiaries' access to the new renal dialysis drugs and biological 
products. Because of these incentives, which would encourage ESRD 
facilities to efficiently allocate resources, we anticipate that the 
proposed methodology would not encourage higher launch prices for new 
renal dialysis drugs and biological products, as manufacturers would 
need to price such drugs and biological products appropriately to 
compete with existing drugs and biological products included in the 
ESRD PPS bundled payment.
    We also do not agree with MedPAC's recommendation that CMS limit 
the post-TDAPA add-on payment adjustment to new renal dialysis drugs 
and biological products that show a substantial clinical improvement 
compared with existing products reflected in the ESRD PPS bundled 
payment. As stated previously, we recognize that continuity and 
predictability is integral to ESRD facilities' operations, and we do 
not believe that this principle applies only to drugs and biological 
products that show a substantial clinical improvement. As we explained 
in the CY 2023 ESRD PPS final rule (87 FR 67189), the intent of the 
ESRD PPS functional category framework is to be broad and to facilitate 
adding new drugs to the therapeutic armamentarium of the treating 
physician. As we further explained in the CY 2023 ESRD PPS final rule, 
the functional category structure helps to ensure the ESRD

[[Page 42460]]

patient has broad access to all renal dialysis service drugs, which is 
a distinct benefit to the patient. In addition, the structure of the 
functional categories helps to ensure the treating physician has a 
broad array of drugs to meet the specific, individual needs of each 
ESRD patient, including differing pharmaceutical profiles, 
comorbidities, contra-indications with other drugs the patient may be 
taking, and personal patient preference (87 FR 67189). We do not 
believe that limiting the post-TDAPA add-on payment adjustment based on 
CMS's determination of substantial clinical improvement would align 
with this stated intent of the ESRD PPS functional category framework 
to support broad access to all renal dialysis service drugs. We further 
note that the current TDAPA exclusion criteria under Sec.  413.234(e) 
consider FDA's determination of the drug's new drug application (NDA) 
type or approval under section 505(j) of the Federal Food, Drug, and 
Cosmetic Act, which is less subjective than a determination of 
substantial clinical improvement. Furthermore, we believe that our 
proposed methodology for the post-TDAPA add-on payment adjustment would 
incentivize ESRD facilities' efficient use of resources, because as 
previously stated, payment for an individual claim would not be 
dependent on individual utilization of the new renal dialysis drug or 
biological product. Accordingly, we believe that under our proposed 
methodology, for new renal dialysis drugs and biological products that 
are not a substantial clinical improvement over existing renal dialysis 
drugs and biological products, utilization would diminish over time and 
the amount of the post-TDAPA add-on payment adjustment would decline 
accordingly. As discussed earlier in this proposed rule, we anticipate 
that the incentives for ESRD facilities under the proposed methodology 
for the post-TDAPA add-on payment adjustment would result in 
competition between new and existing renal dialysis drugs and 
biological products, and that this competition would serve to drive 
down prices of such new renal dialysis drugs and biological products 
over time.
    We are proposing to calculate the post-TDAPA add-on payment 
adjustment following the methodology described in the following 
subsections for any new renal dialysis drug or biological product that 
is paid for using the TDAPA under Sec.  413.234(c)(1). We are proposing 
that the post-TDAPA add-on payment adjustment would be applied for a 
period of 3 years following the end of the TDAPA period for those 
products. We believe that a 3-year payment period would provide 
sufficient time for CMS to analyze cost reports that include costs for 
the new renal dialysis drug or biological product paid for using the 
TDAPA under the ESRD PPS, in order to incorporate changes as 
appropriate to the ESRD PPS market basket price proxies. The ESRDB 
market basket is a fixed-weight, Laspeyres-type price index. A 
Laspeyres-type price index measures the change in price, over time, of 
the same mix of goods and services purchased in the base period. The 
proposed 3-year payment period for the post-TDAPA add-on payment 
adjustment would allow CMS to evaluate how the new drug or biological 
product affects the overall mix of renal dialysis drugs and biological 
products in the ESRDB market basket and to determine the appropriate 
price proxies for such new drug or biological product. We note that for 
new renal dialysis drugs and biological products that are not 
considered included in the ESRD PPS base rate, the TDAPA is paid until 
sufficient claims data for rate setting analysis for the new renal 
dialysis drug or biological product is available, but not for less than 
2 years. Similarly, as described earlier in this paragraph, we are 
proposing a 3-year payment period for the post-TDAPA add-on payment 
adjustment, which would enable the collection and analysis of 
sufficient cost report information and would address the concerns that 
commenters raised about the effectiveness of the ESRD PPS market basket 
price proxies to account for the costs of new renal dialysis drugs and 
biological products going forward by allowing CMS to incorporate data 
showing trends in use over an adequate period of time. Additionally, we 
believe that a 3-year period for the post-TDAPA add-on payment 
adjustment would be appropriate and consistent with the transition 
period that we finalized at the beginning of the ESRD PPS, when ESRD 
facilities were transitioned from receiving payments under the 
composite rate payment system to receiving payments under the ESRD PPS 
(79 FR 49162). We finalized the transition period for CY 2011 through 
CY 2013 in order to comply with the requirement of section 
1881(b)(14)(E)(i) of the Act to provide a 4-year phase-in of the 
payment amount under the ESRD PPS, where full implementation of the 
ESRD PPS payment would occur beginning in the fourth year, CY 2014. We 
are proposing a similar timeline to provide an appropriate transition 
for new renal dialysis drugs and biological products in existing ESRD 
PPS functional categories, which are not eligible for a modification to 
the ESRD PPS base rate. Based on the experience of ESRD facilities 
during the 4-year phase-in from CY 2011 to CY 2014, ESRD facilities 
would be familiar with this timeline for phasing in major changes that 
impact their long-term planning and budgeting. Lastly, in the interest 
of transparency, we note that this 3-year period would provide time for 
analysis of utilization data for public awareness about the potential 
need for refinements to the ESRD PPS. Therefore, we are proposing to 
calculate and apply the post-TDAPA add-on payment adjustment for a 
period of 3 years following the end of the TDAPA period, with no post-
TDAPA add-on payment adjustment calculated beginning in the 4th year.
    We are proposing that this post-TDAPA add-on payment adjustment 
would not be budget neutral, as discussed later in this proposed rule. 
We note that this proposed post-TDAPA add-on payment adjustment, if 
finalized, would be calculated for KorsuvaTM, the only renal 
dialysis drug currently receiving the TDAPA, and that payment of this 
post-TDAPA add-on payment adjustment, if finalized, would begin April 
1, 2024 at the end of the TDAPA period for KorsuvaTM.
(a) Calculation of the Proposed Post-TDAPA Add-On Payment Adjustment
    As discussed earlier in this section of the proposed rule, we are 
proposing to establish a new add-on payment adjustment for certain new 
renal dialysis drugs and biological products in existing ESRD PPS 
functional categories after the end of the TDAPA period. We are 
proposing to apply the post-TDAPA add-on payment adjustment to all ESRD 
PPS payments beginning at the end of a new renal dialysis drug or 
biological product's TDAPA period. Specifically, we are proposing that 
the post-TDAPA add-on payment adjustment would begin 8 calendar 
quarters after the beginning of the first calendar quarter in which 
TDAPA payment is made for the new renal dialysis drug or biological 
product in an existing ESRD PPS functional category, and would end no 
later than the 12th calendar quarter after the last calendar quarter in 
which TDAPA payment is made. As discussed in the following paragraphs, 
we believe our proposed calculation of the post-TDAPA add-on payment 
adjustment would be the most appropriate to address the patient access 
concerns we discussed in the CY 2023 ESRD PPS proposed rule and in this 
section of the proposed rule, and the most consistent with the

[[Page 42461]]

principles of prospective payment. This proposal would apply the 
patient-level adjustment factors to the post-TDAPA add-on payment 
adjustment amount paid on each claim, which would ensure that ESRD PPS 
payment would support access to new renal dialysis drugs and biological 
products for beneficiaries with conditions that are costlier to treat, 
in alignment with our goals as stated earlier in this proposed rule. We 
are proposing to codify the payment of the post-TDAPA add-on payment 
adjustment as part of the per treatment payment amount at Sec.  
413.230(f). We are proposing to codify the methodology for calculating 
the post-TDAPA add-on payment adjustment at Sec.  413.234(g). We are 
proposing to make additional changes under Sec.  413.234(b) and (c) to 
address payment of the post-TDAPA payment adjustment.
    In determining the proposed calculation of the proposed post-TDAPA 
add-on payment adjustment, we considered the comments that we received 
regarding the RFI in the CY 2023 ESRD PPS proposed rule. Some 
commenters expressed that new and innovative drugs may only be used by 
a small percentage of the dialysis population and suggested that an 
add-on payment adjustment should address patient-specific needs in 
order to support access.
    First, we considered calculating the post-TDAPA add-on payment 
adjustment as the average cost for patients that used the new renal 
dialysis drug or biological product that was previously paid for using 
the TDAPA under the ESRD PPS, and applying the post-TDAPA add-on 
payment adjustment only to claims that include the new renal dialysis 
drug or biological product. However, we are concerned that such an 
approach would not align with the principles of prospective payment 
under the ESRD PPS. As we noted earlier in this proposed rule, a 
central objective of the ESRD PPS (and of prospective payment systems 
in general) is for ESRD facilities to be efficient in their resource 
use. Under a PPS, Medicare makes payments based on a predetermined, 
fixed amount that reflects the average patient, and CMS acknowledges 
there will be patients whose treatment costs at an ESRD facility would 
be more or less than the ESRD PPS payment amount. Additionally, we are 
concerned that such an approach would result in a substantial cost 
burden for beneficiaries who use the new renal dialysis drug or 
biological product, because they incur a 20 percent coinsurance under 
Part B for renal dialysis services. We do not believe this approach 
would align with our priorities to reduce drug costs for Medicare 
beneficiaries. In contrast, our proposed methodology would apply the 
post-TDAPA add-on payment adjustment to all ESRD PPS payments, which 
would result in a minimal increase in per-treatment coinsurance amounts 
for all beneficiaries. As discussed later in this section, we are 
proposing to apply the ESRD PPS patient-level adjustments to the post-
TDAPA add-on payment adjustment for each treatment.
    Next, we considered applying the post-TDAPA add-on payment 
adjustment based only on claims from ESRD facilities that used the new 
renal dialysis drug or biological product during the TDAPA period. 
However, like the previous option, we believe that limiting application 
of this add-on payment adjustment to claims from ESRD facilities that 
include the new renal dialysis drug or biological product would be 
inconsistent with the principles of prospective payment. As we 
discussed in the CY 2011 ESRD PPS final rule, there are patients whose 
medical treatment results in more costly care as well as those with 
less costly care, and the ESRD PPS bundled base rate reflects Medicare 
payment for the average ESRD patient (75 FR 49045). Further, we are 
concerned that limiting the post-TDAPA add-on payment adjustment to 
claims from ESRD facilities that use the new renal dialysis drug or 
biological product could result in substantial overestimation of the 
post-TDAPA add-on payment adjustment, if more ESRD facilities begin 
using the new renal dialysis drug or biological product. As we discuss 
later in this proposed rule, we are proposing to apply this post-TDAPA 
add-on payment adjustment in a non-budget neutral manner. Therefore, we 
are concerned that an overestimation of the post-TDAPA add-on payment 
adjustment could result in an inappropriate increase in Medicare 
expenditures. As we discussed in the CY 2019 and CY 2020 ESRD PPS final 
rules (83 FR 56935; 84 FR 60654), for new renal dialysis drugs and 
biological products that fall into an existing ESRD PPS functional 
category, the TDAPA helps ESRD facilities to incorporate the new drugs 
and biological products and make appropriate changes in their 
businesses to adopt such products, provides additional payments for 
such associated costs, and promotes competition among the products 
within the ESRD PPS functional categories, while focusing Medicare 
resources on products that are innovative. We believe that after the 
end of the TDAPA period, ESRD facilities will have made appropriate 
changes in their business models to adopt such products, and therefore 
any approach to a post-TDAPA add-on payment adjustment should apply 
equally to all ESRD PPS treatments, in order to apply the appropriate 
incentive structures for ESRD facilities' utilization of renal dialysis 
drugs and biological products and to continue to promote competition 
among the products within the ESRD PPS functional categories, including 
the new renal dialysis drug or biological product that was previously 
paid for using the TDAPA under the ESRD PPS. Furthermore, we believe 
that such an approach would help to support access to new renal 
dialysis drugs and biological products to the widest scope of 
beneficiaries. This is in line with CMS's commitment to advance health 
equity by supporting access to renal dialysis services.
    Accordingly, we are proposing to apply the post-TDAPA add-on 
payment adjustment to each ESRD PPS treatment, and to adjust it for 
patient characteristics. In other words, the post-TDAPA add-on payment 
adjustment would be multiplied by the ESRD PPS patient-level 
adjustments under Sec.  413.235. We believe this approach would 
appropriately adjust aggregate ESRD PPS payment to account for the new 
renal dialysis drugs and biological products in a way that is 
consistent with the principles of prospective payment, and would 
support beneficiary access to new renal dialysis drugs and biological 
products by recognizing the additional patient-specific needs 
associated with the existing ESRD PPS case-mix adjusters. We note that 
in order to calculate an appropriate post-TDAPA add-on payment 
adjustment, we would apply a case-mix standardization factor to the 
post-TDAPA add-on payment adjustment amount as discussed in the 
following paragraphs.
    In addition, we considered the public comments regarding the need 
to reconcile estimated expenditures for a new renal dialysis drug or 
biological product with the declines in expenditures for related drugs. 
As we noted earlier in this proposed rule, commenters expressed support 
for establishing a methodology that would consider the decline in 
estimated expenditures for drugs that are clinically or empirically 
related to the new renal dialysis drug or biological product. Such a 
methodology would be highly complex and less transparent than other 
potential options that commenters suggested. Commenters noted various 
ideas that CMS would

[[Page 42462]]

need to consider when attempting to establish the offsetting financial 
effects of drugs and biological products that are either clinically or 
empirically-related to the new renal dialysis drug or biological 
product. For example, most commenters suggested that CMS use drugs with 
the same FDA clinical indication to offset the payment adjustment, in 
the interest of transparency and objectivity. However, some commenters, 
including MedPAC, noted that they do not believe that FDA 
determinations or ESRD PPS functional categories should be the basis of 
eligibility for the post-TDAPA payment adjustment, as CMS should make 
these determinations based on the specific needs of the Medicare 
population. We believe that such considerations based on specific 
population needs could be less transparent than alternative approaches, 
especially in situations when there could, in the future, be multiple 
new renal dialysis drugs or biological products for which we would be 
calculating multiple offset adjustments. We anticipate that it would be 
challenging for CMS to determine, within the annual rulemaking 
timeframes, the extent to which changes in the utilization of existing 
renal dialysis drugs and biological products are clinically or 
empirically related to utilization of a new renal dialysis drug or 
biological product paid for using the TDAPA. We note that the latest 
available data at the time of this proposed rulemaking includes less 
than a full year of TDAPA utilization. We anticipate that as additional 
data are collected, CMS would be able to analyze trends and may be able 
to retrospectively determine the extent of any substitution effects 
between new and existing renal dialysis drugs and biological products. 
Furthermore, the calculation of these offsets could involve multiple 
overlapping periods of time, which would further increase complexity 
and reduce transparency. As an alternative, we considered MedPAC's 
suggestion to align the methodology closer to that of the ESRD PPS 
TPNIES, wherein CMS pays a reduced percentage of the estimated 
incremental cost of a new product as a risk-sharing mechanism with ESRD 
facilities and to provide a disincentive for significant increases in 
drug prices. Under the TPNIES, CMS calculates the TPNIES amount as 65 
percent of the MAC-determined price for certain new and innovative 
equipment and supplies (Sec.  413.236(f)). We believe this approach 
would have the same general effect of accounting for declines in other 
drug expenditures, while being significantly less complex and more 
transparent. In the CY 2020 ESRD PPS final rule that established the 65 
percent cost-sharing proportion for TPNIES, we stated that the goal of 
TPNIES was to support ESRD facility use of new and innovative renal 
dialysis equipment and supplies (84 FR 60692). In that same CY 2020 
ESRD PPS final rule, we further stated in response to comments that we 
believe that we need to balance this goal with sharing risk for the new 
product (84 FR 60697). As noted earlier in this proposed rule, one goal 
of the proposed post-TDAPA add-on payment adjustment is to support 
continued access to new renal dialysis drugs and biological products 
and to support ESRD facilities' long-term planning and budgeting for 
such drugs after the TDAPA period. Additionally, as stated earlier in 
this section of this proposed rule, our goal is also to incentivize 
efficient use of resources, consistent with the principles of 
prospective payment under the ESRD PPS. We believe that applying a 
cost-sharing proportion of 65 percent to the proposed post-TDAPA add-on 
payment adjustment would effectively achieve these goals, because it 
would provide a significant level of payment that supports access for 
beneficiaries and long-term planning for ESRD facilities, while 
incentivizing ESRD facilities to efficiently allocate resources by 
sharing a significant portion of the cost with ESRD facilities. 
Furthermore, this proposed 65 percent cost-sharing factor would serve 
to further reduce the minimal cost-sharing burden of new renal dialysis 
drugs and biological products for beneficiaries, under the proposed 
post-TDAPA add-on payment methodology. Lastly, we note that for home 
dialysis machines that are capital-related assets that qualify for the 
TPNIES, our policy is to apply an offset to account for the amount of 
such capital-related assets in the ESRD PPS base rate. As we discussed 
previously, we considered applying an offset to the proposed post-TDAPA 
add-on payment adjustment; however, we believe that considerations 
based on specific population needs could be less transparent than 
applying a simple 65-percent risk-sharing percentage. Additionally, we 
noted that in the future, there could be multiple new renal dialysis 
drugs or biological products for which we would be calculating multiple 
offset adjustments, which would further increase complexity and reduce 
transparency. We are soliciting comments on whether there are other 
ways CMS could consider calculating an offset amount for the post-TDAPA 
payment adjustment. Alternatively, we seek comment on if there are 
other ways CMS can ensure any growth in post-TDAPA add-on payment 
adjustment amounts is reasonable, such as not allowing increases to 
exceed inflation or other relevant metrics.
    We are proposing to calculate the post-TDAPA add-on payment 
adjustment annually, based on the latest available full calendar 
quarter of average sales price (ASP) data, which would be consistent 
with the current policy for determining the basis of payment for the 
TDAPA. Under current policy, finalized in the CY 2020 ESRD PPS final 
rule (84 FR 60679), we pay the TDAPA based on 100 percent of ASP. If 
ASP is not available, we base the TDAPA payment adjustment on wholesale 
acquisition cost (WAC), and if WAC is not available, then we base 
payment on invoice pricing. As we stated in the CY 2020 ESRD PPS final 
rule, we continue to believe that after the TDAPA period, calculating 
the proposed post-TDAPA add-on payment adjustment for new renal 
dialysis drugs based on ASP, as compared to WAC or invoice pricing, 
would be the most appropriate choice for the ESRD PPS, and would strike 
the right balance in supporting ESRD facilities in their uptake of 
innovative, new renal dialysis drugs and biological products and 
limiting increases to Medicare expenditures. We propose to address the 
annual calculation of the post-TDAPA add-on payment adjustment in the 
annual proposed and final ESRD PPS rules for future years.
    As discussed in section II.B.1.k, under current TDAPA policy, if 
CMS stops receiving ASP during the TDAPA period, then CMS will stop 
paying the TDAPA after 2 calendar quarters. Similarly, we believe that 
if drug manufacturers were to stop submitting ASP data for products 
that are included in the calculation of the proposed post-TDAPA add-on 
payment adjustment, and we had to revert to basing calculation of the 
post-TDAPA add-on payment adjustment on WAC or invoice pricing, we 
would be overpaying for the proposed add-on payment adjustment. 
Therefore, we are proposing to make payment of the post-TDAPA add-on 
payment adjustment conditional on receiving ASP data. Because the post-
TDAPA add-on payment adjustment would be calculated annually rather 
than quarterly, we are proposing that if CMS does not receive the 
latest full calendar quarter of ASP data for a drug that would be 
included in the calculation of the post-TDAPA add-on payment 
adjustment, then CMS would not include that drug in the calculation of 
the post-TDAPA add-on payment

[[Page 42463]]

adjustment for any future years. We are also proposing that if CMS 
stops paying the TDAPA for a drug or biological product because CMS 
stops receiving the latest full calendar quarter of ASP data, then we 
would not include that drug or biological product in the calculation of 
the post-TDAPA add-on payment adjustment for the next CY or any future 
CY. Consistent with our policy for calculating the TDAPA, as discussed 
in section II.B.1.k of this proposed rule, we are proposing that in 
situations when a manufacturer reports zero or negative sales, we would 
consider CMS to have received the latest full calendar quarter of ASP 
data, but we would calculate the post-TDAPA payment adjustment based on 
WAC, or if WAC is not available, on invoice pricing, in such 
circumstances.
    Finally, we are proposing that for each of the 3 years for which 
this proposed post-TDAPA add-on payment adjustment would be paid, we 
would update the amount of the post-TDAPA add-on payment adjustment by 
the ESRD PPS market basket update to account for estimated future input 
price changes faced by ESRD facilities. We are soliciting comment on 
whether it would be more appropriate to consider using the growth in 
the market basket price proxy for the Pharmaceuticals cost category in 
the ESRDB market basket, rather than the market basket update.
    Therefore, we are proposing to use the following calculation to 
determine the amount of the post-TDAPA add-on payment adjustment to be 
applied to each ESRD PPS treatment.
     Step 1, using the most recent available 12 months of 
claims data, calculate the total expenditure of the new renal dialysis 
drug or biological product being paid for using the TDAPA under the 
ESRD PPS. Total expenditure would be calculated by multiplying the 
latest available full calendar quarter of ASP data for the new renal 
dialysis drug or biological product by the quantity of units billed. If 
CMS does not receive the latest available calendar quarter of ASP data 
for a drug or biological product, then CMS would not apply the post-
TDAPA add-on payment adjustment for that drug or biological product. As 
we noted earlier, if the latest available full calendar quarter of ASP 
data reflects zero or negative sales, CMS would calculate the post-
TDAPA add-on payment adjustment based on WAC, or if WAC is not 
available, invoice pricing.
     Step 2, divide the total expenditure of the new renal 
dialysis drug or biological product from Step 1 by the total number of 
ESRD PPS treatments furnished during the same 12-month period as used 
in Step 1. The resulting quotient from Step 2 would be the post-TDAPA 
add-on payment adjustment amount for each treatment, before applying 
the reduction factor to account for case-mix standardization, as 
described in Step 4.
     Step 3, calculate the dollar amount of the total aggregate 
case-mix adjusted post-TDAPA add-on payment adjustment amount by 
multiplying the post-TDAPA add-on payment adjustment amount from Step 2 
by the applicable patient-level adjustments for each ESRD PPS treatment 
furnished during the 12-month period.
     Step 4, divide the aggregate case-mix adjusted add-on 
payment adjustment amount from Step 3 by total expenditure from Step 1. 
The resulting quotient would be the reduction factor applied to the 
post-TDAPA add-on payment adjustment amount to account for case-mix 
standardization.
     Step 5, apply the reduction factor from Step 4 to the 
post-TDAPA add-on payment adjustment amount from Step 2.
     Step 6, apply the 65 percent risk-sharing factor to the 
amount from Step 5 to calculate the case-mix adjusted post-TDAPA add-on 
payment adjustment amount.
     Step 7, multiply the case-mix adjusted post-TDAPA add-on 
payment adjustment amount by the ESRD PPS market basket update 
percentage.
    We propose to amend 42 CFR 413.234 by revising Sec.  
413.234(c)(1)(i) and adding regulations at Sec.  413.234(b)(1)(iii), 
(c)(1)(ii), (c)(3), and (g) that would describe the post-TDAPA payment 
adjustment and the calculation we would use to determine the post-TDAPA 
payment adjustment amount, as described above. In addition, we propose 
to amend Sec.  413.230 by adding reference to the proposed post-TDAPA 
add-on payment adjustment in the calculation of the ESRD PPS per 
treatment payment amount.
    In the section below, we provide an example of the proposed 
calculation for CY 2024 for Korsuva\TM\ based on the latest available 
information at the time of this proposed rulemaking.
    We are proposing to follow these steps to calculate the case-mix 
adjusted post-TDAPA add-on payment adjustment amount for CY 2024 and 
future years, when appropriate. We are proposing to include in the 
calculation of the case-mix adjusted post-TDAPA add-on payment 
adjustment amount any new renal dialysis drugs and biological products 
in existing ESRD PPS functional categories that are eligible for 
payment using the TDAPA described in Sec.  413.234(c). We are proposing 
to begin making payment under this new post-TDAPA add-on payment 
adjustment 8-calendar quarters after the beginning of the TDAPA payment 
period for the new renal dialysis drug or biological product. We are 
proposing that payment of the post-TDAPA add-on payment adjustment 
would end no later than 12 calendar quarters after the end of the TDAPA 
payment period for the new renal dialysis drug or biological product. 
We are soliciting comments on this proposed methodology for a post-
TDAPA add-on payment adjustment and its appropriateness for CY 2024 and 
future years.
(b) Example of the Proposed Post-TDAPA Add-On Payment Adjustment 
Calculation
    Following the proposed methodology in the previous section, we are 
proposing to apply a post-TDAPA add-on payment adjustment to all ESRD 
PPS treatments beginning April 1, 2024, when the TDAPA payment period 
for Korsuva\TM\ ends. We are proposing to calculate the amount of this 
post-TDAPA add-on payment adjustment based on the most recent available 
12 months of utilization data for Korsuva\TM\ and the most recent 
available 12 months of ESRD PPS claims data for this proposed 
rulemaking. We are also proposing that we would use updated data, if 
available, for the ESRD PPS final rule. We are proposing to apply the 
ESRD PPS patient-level adjustment factors for determining the amount of 
the post-TDAPA add-on payment adjustment for each ESRD PPS claim.
    Based on the latest available data, which includes utilization of 
Korsuva\TM\ from May 2022 through December 2022, we estimate that total 
expenditure for Korsuva\TM\ in CY 2022 is $3,150,910 and that 
19,511,284 total ESRD PPS treatments were furnished during the same 
time period. Taking into account the existing ESRD PPS patient-level 
adjustment factors and the proposed TPEAPA as discussed in section 
II.B.1.g of this proposed rule, the reduction to the post-TDAPA add on 
payment adjustment to account for case-mix standardization for this 
time period is 0.900244. Accordingly, we would calculate a proposed 
case-mix adjusted post-TDAPA add-on payment adjustment for CY 2024 
equal to (($3,150,910)/(19,511,284)) x (0.900244) x (0.65) x (1.017) = 
$0.0961. Estimates for the impact of this proposed post-TDAPA add-on 
payment adjustment for CY 2024 are included in section VIII.D.3 of this 
proposed rule.

[[Page 42464]]

(c) Considerations Related to Budget Neutrality for the Proposed Add-On 
Payment Adjustment
    As discussed earlier in this proposed rule, the ESRD PPS includes 
other add-on payment adjustments based on the authority in section 
1881(b)(14)(D)(iv) of the Act, which are not statutorily required to be 
budget neutral. In the case of existing add-on payment adjustments 
under the ESRD PPS, these generally account for costs that were not 
included in cost reports used for the construction of the ESRD PPS 
bundled payment. These include items that either did not exist at the 
time of the construction of the ESRD PPS bundled payment, like new 
drugs and equipment, or services that were not commonplace that the 
add-on payment adjustment is meant to encourage, like home dialysis 
training. We expect this increased payment would support ESRD 
facilities in providing the new renal dialysis drug or biological 
product to all beneficiaries for whom it is reasonable and medically 
necessary. We believe it is also important to support access to new 
renal dialysis drugs and biological products while minimizing the 
financial impact to beneficiaries, who incur a 20 percent coinsurance 
for renal dialysis services under the ESRD PPS.
    As discussed above, we considered and are proposing this new post-
TDAPA add-on payment adjustment in response to concerns that a sudden 
decrease in payment for certain new renal dialysis drugs and biological 
products after the end of the TDAPA period could negatively affect 
Medicare beneficiaries' access to such new renal dialysis drugs and 
biological products. Although we have noted that the ESRD PPS base rate 
already includes money for renal dialysis drugs and biological products 
that fall within an existing ESRD PPS functional category, we do not 
believe that proposing a budget neutral payment adjustment would be 
appropriate for the post-TDAPA add-on payment adjustment. Because we 
are proposing to apply the post-TDAPA add-on payment adjustment to 
every ESRD PPS treatment, budget neutralizing this proposed add-on 
payment adjustment would effectively undo the adjustment and leave 
aggregate payments at the same level they would have been without an 
adjustment, which as we previously noted could negatively affect 
beneficiaries' access to such drugs and biological products. In 
contrast, applying this proposed add-on payment adjustment in a non-
budget neutral manner would increase aggregate ESRD PPS expenditures to 
a level that reflects the most recent 12 months' utilization of the new 
renal dialysis drug or biological product, which we believe would 
support beneficiary access. By applying the proposed post-TDAPA add-on 
payment adjustment in a non-budget neutral way, we would effectively 
maintain expenditures for these new renal dialysis drugs and biological 
products at 65 percent of the level of expenditures paid during the 
TDAPA period. We believe this approach would provide consistency and 
predictability in a way that would support beneficiaries' continued 
access to new renal dialysis drugs and biological products, while 
appropriately reducing expenditures for such drugs after the TDAPA 
period ends both for the Medicare program and for individual 
beneficiaries, as discussed earlier in this section. Accordingly, we 
are proposing that this post-TDAPA add-on payment adjustment would not 
be budget neutral. We welcome comments on the budget neutrality aspect 
of this proposal.
j. Proposal to Require ``Time on Machine'' Hemodialysis Treatment Data 
as a Recordkeeping and Cost Reporting Requirement for Outpatient 
Maintenance Dialysis
    We are proposing certain new recordkeeping and cost reporting 
requirements for outpatient maintenance dialysis at proposed 42 CFR 
413.198(b)(5). CMS proposes to require patient-level reporting on 
resource use involved in furnishing hemodialysis treatment in-center in 
ESRD facilities that would serve to apportion composite rate costs for 
use in the case-mix adjustment. Importantly, this new data would be 
used to disaggregate facility-level composite rate costs (as obtained 
from the cost reports) and assign them to the patient-month level, 
which would enable a refined single-equation estimation methodology. 
The integrity of the ESRD PPS is dependent on our ability to monitor 
payment accuracy and make refinements to the payment system, as needed. 
Under this proposal, CMS would require ESRD facilities to report 
information on ESRD PPS claims for renal dialysis services about the 
duration of time in minutes that ESRD beneficiaries spend in center 
receiving hemodialysis treatment, also known as ``time on machine'' 
(hereafter referred to in this section as ``time on machine''). We 
would use time on machine data to help us evaluate and monitor the 
accuracy of our payments for patient-level adjustment factors. CMS 
would also evaluate whether the data could be used to inform future 
refinements to the existing patient-level adjustment factors set forth 
at Sec.  413.235(a), which include patient age, body mass index (BMI), 
BSA, and co-morbidities such as sickle cell anemia. Finally, CMS would 
review the data for its potential to identify any disparities from a 
health equity perspective that may support proposing in future 
rulemaking new patient-level adjustment factors, including potential 
social determinants of health (SDOH) factors.
(1) Statutory Authorities for Recordkeeping, Cost Reporting, and Case-
Mix Adjustments Under the ESRD PPS
    Section 1881(b)(2)(B) of the Act generally directs the Secretary to 
prescribe in regulations any methods and procedures to determine the 
costs incurred by providers of services and renal dialysis facilities 
in furnishing covered services to individuals with ESRD, and to 
determine, on a cost-related or other economical and equitable basis, 
payment amounts for Medicare part B services furnished by such 
providers and facilities to individuals with ESRD. To that end, CMS 
promulgated 42 CFR 413.198,\34\ which specifies certain recordkeeping 
and cost reporting requirements for ESRD facilities that meet the 
conditions for coverage under 42 CFR part 494.\35\ The recordkeeping 
and cost reporting requirements at Sec.  413.198 enable CMS to 
determine the costs incurred in furnishing outpatient maintenance 
dialysis and support the two-equation payment model that is currently 
used as the basis for the ESRD PPS.
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    \34\ We note that Sec.  413.198 was promulgated prior to the 
establishment of the ESRD PPS. It was initially set forth in 1983 at 
42 CFR 405.441 (48 FR 21254), to implement section 2145 of the 
Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35). Section 
405.441 was later redesignated in 1986 as 42 CFR 413.174 (51 FR 
34790-01), and the requirements were moved again, from Sec.  413.174 
to Sec.  413.198, in a reorganization of subpart H of part 413 (62 
FR 43657).
    \35\ Likewise, under section 1881 of the Act, CMS established 
related data and information requirements at 42 CFR 494.180(h).
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    Section 1881(b)(14)(D)(i) of the Act requires that the ESRD PPS 
include a payment adjustment based on case-mix that may take into 
account patient weight, body mass index, comorbidities, length of time 
on dialysis, age, race, ethnicity, and other appropriate factors. We 
implemented this statutory requirement in Sec.  413.235, which sets 
forth certain patient characteristics for which the per treatment ESRD 
PPS base rate may be adjusted, specifically where those patient 
characteristics result in higher costs for ESRD facilities. The patient 
characteristics at Sec.  413.235(a) include: patient age, body surface 
area, low body mass index, onset of renal

[[Page 42465]]

dialysis (new patient), and co-morbidities. The Secretary is also 
authorized, under section 1881(b)(14)(D)(iv) of the Act, to apply such 
other payment adjustments under the ESRD PPS as the Secretary 
determines appropriate. Per 42 CFR 413.196, we publish notice of any 
proposed changes to payment adjustments, including adjustments to the 
composite rate,\36\ in the Federal Register. We last updated the 
payment multipliers for the ESRD PPS patient-level adjustment factors 
in the CY 2016 ESRD PPS final rule (80 FR 68968, at 68973 through 
68984), for age, BSA, low BMI, sex, four co-morbidity categories (that 
is, pericarditis; gastrointestinal tract bleeding with hemorrhage; 
hereditary hemolytic or sickle cell anemias; and myelodysplastic 
syndrome), and the onset of renal dialysis. We also established payment 
adjustments for pediatric patients and for facilities treating a low-
volume of patients with ESRD.
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    \36\ As explained in the CY 2011 ESRD PPS final rule (75 FR 
49030 at 49032), the composite rate is the method by which CMS 
determines prospectively the amounts of payments for renal dialysis 
services furnished by providers of services and by renal dialysis 
facilities to individuals in a facility, and to such individuals at 
home. The composite rate is a single composite weighted formula that 
is combined with separately billable services under a single 
payment, adjusted to reflect patient differences in resource needs 
or case-mix.
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    Finally, the proposal to collect and evaluate time on machine data 
would provide additional information concerning resource use to enable 
CMS to identify, assess, and address potential health disparities. This 
proposal therefore may support the Secretary's efforts to evaluate race 
and ethnicity data and provide recommendations for improving the 
quality of the data, as required under section 1809 of the Act, 
previously discussed in the CY 2011 ESRD PPS final rule (75 FR 49030 at 
49108 through 49113).
    We note that, if the proposed requirement to collect time on 
machine data were to be finalized as proposed, we would issue 
corresponding guidelines. Such guidance would provide instructions 
regarding the applicable administrative requirements for reporting a 
value code on an electronic claim, here value code D6, connected to the 
number of minutes of hemodialysis treatment provided in center in an 
ESRD facility. We further note that the National Uniform Billing 
Committee (NUBC) has approved and is prepared for ESRD facilities' use 
of value code D6 on claim form CMS-1450 (UB-04) (OMB-0938-0997), to 
report the total number of minutes of hemodialysis provided during the 
billing period.
(2) Case-Mix Adjustments Background and the Two-Equation ESRD PPS Model
    The ESRD PPS includes patient-level adjustments that adjust the 
ESRD PPS base rate for certain patient characteristics. The current 
ESRD PPS case-mix adjustments are derived from a case-mix adjustment 
model involving two equations. In the CY 2011 ESRD PPS final rule (75 
FR 49083), we discussed the two-equation methodology used to develop 
the adjustment factors that would be applied to the ESRD PPS base rate 
to calculate each patient's case-mix adjusted payment per treatment. 
The two-equation approach used to develop the ESRD PPS included a 
facility-based regression model for services historically paid for 
under the composite rate as indicated in ESRD facility cost reports, 
and a patient-month-level regression model for services historically 
billed separately. One significant limitation, which in large part 
drove the development of the two-equation model, was that there was no 
way to reliably identify, using claims data, the costs for composite 
rate services--that is, items and services such as staff labor, 
dialysate, capital-related assets such as renal dialysis machines, and 
certain drugs and laboratory tests, that are used in the provision of 
outpatient maintenance dialysis for the treatment of ESRD and that were 
included in the composite payment system established under section 
1881(b)(7) of the Act and the basic case-mix adjusted composite payment 
system established under section 1881(b)(12) of the Act.
    In the CY 2016 ESRD PPS final rule, we updated the payment 
multipliers for the ESRD PPS patient-level adjustment factors for age, 
BSA, low BMI, sex, four co-morbidity categories (that is, pericarditis; 
gastrointestinal tract bleeding with hemorrhage; hereditary hemolytic 
or sickle cell anemias; and myelodysplastic syndrome), and the onset of 
renal dialysis; we also established payment adjustments for pediatric 
patients and for ESRD facilities treating a low-volume of ESRD patients 
(80 FR 68968 at 68973 through 68984). In that CY 2016 ESRD PPS final 
rule, we discussed and responded to a number of public comments in 
which commenters expressed concerns about the continued use of the two-
equation model (80 FR 68974 through 68976). One comment from MedPAC 
suggested that CMS develop a one-equation model for the ESRD PPS. In 
response, we noted that the ESRD PPS is not currently able to utilize a 
one-equation method because ESRD facilities do not report charges 
associated with the components of renal dialysis treatment costs that 
vary across patients, such as time on machine. In other words, patient-
level claims provide line item detail on the use of the formerly 
separately billable services, but do not provide any information 
regarding variation across patients in the use of the formerly 
composite rate services. In addition, we stated that we believed that 
capturing the resource cost for furnishing renal dialysis services is 
complex since Medicare has historically paid an ESRD PPS base rate 
(that is, composite rate payment) to account for those costs that were 
never itemized on a claim but were reported through the cost report (80 
FR 68975 through 68976).
(3) Background on CMS Efforts To Explore the Use of ``Time on Machine'' 
Data To Refine the Case-Mix Adjustment Model
    Interested parties, including MedPAC, have long expressed concerns 
about the complexity of the two-equation model underpinning the ESRD 
PPS and have questioned the validity of assuming that the composite 
rate costs for all patients at an ESRD facility are the same. 
Interested parties have encouraged CMS to develop a patient cost model 
that is based on a single patient-level cost variable that accounts for 
all composite rate and formerly separately billable services. 
Additionally, interested parties have expressed concerns that the 
existing case-mix adjustors might not correlate well with the current 
cost of renal dialysis treatment and have encouraged CMS to explore a 
refinement.
    In response, CMS has explored the feasibility of collecting time on 
machine data on patient claims from ESRD facilities and the potential 
for using such data. These efforts include: a Technical Expert Panel 
(TEP) held on December 6, 2018, a Request for Information (RFI) 
published in the ESRD PPS CY 2020 ESRD PPS proposed rule (84 FR 38399), 
and more recently an RFI published in the ESRD PPS CY 2022 proposed 
rule (86 FR 36322, 36399 through 36400). In addition, CMS issued sub-
regulatory guidance in Transmittal 10368, from September 24, 2020, in 
an effort to begin collecting time on machine data, but it later 
rescinded that guidance.
(a) Technical Expert Panel (TEP) December 2018
    As we discussed in the CY 2020 ESRD PPS proposed rule (84 FR 38396 
through 38400), a TEP was held on

[[Page 42466]]

December 6, 2018, to discuss options for improving data collection to 
refine the ESRD PPS case-mix adjustment model. In that CY 2020 ESRD PPS 
proposed rule, we discussed the purpose of the TEP and the topics that 
were discussed, including several data collection options.\37\
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    \37\ The final TEP report from December 2018 and other materials 
can be found at: https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/ESRDpayment/Educational_Resources.
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    In the CY 2020 ESRD PPS proposed rule, we noted that CMS's data 
contractor's pre-TEP analysis of CY 2016 cost report data showed that 
composite rate costs comprise nearly 90 percent of average total 
treatment costs, with capital, direct patient care labor, and 
administrative costs representing approximately 88 percent of total 
average composite rate cost per treatment. The data contractor provided 
examples of ways that longer duration of renal dialysis time might be 
associated with increased treatment costs, including utility costs, 
accelerated depreciation on equipment, and lower daily census counts, 
which, among other things, would result in increased per-treatment 
capital costs. The analysis suggested that additional labor hours for a 
patient with longer treatments on average could increase per-treatment 
labor costs, and that patients with increased use of dialysate and 
water treatment supplies or equipment likely have higher average per-
treatment supply costs. We noted that, under current reporting 
practices, there are no data on the patient-and treatment-level 
variation in the cost of composite rate items and services. We 
explained that these findings underscore the importance of identifying 
variation in these costs to inform the development of a refined case-
mix adjustment model.
    CMS published the findings from the December 2018 TEP in a report 
dated June 2019.\38\ The 2018 TEP report provided examples of ways that 
extended treatment duration could affect cost components. First, an 
imputed cost per treatment was calculated using a combination of 
treatment duration data from CROWNWeb \39\ (now the ESRD Quality 
Reporting System, or EQRS) and facility cost per-minute data from cost 
reports to infer differences in cost report costs across patient-
months. An average interquartile range of 34.6 minutes was observed 
from CROWNWeb duration data, indicating significant within-facility 
variation in dialysis treatment time. Significant variation in average 
imputed cost per hemodialysis sessions also was observed, with an 
across-facility interquartile range of $62.62. Overall, it was found 
that cost report costs increased with longer treatment times, and this 
pattern was consistent for the individual cost report components as 
well. Facilities with a higher proportion of beneficiaries receiving 
treatments >=4.5 hours duration were found to have higher average costs 
for each cost component, with the exception of cost report drugs.\40\
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    \38\ The final TEP report from December 2018 is found directly 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Downloads/ESRD-PPS-TEP-Summary-Report-June-2019.pdf.
    \39\ In 2008, CMS introduced an electronic Web-based data 
collection system, Consolidated Renal Operations in a Web-enabled 
Network (CROWNWeb) which was designed to collect clinical 
performance measures data from dialysis facilities (73 FR 20370, at 
20372). CROWNweb is now ``EQRS''--that is, the ESRD Quality 
Reporting System (OMB Control Number 0938-1289).
    \40\ Acumen LLC. ESRD PPS Case-Mix Adjustment Technical Expert 
Panel (TEP). Slide Presentation Slide 42. December 2018. See https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Downloads/ESRD-PPS-TEP-Presentation.pdf.
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    CMS presented further discussion into collection of time on machine 
data for each dialysis session in the CY 2020 ESRD PPS proposed rule 
(84 FR 38396 through 38400), where we further identified this potential 
data set as a singular option that would provide sufficient data to 
develop a refined case-mix adjustment model. If renal dialysis session 
time were reported for each renal dialysis treatment, cost report and 
treatment-level data could be integrated to infer differences in 
composite rate costs across patients. In this paradigm, patient-level 
differences in composite rate costs could be attributed to two discrete 
categories: differences due to renal dialysis treatment duration 
(measured in units of time); and, differences unrelated to treatment 
duration. To alleviate concerns from interested parties, we noted that 
time on machine data would not be used to directly adjust ESRD PPS 
payment, rather, it would be used to apportion composite rate costs 
(currently only observable at the facility level to the patient or 
treatment level) for use in the case-mix adjustment. Time on machine 
data would allow for a higher proportion of composite rate costs to be 
allocated to patients with longer renal dialysis treatment times, and 
ultimately inform CMS refinements to existing patient-level adjusters, 
including age and comorbidities.
    We further explained that, in the December 2018 TEP, the data 
contractor proposed two approaches to collect time on machine data: (1) 
Use existing data from Consolidated Renal Operations in a Web-Enabled 
Network (CROWNWeb) (now EQRS) on delivered renal dialysis minutes 
during the monthly session when a laboratory specimen is drawn to 
measure blood urea nitrogen (BUN); or (2) have ESRD facilities report 
time on machine data on Medicare claims. For the latter, we suggested 
that time on machine data could be reported by using a new HCPCS or 
revenue center code to indicate units of treatment time for each renal 
dialysis treatment or by updating the definition of the existing 
revenue center code for renal dialysis treatments so that the units 
correspond to treatment time instead of the number of treatments. We 
noted that ESRD facilities already reported to CMS a single monthly 
treatment time in CROWNWeb for in-facility treatments, indicating that 
ESRD facilities currently collect time on machine data.\41\ Moreover, 
we stated that we were aware that many ESRD facilities' electronic 
health records (EHR) systems automatically collect this information for 
every renal dialysis treatment, minimizing additional burden of 
reporting this metric on claims.
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    \41\ Centers for Medicare & Medicaid Services (CMS) End-Stage 
Renal Disease Quality Incentive Program (ESRD QIP) Payment Year (PY) 
2021 Measure Technical Specifications. Page 23. Available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ESRDQIP/Downloads/PY-2021-TechnicalSpecifications-.pdf.
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    The December 2018 TEP participants preferred that the data be 
collected on Medicare claims (84 FR 38398). They did not support using 
the then-existing CROWNWeb data for time on machine data, as there were 
too many questions about its completeness and timeliness. They agreed 
that if time on machine data is collected on claims that it should be 
reported in actual minutes dialyzed and not, for example, in 15-minute 
increments. We explained that the TEP participants cautioned that 
reporting time on renal dialysis on the claims would place additional 
burden on ESRD facilities. However, we stated that we believed that, 
for ESRD facilities with EHRs, the burden associated with the 
collection of renal dialysis treatment time is expected to be small and 
temporary, because the information is already being collected. We noted 
that collecting time on machine data could be difficult to accomplish 
for ESRD facilities that do not use EHRs. Lastly, we stated that some 
participants maintained that certain factors related to patient 
complexity--such as comorbidities and mental health status--that are 
associated with treatment costs are unrelated to treatment duration.

[[Page 42467]]

(b) Request for Information (RFI) in the CY 2020 ESRD PPS Proposed Rule
    In addition to presenting the findings from the December 2018 TEP, 
we solicited comments in the CY 2020 ESRD PPS proposed rule (84 FR 
38399) on the option of collecting time on machine data. As discussed 
in the CY 2020 ESRD PPS final rule (84 FR 60648, 60782), commenters 
responding to the RFI opposed the use of time on machine data, 
maintaining that other factors were more directly related to cost of 
treatment. Commenters claimed that many subgroups of patients are 
challenged to stay on renal dialysis for the prescribed treatment time 
because of their physical status or other limitations, leading to more 
frequent treatment and/or higher costs related to patients' special 
circumstances and comorbidities and not to treatment duration. With 
regard to patient-level factors contributing to high costs of care, 
commenters expressed that patient-level adjusters should be based on 
sound, empirical evidence of their contribution to cost of care and 
opposed the use of time on machine data as a single, patient-level 
factor to estimate variation in composite rate costs. Some commenters 
expressed the objection that use of this measure would not be 
productive because there was great homogeneity in treatment times 
across patients.
(c) CMS Sub-Regulatory Guidance in Transmittal 10368 (September 24, 
2020) (Now Rescinded)
    In Transmittal 10368, published September 24, 2020, CMS instructed 
its Medicare Administrative Contractors (``MACs'') to implement a new 
value code D6, which reflects the total number of minutes of dialysis 
provided during the billing period. See Transmittal 10368, CR 11871 
(Changes to the End Stage Renal Disease (ESRD) PRICER to Accept the New 
Outpatient Provider Specific File Supplemental Wage Index Fields, the 
Network Reduction Calculation and New Value Code for Time on Machine), 
effective January 1, 2021. At the same time, CMS announced a new 
requirement for ESRD facilities to report value code D6 on ESRD claims, 
for in-facility or home hemodialysis maintenance, training, or 
retraining treatments. Shortly after making these contractor directions 
public, CMS issued a Medicare Learning Network (MLN) Matters guidance 
document (MLN Matters No. MM11871) advising ESRD facilities of the new 
requirement to include treatment time on claims. However, after a large 
dialysis organization submitted a petition \42\ pursuant to the HHS 
Good Guidance Practices Regulation,\43\ HHS issued a finding that 
notice-and-comment rulemaking was required for CMS to impose such a 
requirement. Consequently, CMS rescinded Transmittal 10368 and replaced 
it with Transmittal 10576, dated January 20, 2021, withdrawing the 
requirement for reporting time on the dialysis machine with value code 
D6. Although the guidance to report time on machine data was rescinded, 
the value code D6 for the time on machine in minutes remains approved 
by the NUBC and remains on the CMS claim form CMS-1450 (UB-04) (OMB-
0938-0997), in a deactivated status.
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    \42\ The petition (dated December 23, 2020) is attached as 
Exhibit A to HHS's petition response (January 8, 2021) which can be 
found at https://www.hhs.gov/sites/default/files/davita-petition-response-and-exhibit.pdf.
    \43\ The HHS ``Good Guidance Practices'' final rule appeared in 
the Federal Register on December 7, 2020 (85 FR 78770), and was 
later rescinded July 25, 2022 (87 FR 44002).
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(d) Request for Information (RFI) in the CY 2022 ESRD PPS Proposed Rule
    CMS revisited the topic of time on machine in the 2020 TEP and 
discussed the case-mix adjusters.\44\ Interested parties continued 
expressing concerns that the existing case-mix adjustors might not 
align with resource-intensive patient-level services such as isolation 
rooms, behavioral issues, or neurocognitive issues. We sought 
additional public input in the ESRD PPS CY 2022 proposed rule, 
requesting information on the methodology used to calculate the case-
mix adjustment (86 FR 36322, 36399 through 36400), in particular, the 
methodology to collect data to reflect patient-level differences in 
composite rate costs, including the use of a value code to collect time 
on machine on the claim.\45\
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    \44\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
    \45\ We published a summary of the responses to the CY 2022 ESRD 
PPS RFI (86 FR 36322, 36399 through 36400) for the current case-mix 
methodology in the ESRD PPS CY 2022 final rule (86 FR 61874, 61997) 
and provided greater detail on the CMS website at https://www.cms.gov/files/document/cy-2022-esrd-pps-rfi-summary-comments.pdf.
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    We received similar comments on this RFI to those expressed in 
response to the CY 2020 ESRD PPS proposed rule. As discussed in the CY 
2022 ESRD PPS final rule, commenters cited concerns that apportioned 
composite rate costs (such as labor and capital related costs) from the 
cost reports, used in the case-mix adjustments, were currently only 
observable at the facility-level and did not include patient or 
treatment level variations.
    Similar to previously mentioned concerns regarding the collection 
of time on machine data, commenters suggested this data element would 
be burdensome and complex (especially for those dialyzing at home), and 
would not identify high-cost patients. They stated that what little 
variation might be identified would not be worth the burden of 
collecting the information. In addition, these commenters stated that 
ESRD facilities' staffing is based on prescribed time, not on the 
actual time a patient is on the machine. They stated that the 
prescription approach is the most rational way to determine staffing 
levels, because ESRD facilities do not have time on machine in advance. 
According to these commenters, ESRD facilities thus would only have the 
prescribing physician's prescription to use.
    A provider advocacy organization opposed the use of time on machine 
data for purposes of ESRD PPS primarily because certain patients 
benefit from shorter, more frequent dialysis, such as patients with 
catheter-related access issues, non-compliant patients, patients with 
chronic pain or diarrhea, and patients suffering from certain 
comorbidities. They expressed significant concern that use of time on 
machine data for differentiating treatment cost variability creates 
inappropriate incentives for certain ESRD facilities to ``game the 
system'' by: (1) putting patients on renal dialysis longer than 
necessary; or (2) placing patients on the cheapest dialyzer and keeping 
them on it for all five possible hours of dialysis. Another small renal 
dialysis organization agreed, pointing out that most renal dialysis 
treatments, regardless of time, will have similar composite rate costs. 
In other words, they asserted that if a treatment is 3.5 hours compared 
to 5 hours, the composite rate costs for those treatments will be very 
similar. The only difference in cost between those two treatments would 
be 1.5 hours more use of utilities, dialysate and bicarbonate solution, 
machine depreciation, and a small amount of labor to check on the 
patient. The vast majority of labor for renal dialysis treatments is 
putting the patient on and taking the patient off of dialysis. 
Therefore, in both of the above scenarios, the commenter asserted that 
cost will remain the same. Further, they pointed out that some patients 
will not remain for their full renal dialysis treatment, and they 
generally cannot force a patient to remain for their full prescribed 
treatment time. Therefore, in

[[Page 42468]]

their view, using actual treatment time for cost allocation is not 
realistic.
    A small renal dialysis organization within a large non-profit 
health system commented that reporting treatment times would be 
difficult and confusing and identified many factors that would need to 
be outlined by CMS including: When does renal dialysis time start; what 
happens when a patient chooses to discontinue their treatment early, or 
has complications resulting in reduced treatment time; what happens 
when an ESRD facility inadvertently does not track time for a 
treatment; how does this information get included on a claim; and how 
ESRD facilities would need to train staff on how to count and track 
time. They also expressed concern about the reporting of time on 
machine creating opportunities for ESRD facilities to game the system 
by having the renal dialysis run a few extra minutes to move into the 
next highest level.
    Several commenters recommended changes or removal of the case-mix 
adjusters, including refinement of the age and weight (BSA and BMI) 
adjustments and removal of the comorbidity adjustments, based on 
declining frequency of claims containing comorbidities. Moreover, some 
comments recommended removal of the comorbidity adjustments, because 
they report the adjustments are not utilized. They recommended CMS 
refine the age and weight (BSA and BMI) adjusters to better capture and 
designate higher cost patients. Many commenters expressed the belief 
that the comorbidity categories no longer protect beneficiary access 
and no longer correlate with increased costs. A non-profit renal 
dialysis association recommended that CMS minimize resources devoted to 
adjusters, providing only the minimum needed to deliver quality patient 
care, restore significant funding to the ESRD PPS base rate for the 
benefit and care of all beneficiaries, and focus retained adjusters 
only on those that are clearly linked to patient cost of care or clear 
barriers to access. Specifically, they recommended that: CMS retire the 
remaining comorbid case mix adjusters; revise the weight adjusters to 
maintain a low-BMI adjuster; create a high-BMI adjuster; eliminate the 
BSA adjuster; retire the age adjuster (which they believe is not 
methodologically sound and does not resonate with clinician or renal 
dialysis facility experience of care); maintain the adjuster for low 
volume facilities; consider expanding the adjuster to a second tier of 
facilities providing fewer than 6,000 treatments per year; eliminate 
the rural adjuster; and maintain the onset of renal dialysis adjuster 
to support the resource intensive needs of patients starting dialysis. 
Other commenters stated it would be too preliminary to eliminate the 
case-mix adjusters wholesale; they recommended that CMS initiate a 
discussion of the adjusters that are true drivers of high costs and how 
the use of adjusters can be operationalized for practical purposes. One 
payment adjustment that was universally supported by commenters was the 
onset adjustment.
    MedPAC recommended that CMS develop a one-equation regression model 
in place of the current two-equation model currently used as the basis 
for the ESRD PPS. MedPAC also recommended that CMS consider removing 
the comorbidity adjustments and revise the body size adjustment. MedPAC 
further recommended that CMS address the inherent correlation between 
BSA and BMI by jointly estimating the association of BSA and BMI with 
treatment cost. Both BSA and BMI are calculated based on patient height 
and weight. MedPAC's analyses found that BSA and BMI values are 
correlated such that patients with low BMI also tend to have low BSA, 
and that these variables have a joint effect on treatment costs that is 
different from the sum of independent effects as currently implemented. 
We reiterated our current inability to implement such a model given the 
absence of data on the charges associated with the components of renal 
dialysis treatment costs that vary across patients in the use of the 
formerly composite rate services. A non-profit renal dialysis 
association agreed with MedPAC.
(4) Health Equity Considerations Supporting the Proposed Collection of 
Time on Machine Data
    CMS prioritizes expansion of the collection, reporting, and 
analysis of standardized data as a key means to advance health 
equity.\46\ By increasing our understanding of the needs of those we 
serve, CMS aims to ensure all individuals have access to equitable care 
and coverage. CMS's proposal to collect time on machine data supports 
these priorities. CMS believes the proposed data reporting requirements 
would support our ability to assess whether, and to what extent, our 
programs and policies may perpetuate or exacerbate systemic barriers to 
opportunities and benefits for underserved communities.
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    \46\ https://www.cms.gov/about-cms/agency-information/omh/health-equity-programs/cms-framework-for-health-equity.
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    As noted earlier, as part of CMS's December 2018 TEP and in the 
ESRD PPS CY 2020 final rule, CMS's EQRS data (formerly collected under 
CROWNWeb) is reported once per patient-month. Thus, CMS's proposal to 
collect time on machine data, which would require duration of treatment 
data reported for every renal dialysis treatment, would provide a more 
granular set of standardized data for analyzing (and, potentially, 
apportioning) composite rate costs for use in the case-mix adjustment. 
CMS would also look to time on machine data as a source to monitor 
claims data and identify disparities in care that could be mitigated by 
potential future adjustments that would incentivize equitable care 
within the framework of the ESRD PPS.
    We note that ESRD PPS reform is an on-going multi-year effort to 
refine payment adjustments and methodologies under the ESRD PPS. 
Section 1881(b)(2)(B) of the Act provides that the Secretary shall 
prescribe in regulations any methods and procedures to determine the 
amounts of payments to be made for part B services (which include renal 
dialysis services), on a cost-related basis or other economical and 
equitable basis. Furthermore, section 1881(b)(14)(D) of the Act 
requires the ESRD PPS to include a payment adjustment based on case mix 
that may take into account various patient characteristics and other 
appropriate factors.
    Since the establishment of the ESRD PPS in the CY 2011 ESRD PPS 
final rule (75 FR 49030), CMS has been engaged in ongoing monitoring 
and analysis of the ESRD PPS. CMS publishes these monitoring results 
regularly.\47\ CMS's monitoring activities have involved analysis of 
ESRD facility cost reports and patient claims to determine the most 
accurate adjustments and methodologies as well as to identify trends in 
beneficiary health outcomes. Similarly, CMS notes that this proposal to 
collect more-detailed standardized data (that is, the proposed time on 
machine reporting) than is presently available for analysis supports 
our ability to evaluate potential disparities in health care provided 
to our beneficiaries.
---------------------------------------------------------------------------

    \47\ Since the implementation of the ESRD PPS in January 2011, 
CMS has monitored outcomes, through a claims-based monitoring 
program, for Medicare beneficiaries receiving outpatient maintenance 
dialysis. See https://www.cms.gov/medicare/medicare-fee-for-service-payment/esrdpayment/esrd-claims-based-monitoring.

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[[Page 42469]]

    Presently, CMS adjusts the per-treatment ESRD PPS base rates to 
account for variation in the case mix, as set forth in 42 CFR 413.235. 
These adjustments account for patient age, BSA, low BMI, onset of renal 
dialysis (new patient), and comorbidities (for example, sickle cell 
anemia), as specified by CMS. The data and information that inform 
these adjustments are derived from cost reports, which are submitted to 
CMS on the facility level. However, we note that time on machine data 
would be provided to CMS at the patient level, on patient claims. This 
change would shift CMS's focus to a more patient-centered paradigm. We 
believe time on machine data would provide the insights we need to 
develop (and propose) potential amendments to the payment multipliers 
for the current, and potential future, patient-level adjustments, 
including new SDOH factors or health conditions (such as profound post-
dialytic exhaustion) as patient-level adjustments. More immediately, 
however, time on machine data would significantly enhance CMS's insight 
into whether our current payment adjusters are appropriately aligning 
with actual resource use for individuals and communities who are 
underserved or disadvantaged and who may have multiple patient-level 
characteristics that necessitate longer renal dialysis times.
    For example, CMS is aware of anecdotal evidence and published 
studies showing that patients with the comorbidity of sickle cell 
anemia may need a longer renal dialysis treatment time as well as 
additional resources from medical staff to attend to the manifestations 
of sickle cell that occur during dialysis. In fact, renal dialysis 
patients with sickle cell anemia may have frequent pain attacks during 
the actual renal dialysis treatment.\48\ Such an attack, known as a 
vaso-occlusive pain crisis, precipitates a series of medical 
interventions involving intravenous fluids, analgesia, as well as the 
treatment of any precipitant and/or acute comorbid state.\49\ CMS would 
be able to use time on machine data for patients with sickle cell 
anemia to evaluate its alignment with the patient-level adjuster for 
the corresponding co-morbidity.
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    \48\ Benjamin Jacob et al. Management of the Dialysis Patient 
with Sickle Cell Disease (Seminars in Dialysis 14 July 2015, https://doi.org/10.1111/sdi.12403).
    \49\ Derebail VK, Lacson EK Jr, Kshirsagar AV, Key NS, Hogan SL, 
Hakim RM, et al.: Sickle trait in African-American hemodialysis 
patients and higher erythropoiesis-stimulating agent dose. J Am Soc 
Nephrol 25: 819-826, 2014.
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    In addition to re-evaluating and potentially updating the payment 
multiplier for the patient-level adjuster for the co-morbidity of 
sickle cell anemia, CMS anticipates that there could be other instances 
where patients need more time on renal dialysis to avoid uncomfortable 
post-dialytic sequela, such as profound post-dialytic exhaustion. In 
instances of profound post-dialytic exhaustion, for example, CMS would 
evaluate the forthcoming time on machine data for the potential 
correlations between additional hemodialysis treatment time and 
decreased incidence of profound post-dialytic exhaustions, which may 
have cost implications. We are aware that there may be a need for a 
future patient-level payment adjuster associated with post-dialysis 
fatigue.
(5) Proposed Requirement for Reporting Time on Machine Data To Evaluate 
Accuracy of Current Payment Adjusters Aligned With Resource Use
    We propose to require patient-level reporting on resource use 
involved (time on machine) in furnishing hemodialysis treatment in-
center in ESRD facilities, which would serve as a proxy to apportion 
composite rate costs (capital, labor, and administrative costs, as well 
as drugs, laboratory tests, and supplies necessary to administer the 
dialysis treatment) for use in the case-mix adjustment. This would 
allow us to more precisely estimate the average costs of the various 
above-mentioned components of a renal dialysis treatment that cannot 
currently be captured because payment for these items is bundled, and 
claims data do not contain detail on the use of these items and 
services. CMS would review the patient-level resource use data, 
including time on machine data, to evaluate and monitor the accuracy of 
the methods and procedures, including the patient-level adjustment 
factors, enhancing the integrity of the ESRD PPS. In addition, CMS 
would evaluate whether the data could be used to inform future 
refinements to the existing patient-level adjustment factors set forth 
at Sec.  413.235(a), which may include age, BMI, BSA, and co-
morbidities such as sickle cell anemia. Finally, CMS would review the 
data for its potential to identify any disparities from a health equity 
perspective and to support the future proposal of any new patient-level 
adjustment factors, including potential SDOH factors. We note that such 
data may also be used to inform potential future refinements to the 
facility-level adjustment factors, if appropriate. Per 42 CFR 413.196, 
we would publish notice of any proposed changes to payment adjustments, 
including adjustments to the composite rate, in the Federal Register.
(a) Proposed Changes to 42 CFR 413.198
    We propose to amend 42 CFR 413.198 by adding language at Sec.  
413.198(b)(5) that would require each ESRD facility to submit data and 
information, under existing paragraph Sec.  413.198(b)(3) describing 
allowable costs, of the types and in the formats established by CMS, 
for the purpose of estimating patient-level and facility-level 
variation in resource use, such as data and information on the duration 
of hemodialysis treatment (that is, time on machine data) involved in 
furnishing hemodialysis treatment in center in an ESRD facility. For 
additional context, we note that, under Sec.  413.198(b)(3), allowable 
cost is the reasonable cost related to renal dialysis treatments. 
Reasonable cost includes all necessary and proper expenses incurred by 
the ESRD facility in furnishing the renal dialysis treatments, such as 
administrative costs, maintenance costs, and premium payments for 
employee health and pension plans. Reasonable cost includes both direct 
and indirect costs and normal standby costs.
    We also propose to update Sec.  413.198(a) by adding a reference to 
section 1881(b)(14) of the Act to acknowledge the statutory provisions 
for the ESRD PPS.
    (b) Additional Considerations for the Proposed Reporting of Time on 
Machine Data CMS reviewed past comments from its TEPs and RFIs and gave 
additional consideration to the approach of our now-rescinded sub-
regulatory guidance in Transmittal 10368 and to the complexities of 
reporting the number of minutes of hemodialysis treatment on patient 
claims. With this background in mind, we further refined our proposed 
requirements at proposed Sec.  413.198(b)(5) in a way that would result 
in the reporting of the most useful, high value data.
    In light of past comments questioning the feasibility and accuracy 
of time on machine reporting for home dialysis patients, we are 
proposing a reporting requirement that would only apply to patients 
receiving an in-center hemodialysis treatment. We believe this approach 
would ensure greater uniformity to the recording process and thus 
greater consistency in the data reported. We note that Chapter 11 of 
the Medicare Benefit Policy Manual at

[[Page 42470]]

section 10.A.1,\50\ defines ``hemodialysis'' as the process by which 
blood passes through an artificial kidney machine and the waste 
products diffuse across a manmade membrane into a bath solution known 
as dialysate after which the cleansed blood is returned to the 
patient's body. Hemodialysis is accomplished usually in 3 to 5 hour 
sessions, 3 times a week.
---------------------------------------------------------------------------

    \50\ Section 10.A.1 of Chapter 11 of the Medicare Benefit Policy 
Manual also directs the reader to review section 50.A.1 of Chapter 
11 for payment information.
---------------------------------------------------------------------------

    CMS also considered past comments responding to its RFI in the CY 
2020 ESRD PPS final rule (84 FR 60648, 60782) regarding patient-level 
factors that contribute to high costs of care. CMS agrees with 
commenters that expressed that patient-level adjusters should be based 
on sound, empirical evidence of their contribution to cost of care.
    We also considered comments from a provider advocacy organization 
that opposed the use of time on machine data for purposes of ESRD PPS 
primarily because, they stated, certain patients benefit from shorter, 
more frequent dialysis, such as patients with catheter-related access 
issues, non-compliant patients, patients with chronic pain or diarrhea, 
and patients suffering from certain comorbidities. Still other 
commenters claimed that many subgroups of patients are challenged to 
stay on renal dialysis for the prescribed treatment time because of 
their physical status or other limitations, leading to more frequent 
treatment and/or higher costs related to patients' special 
circumstances and comorbidities and not to treatment duration. The 
commenters noted that, in both of the above scenarios, costs would 
remain the same. Further, they pointed out that some patients will not 
remain for their full renal dialysis treatment, and short of using 
restraints, there is nothing that can be done to force a patient to 
remain for their full prescribed treatment time. Therefore, in their 
view, using actual treatment time for cost allocation is not realistic.
    CMS agrees that the payment multipliers for patient-level adjusters 
should be grounded in strong evidence, and we recognize that each 
patient will have unique needs, with some being more costly to treat 
and others with fewer costs, given their medical backgrounds. We 
emphasize and again clarify that, under this proposal, time on machine 
data would not be directly used to determine payment for renal dialysis 
services, nor would higher payments be made for longer treatments.
    CMS also considered comments suggesting that a ``time on machine'' 
data element would not identify high-cost patients and comments 
suggesting such a data element would not be productive given the 
commenter's assertion that there was great homogeneity in treatment 
times across patients. One commenter noted that the vast majority of 
labor for renal dialysis treatments is putting the patient on and 
taking the patient off of dialysis, and another commenter pointed out 
that most renal dialysis treatments, regardless of time, will have 
similar composite rate costs. (In other words, they asserted that if a 
treatment is 3.5 hours compared to 5 hours, the composite rate costs 
for those treatments will be very similar. The only difference in cost 
between those two treatments would be 1.5 hours more use of utilities, 
dialysate and bicarbonate solution, machine depreciation, and a small 
amount of labor to check on the patient.) We agree with commenters that 
treatment times and costs may be similar across most patients based on 
our analysis and the comments of TEP participants. However, we would 
not expect to find that ESRD facilities are treating ESRD patients in a 
homogeneous fashion, but on a case-by-case basis determined by patient-
centered plans of care. We note that a review of CY 2016 cost report 
data, conducted as part of the December 2018 TEP,\51\ showed that 
overall costs of renal dialysis services (within the ESRD facility cost 
reports) increased with longer treatment times, and that this pattern 
was consistent for the individual cost report components.
---------------------------------------------------------------------------

    \51\ As presented on Slide 42 from the December 2018 TEP, 
overall costs of renal dialysis services (within the ESRD facility 
cost reports) increased with longer treatment times. See https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Downloads/ESRD-PPS-TEP-Presentation.pdf.
---------------------------------------------------------------------------

    We anticipate that the data that would become available under the 
proposed requirement, if finalized, for reporting time on machine data 
would provide insight into meaningful, measurable variabilities in 
certain costs associated with patient-level characteristics.
    The significance of the proposed time on machine data is dependent 
upon the collection of data from a preponderance of patient claims for 
in-facility hemodialysis. While the majority of patient claims may come 
from patients with similar profiles and treatment plans, the needs of 
the more complex and resource-intensive patients can only be identified 
by CMS through the collection of patient-level data from across the 
ESRD PPS patient population. Complex and resource-intensive patients 
are frequently encountered in the ESRD dialysis treatment setting, but 
it is not possible to obtain precise estimates of the higher costs of 
these patients' hemodialysis treatments from currently reported data. 
Cost reports and claims are the two data sources from which per 
treatment costs can be estimated. Since cost reports aggregate data at 
the facility level, patient-level differences in resource use are not 
detectable as higher medical needs, and related costs are masked by 
averages. Further, analysis of claims data from 2016 found that roughly 
99 percent of ESRD facilities reported 10 or fewer distinct charge 
values across all patients and treatment modalities.\52\ Routinely 
collected, ESRD patient population-based data on time on machine for 
each in-facility hemodialysis treatment would enable CMS to assess 
variation in the use of composite rate items and services at the 
patient level and to identify high-need and high-cost patients. In 
addition, the proposed time on machine data set would enable CMS to 
further determine what trends or causal relationships may exist between 
certain patient-level characteristics and the number of minutes of 
hemodialysis treatment received by such patients. CMS would evaluate 
whether specific patient characteristics are associated with increased 
length of dialysis treatment, which contribute to cost.
---------------------------------------------------------------------------

    \52\ See page 9 of the December 2018 TEP Report at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Downloads/ESRD-PPS-TEP-Summary-Report-June-2019.pdf. See also Slide 
27 from the December 2018 TEP Presentation at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/Downloads/ESRD-PPS-TEP-Presentation.pdf. And see Slide 30 from the December 
2019 TEP Presentation at https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-presentation-december-2019.pdf.
---------------------------------------------------------------------------

    We also considered comments that the costs to ESRD facilities for 
providing dialysis treatment could be better measured by looking at 
costs based on prescribed time, and not on the actual time a patient is 
on the dialysis machine. The commenters stated their view that looking 
to prescribed time(s) would be the most rational way to determine 
staffing levels (and costs), because ESRD facilities plan for dialysis 
session length based on the prescribed time. Although CMS recognizes 
ESRD facilities' labor practices to align staffing with the stated 
prescription times, CMS is concerned that, for some patients, their 
prescription times are not aligning with actual usage and thus may not 
be the best predictor of ESRD facilities' costs. For example, we are 
aware that patients who experience severe itching

[[Page 42471]]

or have certain psychological disorders may be less likely to receive 
dialysis for the full prescribed time. For such patients, only the 
collection of time on machine data for the number of minutes of 
hemodialysis treatment received would facilitate CMS's understanding of 
their complex needs and the implications for the ESRD PPS. For such 
patients, a pattern of shorter treatment times may ultimately result in 
worse patient outcomes and higher patient costs to the ESRD facility as 
well as to Medicare. CMS is also aware that patients with certain 
characteristics, such as higher BSA quartiles, may be more likely to 
need longer dialysis times.\53\ Additionally, CMS has been made aware 
of instances in which ESRD facilities may avoid treating complex 
patients or patients with higher costs generally (thereby favoring 
average or lower cost patients). We note that prescribed dialysis times 
would not provide insight into costs for dialysis sessions for patients 
whose individual needs or circumstances might necessitate a dialysis 
treatment time that differs in practice from the prescribed dialysis 
time. Therefore, identifying actual resource usage, as correlated with 
the needs, health outcomes, and patient-level characteristics of 
complex patients would enable CMS to better align the payment 
multipliers with resource use within the ESRD PPS.
---------------------------------------------------------------------------

    \53\ See slide 31 from the 2020 ESRD TEP presentation, which can 
be found here: https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-presentation-december-2020.pdf.
---------------------------------------------------------------------------

    We anticipate that our proposed requirement would generate the data 
we would need to evaluate a potential adjustment of the payment 
multipliers for patient level adjustments, thereby allowing us to 
counteract possible financial disincentives to serving those patients. 
We would expect that such adjustments may thereby enhance access to 
renal dialysis services for such resource-intensive patients. We also 
believe that collecting time on machine data is preferable to 
collecting prescribed times, since we recognize that patients' actual 
experiences do not always align with their doctors' orders.
    Finally, we considered the comments by a small renal dialysis 
organization within a large non-profit health system that reporting 
treatment times would be difficult and confusing and that identified 
many factors that would need to be outlined by CMS including: When does 
renal dialysis time start; what happens when a patient chooses to 
discontinue their treatment early, or has complications resulting in 
reduced treatment time; what happens when an ESRD facility 
inadvertently does not track time for a treatment; how does this 
information get included on a claim. We recognize that a new reporting 
requirement will require uniformity in its implementation across ESRD 
facilities. We note that the proposed ``time on machine'' requirement 
is for the reporting of the number of minutes of hemodialysis treatment 
a beneficiary receives, and it refers to only the minutes (reported in 
whole minutes) spent dialyzing, while the patient is connected to the 
dialysis machine. If the proposed requirement were to be finalized, we 
would address such details in operational guidance.
(c) Using a Medicare Claims Data Field to Report Time on Machine Data
    We propose that ESRD facilities report the number of minutes of 
hemodialysis treatment received in center in an ESRD facility using the 
D6 value code on the Medicare 72X type of bill (TOB) that is part of 
the CMS claim form CMS-1450 (UB-04) (OMB-0938-0997).\54\ While our 
proposal limits the time on machine reporting requirement to in-center 
claims, to address the concerns raised by interested parties about the 
burden and complexity of home dialysis reporting, we note that time on 
machine for home dialysis data could nonetheless be voluntarily 
reported using the D6 value code on claims.
---------------------------------------------------------------------------

    \54\ We considered collecting relevant time on machine duration 
of treatment data through the ESRD Quality Reporting System (EQRS), 
but we did not propose this approach due to concerns that interested 
parties raised--which we discussed in the December 2018 TEP and in 
the ESRD PPS CY 2020 final rule--that CROWNWeb (now EQRS) data is 
not reflective of typical patient treatment duration throughout the 
month. We note that EQRS data is reported once per patient-month and 
thus would include fewer observations than duration of treatment 
data reported for every renal dialysis treatment. It could therefore 
be less reliable for the purposes of monitoring and evaluating 
patient-level resource use, as well as for the purposes of 
apportioning composite rate costs for use in the case-mix 
adjustment. We further note that EQRS data are submitted on a 
voluntary basis and reflect a point in time each month for each 
facility and thus do not capture the full range of variation that 
ESRD facilities experience with patients over time.
---------------------------------------------------------------------------

    CMS further notes that the proposed time on machine data 
requirement would be collected on Medicare 72X claims. This approach 
would address long-standing concerns, including such concerns raised by 
MedPAC and other interested parties, that CMS should move to a one-
equation model. CMS agrees with interested parties that a single-
equation model, to be constructed at the patient level, would reduce 
the complexity of the current model and would better align payment with 
costs. The current two-equation model's payment adjusters are derived 
using weighted averages of the coefficients from the facility-level and 
patient-level equations. Because the composite rate items currently 
compose roughly 90 percent of the payment, we are seeking a more 
detailed understanding of patients' utilization of such treatment 
resources. We anticipate that the time on machine data would provide a 
useful proxy for these composite rate items.
    Furthermore, CMS notes that its proposal to collect time on machine 
data on patient claims would address past comments on whether such a 
reporting requirement could create perverse incentives for ESRD 
facilities to amend actual reported time on machine. Another past 
commenter expressed concern about whether an ESRD facility might have 
the renal dialysis run a few extra minutes to increase the payment. 
However, we note that requiring the reporting of time on machine data 
on a claim, by definition, would involve an attestation that the 
information submitted is correct and that the items presented represent 
medically necessary expenses. The False Claims Act (31 U.S.C. 3729 to 
3733) establishes civil liability for knowingly presenting a false or 
fraudulent claim to the government for payment.
    We note that, if the proposed requirement to collect duration of 
treatment data were to be finalized, we would then issue operational 
guidance in support of the requirement. Such guidance would describe 
the applicable instructions for reporting a value code (in this case, 
the D6 \55\ value code) connected to the number of minutes of 
hemodialysis treatment provided to a patient in center.
---------------------------------------------------------------------------

    \55\ Value code D6 on claim form CMS-1450 (UB-04) (OMB-0938-
0997), for reporting the total number of minutes of dialysis 
provided during the billing period.
---------------------------------------------------------------------------

(d) Proposed Use of Time on Machine Data for the ESRD PPS
    We emphasize and again clarify that, under this proposal, time on 
machine data would not be directly used to determine payment for renal 
dialysis services, nor would higher payments be made for longer 
treatments. Rather, time on machine data would allow for patient-
specific calculation of costs for composite rate services, including 
labor costs, costs for the use of renal dialysis machines and related 
equipment, and costs for such items as dialysate and other essential 
supplies. In this way, time on machine data would be used to 
disaggregate facility-level composite rate costs (as obtained from the 
cost reports) and assign them to the patient-month

[[Page 42472]]

level, which would enable a refined, single-equation estimation 
methodology. The refined, single-equation regression analysis 
(currently under development) would still be used to determine the 
inclusion/exclusion and magnitude of payment multipliers for patient-
level case-mix flags that are associated with higher costs. Final 
payment adjustments would still only depend on existing patient-level 
case-mix adjustors, rather than a factor directly derived from time on 
machine data.
(e) Request for Information About Effective Date
    We are proposing a January 1, 2025, effective date for this new 
reporting requirement. We are aware that all ESRD facilities record the 
time a patient has received hemodialysis treatment into a patient's 
medical record, and that, for most ESRD facilities, this time is 
automatically recorded into the patient's electronic health record 
(EHR). We further understand that ESRD facilities are able to transfer 
data from EHRs into the patient-specific claims that are submitted to 
Medicare for payment. However, we recognize that some ESRD facilities 
with limited resources may need to make modifications to their record 
keeping and reporting systems to facilitate the transfer of a patient's 
recorded hemodialysis treatment time in the patient's medical record to 
the Medicare claim. Although we did receive a past comment indicating 
that a facility's implementation time would involve training staff on 
how to count and track time, we do not expect that the manual recording 
of a patient's hemodialysis treatment time into their health record is 
widespread. Finally, we note that ESRD facilities are already reporting 
extensive information from patient EHRs into Medicare institutional 
claim form CMS-1450 (UB-04) (OMB-0938-0997), and we would not expect 
implementation to be overly burdensome to ESRD facilities. We recognize 
that some ESRD facilities would need to establish a new pathway from 
patient EHRs to the Medicare claim form, in addition to making simpler 
programming updates to add a field for the total number of minutes of 
dialysis provided during the billing period. Based on our findings in 
the TEP from December 2018, we anticipate that the implementation 
challenges that ESRD facilities might experience would be small and 
temporary, as a patient's time receiving dialysis treatment is already 
collected for the patient's medical record. We are seeking comment on 
whether an earlier effective date, such as January 1, 2024, is feasible 
and would provide ESRD facilities with adequate time to implement this 
new reporting requirement.
(6) Proposed Technical Change to 42 CFR 413.198
    We are proposing to fix a typographical error in 42 CFR 
413.198(b)(3)(iii), which currently refers to ``luxury items or 
servicess''. We are proposing to change this to ``luxury items or 
services''.
k. Proposed Clarification to TDAPA Average Sales Price (ASP) Policy
    In the CY 2020 ESRD PPS final rule, we finalized a conditional 
policy for TDAPA payment based on the availability of ASP data (84 FR 
60679). In that final rule, we explained that if drug manufacturers 
were to stop submitting full quarters of ASP data for products that are 
eligible for the TDAPA, and we had to revert to basing the TDAPA on WAC 
or invoice pricing, we believed we would be overpaying for the TDAPA 
for those products. We stated that we would no longer apply the TDAPA 
for a new renal dialysis drug or biological product if a drug 
manufacturer submits a full calendar quarter of ASP data into CMS 
within 30 days after the last day of the 3rd calendar quarter after the 
TDAPA is initiated for the product, but at a later point during the 
applicable TDAPA period specified in Sec.  413.234(c)(1) or (2), stops 
submitting a full calendar quarter of ASP data into CMS. We explained 
that once we determine that the latest full calendar quarter of ASP is 
not available, we would stop applying the TDAPA for the new renal 
dialysis drug or biological product within the next 2-calendar 
quarters. For example, we stated that if we begin paying the TDAPA on 
January 1, 2021 for an eligible new renal dialysis drug or biological 
product, and a full calendar quarter of ASP data is made available to 
CMS by October 30, 2021 (30 days after the close of the 3rd quarter of 
paying the TDAPA), but a full calendar quarter of ASP data is not made 
available to CMS as of January 30, 2022 (30 days after the close of the 
4th quarter of paying the TDAPA), we would stop applying the TDAPA for 
the product no later than June 30, 2022 (2 quarters after the 4th 
quarter of paying the TDAPA).
    We adopted this conditional policy in order to avoid overpaying for 
the TDAPA on an ongoing basis and in order to ensure that TDAPA payment 
is based on the most appropriate data, that is, ASP. Specifically, we 
explained in the CY 2020 ESRD PPS proposed rule (84 FR 38349) and final 
rule (84 FR 60680) that we were concerned about (1) increases to 
Medicare expenditures due to the TDAPA for calcimimetics; (2) drug 
manufacturers not reporting ASP data for products eligible for TDAPA; 
and (3) our TDAPA policy potentially incentivizing drug manufacturers 
to withhold ASP data from CMS.
    Our existing regulation at Sec.  413.234(c) does not specifically 
address the application of the TDAPA conditional policy in situations 
in which the manufacturer of the new renal dialysis drug or biological 
product submitted ASP data to CMS and reported zero or negative sales. 
Zero or negative sales may occur for a variety of reasons, including no 
sales, recalls of a product, or repurchases of sold products. In the CY 
2012 PFS final rule (76 FR 73296), CMS clarified that zero or negative 
values are valid for ASP, ASP units, and WAC. Therefore, when such a 
scenario occurs for separately payable Part B drugs, we consider the 
submission of zero or negative sales to fulfill the reporting 
requirements of manufacturer ASP data to CMS as set forth in sections 
1927(b)(3)(A)(iii) and 1847A(f) of the Act. We note that in situations 
when zero sales are submitted, CMS guidance \56\ instructs the 
manufacturer to report ``0.000'' for the ASP and the number of ASP 
units. The payment allowance limits for drugs and biologicals that are 
not included in the ASP Medicare Part B Drug Pricing File or Not 
Otherwise Classified (NOC) Pricing File, other than new drugs that are 
produced or distributed under a new drug application (or other 
application) approved by the Food and Drug Administration, are based 
either on the published WAC or invoice pricing (except under OPPS, 
where the payment allowance limit is 95 percent of the published 
average wholesale price (AWP)). In determining the payment limit based 
on WAC, the contractors follow the methodology specified in Publication 
100-04, Chapter 17, section 20.4 Drugs and Biologicals, for calculating 
the AWP, but substitute WAC for AWP. The payment limit is 106 percent 
of the lesser of the lowest-priced brand or median generic WAC.\57\ 
Therefore, for purposes of the TDAPA conditional policy, in 
circumstances where a manufacturer submitted ASP data reflecting zero 
or negative sales during the TDAPA period, we are

[[Page 42473]]

clarifying that we consider CMS to have received the latest full 
calendar quarter of ASP data, and we would not discontinue TDAPA 
payment under the conditional policy in Sec.  413.234(c). Consistent 
with the pricing methodologies for separately payable Part B drugs, we 
would set the TDAPA payment amount based on WAC, or if WAC is not 
available, invoice pricing, for the quarter in which zero or negative 
sales were reported.
---------------------------------------------------------------------------

    \56\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/Downloads/ASP_Data_Collection_Validation_Macro_User_Guide.pdf.
    \57\ Medicare Claims Processing Manual Chapter 17, section 
20.1.3 https://www.cms.gov/Regulations-and-Guidance/Guidance/
Manuals/Downloads/clm104c17.pdf.
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C. Transitional Add-On Payment Adjustment for New and Innovative 
Equipment and Supplies (TPNIES) Proposals and Application for CY 2024 
Payment

1. Background
    In the CY 2020 ESRD PPS final rule (84 FR 60681 through 60698), CMS 
established the transitional add-on payment adjustment for new and 
innovative equipment and supplies (TPNIES) under the ESRD PPS, under 
the authority of section 1881(b)(14)(D)(iv) of the Act, to support ESRD 
facility use and beneficiary access to these new technologies. We 
established this add-on 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 TPNIES.
    In the CY 2020 ESRD PPS final rule (84 FR 60650), we established in 
Sec.  413.236(b) that for dates of service occurring on or after 
January 1, 2020, we would 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 granted marketing authorization by the FDA on or after 
January 1, 2020; (3) is commercially available by January 1 of the 
particular CY, 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 CY; (5) is 
innovative, meaning it meets the substantial clinical improvement 
criteria specified in the Inpatient Prospective Payment System (IPPS) 
regulations at 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 we would use 
the following criteria to evaluate substantial clinical improvement for 
purposes of the TPNIES under the ESRD PPS based on the IPPS substantial 
clinical improvement criteria in Sec.  412.87(b)(1) and related 
guidance:
    A new technology represents an advance that substantially improves, 
relative to renal dialysis services previously available, the diagnosis 
or treatment of Medicare beneficiaries. First, CMS considers the 
totality of the circumstances when making a determination that a new 
renal dialysis equipment or supply represents an advance that 
substantially improves, relative to renal dialysis services previously 
available, the diagnosis or treatment of Medicare beneficiaries. 
Second, a determination that a new renal dialysis equipment or supply 
represents an advance that substantially improves, relative to renal 
dialysis services previously available, the diagnosis or treatment of 
Medicare beneficiaries means one of the following:
     The new renal dialysis equipment or supply offers a 
treatment option for a patient population unresponsive to, or 
ineligible for, currently available treatments; or
     The new renal dialysis equipment or supply offers the 
ability to diagnose a medical condition in a patient population where 
that medical condition is currently undetectable, or offers the ability 
to diagnose a medical condition earlier in a patient population than 
allowed by currently available methods, and there must also be evidence 
that use of the new renal dialysis service to make a diagnosis affects 
the management of the patient; or
     The use of the new renal dialysis equipment or supply 
significantly improves clinical outcomes relative to renal dialysis 
services previously available as demonstrated by one or more of the 
following: (1) a reduction in at least one clinically significant 
adverse event, including a reduction in mortality or a clinically 
significant complication; (2) a decreased rate of at least one 
subsequent diagnostic or 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; an improved 
quality of life; or (6) a demonstrated greater medication adherence or 
compliance; or,
     The totality of the circumstances otherwise demonstrates 
that the new renal dialysis equipment or supply substantially improves, 
relative to renal dialysis services previously available, the diagnosis 
or treatment of Medicare beneficiaries.
    Third, evidence from the following published or unpublished 
information sources from within the United States or elsewhere may be 
sufficient to establish that a new renal dialysis equipment or supply 
represents an advance that substantially improves, relative to renal 
dialysis services previously available, the diagnosis or treatment of 
Medicare beneficiaries: Clinical trials, peer reviewed journal 
articles; study results; meta-analyses; consensus statements; white 
papers; patient surveys; case studies; reports; systematic literature 
reviews; letters from major healthcare associations; editorials and 
letters to the editor; and public comments. Other appropriate 
information sources may be considered.
    Fourth, the medical condition diagnosed or treated by the new renal 
dialysis equipment or supply may have a low prevalence among Medicare 
beneficiaries.
    Fifth, the new renal dialysis equipment or supply may represent an 
advance that substantially improves, relative to services or 
technologies 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.
    In the CY 2020 ESRD PPS final rule (84 FR 60681 through 60698), we 
also established a process modeled after IPPS's process of determining 
if a new medical service or technology meets the substantial clinical 
improvement criteria specified in Sec.  412.87(b)(1). As we discussed 
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 payment adjustments similar to the IPPS New 
Technology Add-On Payment and to provide stakeholders with standard 
criteria for both inpatient and ESRD facility 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. We would 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

[[Page 42474]]

ESRD PPS proposed rules. Then, after consideration of public comments, 
we would 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. 
In the CY 2020 ESRD PPS final rule, we also specified certain deadlines 
for the application requirements. We noted that we would only consider 
a complete application received by February 1 prior to the particular 
CY. In addition, we required that FDA marketing authorization for the 
equipment or supply must occur by September 1 prior to the particular 
CY. We also stated in the CY 2020 ESRD PPS final rule (84 FR 60690 
through 60691) that we would establish a workgroup of CMS medical and 
other staff to review the materials submitted as part of the TPNIES 
application, public comments, FDA marketing authorization, and HCPCS 
application information and assess the extent to which the product 
provides substantial clinical improvement over current technologies.
    In the CY 2020 ESRD PPS final rule, we established Sec.  413.236(d) 
to provide a payment adjustment for certain new and innovative renal 
dialysis equipment or supplies. We stated that the TPNIES is paid for 
two calendar years. 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.
    Regarding the basis of payment for the TPNIES, in the CY 2020 ESRD 
PPS final rule, we finalized at Sec.  413.236(e) that the TPNIES is 
based on 65 percent of the price established by the MACs, using the 
information from the invoice and other specified sources of 
information.
    In the CY 2021 ESRD PPS final rule (85 FR 71410 through 71464), we 
made several changes to the TPNIES eligibility criteria at Sec.  
413.236. First, we revised the definition of new at Sec.  413.236(b)(2) 
as within 3 years beginning on the date of the FDA marketing 
authorization. Second, we changed the deadline for TPNIES applicants' 
HCPCS Level II code application submission from September 1 of the 
particular CY to 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 CY. 
In addition, a copy of the applicable 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. 
Third, we revised Sec.  413.236(b)(5) to remove a reference to related 
guidance on the substantial clinical improvement criteria, as the 
guidance had already been codified.
    Finally, in the CY 2021 ESRD PPS final rule, we expanded the TPNIES 
policy to include certain capital-related assets that are home dialysis 
machines when used in the home for a single patient. We explained that 
capital-related assets 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). We noted that examples of capital-related assets for 
ESRD facilities are dialysis machines and water purification systems. 
We explained that, although we stated in the CY 2020 ESRD PPS proposed 
rule (84 FR 38354) that 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 are generally used for multiple patients, there were a 
number of other factors we considered that led us to consider expanding 
eligibility for these technologies in the CY 2021 ESRD PPS rulemaking. 
We explained that, following publication of the CY 2020 ESRD PPS final 
rule, 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 considered various HHS home 
dialysis initiatives, Executive Orders to transform kidney care, and 
how the risk of COVID-19 for particularly vulnerable ESRD beneficiaries 
could be mitigated by encouraging home dialysis.
    After closely considering these issues, we proposed a revision to 
Sec.  413.236(b)(6) in the CY 2021 ESRD PPS proposed rule 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.  413.235(b), and finalized 
the exception as proposed in the CY 2021 ESRD PPS final rule. We 
finalized the same determination process for TPNIES applications for 
capital-related assets that are home dialysis machines as for all other 
TPNIES applications; that we will consider whether the new home 
dialysis machine meets the eligibility criteria specified in Sec.  
413.236(b) and announce the results in the Federal Register as part of 
our annual updates and changes to the ESRD PPS. In accordance with 
Sec.  413.236(c), we will only consider, for additional payment using 
the TPNIES for a particular CY, an application for a capital-related 
asset that is a home dialysis machine received by February 1 prior to 
the particular CY. If the application is not received by February 1, 
the application will be denied and the applicant is able to reapply 
within 3 years beginning on the date of FDA marketing authorization to 
be considered for the TPNIES, in accordance with Sec.  413.236(b)(2).
    In the CY 2021 ESRD PPS final rule, at Sec.  413.236(f), we 
finalized a pricing methodology for capital-related assets that are 
home dialysis machines when used in the home for a single patient, 
which requires the MACs to calculate the annual allowance and the 
preadjusted per treatment amount. 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.\58\ 
We finalized that this amount would be updated on an annual basis so 
that it is consistent with how the ESRD PPS base rate is updated.
---------------------------------------------------------------------------

    \58\ The CY 2023 TPNIES offset amount was $9.79. CMS is 
proposing a CY 2024 TPNIES offset amount of $9.96, as discussed in 
section II.B.1.e of this proposed rule.
---------------------------------------------------------------------------

    We revised 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.
    We revised Sec.  413.236(d)(2) to reflect 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 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.
    In summary, under the current eligibility requirements in Sec.  
413.236(b), CMS provides for a 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 within 3 years beginning on the date of the FDA 
marketing authorization; (3) is commercially available by January 1 of 
the particular CY, meaning the year in

[[Page 42475]]

which the payment adjustment would take effect; (4) has a complete 
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 DMEPOS items 
and services as specified in the HCPCS Level II coding guidance on the 
CMS website prior to the CY; (5) is innovative, meaning it meets the 
criteria specified in Sec.  412.87(b)(1); and (6) is not a capital-
related asset, except for capital-related assets that are home dialysis 
machines.
2. Proposed Clarifications Regarding CMS's Evaluation of the TPNIES 
Eligibility Criteria
    This section of the proposed rule discusses proposed clarifications 
to our policies for evaluating the TPNIES eligibility criteria under 
Sec.  413.236(b).
a. Sequential Order of CMS Review of the TPNIES Eligibility Criteria 
(Sec.  413.236(b))
    As stated previously, we consider whether a new renal dialysis 
supply or equipment meets the TPNIES eligibility criteria as part of 
the annual ESRD PPS rulemaking and announce the results in ESRD PPS 
final rule. To qualify for the TPNIES, an applicant must meet each of 
the TPNIES eligibility criteria set forth in Sec.  413.236(b)(1) 
through (6). An applicant that fails to demonstrate that it meets each 
of the six eligibility criteria is not eligible for the TPNIES.
    In the CY 2021 ESRD PPS final rule, we focused our analysis of the 
TPNIES eligibility criteria on those that were not met. That is, for 
the Theranova Dialyzer, we included our analysis of how the applicant 
did not meet the innovation criterion under Sec.  413.236(b)(5), and 
for the Tablo[supreg] cartridge, we included our analysis of how the 
applicant did not meet the newness criterion under Sec.  413.236(b)(2) 
and innovation criterion under Sec.  413.236(b)(5) (85 FR 71444 through 
71464). In the CY 2022 and CY 2023 ESRD PPS final rules, we expanded 
our analysis to include our determination as to whether the applicants 
met each of the six criteria. In doing so, we analyzed the TPNIES 
eligibility criteria in the sequence that is provided in Sec.  
413.236(b)(1) through (6) (86 FR 61889 through 61906 and 87 FR 67193 
through 67216).
    We clarify that our analysis of the TPNIES eligibility criteria 
would continue to proceed in sequential order. Specifically, in the 
annual ESRD PPS proposed rule, we would continue to summarize the 
information from the application regarding each of the six eligibility 
criteria and include any questions or concerns that we identify during 
our analysis of the application.
    Based on information provided by the applicant and from public 
comments during the annual ESRD PPS rulemaking cycle, we would continue 
to analyze the TPNIES eligibility criteria in sequential order in the 
annual ESRD PPS final rule. However, the change that we are proposing 
is that once it has been established that one criterion has not been 
met, we would not discuss or make specific determinations on the 
subsequent criteria for that item in the annual ESRD PPS final rule. We 
note that the criteria set forth in Sec.  413.236(b) are intentionally 
listed in the order in which they appear. The first criterion is 
foundational in that an equipment or supply that is not a renal 
dialysis service would not be paid for under the ESRD PPS and therefore 
would not fit within the TPNIES payment pathway. As such, it would not 
be pertinent to evaluate the remaining TPNIES criteria for that item. 
TPNIES criteria two through four are objective and not subject to 
interpretation in that they each require date evidence to demonstrate 
newness, commercial availability, and the submission of a HCPCS 
application, respectively. The TPNIES innovation criterion under Sec.  
413.236(b)(5) requires the most significant CMS evaluation. Under our 
TPNIES policy and Sec.  412.87(b)(1)(i), CMS is required to consider 
the totality of the circumstances 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. In 
doing so, we consider various non-objective circumstances in our review 
of the TPNIES applications, including the state of the ESRD landscape 
and the particular challenges and vulnerabilities of patients with ESRD 
(86 FR 61905). We believe that it is prudent to reserve our in-depth 
analysis of the TPNIES innovation criterion only for applications that 
provide the necessary evidence to demonstrate that they meet the 
earlier foundational and objective TPNIES criteria.
    As described previously in the background section of this proposed 
rule, the TPNIES innovation criterion in Sec.  413.236(b)(5) 
incorporates the substantial clinical improvement criteria in the IPPS 
regulations at Sec.  412.87(b)(1) for the new technology add-on payment 
(NTAP). This sequential approach for reviewing eligibility criteria is 
also in place for the NTAP pathway. The FY 2009 IPPS final rule (73 FR 
48561 through 48563) discussed the way in which CMS evaluates the NTAP 
eligibility criteria for new medical service or technology add-on 
payment applications. That is, we first determine whether a medical 
service or technology meets the newness criterion, and only if so, do 
we then make a determination as to whether the technology meets the 
cost threshold and represents a substantial clinical improvement over 
existing medical services or technologies. The NTAP cost criterion is 
not applicable in analyzing TPNIES eligibility. However, consistent 
with our approach under NTAP, we believe that the most prudent use of 
CMS resources would be to reserve our analysis and determination 
regarding whether a new equipment or supply meets the TPNIES innovation 
criterion by representing a substantial clinical improvement over 
existing technologies until after we determine the new equipment or 
supply meets the earlier criteria.
    Under this proposal, we would first determine whether an equipment 
or supply meets the renal dialysis service criterion in Sec.  
413.236(b)(1) and present our analysis of this first criterion in the 
final rule. In instances where CMS determines that Sec.  413.236(b)(1) 
has been met, we would proceed in assessing the newness criterion in 
Sec.  413.236(b)(2) and present our analysis of this second criterion 
in the final rule. In instances where CMS determines that Sec.  
413.236(b)(2) has been met, we would proceed in assessing whether the 
commercial availability criterion in Sec.  413.236(b)(3) has either 
been met or the applicant expects that it will be met by January 1 of 
the particular calendar year deadline and present our analysis of this 
third criterion in the final rule. In instances where CMS determines 
that Sec.  413.236(b)(3) has been met or the applicant expects that it 
will be met by January 1 of the particular calendar year deadline, we 
would proceed in assessing the HCPCS Level II code application 
criterion in Sec.  413.236(b)(4) and present our analysis of this 
fourth criterion in the final rule. In instances where CMS determines 
that Sec.  413.236(b)(4) has been met, we would proceed in assessing 
the innovation criteria in Sec. Sec.  413.236(b)(5) and 412.87(b)(1) 
and present our analysis of this fifth criterion in the final rule. In 
instances where CMS determines that Sec.  413.236(b)(5) has been met, 
we would proceed in assessing the non-capital-related asset (except 
home dialysis machines) criterion in Sec.  413.236(b)(6) and present 
our analysis of this sixth criterion in the final rule. In instances 
where CMS determines that

[[Page 42476]]

Sec.  413.236(b)(6), as well as each of the five preceding criteria in 
Sec.  413.236(b)(1) through (5) as discussed above have been met, the 
equipment or supply would qualify for and would be paid for under the 
ESRD PPS using the TPNIES per Sec.  413.236(d) beginning in the year 
that is the subject of the rulemaking.
    In summary, we are proposing to clarify that as CMS proceeds 
through the sequential analysis of the six TPNIES eligibility criteria 
in the ESRD PPS final rule for a particular equipment or supply, once 
we determine that the item has failed to demonstrate having met one of 
the eligibility criteria, the item would be ineligible for the TPNIES. 
We would limit our analysis in the final rule to the TPNIES criterion 
that is not met and any preceding criteria that have been determined to 
have been met. We would not include the analysis of the remaining 
criteria in the final rule. If finalized, this policy would be 
effective January 1, 2024, and would apply to our analysis of TPNIES 
applications for CY 2025 payment.
b. Clarifications Regarding the TPNIES Newness Criterion (Sec.  
413.236(b)(2))
    As stated previously, applicants must meet the newness criterion in 
Sec.  413.236(b)(2) to qualify for the TPNIES. CMS defines the TPNIES 
newness criterion at Sec.  413.236(b)(2) as within 3 years beginning on 
the date of the FDA marketing authorization. In this proposed rule, we 
wish to clarify two distinct aspects of the criterion that are 
consistent with our current TPNIES policies and would not represent any 
changes to the eligibility criteria: (1) the 3-year newness period and 
(2) FDA marketing authorization.
    First, with respect to the 3-year newness period, we stated in the 
CY 2021 ESRD PPS final rule that by defining new as within 3 years 
beginning on the date of the FDA marketing authorization, we limit 
eligibility for the TPNIES to new technologies but allow prospective 
TPNIES applicants 3 years beginning on the date of FDA marketing 
authorization in which to submit their applications (85 FR 71410 
through 71464).
    To ensure that the timeframe during which a prospective TPNIES 
applicant is eligible to apply is clear, we are proposing to modify our 
regulation to specify that the applicant would have 3 years from the 
date of FDA marketing authorization to apply for the TPNIES, based on 
the date the application is submitted. This proposed modification is 
consistent with current policy, and while it is not a change in policy, 
we believe that clarifying the regulation text would help to eliminate 
any confusion about the 3-year newness period. As indicated in Sec.  
413.236(c), February 1 prior to the particular calendar year is the 
annual TPNIES application submission deadline. We are proposing to 
clarify that the 3-year newness period is only for submission of the 
complete application. An applicant does not have to ensure that the 
application is submitted and that CMS renders its determination through 
notice and comment rulemaking within the 3-year newness period. 
Specifically, we are proposing to revise Sec.  413.236(b)(2) to clarify 
that the equipment or supply is new if a complete application has been 
submitted to CMS under Sec.  413.236(c) within 3 years of the date of 
the FDA marketing authorization.
    Second, with respect to the requirement in Sec.  413.236(b)(2) that 
the equipment or supply must have FDA marketing authorization, we 
clarify that an equipment or supply with FDA Exempt status would not 
meet the newness criterion and therefore would not be eligible for the 
TPNIES. As described on the FDA website, the Medical Device Amendments 
of 1976 to the Federal Food, Drug, and Cosmetic Act established three 
regulatory classes for medical devices: Class I, Class II, and Class 
III. The three classes are based on the degree of control necessary to 
assure the various types of devices are safe and effective.\59\ Most 
Class 1 and some Class II devices, as noted on FDA's website, are 
exempt from premarket notification (510(k)) requirements, subject to 
certain limitations.\60\ As we stated in the CY 2023 ESRD PPS final 
rule, devices that receive FDA marketing authorization have met 
regulatory standards that provide a reasonable assurance of safety and 
effectiveness for the devices. For exempt devices, FDA has determined 
that a premarket notification is not required to provide a reasonable 
assurance of safety and effectiveness for the devices. However, 
generally a Class I or Class II device that is exempt from 510(k) 
requirements still must comply with certain regulatory controls (known 
as ``general controls'') to provide a reasonable assurance of safety 
and effectiveness for such devices. In limiting the TPNIES policy to 
items that have received FDA marketing authorization, we intended to 
exclude devices that lack FDA marketing authorization (87 FR 38511). In 
the absence of evidence that the renal dialysis equipment or supply is 
new, meaning a complete application has been submitted to CMS under 
Sec.  413.236(c) within 3 years of the date of the FDA marketing 
authorization, the equipment or supply would not meet the TPNIES 
newness criterion under Sec.  413.236(b)(2).
---------------------------------------------------------------------------

    \59\ Food & Drug Administration. Learn if a Medical Device Has 
Been Cleared by FDA for Marketing. Available at: https://www.fda.gov/medical-devices/consumers-medical-devices/learn-if-medical-device-has-been-cleared-fda-marketing. Accessed on March 14, 
2023.
    \60\ Food & Drug Administration. Class I and Class II Device 
Exemptions. Available at: https://www.fda.gov/medical-devices/classify-your-medical-device/class-i-and-class-ii-device-exemptions. 
Accessed on May 30, 2023.
---------------------------------------------------------------------------

    We received one application for the TPNIES for CY 2024. A 
discussion of the application is presented below.
3. CY 2024 TPNIES Application for Buzzy[supreg] Pro
    Pain Care LabsTM submitted an application for the TPNIES 
for Buzzy[supreg] Pro for CY 2024. Buzzy[supreg] Pro is one of several 
models of the Buzzy[supreg] device. The Buzzy[supreg] device is 
intended to control pain associated with needle procedures and for 
temporary relief of minor injuries. Buzzy[supreg] Pro is a palm-sized 
external use vibration device used with unique ice packs and is 
intended to temporarily desensitize and physiologically block pain 
associated with dialysis cannulation. The applicant stated that 
dialysis cannulation pain affects 12 to 80 percent of dialysis patients 
and is a substantial contributor to reduced quality of 
life.61 62 The applicant further stated that cannulation 
pain is associated with fear of the cannulation process, the decision 
to undergo hemodialysis and sometimes the hemodialysis itself.
---------------------------------------------------------------------------

    \61\ Kosmadakis G, Amara I, Costel G. Pain on arteriovenous 
fistula cannulation: A narrative review. Semin Dial 2021;34(4):275-
84 doi: 10.1111/sdi.12979 [published Online First: 20210507].
    \62\ Kosmadakis G, Amara B, Costel G, Lescure C. Pain associated 
with arteriovenous fistula cannulation: Still a problem. Nephrol 
Ther 2022;18(1):59-62 doi: 10.1016/j.nephro.2021.05.002 [published 
Online First: 20210618].
---------------------------------------------------------------------------

    The applicant described the steps for using Buzzy[supreg] Pro 
during dialysis: (1) thread the hands free strap or regular tourniquet 
through the ice pack and the device so that the ice pack is on the 
concave side of the device; (2) attach the device and the ice directly 
over the site; (3) activate the vibration toggle switch and leave in 
place 30 to 120 seconds; (4) during cannulation, move the device 
proximally so the dot on the side opposite the switch is 2 to 3 cm 
proximal to the cannulation site; (5) clean the site per cannulation 
protocol; and (6) remove the device after the painful part of procedure 
is completed.
a. Renal Dialysis Service Criterion (Sec.  413.236(b)(1))
    Regarding the first TPNIES eligibility criterion in Sec.  
413.236(b)(1), that the item

[[Page 42477]]

has been designated by CMS as a renal dialysis service under Sec.  
413.171, pain management associated with dialysis cannulation is a 
service that is furnished to individuals for the treatment of ESRD and 
is essential for the delivery of maintenance dialysis, and therefore 
would be considered a renal dialysis service under Sec.  413.171.
b. Newness Criterion (Sec.  413.236(b)(2))
    With respect to the second TPNIES eligibility criterion in Sec.  
413.236(b)(2), that the item is new, meaning within 3 years beginning 
on the date of the FDA marketing authorization, the applicant stated 
that it is seeking 510(k) marketing authorization from the FDA for a 
new utility and design of Buzzy[supreg] created for dialysis fistulae 
sites, patented in 2022 under the name Buzzy[supreg] Pro. To be 
eligible for the TPNIES, the applicant must apply within 3 years of the 
FDA marketing authorization date and receive FDA marketing 
authorization by the HCPCS Level II deadline of July 3, 2023.
    The applicant submitted the indications for use portion of its FDA 
510(k) application that identifies Buzzy[supreg] as all Buzzy[supreg] 
models: Mini Healthcare, XL Healthcare, Mini Personal, XL Personal and 
Pro to control pain associated with needle procedures including 
dialysis and the temporary relief of minor injuries. The applicant 
provided supplemental information in a document titled ``510(k) 
Summary'' that included a comparison table of the Predicate Device 
(K130631) to the Subject Device (K202993). The document indicated that 
only the Buzzy[supreg] Pro model is recommended for dialysis. The 
document also indicated that Buzzy[supreg] Pro is identical to the 
predicate device in terms of materials, vibration motor, circuitry, 
functionality, and intended use; differs only in shape but is 
comparable in size to the predicate device; and Buzzy[supreg] Pro is 
distinguished by its rectangular shape to offer users a more 
professional looking alternative to the bee-shape of the other device. 
We would be interested in better understanding the way in which the 
Buzzy[supreg] Pro, that is the subject of this TPNIES application, 
differs from the other Buzzy[supreg] models and whether Buzzy[supreg] 
Pro is indicated for adult versus pediatric patients, or both. We note 
that to satisfy the newness criterion, the FDA 510(k) marketing 
authorization must have been issued within 3 years covering the 
specific device and model that is the subject of the TPNIES 
application. We welcome public comment on this issue.
c. Commercial Availability Criterion (Sec.  413.236(b)(3))
    Regarding the third TPNIES eligibility criterion in Sec.  
413.236(b)(3), that the item is commercially available by January 1 of 
the particular calendar year, meaning the year in which the payment 
adjustment would take effect, the applicant stated that it expects 
Buzzy[supreg] Pro would be commercially available immediately after 
receiving FDA marketing authorization.
d. HCPCS Level II Application Criterion (Sec.  413.236(b)(4))
    Regarding the fourth TPNIES eligibility criterion in Sec.  
413.236(b)(4) requiring that the applicant submit a complete HCPCS 
Level II code application by the HCPCS Level II application deadline of 
July 3, 2023, the applicant stated that it intends to apply by the 
deadline.
e. Innovation Criteria (Sec. Sec.  413.236(b)(5) and 412.87(b)(1))
(1) Substantial Clinical Improvement Claims and Sources
    With regard to the fifth TPNIES eligibility criterion under Sec.  
413.236(b)(5), that the item is innovative, meaning it meets the 
substantial clinical improvement criteria specified in Sec.  
412.87(b)(1), the applicant presented two substantial clinical 
improvement claims. First, the applicant stated that Buzzy[supreg] Pro 
controls needle pain for dialysis. Specifically, per the applicant, 
Buzzy[supreg] Pro makes cannulation pain relief available to dialysis 
patients, which significantly improves clinical outcomes related to 
depression and discontinuation of dialysis due to needle pain. Second, 
the applicant stated that Buzzy[supreg] Pro reduces needle fear.
    With respect to the claim that Buzzy[supreg] Pro controls needle 
pain for dialysis, the applicant stated that currently, the most 
effective options for dialysis cannulation pain are the topical 
anesthetic, EMLA[supreg] and vapocoolant spray.\63\ Per the applicant, 
systematic reviews recommend against vapocoolant use due to lack of 
efficacy \64\ and EMLA[supreg] incurs $15 cost per use and takes 1 hour 
to become effective. The applicant asserted that the Buzzy[supreg] 
device has been shown to be superior to vapocoolant spray \65\ and 
equivalent to topical anesthetics EMLA[supreg] and LMX[supreg] at a 
fraction of the cost and time.66 67 The applicant stated 
that while ice is effective for reducing dialysis pain for both adults 
and children, it is messy and inferior. The applicant further stated 
that a Buzzy[supreg] device cannulation study in adults found that ice 
is only 10 percent of the effect, with the mechanical gate control 
neuromodulation (vibration) providing 90 percent of the pain 
relief.\68\
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    \63\ [Ccedil]elik G, [Ouml]zbek O, Y[inodot]lmaz M, Duman I, 
[Ouml]zbek S, Apiliogullari S. Vapocoolant spray vs lidocaine/
prilocaine cream for reducing the pain of venipuncture in 
hemodialysis patients: a randomized, placebo-controlled, crossover 
study. Int J Med Sci 2011;8(7):623-7 doi: 10.7150/ijms.8.623 
[published Online First: 20111012].
    \64\ Hogan ME, Smart S, Shah V, Taddio A. A systematic review of 
vapocoolants for reducing pain from venipuncture and venous 
cannulation in children and adults. J Emerg Med 2014;47(6):736-49 
doi: 10.1016/j.jemermed.2014.06.028 [published Online First: 
20140829].
    \65\ Baxter AL, Leong T, Mathew B. External thermomechanical 
stimulation versus vapocoolant for adult venipuncture pain: pilot 
data on a novel device. Clin J Pain 2009;25(8):705-10 doi: 10.1097/
AJP.0b013e3181af1236 [published Online First: 2009/11/19].
    \66\ Lescop K, Joret I, Delbos P, et al. The effectiveness of 
the Buzzy[supreg] device to reduce or prevent pain in children 
undergoing needle-related procedures: The results from a 
prospective, open-label, randomised, non-inferiority study. Int J 
Nurs Stud 2021;113:103803 doi: 10.1016/j.ijnurstu.2020.103803 
[published Online First: 20201019].
    \67\ Potts DA, Davis KF, Elci OU, Fein JA. A Vibrating Cold 
Device to Reduce Pain in the Pediatric Emergency Department: A 
Randomized Clinical Trial. Pediatr Emerg Care 2017 doi: 10.1097/
pec.0000000000001041 [published Online First: 2017/01/26].
    \68\ Abidin NH. Assessing The Effectiveness Of A 
Thermomechanical Device (Buzzy[supreg]) In Reducing Venous 
Cannulation Pain In Adult Patients. Middle East Journal of 
Anesthesiology 2018;25(1):61-67.
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    With respect to the claim that Buzzy[supreg] Pro reduces needle 
fear, the applicant stated that 25 to 47 percent of chronic kidney 
patients have needle fear.\69\ The applicant further stated that the 
Centers for Disease Control and Prevention (CDC) recommends vibrating 
cold devices for needle fear in children, and cold devices with a 
buzzer for adults.\70\ The applicant also stated that meta-analyses 
demonstrate significant fear reduction with Buzzy[supreg] device,\71\ 
and a New Zealand study demonstrated improved adherence to Bicillin 
injections with fear reduced 50 percent after three uses of 
Buzzy[supreg] device.\72\ The

[[Page 42478]]

applicant also stated that Buzzy[supreg] device is indicated by Health 
Canada to ``control pain and fear from needles'' and is used for 
fearful dialysis patients in the Netherlands.
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    \69\ Duncanson E, Le Leu RK, Shanahan L, et al. The prevalence 
and evidence-based management of needle fear in adults with chronic 
disease: A scoping review. PLoS One 2021;16(6):e0253048 doi: 
10.1371/journal.pone.0253048 [published Online First: 20210610].
    \70\ Easy to Read: Needle Phobia. Available at: https://www.cdc.gov/ncbddd/humandevelopment/covid-19/needle-phobia/index.html Accessed March 9, 2023.
    \71\ Ballard A, Khadra C, Adler S, Trottier ED, Le May S. 
Efficacy of the Buzzy[supreg] Device for Pain Management during 
Needle-Related Procedures: A Systematic Review and Meta-analysis. 
Clin J Pain 2019 doi: 10.1097/ajp.0000000000000690 [published Online 
First: 2019/03/05].
    \72\ Russell K, Nicholson R, Naidu R. Reducing the pain of 
intramuscular benzathine penicillin injections in the rheumatic 
fever population of Counties Manukau District Health Board. J 
Paediatr Child Health 2014;50(2):112-7 doi: 10.1111/jpc.12400 
[published Online First: 2013/10/19].
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    The applicant submitted 33 unique sources of evidence with its 
application in support of its claims of substantial clinical 
improvement. Thirty of the sources that were submitted examined the 
effect of external cold and vibration devices, including the 
Buzzy[supreg] device, though not Buzzy[supreg] Pro, during needle 
procedures other than dialysis cannulation. One article examined the 
effect of cryotherapy on pediatric pain management at the arteriovenous 
fistula site during hemodialysis.\73\ Because the study did not examine 
the effect of external cold and vibration devices such as the 
Buzzy[supreg] device or more specifically the device that is the 
subject of this TPNIES application, Buzzy[supreg] Pro, in managing 
dialysis related pain or fear, it was not directly applicable to the 
applicant's substantial clinical improvement claims. One article 
evaluated the effectiveness of distraction cards, in pediatrics in 
reducing pain and anxiety during intramuscular injection.\74\ Because 
the study did not examine the effect of external cold and vibration 
devices such as the Buzzy[supreg] device or the Buzzy[supreg] Pro 
device in managing dialysis-related pain or fear, it was not directly 
applicable to the applicant's substantial clinical improvement claims. 
One document labeled as Dutch guidelines was submitted in non-English 
text and thus, was not readily accessible to our review team.
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    \73\ Attia, A., Hassan, A. Effect of cryotherapy on pain 
management at the puncture site of arteriovenous fistula among 
children undergoing hemodialysis. International Journal of Nursing 
Sciences 2017; (4) 46-51.
    \74\ Sahiner, N., Turkmen, A. The Effect of Distraction Cards on 
Reducing Pain and Anxiety During Intramuscular Injection in 
Children. Worldviews on Evidence-Based Nursing 2019; 1-6.
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    The applicant also submitted a list of references, referred to as a 
literature review, that pertained to the applicant's products, among 
which, the Buzzy[supreg] device was listed as relieving or reducing 
needle pain and fear and for needle procedures and for musculoskeletal 
pain.
    In a document titled ``Summary of Clinical Evidence--relief of 
needle pain and fear,'' the applicant presented the study objectives 
and key features of 29 \75\ of the 30 submitted sources that examined 
the effect of external cold and vibration devices, including the 
Buzzy[supreg] device, though not Buzzy[supreg] Pro, during needle 
procedures other than dialysis cannulation. The document identified 
several additional sources that were not submitted by the applicant. 
Finally, the applicant submitted a document titled ``Buzzy Fear 
reduction rationale and table'' that duplicated information already 
captured in the ``Summary of Clinical Evidence--relief of needle pain 
and fear'' document. Table 10 below lists the 29 sources that were both 
identified by the applicant in the ``Summary of Clinical Evidence--
relief of needle pain and fear'' document and that were submitted. We 
have not included sources that were mentioned by the applicant, but not 
submitted to us.
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    \75\ The following source was not included in the summary table: 
Redfern RE, Chen JT, Sibrel S, Effects of Thermomechanical 
Stimulation during Vaccination on Anxiety, Pain, and Satisfaction in 
Pediatric Patients: A Randomized Controlled Trial. J Pediatr 
Nurs.2018.38: 1-7.
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    As stated previously, the applicant must demonstrate that the 
equipment or supply meets at least one of the following three 
substantial clinical improvement criteria in order to be eligible for 
the TPNIES: (1) the item offers a treatment option for a patient 
population unresponsive to, or ineligible for, currently available 
treatment; (2) the item offers the ability to diagnose a medical 
condition in the 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; or (3) the item significantly improves clinical 
outcomes relative to services or technologies previously available. The 
applicant stated that

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Buzzy[supreg] Pro makes dialysis cannulation pain relief available to 
dialysis patients, which significantly improves clinical outcomes 
related to depression and discontinuation of dialysis due to needle 
pain. Therefore, we believe that the applicant is targeting the 
clinical outcomes criterion (number (3) above). The applicant also 
stated that Buzzy[supreg] Pro reduces needle fear. We did not identify 
evidence within the application or the submitted materials documenting 
improved clinical outcomes related to depression or dialysis adherence 
but would be interested in reviewing such evidence.
    With respect to the submitted evidence, it does not appear that the 
studies reflect the use of (1) Buzzy[supreg] Pro, the device that is 
the subject of the TPNIES application, nor (2) Buzzy[supreg] Pro in the 
context of dialysis cannulation. Specifically, the applicant submitted 
an application for Buzzy[supreg] Pro, indicating that Buzzy[supreg] Pro 
is a new design created for dialysis fistulae sites, patented in 2022. 
However, the sources submitted were dated prior to the 2022 new design 
patent date for dialysis fistulae sites. As such, it appears that the 
sources submitted reflect the use of a predecessor Buzzy[supreg] 
device. In addition, while the applicant's ``Summary of Clinical 
Evidence'' document presented sources as evaluating Buzzy[supreg] Pro's 
efficacy in managing vascular access pain or fear, we note that none of 
these sources appear to evaluate vascular access in the context of 
dialysis cannulation. The studies evaluated pain and fear in the 
context of other types of needle procedures, including vaccine or 
medication injections, blood specimen collection, and intravenous 
catheter insertion.
    It is unclear whether findings of pain or fear reduction from the 
use of the Buzzy[supreg] device in non-dialysis needle procedures could 
be extrapolated to dialysis cannulation pain or fear. There are several 
unique features to dialysis cannulation that may limit 
generalizability. These include the need for regular punctures several 
times per week, the maintenance of cannulation for several hours during 
dialysis treatments, the use of substantially larger needle sizes in 
dialysis, and complications that are associated with frequent vascular 
access cannulation, such as infections and thrombosis. As such, we 
question whether outcomes could reasonably be extrapolated as 
applicable to patients undergoing dialysis cannulation.
    As identified in the table, the majority of the studies provided in 
support of the applicant's claims reflect pediatric patient 
experiences. We note that pediatric patients comprise a small 
proportion, just 0.14 percent, of the total Medicare ESRD patient 
population (87 FR 67222). As such, the data that is heavily weighted 
towards the pediatric population may have limited generalizability to 
the non-pediatric majority of the ESRD patient population.
    While the applicant stated that the Buzzy[supreg] devices are less 
expensive than topical anesthetic, we note that cost is not an 
eligibility criterion for the TPNIES.
    It is also unclear whether a single Buzzy[supreg] Pro device and 
its components (for example, tourniquet and ice pack) are intended for 
single versus multiple patient use in the ESRD facility setting. To the 
extent that the device or its components are intended for use among 
multiple patients, we would be interested in data that examines the 
risk of infection associated with the use of Buzzy[supreg] Pro in the 
dialysis patient population. Additionally, we are not aware of any data 
that examines the risk of harm to the dialysis access site or any other 
adverse events associated with use of the Buzzy[supreg] Pro in the 
dialysis patient population, including access and bloodstream 
infections and thromboses but would be interested in the results of 
such data.
    In addition, the applicant stated that currently, the most 
effective options for dialysis cannulation pain are topical anesthetics 
and vapocoolant spray. We would be interested in studies comparing the 
use of Buzzy[supreg] Pro to topical anesthetics or vapocoolant and that 
demonstrate that Buzzy[supreg] Pro significantly improves clinical 
outcomes of dialysis patients relative to existing available 
treatments.
    We are inviting public comments on whether the Buzzy[supreg] Pro 
meets the substantial clinical improvement criteria for the TPNIES.
f. Capital-Related Assets Criterion (Sec.  413.236(b)(6))
    With respect to the sixth TPNIES eligibility criterion under Sec.  
413.236(b)(6), limiting capital-related assets from being eligible for 
the TPNIES, except those that are home dialysis machines, we note that 
Buzzy[supreg] Pro does not meet the definition of a capital-related 
asset under Sec.  413.236(a)(2), because it is not an asset that the 
ESRD facility has an economic interest in through ownership that is 
subject to depreciation.\76\
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    \76\ See also CMS Provider Reimbursement Manual, Chapter 1, 
section 104.1. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929
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D. Continuation of Approved Transitional Add-On Payment Adjustments for 
New and Innovative Equipment and Supplies for CY 2024

    In this section of the proposed rule, we identify any items 
previously approved for the TPNIES and for which payment is continuing 
for CY 2024. As described in the CY 2023 ESRD PPS final rule, payment 
for the one item approved for TPNIES, the Tablo[supreg] Hemodialysis 
System, as described by HCPCS code E1629, expires on December, 31, 2023 
(87 FR 67216). As such there are no items previously approved for 
TPNIES for which payment is continuing in CY 2024.

E. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments for CY 2024

    Under Sec.  413.234(c)(1), a new renal dialysis drug or biological 
product that is considered included in the ESRD PPS base rate is paid 
the TDAPA for 2 years. In December 2021, CMS approved 
KorsuvaTM (difelikefalin) for the TDAPA under the ESRD PPS, 
effective April 1, 2022. Implementation instructions are specified in 
CMS Transmittal 11295,\77\ dated March 15, 2022, and available at: 
https://www.cms.gov/files/document/r11295CP.pdf. In this section of the 
proposed rule, we provide a table that identifies the one new renal 
dialysis drug that was approved for the TDAPA effective in CY 2022, and 
for which the TDAPA payment period as specified in Sec.  413.234(c)(1) 
will continue in CY 2024. Table 11 also identifies the product's HCPCS 
coding information as well as the payment adjustment effective date and 
end date.
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    \77\ CMS Transmittal 11295 rescinded and replaced CMS 
Transmittal 11278, dated February 24, 2022.

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III. Calendar Year (CY) 2024 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 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 to implement subsection (r) of section 1834 of the 
Act and the amendments to section 1861(s)(2)(F) of the Act, including 
the payment rate for AKI dialysis (81 FR 77866 through 77872 and 
77965). We interpret section 1834(r)(1) of the Act as requiring the 
amount of payment for AKI dialysis services to be the base rate for 
renal dialysis services determined for a year under the ESRD PPS base 
rate as set forth in Sec.  413.220, updated by the ESRD bundled market 
basket percentage increase factor minus a productivity adjustment as 
set forth in Sec.  413.196(d)(1), adjusted for wages as set forth in 
Sec.  413.231, and adjusted by any other amounts deemed appropriate by 
the Secretary under Sec.  413.373. We codified this policy in Sec.  
413.372 (81 FR 77965).

B. Proposed Annual Payment Rate Update for CY 2024

1. CY 2024 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 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.1.d of this proposed rule, the 
proposed ESRD PPS base rate is $269.99, which reflects the application 
of the proposed CY 2024 wage index budget-neutrality adjustment factor 
of 0.999652 and the proposed CY 2024 ESRDB market basket percentage 
increase of 2.0 percent reduced by the proposed productivity adjustment 
of 0.3 percentage point, that is, 1.7 percent. Accordingly, we are 
proposing a CY 2024 per treatment payment rate of $269.99 (($265.57 x 
0.999652) x 1.017 = $269.99) for renal dialysis services furnished by 
ESRD facilities to individuals with AKI. This proposed payment rate is 
further adjusted by the wage index, as discussed in the next section of 
this proposed rule.
2. Geographic Adjustment Factor
    Under section 1834(r)(1) of the Act and regulations at 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 ESRDB market basket percentage 
increase and reduced by the 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.1.b of this proposed 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 ESRD 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. We also apply the wage index policies regarding 
the 0.600 wage index floor (87 FR 67161 through 67166) and the 5 
percent cap on wage index decreases (87 FR 67159 through 67161) to AKI 
dialysis payments to ESRD facilities. As stated previously, we are 
proposing a CY 2024 AKI dialysis payment rate of $269.99, adjusted by 
the ESRD facility's wage index.

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

A. Background

    For a detailed discussion of the End-Stage Renal Disease Quality 
Incentive Program's (ESRD QIP's) background and history, including a 
description of the Program's authorizing statute and the policies that 
we have adopted in previous final rules, we refer readers to previous 
ESRD QIP rules at: 75 FR 49030; 76 FR 628; 76 FR 70228; 77 FR 67450; 78 
FR 72156; 79 FR 66120; 80 FR 68968; 81 FR 77834; 82 FR 50738; 83 FR 
56922; 84 FR 60648; 85 FR 71398; 86 FR 61874; and 87 FR 67136.
    We have also codified many of our policies for the ESRD QIP at 42 
CFR 413.177 and 413.178.

B. Proposals To Update the Regulation Text for the ESRD QIP

1. Proposal To Revise the Definition of ``Minimum Total Performance 
Score (mTPS)'' at Sec.  413.178(a)(8)
    In the CY 2019 ESRD PPS final rule, we codified a number of key 
terms used in the ESRD QIP at Sec.  413.178(a) of our regulations (83 
FR 56980 through 56982). One of these terms is ``minimum total 
performance score'' (mTPS), which we defined at Sec.  413.178(a)(8) 
``with respect to a payment year'' \78\ as ``the total performance 
score that an ESRD facility would receive if, during the

[[Page 42487]]

baseline period, it performed at the 50th percentile of national ESRD 
facility performance on all clinical measures and the median of 
national ESRD facility performance on all reporting measures.''
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    \78\ In the CY 2023 ESRD PPS final rule, we revised Sec.  
413.178(a)(8) to exempt PY 2023 (87 FR 67229).
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    We have recently reevaluated this definition and determined that it 
should be revised to more accurately capture how we calculate the 
median of national ESRD facility performance on reporting measures. 
Although we use data prior to the performance period to calculate these 
medians, the data may not be from the same time period, or ``baseline 
period'' (see Sec.  413.178(a)(2)) used to calculate the 50th 
percentile of national ESRD facility performance on the clinical 
measures. Instead, our policy has been to calculate the median of 
national ESRD facility performance on the ESRD QIP reporting measures 
using the most recently available data prior to the applicable 
performance period for the payment year. If there were no data 
available prior to the first performance period of a new reporting 
measure, as was the case for the Clinical Depression Screening and 
Follow-Up reporting measure, we would use a proxy median for purposes 
of including the reporting measure in our calculation of the mTPS. We 
selected the values for these proxy medians based on the availability 
of previous measure data, a facility's familiarity with similar 
measures or requirements, and considerations regarding a facility's 
ability to comply with new reporting measure requirements during the 
initial performance periods for a new reporting measure.
    We are proposing to update the definition of ``minimum total 
performance score'' at Sec.  413.178(a)(8) so that it accurately 
captures these policies. We are also proposing that, with respect to 
the adoption of future reporting measures, including the reporting 
measures proposed in this proposed rule, if there are an insufficient 
quantity of data available prior to the first performance period of a 
new reporting measure, we will set a proxy median of zero for the 
reporting measure until we have sufficient data to calculate the 
median. We believe that this proposal will provide facilities with 
additional predictability and transparency regarding our calculation of 
the mTPS for a payment year. Although many facilities score much higher 
than zero during the initial performance periods of a new reporting 
measure, we believe that setting the proxy median at zero where we do 
not have sufficient data available will account for the possibility 
that new reporting measures may have different reporting requirements. 
For example, a new reporting measure may require a facility to report 
new or additional data in EQRS in order to be eligible for scoring on 
the reporting measure. Additionally, a new reporting measure may 
require that a facility reconsider its internal processes to comply 
with the reporting requirements and be eligible for scoring. We believe 
that using a median of 0 for new reporting measures would ensure that 
the mTPS is calculated based on the worst-case scenario, rather than 
assuming a median higher than what may be observed once data are 
available. Setting the proxy median at zero until we have sufficient 
data available to calculate the median would allow the timely inclusion 
of a new reporting measure in the ESRD QIP measure set, as well as our 
calculation of the mTPS, while also encouraging facilities to report 
the new or additional data that may be specified by that reporting 
measure so that they are able to receive credit for reporting.
    We welcome public comment on this proposal.
2. Proposal To Codify the ESRD QIP Measure Adoption, Retention, and 
Removal Policies
    In the CY 2013 ESRD PPS final rule (77 FR 67475), we finalized a 
policy to retain measures from prior program years for each successive 
program year, unless otherwise proposed and finalized. In the CY 2019 
ESRD PPS final rule (83 FR 56983 through 56985), we finalized eight 
measure removal factors for the ESRD QIP, and we refer readers to that 
final rule for details. We also finalized a policy to retain a measure 
for certain specified reasons, such as when a particular measure 
addresses a gap in quality so significant that removing the measure 
could result in poor quality or when a measure addresses a statutorily-
required topic, even if one or more of the measure removal factors 
applies. In the CY 2013 ESRD PPS final rule (77 FR 67475), we also 
finalized that we would generally remove an ESRD QIP measure using 
notice and comment rulemaking unless we determined that the continued 
collection of data on the measure raised patient safety concerns. In 
that case, we stated that we would promptly remove the measure, 
immediately notify ESRD facilities and the public through the usual 
communication channels (including listening sessions, memos, email 
notification, and website postings), and publish the justification for 
the removal in the Federal Register during the next rulemaking cycle.
    We are proposing to revise 42 CFR 413.178(c) to incorporate these 
measure adoption, retention, and removal policies. Existing Sec.  
413.178(c)(1) through (5) would be consolidated and renumbered as Sec.  
413.178(c)(1)(i) through (v), and we would add a new Sec.  
413.178(c)(1)(vi), which would codify our policy to adopt measures for 
the ESRD QIP beyond those that address the topics described at Sec.  
413.178(c)(1)(i) through (v). We are also proposing to codify at Sec.  
413.178(c)(2) our policies regarding the use of endorsed measures. We 
are proposing to codify at Sec.  413.178(c)(3) our policy regarding the 
updating of measure specifications. Additionally, we are proposing to 
codify at Sec.  413.178(c)(4) our policy regarding measure retention. 
Finally, we are proposing to codify at Sec.  413.178(c)(5) our policies 
regarding measure removal. We believe these proposals will make it 
easier for interested parties to find these policies and will further 
align the ESRD QIP regulations with the regulations we have codified 
for other quality reporting programs.
    We welcome public comment on these proposals.

C. Proposed Updates to Requirements Beginning With the PY 2026 ESRD QIP

1. PY 2026 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). In this proposed rule, we are 
proposing to remove the Ultrafiltration Rate reporting measure and the 
Standardized Fistula Rate clinical measure beginning with PY 2026. We 
are also proposing to add the Facility Commitment to Health Equity 
reporting measure to the ESRD QIP measure set beginning with PY 2026. 
Table 12 below summarizes the previously finalized and proposed new 
measures that we would include in the PY 2026 ESRD QIP measure set. The 
technical specifications for each of these measures that would apply 
for PY 2026 can be found in the CMS ESRD Measures Manual for the 2023 
Performance Period.\79\
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    \79\ https://www.cms.gov/files/document/esrd-measures-manual-v80.pdf.
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BILLING CODE 4120-01-C
2. Proposal To Adopt the Facility Commitment to Health Equity Reporting 
Measure Beginning With the PY 2026 ESRD QIP
a. Background
    Significant and persistent disparities in healthcare outcomes exist 
in the U.S. For example, belonging to a racial or ethnic minority 
group, being a member of the lesbian, gay, bisexual, transgender, and 
queer (LGBTQ+) community, being a member of a religious minority, 
living in a rural area, being a person with a disability or 
disabilities, or being near or below the poverty level, is often 
associated with worse health 
outcomes.81 82 83 84 85 86 87 88 89 90 Numerous studies have 
shown that among Medicare beneficiaries, individuals who are racial and 
ethnic minorities often receive lower quality hospital care, report 
lower experiences of care, and experience more frequent hospital 
readmissions and procedural complications.91 92 93 94 95 96 
Readmission rates in the Hospital Readmissions Reduction Program have 
shown to be higher among Black and Hispanic Medicare beneficiaries with 
common conditions, including congestive heart failure and acute 
myocardial infarction.97 98 99 100 101 Data indicate that, 
even after accounting for factors such as socioeconomic conditions, 
members of racial and ethnic minority groups reported experiencing 
lower quality healthcare.\102\ Evidence of differences in quality of 
care received by people from racial and ethnic minority groups show 
worse health outcomes, including a higher incidence of diabetes 
complications such as retinopathy.\103\ Additionally, inequities in the 
drivers of health affecting these groups, such as poverty and 
healthcare access, are interrelated and influence a wide range of 
health and quality-of-life outcomes and risks.\104\
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    \80\ In previous years, we referred to the consensus-based 
entity by corporate name. We have updated this language to refer to 
the consensus-based entity more generally.
    \81\ Joynt KE, Orav E, Jha AK. 2011. Thirty-Day Readmission 
Rates for Medicare Beneficiaries by Race and Site of Care. JAMA, 
305(7), 675-681. Available at: doi:10.1001/jama.2011.123.
    \82\ Lindenauer PK, Lagu T, Rothberg MB, et al. (2013). Income 
Inequality and thirty-Day Outcomes After Acute Myocardial 
Infarction, Heart Failure, and Pneumonia: Retrospective Cohort 
Study. BMJ, 346. Available at: https://doi.org/10.1136/bmj.f521.
    \83\ Trivedi AN, Nsa W, Hausmann LRM, et al. (2014). Quality and 
Equity of Care in U.S. Hospitals. N Engl J Med, 371(24), 2298-2308. 
Available at: doi: 10.1056/NEJMsa1405003.
    \84\ Polyakova, M, Udalova V, Kocks, G, Genadek K, Finlay K, 
Finkelstein AN. 2021. Racial Disparities In Excess All-Cause 
Mortality During The Early COVID-19 Pandemic Varied Substantially 
Across States. Health Affairs, 40(2), 307-316. Available at: https://doi.org/10.1377/hlthaff.2020.02142.
    \85\ Rural Health Research Gateway. 2018. Rural Communities: 
Age, Income, and Health Status. Rural Health Research Recap. 
Available at: https://www.ruralhealthresearch.org/assets/2200-8536/rural-communities-age-income-health-status-recap.pdf.
    \86\ HHS Office of Minority Health. 2020. Progress Report to 
Congress, 2020 Update on the Action Plan to Reduce Racial and Ethnic 
Health Disparities. Department of Health and Human Services. 
Available at: https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
    \87\ Heslin KC, Hall JE. 2021. Sexual Orientation Disparities in 
Risk Factors for Adverse COVID-19-Related Outcomes, by Race/
Ethnicity--Behavioral Risk Factor Surveillance System, United 
States, 2017-2019. MMWR Morb Mortal Wkly Rep, 70(5), 149. doi: 
10.15585/mmwr.mm7005a1.
    \88\ Poteat TC, Reisner SL, Miller M, Wirtz AL. 2020. COVID-19 
Vulnerability of Transgender Women With and Without HIV Infection in 
the Eastern and Southern U.S. medRxiv. doi: 10.1101/
2020.07.21.20159327.
    \89\ Vu M, Azmat A, Radejko T, Padela AI. 2016. Predictors of 
Delayed Healthcare Seeking Among American Muslim Women. Journal of 
Women's Health, 25(6), 586-593. doi: 10.1089/jwh.2015.5517.
    \90\ Nadimpalli SB, Cleland CM, Hutchinson MK, Islam N, Barnes 
LL, Van Devanter N. (2016). The Association Between Discrimination 
and the Health of Sikh Asian Indians. Health Psychology, 35(4), 351-
355. https://doi.org/10.1037/hea0000268.
    \91\ CMS Office of Minority Health. 2020. Racial, Ethnic, and 
Gender Disparities in Healthcare in Medicare Advantage. Baltimore, 
MD: Centers for Medicare & Medicaid Services. Available at:
    \92\ CMS Office of Minority Health. Updated August 2018. Guide 
to Reducing Disparities in Readmissions. Baltimore, MD: Centers for 
Medicare & Medicaid Services. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/OMH_Readmissions_Guide.pdf.
    \93\ Singh JA, Lu X, Rosenthal GE, Ibrahim S, Cram P. 2014. 
Racial Disparities in Knee and Hip Total Joint Arthroplasty: An 18-
year analysis of national Medicare data. Ann Rheum Dis., 73(12), 
2107-15. Available at: doi:10.1136/annrheumdis-2013-203494.
    \94\ Rivera-Hernandez M, Rahman M, Mor V, Trivedi AN. 2019. 
Racial Disparities in Readmission Rates among Patients Discharged to 
Skilled Nursing Facilities. J Am Geriatr Soc., 67(8), 1672-1679. 
Available at: https://doi.org/10.1111/jgs.15960.
    \95\ Joynt KE, Orav E, Jha AK. 2011. Thirty-Day Readmission 
Rates for Medicare Beneficiaries by Race and Site of Care. JAMA, 
305(7), 675-681. Available at: doi:10.1001/jama.2011.123.
    \96\ Tsai TC, Orav EJ, Joynt KE. 2014. Disparities in Surgical 
30-day Readmission Rates for Medicare Beneficiaries by Race and Site 
of Care. Ann Surg., 259(6), 1086-1090. Available at: doi: 10.1097/
SLA.0000000000000326.
    \97\ Rodriguez F, Joynt KE, Lopez L, Saldana F, Jha AK. 2011. 
Readmission Rates for Hispanic Medicare Beneficiaries with Heart 
Failure and Acute Myocardial Infarction. Am Heart J., 162(2), 254-
261 e253. Available at: https://doi.org/10.1016/j.ahj.2011.05.009.
    \98\ Centers for Medicare & Medicaid Services. 2014. Medicare 
Hospital Quality Chartbook: Performance Report on Outcome Measures. 
Available at: https://www.hhs.gov/guidance/document/medicare-hospital-quality-chartbook-performance-report-outcome-measures.
    \99\ CMS Office of Minority Health. Updated August 2018. Guide 
to Reducing Disparities in Readmissions. Baltimore, MD: Centers for 
Medicare & Medicaid Services. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/OMH_Readmissions_Guide.pdf.
    \100\ Prieto-Centurion V, Gussin HA, Rolle AJ, Krishnan JA. 
2013. Chronic Obstructive Pulmonary Disease Readmissions at 
MinorityServing Institutions. Ann Am Thorac Soc., 10(6), 680-684. 
Available at: https://doi.org/10.1513/AnnalsATS.201307-223OT.
    \101\ Joynt KE, Orav E, Jha AK. 2011. Thirty-Day Readmission 
Rates for Medicare Beneficiaries by Race and Site of Care. JAMA, 
305(7), 675-681. Available at: doi:10.1001/jama.2011.123.
    \102\ Nelson AR. 2003. Unequal Treatment: Report of the 
Institute of Medicine on Racial and Ethnic Disparities in 
Healthcare. The Annals of thoracic surgery, 76(4), S1377-S1381. doi: 
10.1016/s0003-4975(03)01205-0.
    \103\ Peek, ME, Odoms-Young, A, Quinn, MT, Gorawara-Bhat, R, 
Wilson, SC, & Chin, MH. 2010. Race and Shared Decision-Making: 
Perspectives of African-Americans with diabetes. Social Science & 
Medicine, 71(1), 1-9. Available at: doi:10.1016/
j.socscimed.2010.03.014.
    \104\ Department of Health and Human Services. 2021. Healthy 
People 2020: Disparities. Available at: www.healthypeople.gov/2020/about/foundation-health-measures/Disparities.
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    In the CY 2022 ESRD PPS proposed rule (86 FR 36362 through 36369), 
we requested information on our Equity Plan for Improving Quality in 
Medicare (also referred to as the CMS Framework for Health 
Equity),\105\ which outlines our commitment to close health equity gaps 
through improved data collection, measurement, and analysis of 
disparities across programs and policies. The request for information 
asked for public comment regarding the potential stratification of 
quality measure results by race and ethnicity and the potential 
creation of a hospital or facility equity score in CMS quality 
reporting and value-based purchasing programs, including the ESRD QIP. 
We received many responses to that request for public comment, and we 
refer readers to the CY 2022 ESRD PPS final rule for summaries of those 
comments (86 FR 61934 through 61937). We noted in the CY 2022 ESRD PPS 
final rule the value of these comments in the continuing development of 
our health equity

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quality measurement efforts, and we stated that we would take the 
comments into account for future development and expansion of our 
health equity quality measurement efforts.
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    \105\ Centers for Medicare and Medicaid Services. 2022. CMS 
Framework for Health Equity 2022-2032. Available at: https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf. 
Centers for Medicare & Medicaid Services. 2021. Paving the Way to 
Equity: A Progress Report. Available at: https://www.cms.gov/files/document/paving-way-equity-cms-omh-progress-report.pdf. Accessed on 
February 20, 2023. See also, Centers for Medicare & Medicaid 
Services Office of Minority Health. 2021. The CMS Equity Plan for 
Improving Quality in Medicare. 2015-2021. Available at: https://
www.cms.gov/About-CMS/Agency-Information/OMH/OMH_Dwnld-
CMS_EquityPlanforMedicare_090615.pdf#:~:text=The%20Centers%20for%20Me
dicare%20%26%20Medicaid%20Services%20%28CMS%29,evidence%20base%2C%20i
dentifying%20opportunities%2C%20and%20gathering%20stakeholder%20input
. Accessed on February 20, 2023.
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    The Agency for Healthcare Research and Quality (AHRQ) and The Joint 
Commission have independently concluded that facility leadership plays 
an important role in promoting a culture of quality and 
safety.106 107 108 AHRQ research shows that facility boards 
can influence quality and safety in a variety of ways; not only through 
strategic initiatives, but also through more direct interactions with 
frontline workers.\109\ The Joint Commission found that a leader who is 
committed to prioritizing and making patient safety visible through 
every day actions is a critical part of creating a true culture of 
safety, which in turn fosters an organizational culture in which 
patients are treated with dignity and respect.\110\ Because CMS is also 
working toward the goal of all patients receiving high-quality 
healthcare, regardless of individual characteristics, we are also 
committed to supporting healthcare organizations in building a culture 
of safety and equity that focuses on educating and empowering their 
workforce to recognize and eliminate health disparities. This includes 
patients receiving the right care, at the right time, in the right 
setting for their condition(s), regardless of those characteristics.
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    \106\ Agency for Healthcare Research and Quality. Leadership 
Role in Improving Patient Safety. Patient Safety Primer, September 
2019. Available at: https://psnet.ahrq.gov/primer/leadership-role-improving-safety.
    \107\ Joint Commission on Accreditation of Healthcare 
Organizations, USA. The essential role of leadership in developing a 
safety culture. Sentinel Event Alert. 2017 (Revised June 2021). 
Available at: https://www.jointcommission.org/-/media/tjc/documents/resources/patient-safety-topics/sentinel-event/sea-57-safety-culture-and-leadership-final2.pdf.
    \108\ See information on launch of new ``Health Care Equity 
Certification'' in July 2023 from Joint Commission on Accreditation 
of Healthcare Organizations, USA, available at: https://www.jointcommission.org/our-priorities/health-care-equity/health-care-equity-prepublication/.
    \109\ Agency for Healthcare Research and Quality. Leadership 
Role in Improving Patient Safety. Patient Safety Primer, September 
2019: Available at: https://psnet.ahrq.gov/primer/leadership-role-improving-safety.
    \110\ Joint Commission on Accreditation of Healthcare 
Organizations, USA. The essential role of leadership in developing a 
safety culture. Sentinel Event Alert. 2017 (Revised June 2021). 
Available at: https://www.jointcommission.org/-/media/tjc/documents/resources/patient-safety-topics/sentinel-event/sea-57-safety-culture-and-leadership-final2.pdf.
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    We believe that strong and committed leadership from dialysis 
facility executives and board members is essential and can play a role 
in shifting organizational culture and advancing equity goals for 
dialysis facilities. Studies demonstrate that hospital leadership can 
positively influence culture for better quality, patient outcomes, and 
experience of care.111 112 113 A systematic review of 122 
published studies showed that strong leadership that prioritized 
safety, quality, and the setting of clear guidance with measurable 
goals for improvement resulted in a high-performing hospital with 
better patient outcomes.\114\ We believe this conclusion also applies 
to dialysis facilities, and that the commitment of dialysis facility 
leadership to health equity would result in a reduction of health 
disparities in the ESRD population.
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    \111\ Bradley EH, Brewster AL, McNatt Z, et al. (2018) How 
Guiding Coalitions Promote Positive Culture Change in Hospitals: A 
Longitudinal Mixed Methods Interventional Study. BMJ Qual Saf., 
27(3), 218-225. doi:10.1136/bmjqs-2017-006574.
    \112\ Smith SA, Yount N, Sorra J. 2017. Exploring Relationships 
Between Hospital Patient Safety Culture and Consumer Reports Safety 
Scores. BMC Health Services Research, 17(1), 143. doi:10.1186/
s12913-017-2078-6.
    \113\ Keroack MA, Youngberg BJ, Cerese JL, Krsek C, Prellwitz 
LW, Trevelyan EW. (2007). Organizational Factors Associated with 
High Performance in Quality and Safety in Academic Medical Centers. 
Acad Med., 82(12), 1178-86. doi: 10.1097/ACM.0b013e318159e1ff.
    \114\ Millar R, Mannion R, Freeman T, et al. (2013). Hospital 
Board Oversight of Quality and Patient Safety: A Narrative Review 
and Synthesis of Recent Empirical Research. The Milbank quarterly, 
91(4), 738-70. doi:10.1111/1468-0009.12032.
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    Our belief that a leadership commitment to health equity can lead 
to a reduction of health disparities is also supported by research 
conducted by the Institute for Healthcare Improvement (IHI), which 
studied 23 health systems throughout the U.S. and Canada. The IHI's 
research showed that health equity must be a priority championed by 
leadership teams to improve both patient access to needed healthcare 
services and outcomes among populations that have been disadvantaged by 
the healthcare system.\115\ This IHI study specifically identified 
concrete actions to make advancing health equity a core strategy, 
including establishing this goal as a leader-driven priority alongside 
organizational development structures and processes.\116\ Based upon 
these findings, we believe that dialysis facility leadership can be 
instrumental in setting specific, measurable, attainable, realistic, 
and time-based (SMART) goals to assess progress towards achieving 
equity goals and ensuring high-quality care at dialysis facilities is 
accessible to all. Based on this well-developed body of evidence, we 
are proposing to adopt an attestation-based structural reporting 
measure, Facility Commitment to Health Equity, for the ESRD QIP 
beginning with PY 2026.
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    \115\ Mate KS and Wyatt R. 2017. Health Equity Must Be a 
Strategic Priority. NEJM Catalyst. Available at: https://catalyst.nejm.org/doi/full/10.1056/CAT.17.0556.
    \116\ Mate KS and Wyatt R. 2017. Health Equity Must Be a 
Strategic Priority. NEJM Catalyst. Available at: https://catalyst.nejm.org/doi/full/10.1056/CAT.17.0556.
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    The first pillar of our strategic priorities \117\ reflects our 
deep commitment to improvements in health equity by addressing the 
health disparities that underly our health system. In line with this 
strategic pillar, we developed this structural measure to assess 
facility commitment to health equity across five domains (see Table 13 
below) using a suite of organizational competencies aimed at achieving 
health equity for all patients, including but not limited to patients 
who belong to racial and ethnic minority groups, people with 
disabilities, members of the LGBTQ+ community, individuals with limited 
English proficiency, rural populations, religious minorities, and 
people facing socioeconomic challenges. We believe these elements are 
actionable focus areas, and assessment of dialysis facility leadership 
commitment to them is foundational.
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    \117\ Brooks-LaSure, C. 2021. My First 100 Days and Where We Go 
From Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at: https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
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    We are proposing to adopt the measure under section 
1881(h)(2)(A)(iv) of the Act, which gives the Secretary broad authority 
to specify measures for the ESRD QIP. Disparities in health equity are 
tied to worse patient outcomes in the ESRD community. For example, 
individuals from racial and ethnic minority groups and with lower 
incomes are less likely to receive recommended care for CKD risk 
factors and are also less likely to reduce CKD risk through recommended 
treatment goals.118 119 120 121
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    \118\ United States Renal Data System. 2021 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, 2021.
    \119\ Benjamin O, Lappin SL. End-Stage Renal Disease. Updated 
2021 Sep 16. In: Stat Pearls [internet]. Treasure Island (FL): 
StatPearls Publishing; 2022. Available from: https://www.ncbi.nlm.nih.gov/books/NBK499861/.
    \120\ Norris, K.C., Williams, S.F., Rhee, C.M., Nicholas, S.B., 
Kovesdy, C.P., et al. (2017). Hemodialysis Disparities in African 
Americans: The Deeply Integrated Concept of Race in the Social 
Fabric of Our Society. Seminars in Dialysis 30(3):213-223. 
doi:10.1111/sdi.12589.
    \121\ CMS (2021). Chronic Kidney Disease Disparities: 
Educational Guide for Primary Care. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.

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Consequently, some groups are more likely to progress from CKD to ESRD 
and less likely to be under the care of a nephrologist before starting 
dialysis.\122\ Individuals from racial and ethnic minority groups with 
ESRD are more likely to have 30-day hospital readmissions when compared 
to non-Hispanic White patients.\123\ We believe that this measure is an 
appropriate measure of ESRD quality of care because it would improve 
facilities' awareness of the tie between their structural practices and 
their patient outcomes by reporting these data, thus informing facility 
practices such that their patients attain better outcomes. We also 
believe that the proposed measure would incentivize facilities to 
collect and utilize their data to identify their own critical equity 
gaps, implement plans to address said gaps, and ensure that they 
dedicate resources to addressing those gaps. Facilities could analyze 
data to understand, for example, whether there are any demographic 
factors (such as race, national origin, primary language, and 
ethnicity), or social drivers of health (such as housing status and 
food security) that may be affecting access to care or contributing to 
poor outcomes in their patient populations and, in turn, develop 
appropriate solutions to improve access and outcomes. Thus, the measure 
aims to support facilities in leveraging available data, pursuing 
focused quality improvement activities, and promoting efficient and 
effective use of their resources. While the measure does not require 
facilities to take specific actions, we expect that any solution a 
facility might develop to address a gap it identifies would comply with 
all applicable Federal non-discrimination laws. We also note that the 
proposed measure is intended to promote health equity for all patients 
and is not intended to create a conflict between a CMS requirement and 
a state's civil rights laws.
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    \122\ Norton, J.M., Moxey-Mims, M.M., Eggers, P.W., Narva, A.S., 
Star, R.A., Kimmel, P.L., & Rodgers, G.P. (2016). Social 
Determinants of Racial Disparities in CKD. Journal of the American 
Society of Nephrology: JASN, 27(9), 2576-2595. https://doi.org/10.1681/ASN.2016010027.
    \123\ CMS (2014). Health Disparities Among Aged ESRD 
Beneficiaries, 2014. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/ESRD-Infographic.pdf.
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    The five questions of the proposed structural measure are adapted 
from the CMS Office of Minority Health's Building an Organizational 
Response to Health Disparities framework, which focuses on data 
collection, data analysis, culture of equity, and quality 
improvement.\124\ We have already adopted this measure for the Hospital 
Inpatient Quality Reporting (IQR) Program, and we refer readers to the 
FY 2023 IPPS/LTCH PPS final rule (87 FR 49191 through 49201) for a 
discussion of the measure in that program. Other than replacing the 
term ``hospital'' with the term ``facility,'' the proposed measure is 
identical to the Hospital IQR Program measure. The Facility Commitment 
to Health Equity measure is aligned with the Meaningful Measures Area 
of ``Equity of Care'' and the Meaningful Measures 2.0 goal to 
``Leverage Quality Measures to Promote Equity and Close Gaps in Care'' 
because it seeks to assess structural health equity issues that could 
inform facility practices such that their patients attain better 
outcomes. This measure also supports the Meaningful Measures 2.0 
objective to ``[c]ommit to a patient-centered approach in quality 
measure and value-based incentives programs to ensure that quality and 
safety measures address healthcare equity'' because the measure would 
incentivize facilities to identify their own healthcare equity gaps 
from a structural perspective.
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    \124\ Centers for Medicare & Medicaid Services. 2021. Building 
an Organizational Response to Health Disparities [Fact Sheet]. U.S. 
Department of Health and Human Services. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Health-Disparities-Guide.pdf.
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b. Overview of Measure
    The proposed Facility Commitment to Health Equity reporting measure 
would assess dialysis facility commitment to health equity using a 
suite of equity-focused organizational competencies aimed at achieving 
health equity for all populations, including those that have been 
disadvantaged, marginalized, and underserved by the healthcare system. 
As previously noted, this includes, but is not limited to: racial and 
ethnic minority groups, people with disabilities, members of the LGBTQ+ 
community, individuals with limited English proficiency, rural 
populations, religious minorities, and people facing socioeconomic 
challenges. Table 13 includes the five attestation domains and the 
elements within each of those domains to which a facility would report 
an affirmative attestation for the facility to receive points for that 
domain.
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BILLING CODE 4120-01-C
c. Measure Calculation
    The proposed Facility Commitment to Health Equity measure consists 
of five attestation-based questions, each representing a separate 
domain of commitment. For a facility to affirmatively attest ``yes'' to 
a domain, and receive points for that domain, the facility would need 
to determine that it engages in all of the activities that are included 
as elements under the domain. A facility that engages in all of the 
activities for a domain would report an affirmative attestation by 
answering ``yes'' to the attestation-based question for that domain. 
There is no option for a facility to answer ``yes'' in response to an 
attestation-based question for a domain if the facility engages in 
some, but not all, of the activities included as domain elements, and 
there is also no option for a facility to answer ``no'' in response to 
any attestation-based question for a domain. The measure would be 
expressed as a fraction, and a facility can score either 0, 2, 4, 6, 8, 
or 10 for the performance period, depending on the number of domains to 
which a facility positively attests. We are proposing that the measure 
denominator would be ``ten,'' with each domain being represented as two 
points out of that total ten points, and that the numerator would be 
calculated as two points for each ``yes'' answer the facility reports 
which are then summed together. We chose to award facilities two points 
for each affirmative response to an attestation-based question so that 
the maximum number of points a facility could receive for the measure 
is ten, which is the same maximum number of points that a facility can 
receive on other ESRD QIP measures.
    For example, for Domain 1 (``Facility commitment to reducing 
healthcare disparities is strengthened when equity is a key 
organizational priority''), a facility would evaluate and determine 
whether its strategic plan satisfies all of the elements described in 
(A) through (D) (see Table 13). If the facility's plan satisfies all 
four of these elements, the facility would respond ``yes'' to the 
attestation-based question for Domain 1 and receive two (2) points for 
that response. If the facility determined that its strategic plan 
satisfies elements (A) and (B) but not (C) and (D), the facility would 
not be able to respond ``yes'' to Domain 1 and would not receive any 
points for that domain.
    The numerator would be calculated as the sum of the points the 
facility earns for responding ``yes'' to the attestation-based 
questions. For example, a facility that responds ``yes'' to all five 
attestation-based questions would receive the maximum 10 points (two 
points for each of the five ``yes'' responses). A facility that 
responds ``yes'' to three of the attestation-based questions would 
receive six points.
    We are proposing that the Facility Commitment to Health Equity 
reporting measure would be added to the Reporting Measure Domain, as 
discussed further in section IV.C.6 of this proposed rule. Technical 
specifications for the proposed measure can be found in the ESRD QIP CY 
2024 Technical Measure Specifications, which are available at: https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/esrdqip/061_technicalspecifications. Consistent with case 
minimums we have adopted for our other ESRD QIP reporting measures, we 
are proposing that facilities must have 11 qualifying patients and a 
CCN open

[[Page 42494]]

date before September 1 of the performance period that applies to the 
program year in order to be eligible for scoring on the Facility 
Commitment to Health Equity reporting measure.
d. Data Submission and Reporting
    We are proposing that facilities would be required to submit data 
needed to calculate the Facility Commitment to Health Equity measure 
once on an annual basis using EQRS beginning with PY 2026. We are 
proposing that the deadline for submission would be the end of the EQRS 
December data reporting month for the applicable performance period, 
which is consistent with current reporting deadlines for other ESRD QIP 
measures. For example, for the PY 2026 ESRD QIP, facilities would need 
to report data on the measure by the end of the December data reporting 
month in CY 2024. As described in Table 17 of this proposed rule, we 
are proposing performance standards for the Facility Commitment to 
Health Equity reporting measure. We are proposing a 12-month 
performance period for the measure. We are also proposing that 
facilities would be required to follow the submission and reporting 
requirements for web-based measures for the ESRD QIP posted on the 
QualityNet website: https://qualitynet.cms.gov/esrd/esrdqip.
e. Review by the Measure Applications Partnership
    We included the Facility Commitment to Health Equity measure as a 
measure under consideration for the ESRD QIP on the publicly available 
``List of Measures Under Consideration for December 1, 2022'' (MUC 
List), a list of measures under consideration for use in various 
Medicare quality programs.\125\ The CBE-convened Measure Applications 
Partnership (MAP) Health Equity Advisory Group reviewed the MUC List 
and the Facility Commitment to Health Equity measure (MUC2022-027) in 
detail on December 6-7, 2022.\126\ The Health Equity Advisory Group 
expressed concern that this is more of a ``checklist'' measure that may 
not directly address health inequities at a systemic level, but the 
advisory group generally agreed that a structural measure such as this 
one represents progress toward improving equitable care.\127\ In 
addition, on December 8-9, 2022, the MAP Rural Health Advisory Group 
reviewed the 2022 MUC List, and the MAP Hospital Workgroup reviewed the 
2022 MUC List on December 13-14, 2022.\128\ The MAP Hospital Workgroup 
recognized that reducing health care disparities would represent a 
substantial benefit to overall quality of care, but expressed 
reservations about the measure's link to clinical outcomes; the MAP 
Hospital Workgroup members voted to conditionally support the measure 
for rulemaking pending: (1) endorsement by a consensus-based entity 
(CBE); (2) committing to look at outcomes in the future; (3) providing 
more clarity on the measure and supplementing interpretations with 
results; and (4) verifying attestation provided by the accountable 
entities.\129\ Thereafter, the MAP Coordinating Committee deliberated 
on January 24-25, 2023 and ultimately voted to conditionally support 
the Facility Commitment to Health Equity measure for rulemaking with 
the same conditions.\130\
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    \125\ Centers for Medicare & Medicaid Services. 2022. List of 
Measures Under Consideration for December 1, 2022. Available at: 
https://mmshub.cms.gov/sites/default/files/2022-MUC-List.xlsx.
    \126\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
    \127\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
    \128\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Rural Health Advisory Group, at https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx; see also, MAP Hospital Workgroup, 
available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
    \129\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
    \130\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
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f. Consensus-Based Entity Endorsement
    Although section 1881(h)(2)(B)(i) of the Act generally requires 
that measures specified by the Secretary for the ESRD QIP be endorsed 
by the entity with a contract under section 1890(a) of the Act, section 
1881(h)(2)(B)(ii) of the Act states that in the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a feasible and practical measure has not been endorsed by the entity 
with a contract under section 1890(a) of the Act, the Secretary may 
specify a measure that is not so endorsed as long as due consideration 
is given to measures that have been endorsed or adopted by a consensus 
organization identified by the Secretary. We reviewed CBE-endorsed 
measures and were unable to identify any other CBE-endorsed measures on 
this topic, and therefore we believe the exception in section 
1881(h)(2)(B)(ii) of the Act applies.
g. Public Display
    We are proposing to publicly display the facility-specific results 
for the Facility Commitment to Health Equity reporting measure on an 
annual basis through our Care Compare website at: https://www.medicare.gov/care-compare/. We anticipate making the first public 
report available in January 2026.
    We invite public comment on this proposal.
3. Proposed Modification of the COVID-19 Vaccination Coverage Among 
Healthcare Personnel (HCP) Measure Beginning With PY 2026
a. Background
    On January 31, 2020, the Secretary of the Department of Health and 
Human Services declared a public health emergency (PHE) for the United 
States in response to the global outbreak of SARS-COV-2, a novel (new) 
coronavirus that causes a disease named ``coronavirus disease 2019'' 
(COVID-19).\131\ Subsequently, the measure was adopted across multiple 
quality reporting programs including the End-Stage Renal Disease 
Quality Incentive Program (87 FR 67244 through 67248), the Hospital 
Inpatient Quality Reporting Program (86 FR 45374), the Inpatient 
Psychiatric Facility Quality Reporting Program (86 FR 42633 through 
42640), the Hospital Outpatient Quality Reporting Program (86 FR 63824 
through 63833), the PPS-Exempt Cancer Hospital Quality Reporting 
Program (86 FR 45428 through 45434), the Ambulatory Surgical Center 
Quality Reporting Program (86 FR 63875 through 63883), the Long-Term 
Care Hospital Quality Reporting Program (86 FR 45438 through 45446), 
the Skilled Nursing Facility Quality Reporting Program (86 FR 42480 
through 42489), and the Inpatient Rehabilitation Facility Quality 
Reporting Program (86 FR 42385 through 42396). COVID-19 has continued 
to spread domestically and around the world with more than 103.9 
million cases and 1.1 million deaths in the United States as of March 
27, 2023.\132\ In recognition of the ongoing

[[Page 42495]]

significance and complexity of COVID-19, the Secretary has renewed the 
PHE on April 21, 2020, July 23, 2020, October 2, 2020, January 7, 2021, 
April 15, 2021, July 19, 2021, October 15, 2021, January 14, 2022, 
April 12, 2022, July 15, 2022, October 13, 2022, January 11, 2023, and 
February 9, 2023.\133\ The PHE expired on May 11, 2023; however, HHS 
has stated that the public health response to COVID-19 remains a public 
health priority with a whole of government approach to combatting the 
virus, including through vaccination efforts.\134\
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    \131\ U.S. Dept of Health and Human Services, Office of the 
Assistant Secretary for Preparedness and Response. 2020. 
Determination that a Public Health Emergency Exists. Available at: 
https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx.
    \132\ Centers for Disease Control and Prevention. COVID Data 
Tracker. Accessed March 27, 2023. Available at: https://covid.cdc.gov/covid-data-tracker/#datatracker-home.
    \133\ U.S. Dept. of Health and Human Services. Office of the 
Assistant Secretary for Preparedness and Response. 2023. Renewal of 
Determination that a Public Health Emergency Exists. Available at: 
https://aspr.hhs.gov/legal/PHE/Pages/COVID19-9Feb2023.aspx.
    \134\ U.S. Dept. of Health and Human Services. Fact Sheet: 
COVID-19 Public Health Emergency Transition Roadmap. February 9, 
2023. Available at: https://www.hhs.gov/about/news/2023/02/09/fact-sheet-covid-19-public-health-emergency-transition-roadmap.html.
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    As we stated in the CY 2023 ESRD PPS final rule (87 FR 67244) and 
in our Revised Guidance for Staff Vaccination Requirements,\135\ 
vaccination is a critical part of the nation's strategy to effectively 
counter the spread of COVID-19. We continue to believe it is important 
to incentivize and track HCP vaccination through quality measurement 
across care settings, including dialysis facilities, in order to 
protect health care workers, patients, and caregivers, and to help 
sustain the ability of HCP in each of these care settings to continue 
serving their communities throughout the PHE and beyond. Prior to the 
publication of the CY 2023 ESRD PPS final rule on November 7, 2022, the 
FDA had approved or issued emergency use authorizations (EUAs) for 
COVID-19 vaccines for adults manufactured by Pfizer-BioNTech,\136\ 
Moderna,\137\ and Janssen.\138\ The populations for which all three 
vaccines were authorized at that time included individuals 18 years of 
age and older, and the Pfizer-BioNTech vaccine was authorized for ages 
12 and older. The FDA issued an approval for the Pfizer-BioNTech 
vaccine, now marketed as Comirnaty, on August 23, 2021.\139\ 
Additionally, the FDA issued approval for the Moderna vaccine, marketed 
as Spikevax, on January 31, 2022 \140\ and an EUA for the Novavax 
adjuvanted vaccine on July 13, 2022.\141\ The FDA also issued EUAs for 
single booster doses of the then-authorized COVID-19 vaccines. As of 
November 19, 2021,142 143 144 a single booster dose of each 
COVID-19 vaccine was authorized for all eligible individuals 18 years 
of age and older. EUAs were subsequently issued for a second booster 
dose of the Pfizer-BioNTech and Moderna vaccines in certain populations 
in March 2022.\145\ FDA first authorized the use of a booster dose of 
bivalent or ``updated'' COVID-19 vaccines from Pfizer-BioNTech and 
Moderna in August 2022.\146\
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    \135\ Centers for Medicare & Medicaid Services. Revised Guidance 
for Staff Vaccination Requirements QSO-23-02-ALL. October 26, 2022. 
Available at: https://www.cms.gov/files/document/qs0-23-02-all.pdf.
    \136\ Food and Drug Administration. December 2020. FDA Takes Key 
Action in Fight Against COVID-19 By Issuing Emergency Use 
Authorization for First COVID-19 Vaccine. Available at: https://www.fda.gov/news-events/press-announcements/fda-takes-key-action-fight-against-covid-19-issuing-emergency-use-authorization-first-covid-19.
    \137\ Food and Drug Administration. December 2020. FDA Takes 
Additional Action in Fight Against COVID-19 By Issuing Emergency Use 
Authorization for Second COVID-19 Vaccine. Available at: https://www.fda.gov/news-events/press-announcements/fda-takes-additional-action-fight-against-covid-19-issuing-emergency-use-authorization-second-covid.
    \138\ Food and Drug Administration. February 2021. FDA Issues 
Emergency Use Authorization for Third COVID-19 Vaccine. Available 
at: https://www.fda.gov/news-events/press-announcements/fda-issues-emergency-use-authorization-third-covid-19-vaccine.
    \139\ Food and Drug Administration. August 2021. FDA Approves 
First COVID-19 Vaccine. Available at: https://www.fda.gov/news-events/press-announcements/fda-approves-first-covid-19-vaccine.
    \140\ Food and Drug Administration. January 2022. Coronavirus 
(COVID-19) Update: FDA Takes Key Action by Approving Second COVID-19 
Vaccine. Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-takes-key-action-approving-second-covid-19-vaccine.
    \141\ Food and Drug Administration. July 2022. Coronavirus 
(COVID-19) Update: FDA Authorizes Emergency Use of Novavax COVID-19 
Vaccine, Adjuvanted. Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-emergency-use-novavax-covid-19-vaccine-adjuvanted.
    \142\ Food and Drug Administration. September 2021. FDA 
Authorizes Booster Dose of Pfizer-BioNTech COVID-19 Vaccine for 
Certain Populations. Available at: https://www.fda.gov/news-events/press-announcements/fda-authorizes-booster-dose-pfizer-biontech-covid-19-vaccine-certain-populations.
    \143\ Food and Drug Administration. October 2021. Coronavirus 
(COVID-19) Update: FDA Takes Additional Actions on the Use of a 
Booster Dose for COVID-19 Vaccines. Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-takes-additional-actions-use-booster-dose-covid-19-vaccines.
    \144\ Food and Drug Administration. November 2021. Coronavirus 
(COVID-19) Update: FDA Expands Eligibility for COVID-19 Vaccine 
Boosters. Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-expands-eligibility-covid-19-vaccine-boosters.
    \145\ Food and Drug Administration. March 2022. Coronavirus 
(COVID-19) Update: FDA Authorizes Second Booster Dose of Two COVID-
19 Vaccines for Older and Immunocompromised Individuals. Available 
at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-second-booster-dose-two-covid-19-vaccines-older-and.
    \146\ Food and Drug Administration. August 2022. Coronavirus 
(COVID-19) Update: FDA Authorizes Moderna, Pfizer-BioNTech Bivalent 
COVID-19 Vaccines for Use as a Booster Dose. Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-moderna-pfizer-biontech-bivalent-covid-19-vaccines-use.
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    We stated in the CY 2023 ESRD PPS final rule that HCP are at risk 
of carrying COVID-19 infection to patients, experiencing illness or 
death themselves as a result of contracting COVID-19, and transmitting 
COVID-19 to their families, friends, and the general public (87 FR 
67244). While the impact of COVID-19 vaccines on asymptomatic infection 
and transmission is not yet fully known, there is now robust data 
available on COVID-19 vaccine effectiveness across multiple populations 
against symptomatic infection, hospitalization, and death. Two-dose 
COVID-19 vaccines from Pfizer-BioNTech and Moderna were found to be 88 
percent and 93 percent effective against hospitalization for COVID-19, 
respectively, over 6 months for adults over age 18 without 
immunocompromising conditions.\147\ During a SARS-COV-2 surge in the 
spring and summer of 2021, 92 percent of COVID-19 hospitalizations and 
91 percent of COVID-19-associated deaths were reported among persons 
not fully vaccinated.\148\ Real-world studies of population-level 
vaccine effectiveness indicated similarly high rates of effectiveness 
in preventing SARS-COV-2 infection among frontline workers in multiple 
industries, with a 90 percent effectiveness in preventing symptomatic 
and asymptomatic infection from December 2020 through August 2021.\149\

[[Page 42496]]

Vaccines have also been highly effective in real-world conditions 
preventing COVID-19 in HCP with up to 96 percent effectiveness for 
fully vaccinated HCP, including those at risk for severe infection and 
those in racial and ethnic groups disproportionately affected by COVID-
19.\150\ In the presence of high community prevalence of COVID-19, 
residents of nursing homes with low staff vaccination coverage had 
higher rates of COVID-19 cases and COVID-19 related deaths than those 
among residents of nursing homes with high staff vaccination 
coverage.\151\ Overall, data demonstrate that COVID-19 vaccines are 
effective and prevent severe disease, including hospitalization and 
death.
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    \147\ Centers for Disease Control and Prevention. September 24, 
2021. Morbidity and Mortality Weekly Report (MMWR). Comparative 
Effectiveness of Moderna, Pfizer-BioNTech, and Janssen (Johnson & 
Johnson) Vaccines in Preventing COVID-19 Hospitalizations Among 
Adults Without Immunocompromising Conditions--United States, March-
August 2021. Available at: https://cdc.gov/mmwr/volumes/70/wr/mm7038e1.htm?s_cid=mm7038e1_w.
    \148\ Centers for Disease Control and Prevention. September 10, 
2021. Morbidity and Mortality Weekly Report (MMWR). Monitoring 
Incidence of COVID-19 Cases, Hospitalizations, and Deaths, by 
Vaccination Status--13 U.S. Jurisdictions, April 4-July 17, 2021. 
Available at: https://www.cdc.gov/mmwr/volumes/70/wr/mm7037e1.htm.
    \149\ Centers for Disease Control and Prevention. August 27, 
2021. Morbidity and Mortality Weekly Report (MMWR). Effectiveness of 
COVID-19 Vaccines in Preventing SARS-COV-2 Infection Among Frontline 
Workers Before and During B.1.617.2 (Delta) Variant Predominance--
Eight U.S. Locations, December 2020-August 2021. Available at: 
https://www.cdc.gov/mmwr/volumes/70/wr/mm7034e4.htm.
    \150\ Pilishivi, T. et al. (December 2022). Effectiveness of 
mRNA Covid-19 Vaccine among U.S. Health Care Personnel. New England 
Journal of Medicine. 2021 Dec 16;385(25):e90. Available online at: 
https://pubmed.ncbi.nlm.nih.gov/34551224/.
    \151\ McGarry BE et al. (January 2022). Nursing Home Staff 
Vaccination and Covid-19 Outcomes. New England Journal of Medicine. 
2022 Jan 27;386(4):397-398. Available online at: https://pubmed.ncbi.nlm.nih.gov/34879189/.
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    As SARS-COV-2 persists and evolves, our COVID-19 vaccination 
strategy must remain responsive. When we finalized adoption of the 
COVID-19 Vaccination Coverage Among HCP measure in the CY 2023 ESRD PPS 
final rule, we stated that HCP should be counted as vaccinated if they 
received COVID-19 vaccination any time from when it first became 
available in December 2020 (87 FR 67247). We noted that a completed 
vaccination course, defined for purposes of the measure as the primary 
vaccination series, may require one or more doses depending on the 
specific vaccine used, and that the NHSN application automatically 
calculates the total value for ``Any completed COVID-19 vaccine 
series.'' We also stated that, as vaccination protocols continue to 
evolve, we will continue to work with the CDC to update relevant 
measure specifications as necessary. Since we finalized the COVID-19 
Vaccination Coverage Among HCP measure in the CY 2023 ESRD PPS final 
rule, new variants of SARS-COV-2 have emerged around the world and 
within the United States. Specifically, the Omicron variant (and its 
related subvariants) is listed as a variant of concern by the CDC 
because it spreads more easily than earlier variants.\152\ Vaccine 
manufacturers have responded to the Omicron variant by developing 
bivalent COVID-19 vaccines, which include a component of the original 
virus strain to provide broad protection against COVID-19 and a 
component of the Omicron variant to provide better protection against 
COVID-19 caused by the Omicron variant.\153\ These booster doses of the 
bivalent COVID-19 vaccines have been shown to increase immune response 
to SARS-COV-2 variants, including Omicron, particularly in individuals 
who are more than 6 months removed from receipt of their primary 
series.\154\ The FDA issued EUAs for booster doses of two bivalent 
COVID-19 vaccines, one from Pfizer-BioNTech \155\ and one from 
Moderna,\156\ and strongly encourages anyone who is eligible to 
consider receiving a booster dose with a bivalent COVID-19 vaccine to 
provide better protection against currently circulating variants.\157\ 
COVID-19 booster doses are associated with a greater reduction in 
infections among HCP and their patients relative to those who only 
received primary series vaccination,158 159 with a rate of 
breakthrough infections among HCP who received only a two-dose regimen 
of 21.4 percent compared to a rate of 0.7 percent among boosted 
HCP.\160\ Data from the existing COVID-19 Vaccination Coverage Among 
HCP measure demonstrate clinically significant variation in booster 
dose vaccination rates across facilities.
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    \152\ Food and Drug Administration. August 2021. Variants of the 
Virus. Available at: https://www.cdc.gov/coronavirus/2019-ncov/variants/index.html.
    \153\ Food and Drug Administration. November 2022. COVID-19 
Bivalent Vaccine Boosters.
    \154\ Oster Y et al. (May 2022). The effect of a third BNT162b2 
vaccine on breakthrough infections in health care workers: a cohort 
analysis. Clin Microbiol Infect. 2022 May;28(5):735.e1-735.e3. 
Available online at: https://pubmed.ncbi.nlm.nih.gov/35143997/.
    \155\ Food and Drug Administration. November 2022. Pfizer-
BioNTech COVID-19 Vaccines. Available at: https://www.fda.gov/emergency-preparedness-and-response/coronavirus-disease-2019-covid-19/pfizer-biontech-covid-19-vaccines.
    \156\ Food and Drug Administration. November 2022. Moderna 
COVID-19 Vaccines. Available at: https://www.fda.gov/emergency-preparedness-and-response/coronavirus-disease-2019-covid-19/moderna-covid-19-vaccines.
    \157\ Food and Drug Administration. August 2022. Coronavirus 
(COVID-19) Update: FDA Authorizes Moderna, Pfizer-BioNTech Bivalent 
COVID-19 Vaccines for Use as a Booster Dose. Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-moderna-pfizer-biontech-bivalent-covid-19-vaccines-use.
    \158\ Prasad N et al. (May 2022). Effectiveness of a COVID-19 
Additional Primary or Booster Vaccine Dose in Preventing SARS-CoV-2 
Infection Among Nursing Home Residents During Widespread Circulation 
of the Omicron Variant--United States, February 14-March 27, 2022. 
Morbidity and Mortality Weekly Report (MMWR). 2022 May 6;71(18):633-
637. Available online at: https://pubmed.ncbi.nlm.nih.gov/35511708/.
    \159\ Oster Y et al. (May 2022). The effect of a third BNT162b2 
vaccine on breakthrough infections in health care workers: a cohort 
analysis. Clin Microbiol Infect. 2022 May;28(5):735.e1-735.e3. 
Available online at: https://pubmed.ncbi.nlm.nih.gov/35143997/.
    \160\ Ibid.
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    We believe that vaccination remains the most effective means to 
prevent the worst consequences of COVID-19, including severe illness, 
hospitalization, and death. Given the availability of vaccine efficacy 
data, EUAs issued by the FDA for bivalent boosters, the continued 
presence of SARS-COV-2 in the United States, and variance among rates 
of booster dose vaccination, it is important to modify the COVID-19 
Vaccination Coverage Among HCP measure to reflect recent updates that 
explicitly specify for HCP to receive primary series and booster 
vaccine doses in a timely manner. As the COVID-19 pandemic persists, we 
continue to believe that monitoring and surveillance is important and 
provides patients, beneficiaries, and their caregivers with information 
to support informed decision making. We propose to modify the COVID-19 
Vaccination Coverage Among HCP measure to replace the term ``complete 
vaccination course'' with the term ``up to date'' in the HCP 
vaccination definition. We also propose to update the numerator to 
specify the time frames within which an HCP is considered up to date 
with recommended COVID-19 vaccines, including booster doses, beginning 
with PY 2026. As we stated in the CY 2023 ESRD PPS final rule (87 FR 
67245), the COVID-19 Vaccination Coverage Among HCP measure is a 
process measure that assesses HCP vaccination coverage rates. Unlike 
outcome measures, process measures do not assess a particular outcome.
b. Overview of Updated Measure
    The COVID-19 Vaccination Coverage Among HCP measure is a process 
measure developed by the CDC to track COVID-19 vaccination coverage 
among HCP in settings such as dialysis facilities, and the measure is 
reported via the CDC's National Healthcare Safety Network (NHSN).
    We refer readers to the CY 2023 ESRD PPS final rule (87 FR 67245 
through 67246) for more information on the initial review of the 
measure by the Measure Applications Partnership (MAP). We included an 
updated version of the measure on the Measures Under Consideration 
(MUC) list for the 2022-2023 pre-rulemaking cycle for consideration by 
the MAP. In December 2022, the MAP's Hospital Workgroup discussed the 
modified measure. The Hospital Workgroup stated that the revision of 
the current measure captures up-to-date vaccination information in 
accordance with CDC recommendations

[[Page 42497]]

updated since its initial development. Additionally, the Hospital 
Workgroup appreciated that the respecified proposed measure of the 
target population is broader and simplified from seven categories of 
HCP to four.\161\ During review, the MAP Health Equity Advisory Group 
highlighted the importance of COVID-19 measures and asked whether the 
measure excludes individuals with contraindications to FDA authorized 
or approved COVID-19 vaccines, and whether the measure will be 
stratified by demographic factors. The measure developer confirmed that 
HCP with contraindications to the vaccines are excluded from the 
measure denominator, but the measure would not be stratified since the 
data are submitted at an aggregate rather than an individual level. The 
MAP Rural Health Advisory Group expressed concerns about data 
collection burden, citing that collection is performed manually and 
that small rural facilities may not have employee health software.\162\ 
The measure developer acknowledged the challenge of getting adequate 
documentation and emphasized the goal to ensure the measure does not 
present a burden on the provider. The developer also noted that the 
model used for this measure is based on the Influenza Vaccination 
Coverage Among HCP measure (CBE #0431), and it intends to utilize a 
similar approach to the modified COVID-19 Vaccination Coverage Among 
HCP measure if vaccination strategy becomes seasonal. The revised 
measure received conditional support for rulemaking from both the MAP 
workgroups pending testing indicating the measure is reliable and 
valid, and endorsement by the consensus-based entity (CBE).\163\ The 
MAP noted that the previous version of the measure received endorsement 
from the CBE (CBE #3636).\164\
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    \161\ Centers for Medicare & Medicaid Services. 2022-2023 
Preliminary Analysis Worksheet. 2022. Available at: https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=97891.
    \162\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
    \163\ In previous years, we referred to the consensus-based 
entity by corporate name. We have updated this language to refer to 
the consensus-based entity more generally.
    \164\ Centers for Medicare & Medicaid Services. 3636 Quarterly 
Reporting of COVID-19 Vaccination Coverage among Healthcare 
Personnel. Accessed February 6, 2023. Available at: https://www.qualityforum.org/QPS/3636.
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(1) Measure Specifications
    This reporting measure includes at least one week of data 
collection a month for each of the three months in a quarter. The 
denominator would be the number of HCP eligible to work in the facility 
for at least one day during the reporting period, excluding persons 
with contraindications to COVID-19 vaccination that are described by 
the CDC. Facilities report the following four categories of HCP to 
NHSN:
    1. Employees: includes all persons who receive a direct paycheck 
from the reporting facility (that is, on the facility's payroll), 
regardless of clinical responsibility or patient contact.
    2. Licensed independent practitioners (LIPs): This includes 
physicians (MD, DO), advanced practice nurses, and physician assistants 
only who are affiliated with the reporting facility but are not 
directly employed by it (that is, they do not receive a direct paycheck 
from the reporting facility), regardless of clinical responsibility or 
patient contact. Post-residency fellows are also included in this 
category if they are not on the facility's payroll.
    3. Adult students/trainees and volunteers: This includes all 
medical, nursing, or other health professional students, interns, 
medical residents, and volunteers aged 18 or over who are affiliated 
with the healthcare facility, but are not directly employed by it (that 
is, they do not receive a direct paycheck from the facility), 
regardless of clinical responsibility or patient contact.
    4. Other contract personnel: Contract personnel are defined as 
persons providing care, treatment, or services at the facility through 
a contract who do not fall into any of the previously discussed 
denominator categories. This also includes vendors providing care, 
treatment, or services at the facility who may or may not be paid 
through a contract. Facilities are required to enter data on other 
contract personnel for submission in the NHSN application, but data for 
this category are not included in the COVID-19 Vaccination Coverage 
Among HCP measure.\165\
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    \165\ For more details on the reporting of other contract 
personnel, we refer readers to the NHSN COVID-19 Vaccination 
Protocol, Weekly COVID-19 Vaccination Module for Healthcare 
Personnel available at: https://www.cdc.gov/nhsn/pdfs/hps/covidvax/protocol-hcp-508.pdf.
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    The denominator excludes denominator-eligible individuals with 
contraindications as defined by the CDC.\166\ There are no changes to 
the denominator exclusions.
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    \166\ Centers for Disease Control and Prevention. 2022. 
Contraindications and precautions. Available at: https://www.cdc.gov/vaccines/covid-19/clinical-considerations/interim-considerations-us.html#contraindications.
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    The numerator is the cumulative number of HCP in the denominator 
population who are considered up to date with recommended COVID-19 
vaccines. Facilities should refer to the definition of up to date as of 
the first day of the applicable reporting quarter, which can be found 
at https://www.cdc.gov/nhsn/pdfs/hps/covidvax/UpToDateGuidance-508.pdf. 
For example, for the proposed updated measure, HCP would be considered 
up to date during the applicable performance period for the ESRD QIP if 
they meet one of the following criteria:
    1. Individuals who received an updated bivalent \167\ booster dose, 
or
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    \167\ The updated (bivalent) Moderna and Pfizer-BioNTech 
boosters target the most recent Omicron subvariants. The updated 
(bivalent) boosters were recommended by the CDC on 9/2/2022. As of 
this date, the original, monovalent mRNA vaccines are no longer 
authorized as a booster dose for people ages 12 years and older.
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    2a. Individuals who received their last booster dose less than 2 
months ago, or
    2b. Individuals who completed their primary series \168\ less than 
2 months ago.
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    \168\ Completing a primary series means receiving a two-dose 
series of a COVID-19 vaccine or a single dose of Janssen/J&J COVID-
19 vaccine.
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    We note that for purposes of NHSN surveillance, the CDC began using 
this definition of up to date during the quarter 4 2022 surveillance 
period (September 26, 2022-December 25, 2022).
    We refer readers to https://www.cdc.gov/nhsn/nqf/index.html for 
more details on the measure specifications. We note that the proposed 
updated COVID-19 Vaccination Coverage Among HCP measure will remain a 
reporting measure and that the proposed updates to measure weighting 
for PY 2026 and PY 2027 are discussed further in sections IV.C.6 and 
IV.D.7 of this proposed rule.
(2) Consensus-Based Entity Endorsement
    The current version of the measure in the ESRD QIP received CBE 
endorsement (CBE #3636, ``Quarterly Reporting of COVID-19 Vaccination 
Coverage among Healthcare Personnel'') on July 26, 2022. Although 
section 1881(h)(2)(B)(i) of the Act generally requires that measures 
specified by the Secretary for the ESRD QIP be endorsed by the entity 
with a contract under section 1890(a) of the Act, section 
1881(h)(2)(B)(ii) of the Act states that in the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a feasible and practical measure has not been endorsed by the entity 
with a contract under section 1890(a) of the Act, the Secretary may 
specify a measure that is not so endorsed as long as due consideration 
is

[[Page 42498]]

given to measures that have been endorsed or adopted by a consensus 
organization identified by the Secretary. When we adopted this measure 
in the CY 2023 ESRD PPS final rule, we reviewed CBE-endorsed measures 
and were unable to identify any other CBE-endorsed measures on this 
topic, and, therefore, we believe the exception in section 
1881(h)(2)(B)(ii) of the Act applies. The CDC, as the measure 
developer, is pursuing endorsement for the modified version of the 
measure.
c. Data Submission and Reporting
    We refer readers to the CY 2023 ESRD PPS final rule (87 FR 67246) 
for information on data submission and reporting for the measure. We 
are not proposing any changes to the existing data submission 
requirements.
    We invite public comment on this proposal.
4. Proposal To Convert the Clinical Depression Screening and Follow-Up 
Reporting Measure to a Clinical Measure Beginning With the PY 2026 ESRD 
QIP
    In the CY 2015 ESRD PPS final rule, we finalized the adoption of 
the Clinical Depression Screening and Follow-Up reporting measure, 
beginning in PY 2018 (79 FR 66200 through 66203). As we noted in the CY 
2015 ESRD PPS final rule, depression is a highly prevalent condition in 
patients with ESRD, which impacts many aspects of a patient's life and 
is associated with higher rates of mortality in the ESRD population. 
Adoption of a measure that assesses whether facilities screen patients 
for depression, and develop follow-up plans when appropriate, was and 
still is an opportunity to improve the health of patients with ESRD.
    In this proposed rule, we are proposing to convert the Clinical 
Depression Screening and Follow-Up reporting measure to a clinical 
measure and to adopt a new methodology for scoring that measure as a 
clinical measure. We believe this proposal would help to ensure that 
the measure is scored in a manner that more closely aligns with current 
clinical guidelines for depression screening and follow-up because it 
narrows the number of conditions on which a facility can earn points.
    Clinical guidelines indicate that providers should both screen for 
depression and develop a follow-up plan for patients who test positive 
for depression.\169\ Screening for depression is an important aspect of 
ESRD patient care, especially because ESRD and depression may present 
with similar symptoms, including but not limited to fatigue, poor 
appetite, headaches, and lack of focus.\170\ Developing a follow-up 
plan for patients who screen positive for depression is equally 
important because ESRD patients may not be aware that they can seek 
treatment or that such treatment could be beneficial.\171\ Under the 
specifications of the current Clinical Depression Screening and Follow-
Up reporting measure, facilities are required to report one of six 
conditions with respect to each eligible patient, and we calculate the 
measure rate for the facility as the percentage of eligible patients 
for which the facility reports one of those six conditions. The six 
conditions are as follows:
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    \169\ K/DOQI clinical practice guidelines for cardiovascular 
disease in dialysis patients [bond] Volume 45, SUPPLEMENT 3, 16-153, 
April 2005. https://doi.org/10.1053/j.ajkd.2005.01.019.
    \170\ PCORI Evidence Update. Treating Depression When You're on 
Dialysis (for Patients). July 2021. Available at: https://www.pcori.org/sites/default/files/PCORI-Evidence-Update-for-Patients-Treating-Depression-When-Youre-on-Dialysis.pdf.
    \171\ Michael J. Fischer, Elani Streja, Jui-Ting Hsiung, Susan 
T. Crowley, Csaba P. Kovesdy, Kamyar Kalantar-Zadeh, Wissam M. 
Kourany, Depression screening and clinical outcomes among adults 
initiating maintenance hemodialysis, Clinical Kidney Journal, Volume 
14, Issue 12, December 2021, Pages 2548-2555, https://doi.org/10.1093/ckj/sfab097.
---------------------------------------------------------------------------

     Screening for clinical depression is documented as being 
positive, and a follow-up plan is documented.
     Screening for clinical depression is documented as 
positive, and a follow-up plan is not documented, and the facility 
possesses documentation stating the patient is not eligible.
     Screening for clinical depression is documented as 
positive, the facility possesses no documentation of a follow-up plan, 
and no reason is given.
     Screening for clinical depression is documented as 
negative, and a follow-up plan is not required.
     Screening for clinical depression is not documented, but 
the facility possesses documentation stating the patient is not 
eligible.
     Screening for clinical depression is not documented, and 
no reason is given.
    We are not proposing to revise any of these conditions. However, we 
are proposing that we would convert the measure to a clinical measure 
and award credit to facilities only if they report one of the following 
four of those six conditions:
     Screening for clinical depression is documented as being 
positive, and a follow-up plan is documented.
     Screening for clinical depression is documented as 
positive, and a follow-up plan is not documented, and the facility 
possesses documentation stating the patient is not eligible.
     Screening for clinical depression is documented as 
negative, and a follow-up plan is not required.
     Screening for clinical depression is not documented, but 
the facility possesses documentation stating the patient is not 
eligible.
    If a facility selects one of the other two conditions (that is, 
``Screening for clinical depression is documented as positive, the 
facility possesses no documentation of a follow-up plan, and no reason 
is given'' and ``Screening for clinical depression is not documented, 
and no reason is given''), the facility would not receive credit in the 
numerator. We believe this proposed update is important because it 
would assess facility performance on both the clinical depression 
screening and the follow-up plan, to the extent that one is needed, and 
would also incentivize facilities to report the reason for either not 
documenting that they screened for clinical depression, or why they do 
not possess documentation of a follow-up plan. We believe that the 
performance score calculation methodology changes we are proposing to 
the Clinical Depression Screening and Follow-Up reporting measure would 
have a greater impact on fostering care coordination among providers 
and improving patient outcomes by incentivizing the documentation of 
depression screenings and follow-up plans, or alternatively requiring 
facilities to provide a reason why no screening or follow-up plan was 
documented. This proposed measure update would also align with our 
efforts under the Meaningful Measures Framework, which identifies high-
priority areas for quality measurement and improvement to assess core 
issues most critical to high-quality healthcare and improving patient 
outcomes.\172\ In 2021, we launched Meaningful Measures 2.0 to promote 
innovation and modernization of all aspects of quality, and to address 
a wide variety of settings, stakeholders, and measure 
requirements.\173\ We are addressing healthcare priorities and gaps 
with Meaningful Measures 2.0 by leveraging quality measures to increase 
efficiency, reduce burden, and close gaps in care. The proposed updates 
to the Clinical Depression Screening and Follow-Up

[[Page 42499]]

measure would support these efforts and would align with several 
Meaningful Measures Areas, including ``Seamless Care Coordination,'' 
and ``Behavioral Health,'' as we believe that incentivizing the 
documentation of follow-up plans would encourage care coordination 
efforts to support the behavioral health outcomes of ESRD patients. The 
proposed modifications would also align with the Meaningful Measures 
2.0 goal to ``Leverage measures to drive outcome improvement through 
public reporting and payment programs'' because we believe that 
converting the Clinical Depression Screening and Follow-Up reporting 
measure to a clinical measure would help to drive outcome improvement 
through the ESRD QIP. Additionally, this proposed measure update would 
align with efforts to develop a Universal Foundation \174\ that would 
help implement the vision outlined in our National Quality Strategy 
\175\ and is fundamental to achieving several of the agency's quality 
and value-based care goals.\176\ Our proposal to update the Clinical 
Depression Screening and Follow-Up reporting measure would help to 
align the measure that is used in the ESRD QIP with the measure 
identified for use across multiple programs as part of the Behavioral 
Health domain of the Universal Foundation measure set.\177\
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    \172\ Centers for Medicare & Medicaid Services. Meaningful 
Measures Framework. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.
    \173\ Centers for Medicare & Medicaid Services. 2021. Meaningful 
Measures 2.0: Moving from Measure Reduction to Modernization. 
Available at: https://www.cms.gov/meaningful-measures-20-moving-measure-reduction-modernization. We note that Meaningful Measures 
2.0 is still under development.
    \174\ Jacobs D, Schreiber M, Seshamani M, Tsai D, Fowler E, 
Fleisher, L. Aligning Quality Measures across CMS--The Universal 
Foundation. The New England Journal of Medicine, February 1, 2023. 
Available at: https://www.nejm.org/doi/full/10.1056/NEJMp2215539.
    \175\ Schreiber M, Richards AC, Moody-Williams J, Fleisher LA. 
The CMS National Quality Strategy: a person-centered approach to 
improving quality. Centers for Medicare and Medicaid Services, June 
6, 2022 (https://www.cms.gov/blog/cms-national-quality-strategy-person-centered-approach-improving-quality).
    \176\ Jacobs D, Fowler E, Fleisher L, Seshamani M. The Medicare 
value-based care strategy: alignment, growth, and equity. Health 
Affairs, July 21, 2022 (https://www.healthaffairs.org/content/forefront/medicare-value-based-care-strategy-alignment-growth-and-equity).
    \177\ Jacobs D, Schreiber M, Seshamani M, Tsai D, Fowler E, 
Fleisher, L. Aligning Quality Measures across CMS--The Universal 
Foundation. The New England Journal of Medicine, February 1, 2023. 
Available at: https://www.nejm.org/doi/full/10.1056/NEJMp2215539.
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    We are also proposing to convert the proposed updated version of 
the Clinical Depression Screening and Follow-Up measure to a clinical 
measure beginning with PY 2026, and to move that measure to the Care 
Coordination Measure Domain beginning with that payment year. We are 
proposing to convert the Clinical Depression Screening and Follow-Up 
measure from a reporting measure to a clinical measure because we 
believe that our proposed update to the performance score calculation 
aligns with that of a clinical measure. We are proposing to move the 
Clinical Depression Screening and Follow-Up measure from the Reporting 
Measure Domain to the Care Coordination Measure Domain because the 
updated clinical measure would no longer be appropriate for inclusion 
under the Reporting Measure Domain. We note that we are not proposing 
to change eligibility requirements for the measure. We discuss our 
proposed updates to measure domains and weights for PY 2026 in section 
IV.C.6 of this proposed rule.
    We welcome public comment on our proposal to update the Clinical 
Depression Screening and Follow-Up measure and our proposal to convert 
it to a clinical measure beginning with PY 2026.
5. Proposal To Remove Two Measures From the ESRD QIP Measure Set, 
Beginning With PY 2026
    We have undertaken efforts to review the existing ESRD QIP measure 
set to ensure continued clinical impact and effectiveness of the 
measures on facility performance. Based on that analysis and our 
evaluation of the Program's measures, we are proposing to remove the 
Ultrafiltration Rate reporting measure and the Standardized Fistula 
Ratio clinical measure beginning with PY 2026.
a. Proposal To Remove the Ultrafiltration Rate Reporting Measure From 
the ESRD QIP Measure Set Beginning With PY 2026
    In the CY 2017 ESRD PPS final rule, we adopted the Ultrafiltration 
Rate reporting measure (81 FR 77912 through 77915). 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. 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. 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. When we added this measure to the ESRD QIP, we believed 
the documentation of the ultrafiltration measurements would ultimately 
contribute to the quality of the patient's ESRD treatment (81 FR 77912 
through 77915).
    More recent studies have indicated that the Ultrafiltration Rate 
reporting measure may not result in the intended patient outcomes. For 
example, a patient's body size may be a confounding, possibly 
explanatory factor for the relationship between higher UFR and 
increased mortality.\178\ Additionally, although the Ultrafiltration 
Rate reporting measure captures a patient's UFR measurements reported 
monthly, the mortality risks associated with high UFR may be due to the 
frequency or number of HD sessions with high UFR.\179\ We believe these 
findings show that the documentation of a patient's ultrafiltration 
measurements through the current Ultrafiltration Rate reporting measure 
may not necessarily indicate the quality of a patient's ESRD treatment 
and tracking the ultrafiltration rate as a quality indicator may 
influence decision-making regarding dialysis treatment. Therefore, a 
facility's performance on the measure may not accurately reflect the 
quality of care provided. Accordingly, we are proposing to remove this 
measure from the ESRD QIP measure set under measure removal factor 2 
(performance or improvement on a measure does not result in better or 
the intended patient outcomes) beginning with the PY 2026 ESRD QIP.
---------------------------------------------------------------------------

    \178\ John T. Daugirdas and Daniel Schneditz. Seminars in 
Dialysis: Hemodialysis Ultrafiltration Rate Targets Should Be Scaled 
to Body Surface Area Rather than to Body Weight. 2017.
    \179\ Jose E. Navarrete, Ajai Rajabalan, Jason Cobb, and Janice 
P. Lea. Proportion of Hemodialysis Treatments with High 
Ultrafiltration Rate and the Association with Mortality. Kidney360 
3: 1359-1366, 2022. doi: https://doi.org/10.34067/KID.0001322022.
---------------------------------------------------------------------------

    We welcome public comment on our proposal.
b. Proposal To Remove the Standardized Fistula Rate Clinical Measure 
From the ESRD QIP Measure Set
    In the CY 2018 ESRD PPS final rule, we adopted the Standardized 
Fistula Rate clinical measure (82 FR 50774 through 50777). Along with 
the Long-Term Catheter Rate clinical measure, we stated that the two 
vascular access measures, when used together, consider arteriovenous 
(AV) fistula use as a positive outcome and prolonged use of a tunneled 
catheter as a negative outcome. With the growing recognition that some 
patients may exhaust their options for an AV fistula, or have 
comorbidities that may limit the success of AV fistula creation, 
pairing the measures accounts for all vascular access options. The 
Standardized Fistula Rate measure adjusts for patient

[[Page 42500]]

factors where fistula placement may be either more difficult or not 
appropriate and acknowledges that in certain circumstances an AV graft 
may be the best access option by accounting for that possibility in the 
current measure specifications. In the CY 2018 ESRD PPS final rule, we 
stated that this paired incentive structure that relies on both 
measures reflects consensus best practice and supports maintenance of 
the gains in vascular access success achieved via the Fistula First/
Catheter Last Project over the last decade (82 FR 50777).
    Since the CY 2018 ESRD PPS final rule, there have been several 
changes to what many experts consider to be best practices with respect 
to vascular access in ESRD patients due to improvements in the care of 
ESRD patients overall, changes in patient demographics, and increasing 
patient longevity. Guidance published in 2019 by the National Kidney 
Foundation's Kidney Disease Outcome Quality Initiative (KDOQI) reflects 
updated best practices.\180\ The KDOQI's 2019 guidance notes that prior 
guidelines and initiatives have emphasized a ``fistula first'' approach 
to vascular access choice due to the AV fistula's associations with 
better short-term results compared with other vascular access 
types.\181\ However, the 2019 guidance also notes that more recent data 
have challenged these associations because of the high complication 
rates of AV fistula maturation failure requiring intervention and 
increased acceptability of AV grafts. The guidance also encourages a 
more holistic, long-term approach to dialysis access that strives to 
preserve patient vasculature and avoid unnecessary procedures and 
complications. Therefore, following re-evaluation of this Fistula First 
approach, the KDOQI's 2019 guidance concludes that the Fistula First 
approach should no longer be considered a clinical best practice. 
Instead, the KDOQI's 2019 guidance concludes that a patient-centered 
approach to dialysis access that is based on a consideration of the 
patient's needs and individual factors is preferred. Providers should 
consider what would be most appropriate for the individual patient, 
including that AV fistula may not always be most appropriate based on 
the individual patient's needs and goals.
---------------------------------------------------------------------------

    \180\ Lok CE, Huber TS, Lee T, et al.; KDOQI Vascular Access 
Guideline Work Group. KDOQI clinical practice guideline for vascular 
access: 2019 update. Am J Kidney Dis. 2020;75(4)(suppl 2):S1-S164.
    \181\ KDOQI clinical practice guidelines for vascular access. Am 
J Kidney Dis. 2006;48:S176-S247.
---------------------------------------------------------------------------

    After considering these evolving best practices and the KDOQI's 
2019 guidance, we have determined that the Standardized Fistula Rate 
Clinical Measure does not provide patients and their healthcare 
providers the necessary level of flexibility to choose the most 
suitable dialysis access. We believe that patients and their healthcare 
providers should have the flexibility to choose vascular access (either 
AV fistula or AV graft) where appropriate to their specific patient 
characteristics and treatment plans. This determination should be based 
on the healthcare provider's best clinical judgment that considers the 
vessel characteristics, patient comorbidities, health circumstances, 
and patient preference. Accordingly, we are proposing to remove the 
Standardized Fistula Rate clinical measure from the ESRD QIP measure 
set beginning with PY 2026 under measure removal factor 3 (a measure no 
longer aligns with current clinical guidelines or practice).
    We continue to consider both AV fistula and AV graft as preferable 
forms of vascular access to a long-term catheter, and evidence shows 
that long-term catheters should only be used when all other AV access 
options have been exhausted.\182\ We also continue to believe that it 
is important to track the use of long-term catheters, minimize their 
use where possible, and incentivize best practices for vascular access. 
For those reasons, we are not proposing to remove the Long-Term 
Catheter Rate clinical measure.
---------------------------------------------------------------------------

    \182\ Lok CE, Huber TS, Lee T, et al.; KDOQI Vascular Access 
Guideline Work Group. KDOQI clinical practice guideline for vascular 
access: 2019 update. Am J Kidney Dis. 2020;75(4)(suppl 2):S1-S164.
---------------------------------------------------------------------------

    We are also proposing to remove the reference to the Vascular 
Access Type Measure Topic and to assign the total weight of that topic 
(12 percent) solely to the Long-Term Catheter Rate clinical measure, as 
described in Table 15 of this proposed rule. We are proposing to assign 
the total weight to the Long-Term Catheter Rate clinical measure 
because we believe this continues to be an important measure of 
facility performance tied to improved patient outcomes. We believe that 
our proposal to assign the total 12 percent weight to the Long-Term 
Catheter Rate clinical measure will reflect our view that long-term 
catheter use is the least-favored vascular access treatment option, and 
should be avoided where more clinically preferable vascular access 
treatment options would be appropriate.
    We welcome public comment on our proposal.
6. Proposed Revisions To Measure Domains and To Measure Weights Used To 
Calculate the Total Performance Score (TPS) Beginning With the PY 2026 
ESRD QIP
    In the CY 2023 ESRD PPS final rule (87 FR 67251 through 67254), we 
finalized revisions to the ESRD QIP measure domains beginning with PY 
2025. Specifically, we added the Reporting Domain and updated measure 
domains and measure weights across five measure domains: Patient & 
Family Engagement, Care Coordination, Clinical Care, Safety, and 
Reporting. The measure domains and weights we finalized in the CY 2023 
ESRD PPS final rule are depicted in Table 14 below.
BILLING CODE 4120-01-P

[[Page 42501]]

[GRAPHIC] [TIFF OMITTED] TP30JN23.020

    As discussed above, we are proposing that beginning with PY 2026, 
the Clinical Depression Screening and Follow-Up reporting measure would 
be converted to a clinical measure and included in the Care 
Coordination Domain, the Standardized Fistula Rate clinical measure 
would be removed from the Clinical Care Domain, the Ultrafiltration 
Rate reporting measure would be removed from the Reporting Domain, and 
the Facility Commitment to Health Equity reporting measure would be 
added to the Reporting Domain. To accommodate the new numbers of 
measures in the Care Coordination Domain, Clinical Care Domain, and 
Reporting Domain, we are proposing to update the individual measure 
weights in each of these domains. We believe that these proposed 
updates to the individual measure weights would help to ensure that a 
facility's individual measure performance has an appropriately 
proportionate impact on a facility's TPS, while also further 
incentivizing improvement on clinical measures. For example, for the 
Care Coordination Domain, we are proposing to update the measure 
weights for the SHR clinical measure and the SRR clinical measure to 
accommodate the inclusion of the proposed Clinical Depression Screening 
and Follow-Up clinical measure. We believe these newly proposed measure 
weights would strike an appropriate balance between the importance of 
facility performance on the SHR clinical measure and the SRR clinical 
measure on measuring patient outcomes, while also reflecting the impact 
of the proposed Clinical Depression Screening and Follow-Up clinical 
measure on patient quality of care. Additionally, the Vascular Access 
Type Measure Topic is currently weighted at 12 percent and includes 
both the Standardized Fistula Rate clinical measure and the Long-Term 
Catheter Rate clinical measure. We are proposing to remove the 
Standardized Fistula Rate clinical measure and the Vascular Access Type 
Measure Topic, and we are also proposing to weight the Long-Term 
Catheter Rate clinical measure at 12 percent. We believe this proposal 
would incentivize improvement and reflect the impact of facility 
performance on the Long-Term Catheter Rate clinical measure (as the 
sole vascular access type measure) on patient outcomes. We continue to 
believe that patient outcomes improve when they receive the most 
clinically appropriate vascular access treatment option, and that long-
term catheters should only be used when other vascular access treatment 
options are not feasible. Consistent with our approach in the CY 2023 
ESRD PPS final rule, we are proposing to assign individual measure 
weights to reflect the proposed updated number of measures in the 
Reporting Measure Domain so that each measure is weighted equally (87 
FR 67251 through 67253). In light of these proposed updates to measures 
within the Reporting Measure Domain, we would weight each measure 
equally at 2 percent, which is consistent with our previously finalized 
approach to weight each measure in the Reporting Measure Domain 
equally. We note that although we are proposing to change the number of 
measures in three of the domains and the weights of certain individual 
measures in those domains, we are not proposing to change the weights 
of the five domains themselves because we believe the proposed updates 
to individual measures and measure weights do not significantly impact 
the measure domains themselves such that updating the weights of the 
measure domains would be required to accommodate the updated individual 
measure weights. The previously finalized and newly proposed measures 
that would be included in each domain, along with the proposed new 
measure weights, for PY 2026 are depicted in Table 15.

[[Page 42502]]

[GRAPHIC] [TIFF OMITTED] TP30JN23.021

    We welcome public comment on these proposals.
7. Performance Standards for the PY 2026 ESRD QIP
    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish performance standards with respect to the measures selected 
for the ESRD QIP for a performance period with respect to a year. The 
performance standards must include levels of achievement and 
improvement, as determined appropriate by the Secretary, 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 define the 
terms ``achievement threshold,'' ``benchmark,'' ``improvement 
threshold,'' and ``performance standard'' in our regulations at 42 CFR 
413.178(a)(1), (3), (7), and (12), respectively. For reporting 
measures, performance standards are the levels of data submission and 
completion of other actions specified by CMS that are used to award 
points to an ESRD facility on the measure (42 CFR 413.178(a)(12)).
    In the CY 2023 ESRD PPS final rule (87 FR 67259 through 67260), we 
set the performance period for the PY 2026 ESRD QIP as CY 2024 and the 
baseline period as CY 2022. In this proposed rule, we are estimating 
the performance standards for the PY 2026 clinical measures in Table 5 
using data from CY 2021, which was the most recent data available (87 
FR 67260). For certain measures previously suppressed for the PY 2023 
performance period due to significant impacts on the measure related to 
the COVID-19 public health emergency (87 FR 67225 through 67237), we 
used CY 2019 data. We intend to update these performance standards for 
all measures, using CY 2022 data, in the CY 2024 ESRD PPS final rule.

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[GRAPHIC] [TIFF OMITTED] TP30JN23.022

    In addition, we summarize in Table 17 requirements for successful 
reporting on previously finalized and newly proposed reporting measures 
for the PY 2026 ESRD QIP.

[[Page 42504]]

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8. Eligibility Requirements for the PY 2026 ESRD QIP
    Our current minimum eligibility requirements for scoring the ESRD 
QIP measures are described in Table 18a.

[[Page 42505]]

[GRAPHIC] [TIFF OMITTED] TP30JN23.024

    We are proposing to add eligibility requirements for the new 
measures we are proposing beginning with the PY 2026 ESRD QIP. Our 
previously finalized and proposed new minimum eligibility requirements 
for scoring the

[[Page 42506]]

ESRD QIP measures are described in Table 18b.
[GRAPHIC] [TIFF OMITTED] TP30JN23.025


[[Page 42507]]


9. Payment Reduction Scale for the PY 2026 ESRD QIP
    Under our current policy, a facility does not receive a payment 
reduction for a payment year in connection with its performance under 
the ESRD QIP if it achieves a 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 42 CFR 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.
    Under our current policy, which is codified at 42 CFR 413.177 of 
our regulations, we 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 mTPS 
(76 FR 634 through 635).
    For PY 2026, we estimate using available data that a facility must 
meet or exceed a mTPS of 52 to avoid a payment reduction. We note that 
the mTPS estimated in this proposed rule is based on data from CY 2021 
and CY 2019 instead of the PY 2026 baseline period (CY 2022) because CY 
2022 data are not yet available. We will update and finalize the mTPS 
and associated payment reduction ranges using CY 2022 data in the CY 
2024 ESRD PPS final rule.
[GRAPHIC] [TIFF OMITTED] TP30JN23.026

D. Proposed Updates to Requirements Beginning With the PY 2027 ESRD QIP

1. PY 2027 ESRD QIP Measure Set
    Under our current policy, we generally retain all measures once 
adopted for a payment year for subsequent payment years. In this 
proposed rule, we are proposing to add the Screening for Social Drivers 
of Health reporting measure and the Screen Positive Rate for Social 
Drivers of Health reporting measure to the ESRD QIP measure set 
beginning with PY 2027.

[[Page 42508]]

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[[Page 42509]]


BILLING CODE 4120-01-C
2. Proposal To Adopt the Screening for Social Drivers of Health 
Reporting Measure Beginning With PY 2027
    Our commitment to supporting facilities in building equity into 
their health care delivery practices is, in part, focused on empowering 
their workforce to recognize and eliminate health disparities that 
disproportionately impact their patients who have health-related social 
needs (HRSNs). HRSNs are significant risk factors associated with worse 
health outcomes as well as increased health care utilization.\183\ We 
believe that the identification of HRSNs among facility patients has 
two significant benefits. First, research has shown that certain HRSNs 
disproportionately impact populations that have historically been 
underserved by the healthcare system and screening helps identify 
individuals who may have HRSNs.\184\ Due to the association between 
chronic condition risk and HRSNs, screening for these needs could serve 
as evidence-based building blocks for supporting ESRD facilities in 
addressing persistent disparities and tracking progress towards closing 
the health equity gap in the ESRD population. Second, we believe HRSN 
screening by facilities could enable them to engage in meaningful 
collaboration with other healthcare providers and community-based 
organizations as part of a more holistic approach to addressing health 
equity gaps that negatively impact their ESRD patients, which may also 
eventually result in implementing and evaluating related innovations in 
health and social care delivery among these facilities, healthcare 
providers and community-based organizations.
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    \183\ Centers for Medicare & Medicaid Services. 2021. A Guide to 
Using the Accountable Health Communities Health-Related Social Needs 
Screening Tool: Promising Practices and Key Insights. June 2021. 
Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion. Accessed: November 23, 2021.
    \184\ American Hospital Association. 2020. Health Equity, 
Diversity & Inclusion Measures for Hospitals and Health System 
Dashboards. December 2020. Accessed: January 18, 2022. Available at: 
https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
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    In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49191 through 
49220), we finalized the adoption of two evidence-based measures in the 
Hospital Inpatient Quality Reporting Program, the Screening for Social 
Drivers of Health and the Screen Positive Rate for Social Drivers of 
Health measures. These two Social Drivers of Health measures support 
identification of specific risk factors for inadequate healthcare 
access and adverse health outcomes among patients. These measures also 
encourage hospitals to systematically collect HRSN data. We have also 
finalized a policy requiring that all Special Needs Plans (SNPs) 
include one or more questions on housing stability, food security, and 
access to transportation in their Health Risk Assessment (HRA) using 
questions from a list of screening instruments specified in sub-
regulatory guidance (87 FR 27726 through 27740), as well as adopted the 
Screening for Social Drivers of Health Measure in the Merit-based 
Incentive Payment System Program (87 FR 70054 and 70055).
    Advancing health equity by addressing the health disparities that 
underlie the country's health system is one of our strategic pillars 
and a Biden-Harris Administration priority.\185\ We believe that the 
proposed Screening for Social Drivers of Health reporting measure 
aligns with The CMS Quality Strategy Goals for effective care 
coordination and prevention and treatment of chronic conditions.\186\ 
The proposed Screening for Social Drivers of Health reporting measure 
would enable facilities to identify patients with HRSNs, who are known 
to experience the greatest risk of poor health outcomes. Improvement in 
risk identification has the potential to reduce healthcare access 
barriers, address the disproportionate expenditures attributed to 
populations with greatest risk, and improve the facility's quality of 
care through the facility taking steps to mitigate poor health outcomes 
by improving their care coordination efforts.187 188 189 190 
These data could help facilities improve their care coordination 
efforts, including by understanding what HRSNs might be contributing to 
poor patient outcomes so that facilities can direct resources, as 
appropriate, toward referring their patients to resources that might be 
able to help them resolve their HRSNs.
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    \185\ Brooks-LaSure, C. (2021). My First 100 Days and Where We 
Go From Here: A Strategic Vision for CMS. Centers for Medicare & 
Medicaid. Available at: https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \186\ Centers for Medicare & Medicaid Services. (2021) CMS 
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy
    \187\ Baker, M.C., Alberti, P.M., Tsao, T.Y., Fluegge, K., 
Howland, R.E., & Haberman, M. (2021). Social Determinants Matter for 
Hospital Readmission Policy: Insights From New York City. Health 
Affairs, 40(4), 645-654. Available at: https://doi.org/10.1377/hlthaff.2020.01742.
    \188\ Hammond, G., Johnston, K., Huang, K., Joynt Maddox, K. 
(2020). Social Determinants of Health Improve Predictive Accuracy of 
Clinical Risk Models for Cardiovascular Hospitalization, Annual 
Cost, and Death. Circulation: Cardiovascular Quality and Outcomes, 
13 (6) 290-299. Available at: https://doi.org/10.1161/CIRCOUTCOMES.120.006752.
    \189\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://pubmed.ncbi.nlm.nih.gov/33139407/.
    \190\ Jaffrey, J.B., Safran, G.B., Addressing Social Risk 
Factors in Value-Based Payment: Adjusting Payment Not Performance to 
Optimize Outcomes and Fairness. Health Affairs Blog, April 19, 2021. 
Available at: https://www.healthaffairs.org/do/10.1377/forefront.20210414.379479/full/.
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a. Background
    Health disparities manifest primarily as worse health outcomes in 
population groups where access to care is 
inequitable.191 192 193 194 195 Such differences persist 
across geography and healthcare settings irrespective of improvements 
in quality of care over time.196 197 198 Assessment of HRSNs 
is an essential mechanism for capturing the interaction between social, 
community, and environmental factors associated with health status and 
health

[[Page 42510]]

outcomes.199 200 201 Growing evidence demonstrates that 
specific social risk factors are directly associated with patient 
health outcomes as well as healthcare utilization, costs, and 
performance in quality reporting and payment 
programs.202 203
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    \191\ Seligman, H.K., & Berkowitz, S.A. (2019). Aligning 
Programs and Policies to Support Food Security and Public Health 
Goals in the United States. Annual Review of Public Health, 40(1), 
319-337. Available at: https://pubmed.ncbi.nlm.nih.gov/30444684/.
    \192\ The Physicians Foundation. 2020. Survey of America's 
Patients, Part Three. Available at: https://physiciansfoundation.org/wp-content/uploads/2020/10/2020-Physicians-Foundation-Survey-Part3.pdf.
    \193\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) (2020). Report to Congress: Social Risk Factors 
and Performance Under Medicare's Value-Based Purchasing Program 
(Second of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \194\ Trivedi AN, Nsa W, Hausmann LRM, et al. Quality and Equity 
of Care in U.S. Hospitals. New England Journal of Medicine. 2014; 
371(24):2298-2308.
    \195\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \196\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) (2020). Report to Congress: Social Risk Factors 
and Performance Under Medicare's Value-Based Purchasing Program 
(Second of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \197\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://pubmed.ncbi.nlm.nih.gov/33139407/.
    \198\ Khullar, D., MD. 2020, September 8. Association Between 
Patient Social Risk and Physician Performance American Academy of 
Family Physicians. Addressing Social Determinants of Health in 
Primary Care team-based approach for advancing health equity. 
Available at: https://www.aafp.org/dam/AAFP/documents/patient_care/everyone_project/team-based-approach.pdf.
    \199\ Institute of Medicine. 2014. Capturing Social and 
Behavioral Domains and Measures in Electronic Health Records: Phase 
2. Washington, DC: The National Academies Press. Available at: 
https://doi.org/10.17226/18951.
    \200\ Alley, D.E., C.N. Asomugha, P.H. Conway, and D.M. 
Sanghavi. 2016. Accountable Health Communities--Addressing Social 
Needs through Medicare and Medicaid. The New England Journal of 
Medicine 374(1):8-11. Available at: https://doi.org/10.1056/NEJMp1512532.
    \201\ Centers for Disease Control and Prevention. CDC COVID-19 
Response Health Equity Strategy: Accelerating Progress Towards 
Reducing COVID-19 Disparities and Achieving Health Equity. July 
2020. Available at: https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/cdc-strategy.html. Accessed November 17, 
2021.
    \202\ Zhang Y, Li J, Yu J, Braun RT, Casalino LP. 2021. Social 
Determinants of Health and Geographic Variation in Medicare per 
Beneficiary Spending. JAMA Network Open. 2021;4(6):e2113212. 
doi:10.1001/jamanetworkopen.2021.13212.
    \203\ Khullar, D., Schpero, W.L., Bond, A.M., Qian, Y., & 
Casalino, L.P. (2020). Association Between Patient Social Risk and 
Physician Performance Scores in the First Year of the Merit-based 
Incentive Payment System. JAMA, 324(10), 975-983. https://doi.org/10.1001/jama.2020.13129.
---------------------------------------------------------------------------

    Significant and persistent health disparities in the United States 
result in adverse health outcomes for people with 
ESRD.204 205 The COVID-19 pandemic has illuminated the 
detrimental interaction between HRSNs, adverse health outcomes, and 
health care utilization in the United States.206 207 
Emerging evidence has shown that specific social risk factors are 
directly associated with health outcomes and health care utilization 
and costs.208 209 210 211 Of particular concern among people 
with ESRD are HRSNs that have an effect on treatment outcomes, 
including inadequate access to healthy foods, unstable housing, limited 
transportation, and community safety concerns.212 213
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    \204\ United States Renal Data System. 2021 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, 2021.
    \205\ Weinhandl, E.D., Wetmore, J.B., Peng, Y., Liu, J., 
Gilbertson, D.T., et al. (2021). Initial Effects of COVID-19 on 
Patient with ESKD. Journal of the American Society of Nephrology 32: 
1444-1453. doi: https://doi.org/10.1681/ASN.2021010009.
    \206\ Centers for Disease Control. CDC COVID-19 Response Health 
Equity Strategy: Accelerating Progress Towards Reducing COVID-19 
Disparities and Achieving Health Equity. July 2020. Available at: 
https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/cdc-strategy.html. Accessed November 17, 2021.
    \207\ Weinhandl, E.D., Wetmore, J.B., Peng, Y., Liu, J., 
Gilbertson, D.T., et al. (2021). Initial Effects of COVID-19 on 
Patient with ESKD. Journal of the American Society of Nephrology 32: 
1444-1453. doi: https://doi.org/10.1681/ASN.2021010009.
    \208\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://care.diabetesjournals.org/lookup/doi/10.2337/dci20-0053.
    \209\ Dean, E.B., French, M.T., Mortensen, K. (2020). Health 
Services Research 55 (Supplement 2): 883-893. doi:10.1111/1475-
6773.13283.
    \210\ Berkowitz, S.A., Kalkhoran, S., Edwards, S.T., Essien, 
U.R., Baggett, T.P. (2018). Unstable Housing and Diabetes-Related 
Emergency Department Visits and Hospitalization: A Nationally 
Representative Study of Safety-Net Clinic Patients. Diabetes Care 
41: 933-939. https://doi.org/10.2337/dc17-1812.
    \211\ National Academies of Sciences, Engineering, and Medicine 
2019. Dialysis Transportation: The Intersection of Transportation 
and Healthcare. Washington, DC: The National Academies Press. 
https://doi.org/10.17226/25385.
    \212\ Ibid.
    \213\ CMS (2021). Chronic Kidney Disease Disparities: 
Educational Guide for Primary Care. Available at: https://www.cms.gov/files/document/chronic-kidney-disease-disparities-educational-guide-primary-care.pdf.
---------------------------------------------------------------------------

    We believe that improvement in care coordination between ESRD 
facilities, hospitals, and community-based organizations would yield 
better health outcomes for people with ESRD, and subsequently lead to 
improvements in quality performance for dialysis and other health care 
providers. We believe that the proposed Screening for Social Drivers of 
Health reporting measure would help inform facilities of the impact of 
HRSNs in people with ESRD by assessing the proportion of adult patients 
who are screened for social drivers of health in five core domains: 
food insecurity, housing instability, transportation needs, utility 
difficulties, and interpersonal safety.
    In the CY 2023 ESRD PPS proposed rule, we sought public comment on 
the potential future inclusion of the Screening for Social Drivers of 
Health measure (87 FR 38554 through 38556) in the ESRD QIP. For a 
summary of the comments we received, as well as our responses, we refer 
readers to the CY 2023 ESRD PPS final rule (87 FR 67265 through 67268). 
In the CY 2023 ESRD PPS final rule, we stated that we were considering 
whether to incorporate measures that assess screening for health-
related social needs into the ESRD QIP measure set (87 FR 67264).
    We are proposing to adopt the Screening for Social Drivers of 
Health reporting measure under section 1881(h)(2)(A)(iv) of the Act, 
which gives the Secretary broad authority to specify measures for the 
ESRD QIP. As discussed above, disparities in health equity are tied to 
worse patient outcomes in the ESRD community. While widespread interest 
in addressing HRSNs exists, action is inconsistent, specifically in 
ESRD facilities. Therefore, we believe it is appropriate to require 
facilities to report data on this measure because the intent of the 
proposed measure is to incentivize facilities to collect and utilize 
their data to identify the impact of HRSNs in their ESRD patient 
population, including whether there is a relationship between those 
HRSNs and the outcomes experienced by their patients with those HRSNs. 
Screening data collected by the facility could inform their provision 
of care such that they improve the outcomes experienced by patients 
with HRSNs. Facilities could analyze their screening data to understand 
whether there are any HRSNs that may be affecting their patients' 
access to care or contributing to poor outcomes in their patient 
populations and, in turn, develop appropriate solutions to improve 
access and outcomes. While the measure does not require facilities to 
take specific actions following an HRSN screening, we expect that any 
solution a facility might develop to address a gap it identifies would 
comply with all applicable Federal non-discrimination laws. We also 
note that the proposed measure is intended to promote health equity for 
all patients and is not intended to create a conflict between a CMS 
requirement and a state's civil rights laws.
    Under our Meaningful Measures Framework,\214\ the Screening for 
Social Drivers of Health reporting measure, along with the Screen 
Positive Rate for Social Drivers of Health reporting measure discussed 
in section IV.D.3 of this proposed rule, addresses the quality priority 
of ``Work with Communities to Promote Best Practices of Healthy 
Living'' through the Meaningful Measures Area of ``Equity of Care.'' 
Additionally, consistent with Meaningful Measures 2.0, these measures 
address the ``healthcare equity'' priority area and align with our 
commitment to introduce plans to close health equity gaps and promote 
equity through quality measures, including to ``develop and implement 
measures that reflect social and economic determinants.'' \215\ 
Development and proposal of these measures also aligns with our 
strategic pillar to advance health equity by addressing the health

[[Page 42511]]

disparities that underlie our health system.\216\ We also believe these 
measures would address the quality priority ``Promoting Effective 
Prevention and Treatment of Chronic Disease'' through the Meaningful 
Measures Area ``Management of Chronic Conditions,'' by improving a 
facility's ability to assess and implement effective care coordination 
for its patients. For example, data demonstrate that an overwhelming 
majority of people with ESRD travel outside their homes for dialysis 
three times per week, round trip, and that transportation challenges 
contribute to shortened treatment episodes and adverse health 
outcomes.217 218 Identification of patients with 
transportation difficulties could encourage facilities to provide 
information to these patients about available community-based 
transportation services that could help these patients with their 
transportation needs. We also believe that the proposed measures would 
encourage facilities to incorporate HRSN screening into their routine 
care, which would in turn improve their ability to understand the full 
needs of their patients, including those who may need additional care 
coordination but might be reluctant to otherwise seek assistance due to 
concerns about personal stigmatization.
---------------------------------------------------------------------------

    \214\ Centers for Medicare & Medicaid Services. Meaningful 
Measures Framework. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.
    \215\ Centers for Medicare & Medicaid Services. Meaningful 
Measures 2.0: Moving from Measure Reduction to Modernization. 
Available at: https://www.cms.gov/meaningful-measures-20-moving-measure-reduction-modernization. We note that Meaningful Measures 
2.0 is still under development.
    \216\ Brooks-LaSure, C. (2021). My First 100 Days and Where We 
Go From Here: A Strategic Vision for CMS. Available at: https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \217\ Ibid.
    \218\ United States Renal Data System. 2021 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, 2021.
---------------------------------------------------------------------------

    Growing evidence demonstrates that specific social risk factors are 
directly associated with patient health outcomes as well as healthcare 
utilization, costs, and performance in quality reporting and payment 
programs.219 220 In 2017, CMS's Center for Medicare and 
Medicaid Innovation (CMMI) launched the Accountable Health Communities 
(AHC) Model to test the impact of systematically identifying and 
addressing the HRSNs of community-dwelling Medicare and Medicaid 
beneficiaries (through screening, referral, and community navigation on 
their health outcomes and related healthcare utilization and 
costs).221 222 223 224 The CMS Innovation Center developed 
the AHC Model based on evidence that addressing HRSNs through enhanced 
linkages between health systems and community-based organizations can 
improve health outcomes and reduce costs.\225\ HRSNs are significant 
risk factors associated with adverse health outcomes and increased 
health care utilization, including excessive emergency department (ED) 
visits and avoidable hospitalizations.226 227 Unmet HRSNs, 
such as food insecurity, inadequate or unstable housing, and inadequate 
transportation may increase risk for onset of chronic conditions, such 
as ESRD, and accelerate exacerbation of related adverse health 
outcomes.228 229 230 The AHC Model had a 5-year period of 
performance that began in May 2017 and concluded in April 2022, with 
beneficiary screening beginning in the summer of 2018 following an 
implementation period.231 232 Evaluation of the AHC Model 
data is still underway, and the most recent evaluation was published in 
the second AHC Model evaluation report on May 18, 2023.\233\
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    \219\ Zhang Y, Li J, Yu J, Braun RT, Casalino LP. 2021. Social 
Determinants of Health and Geographic Variation in Medicare per 
Beneficiary Spending. JAMA Network Open. 2021;4(6):e2113212. 
doi:10.1001/jamanetworkopen.2021.13212.
    \220\ Khullar, D., Schpero, W.L., Bond, A.M., Qian, Y., & 
Casalino, L.P. (2020). Association Between Patient Social Risk and 
Physician Performance Scores in the First Year of the Merit-based 
Incentive Payment System. JAMA, 324(10), 975-983. https://doi.org/10.1001/jama.2020.13129.
    \221\ Centers for Medicare & Medicaid Services. 2021. A Guide to 
Using the Accountable Health Communities Health-Related Social Needs 
Screening Tool: Promising Practices and Key Insights. June 2021. 
Accessed: November 23, 2021. Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion.
    \222\ Alley, D.E., C.N. Asomugha, P.H. Conway, and D.M. 
Sanghavi. 2016. Accountable Health Communities--Addressing Social 
Needs through Medicare and Medicaid. The New England Journal of 
Medicine 374(1):8-11. Available at: https://doi.org/10.1056/NEJMp1512532.
    \223\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \224\ Centers for Medicare & Medicaid Services. 2021. 
Accountable Health Communities Model. Accountable Health Communities 
Model [verbar] CMS Innovation Center. Accessed November 23, 2021. 
Available at: https://innovation.cms.gov/innovation-models/ahcm.
    \225\ RTI International. 2020. Accountable Health Communities 
(AHC) Model Evaluation. Available at: https://innovation.cms.gov/data-and-reports/2020/ahc-first-eval-rpt.
    \226\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \227\ Alley, D.E., C.N. Asomugha, P.H. Conway, and D.M. 
Sanghavi. 2016. Accountable Health Communities--Addressing Social 
Needs through Medicare and Medicaid. The New England Journal of 
Medicine 374(1):8-11. Available at: https://doi.org/10.1056/NEJMp1512532.
    \228\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) (2020). Report to Congress: Social Risk Factors 
and Performance Under Medicare's Value-Based Purchasing Program 
(Second of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \229\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://care.diabetesjournals.org/lookup/doi/10.2337/dci20-0053.
    \230\ Laraia, B.A. (2013). Food Insecurity and Chronic Disease. 
Advances in Nutrition, 4: 203-212, doi:10.3945/an.112.003277.
    \231\ RTI International. 2020. Accountable Health Communities 
(AHC) Model Evaluation. Available at: https://innovation.cms.gov/data-and-reports/2020/ahc-first-eval-rpt.
    \232\ We note that the model officially concluded in April 2022 
but many awardees are continuing with no-cost extensions to continue 
utilizing unspent cooperative agreement funding and all awardees 
will conclude by April 2023.
    \233\ RTI International. 2023. Accountable Health Communities 
(AHC) Model Evaluation. Available at: https://innovation.cms.gov/data-and-reports/2023/ahc-second-eval-rpt.
---------------------------------------------------------------------------

    While social risk factors may have a significant impact on health 
outcomes, the mechanisms by which this connection emerges are complex 
and multifaceted.234 235 236 237 The persistent interactions 
between individuals' HRSNs, medical providers' practices/behaviors, and 
community resources significantly impact healthcare access, quality, 
and ultimately costs, as described in the CMS Equity Plan for Improving 
Quality in Medicare.238 239 In

[[Page 42512]]

their 2018 survey of 8,500 physicians, The Physicians Foundation found 
almost 90 percent of physician respondents reported their patients had 
a serious health problem linked to poverty or other social 
conditions.\240\ Additionally, associations between disproportionate 
health risk, hospitalization, and adverse health outcomes have been 
highlighted and magnified by the COVID-19 pandemic.241 242
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    \234\ Kaiser Family Foundation. 2021. Racial and Ethnic Health 
Inequities and Medicare. Available at: https://www.kff.org/medicare/report/racial-and-ethnic-health-inequities-and-medicare/. Accessed 
November 23, 2021.
    \235\ Khullar, D., MD. 2020, September 8. Association Between 
Patient Social Risk and Physician Performance American Academy of 
Family Physicians. 2020. Addressing Social Determinants of Health in 
Primary Care team-based approach for advancing health equity.
    \236\ Hammond, G., Johnston, K., Huang, K., Joynt Maddox, K. 
(2020). Social Determinants of Health Improve Predictive Accuracy of 
Clinical Risk Models for Cardiovascular Hospitalization, Annual 
Cost, and Death. Circulation: Cardiovascular Quality and Outcomes, 
13 (6) 290-299. Available at: https://doi.org/10.1161/CIRCOUTCOMES.120.006752.
    \237\ The Physicians Foundation. 2021. Viewpoints: Social 
Determinants of Health. Available at: https://physiciansfoundation.org/wp-content/uploads/2019/08/The-Physicians-Foundation-SDOH-Viewpoints.pdf. Accessed December 8, 2021.
    \238\ Centers for Medicare & Medicaid Services. 2021. Paving the 
Way to Equity: A Progress Report. Accessed January 18, 2022. 
Available at: https://www.cms.gov/files/document/paving-way-equity-cms-omh-progress-report.pdf.
    \239\ Centers for Medicare & Medicaid Services Office of 
Minority Health. 2021. The CMS Equity Plan for Improving Quality in 
Medicare. 2015-2021. Available at: https://www.cms.gov/About-CMS/
Agency-Information/OMH/OMH_Dwnld-
CMS_EquityPlanforMedicare_090615.pdf#:~:text=The%20Centers%20for%20Me
dicare%20%26%20Medicaid%20Services%20%28CMS%29,evidence%20base%2C%20i
dentifying%20opportunities%2C%20and%20gathering%20stakeholder%20input
.
    \240\ The Physicians Foundation. 2019. Viewpoints: Social 
Determinants of Health. Available at: https://physiciansfoundation.org/wp-content/uploads/2019/08/The-Physicians-Foundation-SDOH-Viewpoints.pdf. Accessed December 8, 2021.
    \241\ Centers for Disease Control and Prevention. 2020. CDC 
COVID-19 Response Health Equity Strategy: Accelerating Progress 
Towards Reducing COVID-19 Disparities and Achieving Health Equity. 
July 2020. Available at: https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/cdc-strategy.html. Accessed November 17, 
2021.
    \242\ Kaiser Family Foundation. 2021. Racial and Ethnic Health 
Inequities and Medicare. Available at: https://www.kff.org/medicare/report/racial-and-ethnic-health-inequities-and-medicare/. Accessed 
November 23, 2021.
---------------------------------------------------------------------------

    The following five core domains were selected to screen for HRSNs 
among Medicare and Medicaid beneficiaries under the AHC Model: (1) food 
insecurity; (2) housing instability; (3) transportation needs; (4) 
utility difficulties; and (5) interpersonal safety. These domains were 
chosen based upon literature review and expert consensus utilizing the 
following criteria: (1) availability of high-quality scientific 
evidence linking a given HRSN to adverse health outcomes and increased 
healthcare utilization, including hospitalizations and associated 
costs; (2) ability for a given HRSN to be screened and identified in 
the inpatient setting prior to hospital discharge, addressed by 
community-based services, and potentially improve healthcare outcomes, 
including reduced hospital re-admissions; and (3) evidence that a given 
HRSN is not systematically addressed by healthcare providers.\243\ In 
addition to established evidence of their association with health 
status, risk, and outcomes, these five domains were also selected 
because they can be assessed across the broadest spectrum of 
individuals in a variety of settings.244 245 246
---------------------------------------------------------------------------

    \243\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \244\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \245\ Centers for Medicare & Medicaid Services. 2021. 
Accountable Health Communities Model. Accountable Health Communities 
Model [bond] CMS Innovation Center. Accessed November 23, 2021. 
Available at: https://innovation.cms.gov/innovation-models/ahcm.
    \246\ Kamyck, D., Senior Director of Marketing. 2019. CMS 
releases standardized screening tool for health-related social 
needs. Activate Care. Available at: https://blog.activatecare.com/standardized-screening-for-health-related-social-needs-in-clinical-settings-the-accountable-health-communities-screening-tool/.
---------------------------------------------------------------------------

    These five evidence-based HRSN domains informed our development of 
the proposed Screening for Social Drivers of Health reporting measure, 
as well as a second measure, Screen Positive Rate for Social Drivers of 
Health reporting measure, that we are also proposing to adopt for the 
ESRD QIP. These domains are described in Table 21.
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    The proposed Screening for Social Drivers of Health reporting 
measure assesses screening of the same HRSNs.
---------------------------------------------------------------------------

    \247\ Berkowitz SA, Seligman HK, Meigs JB, Basu S. Food 
insecurity, healthcare utilization, and high cost: a longitudinal 
cohort study. Am J Managed Care. 2018 Sep;24(9):399-404. PMID: 
30222918; PMCID: PMC6426124.
    \248\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://pubmed.ncbi.nlm.nih.gov/33139407/.
    \249\ Seligman, H.K. & Berkowitz, S.A. (2019). Aligning Programs 
and Policies to Support Food Security and Public Health Goals in the 
United States. Annual Review of Public Health, 40(1), 319-337. 
Available at: https://pubmed.ncbi.nlm.nih.gov/30444684/.
    \250\ National Academies of Sciences, Engineering, and Medicine 
2006. Executive Summary: Cost-Benefit Analysis of Providing Non-
Emergency Medical Transportation. Washington, DC: The National 
Academies Press. Available at: https://doi.org/10.17226/23285.
    \251\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https://pubmed.ncbi.nlm.nih.gov/33139407/.
    \252\ Berkowitz SA, Seligman HK, Meigs JB, Basu S. Food 
insecurity, healthcare utilization, and high cost: a longitudinal 
cohort study. Am J Managed Care. 2018 Sep;24(9):399-404. PMID: 
30222918; PMCID: PMC6426124.
    \253\ Dean, E.B., French, M.T., & Mortensen, K. (2020a). Food 
insecurity, health care utilization, and health care expenditures. 
Health Services Research, 55(S2), 883-893. Available at: https://doi.org/10.1111/1475-6773.13283.
    \254\ Larimer, M.E. (2009). Health Care and Public Service Use 
and Costs Before and After Provision of Housing for Chronically 
Homeless Persons with Severe Alcohol Problems. JAMA, 301(13), 1349. 
Available at: https://doi.org/10.1001/jama.2009.414.
    \255\ Hill-Briggs, F. (2021). Social Determinants of Health and 
Diabetes: A Scientific Review. Diabetes Care. Available at: https://pubmed.ncbi.nlm.nih.gov/33139407/.
    \256\ Henry, M., de Sousa, T., Roddey, C., Gayen, S., Bednar, 
T.; Abt Associates. The 2020 Annual Homeless Assessment Report 
(AHAR) to Congress; Part 1: Point-in-Time Estimates of Homelessness, 
January 2021. U.S. Department of Housing and Urban Development. 
Accessed November 24, 2021. Available at: https://www.huduser.gov/portal/sites/default/files/pdf/2020-AHAR-Part-1.pdf.
    \257\ Larimer, M.E. (2009). Health Care and Public Service Use 
and Costs Before and After Provision of Housing for Chronically 
Homeless Persons with Severe Alcohol Problems. JAMA, 301(13), 1349. 
Available at: https://doi.org/10.1001/jama.2009.414.
    \258\ Baxter, A., Tweed, E., Katikireddi, S., Thomson, H. 
(2019). Effects of Housing First approaches on health and well-being 
of adults who are homeless or at risk of homelessness: systematic 
review and meta-analysis of randomized controlled trials. Journal of 
Epidemiology and Community Health, 73; 379-387. Available at: 
https://jech.bmj.com/content/jech/73/5/379.full.pdf.
    \259\ National Academies of Sciences, Engineering, and Medicine 
2006. Executive Summary: Cost-Benefit Analysis of Providing Non-
Emergency Medical Transportation. Washington, DC: The National 
Academies Press. Available at: https://doi.org/10.17226/23285.
    \260\ National Academies of Sciences, Engineering, and Medicine 
2006. Executive Summary: Cost-Benefit Analysis of Providing Non-
Emergency Medical Transportation. Washington, DC: The National 
Academies Press. Available at: https://doi.org/10.17226/23285.
    \261\ Hill-Briggs, F. (2021, January 1). Social Determinants of 
Health and Diabetes: A Scientific Review. Diabetes Care. Available 
at: https:/pubmed.ncbi.nlm.nih.gov/33139407/.
    \262\ Billioux, A., Verlander, Anthony, S., & Alley, D. (2017). 
Stanardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \263\ Shier, G., Ginsburg, M., Howell, J., Volland, P., & 
Golden, R. (2013). Strong Social Support Services, Such as 
Transportation And Help For Caregivers, Can Lead To Lower Health 
Care Use And Costs. Health Affairs, 32(3), 544-551. Available at: 
https://doi.org/10.1377/hlthaff.2012.0170.
    \264\ Baxter, A., Tweed, E., Katikireddi, S., Thomson, H. 
(2019). Effects of Housing First approaches on health and well-being 
of adults who are homeless or at risk of homelessness: systematic 
review and meta-analysis of randomized controlled trials. Journal of 
Epidemiology and Community Health, 73; 379-387. Available at: 
https://jech.bmj.com/content/jech/73/5/379.full.pdf.
    \265\ Wright, B.J., Vartanian, K.B., Li, H.F., Royal, N., & 
Matson, J.K. (2016). Formerly Homeless People Had Lower Overall 
Health Care Expenditures After Moving into Supportive Housing. 
Health Affairs, 35(1), 20-27. Available at: https://doi.org/10.1377/hlthaff.2015.0393.
    \266\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
    \267\ Henry, M., de Sousa, T., Roddey, C., Gayen, S., Bednar, 
T.; Abt Associates. The 2020 Annual Homeless Assessment Report 
(AHAR) to Congress; Part 1: Point-in-Time Estimates of Homelessness, 
January 2021. U.S. Department of Housing and Urban Development. 
Accessed November 24, 2021. Available at: https://www.huduser.gov/portal/sites/default/files/pdf/2020-AHAR-Part-1.pdf.
    \268\ Larimer, M.E. (2009). Health Care and Public Service Use 
and Costs Before and After Provision of Housing for Chronically 
Homeless Persons with Severe Alcohol Problems. JAMA, 301(13), 1349. 
Available at: https://doi.org/10.1001/jama.2009.414.
---------------------------------------------------------------------------

    We are proposing that facilities would be able to choose a 
screening tool for purposes of this measure or otherwise screen their 
patients using a method of their choosing in order to give facilities 
the flexibility to accommodate the population they serve and their 
individual needs.269 270 We note that the 10-item AHC 
Health-Related Social Needs Screening Tool that AHC Model participants 
used to identify HRSNs in the five core domains (described in Table 21) 
among community-dwelling Medicare, Medicaid, and dually eligible 
beneficiaries was tested across varied care-delivery sites in diverse 
geographic locations across the U.S.271 272 Facilities may 
wish to consider using that tool because it has been found to be both 
reliable and valid, including high inter-rater reliability and 
concurrent and predictive validity.\273\ Moreover, the

[[Page 42514]]

screening tool can be implemented in a variety of places where patients 
seek healthcare, including dialysis facilities.\274\ However, as stated 
above, we are not proposing to require facilities to use this tool, or 
any other specific tool, for purposes of the proposed Screening for 
Social Drivers of Health reporting measure.
---------------------------------------------------------------------------

    \269\ Social Interventions Research & Evaluation Network. 2019. 
Social Needs Screening Tool Comparison Table. Available at: https://sirenetwork.ucsf.edu/tools-resources/resources/screening-tools-comparison. Accessed January 18, 2021.
    \270\ Centers for Medicare & Medicaid Services. 2021. A Guide to 
Using the Accountable Health Communities Health-Related Social Needs 
Screening Tool: Promising Practices and Key Insights (June 2021). 
Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion. Accessed January 18, 2021.
    \271\ More information on the HRSN Screening Tool is available 
at: https://innovation.cms.gov/files/worksheets/ahcm-screeningtool.pdf.
    \272\ RTI International. 2020. Accountable Health Communities 
(AHC) Model Evaluation. Available at: https://innovation.cms.gov/data-and-reports/2020/ahc-first-eval-rpt.
    \273\ Lewis C., Wellman R., Jones S., Walsh-Bailey C., Thompson 
E., Derus A., Paolino A., Steiner J., De Marchis E., Gottlieb L., 
and Sharp A. (2020). Comparing the Performance of Two Social Risk 
Screening Tools in a Vulnerable Subpopulation. J Family Med Prim 
Care. 2020 Sep; 9(9): 5026-5034. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7652127/.
    \274\ CMS. A Guide to Using the Accountable Health Communities 
Health-Related Social Needs Screening Tool: Promising Practices and 
Key Insights. June 2021. Accessed: November 23, 2021. Available at: 
https://innovation.cms.gov/media/document/ahcm-screeningtool-companion.
---------------------------------------------------------------------------

b. Overview of Measure
    The Screening for Social Drivers of Health measure would assess the 
percentage of patients age 18 and older that a dialysis facility 
screens for food insecurity, housing instability, transportation needs, 
utility difficulties, and interpersonal safety. To report on this 
measure, facilities would provide: (1) the number of patients admitted 
to the facility who are 18 years or older during the applicable 
performance period who are screened for all of the following five 
HRSNs: Food insecurity, housing instability, transportation needs, 
utility difficulties, and interpersonal safety; and (2) the total 
number of patients at the facility who are 18 years or older during the 
applicable performance period and who are not excluded from the 
measure. We are proposing to add this measure to the Reporting Measure 
Domain beginning with PY 2027. We discuss our proposed updates to 
measure domains and weights for PY 2027 in section IV.D.7 of this 
proposed rule.
    Measure specifications for this proposed measure are currently 
available on the QualityNet website at: https://qualitynet.cms.gov/esrd/esrdqip.
(1) Cohort
    The cohort for the proposed Screening for Social Drivers of Health 
reporting measure is all patients, aged 18 years and older, who are 
treated at the facility during the applicable performance period and 
not eligible to be excluded from the measure.
(2) Numerator
    The numerator is calculated as the number of patients who are 18 
years or older who are treated at the facility during the applicable 
performance period and are not eligible to be excluded from the 
measure, and are screened during the performance period for all of the 
following five HRSNs: Food insecurity, housing instability, 
transportation needs, utility difficulties, and interpersonal safety.
(3) Denominator
    The denominator is calculated as the number of patients at the 
dialysis facility and who are 18 years or older on the first day of the 
performance period. The following patients would be excluded from the 
denominator: (1) Patients who opt-out of screening; and (2) patients 
who are unable to complete the screening and have no legal guardian or 
caregiver who is able to complete the screening on their behalf.
c. Measure Calculation
    The Screening for Social Drivers of Health measure would be 
calculated as the number of patients at a dialysis facility who are 18 
years or older who are treated at the facility during the applicable 
performance period and are not eligible to be excluded from the 
measure, and are screened by the facility for all five HRSNs (food 
insecurity, housing instability, transportation needs, utility 
difficulties, and interpersonal safety) divided by the total number of 
patients 18 years or older on the 1st day of the performance period 
(January 1st) at that dialysis facility. We are proposing a 12-month 
period of performance for the measure, and facilities would be required 
to report annually. We are proposing that a facility would be scored 
according to the following equation:
[GRAPHIC] [TIFF OMITTED] TP30JN23.032

    We believe that this scoring policy would encourage facilities to 
report the measure data appropriately without penalizing facilities for 
the results of such data, which may be based on circumstances beyond a 
facility's control.
d. Data Submission and Reporting
    We are proposing that facilities would report this measure on an 
annual basis beginning with PY 2027. In alignment with the policy we 
finalized for the Hospital IQR Program, we are proposing that 
facilities would be able to select their own screening tool or method 
to screen patients for food insecurity, housing instability, 
transportation needs, utility difficulties, and interpersonal safety. 
Potential sources of these data for incorporation in a tool could 
include, for example, administrative claims data, electronic clinical 
data, standardized patient assessments, or patient-reported data and 
surveys. Additionally, multiple screening tools exist and are publicly 
available. Facilities could refer to the Social Interventions Research 
and Evaluation Network (SIREN) website, for example, for comprehensive 
information about the most widely used HRSN screening 
tools.275 276 SIREN contains descriptions of the content and 
characteristics of various tools, including information about intended 
populations, completion time, and number of questions. We would 
encourage facilities to consider digital standardized screening tools 
and refer readers to the FY 2023 IPPS/LTCH PPS final rule (87 FR 
49207), where we noted that the use of certified health IT can support 
capture of HRSN information in an interoperable fashion so that these 
data can be shared across the care continuum to support coordinated 
care.
---------------------------------------------------------------------------

    \275\ Social Interventions Research & Evaluation Network. 2019. 
Social Needs Screening Tool Comparison Table. Available at: https://sirenetwork.ucsf.edu/tools-resources/resources/screening-tools-comparison. Accessed January 18, 2021.
    \276\ The Social Interventions Research and Evaluation Network 
(SIREN) at University of California San Francisco was launched in 
the spring of 2016 to synthesize, disseminate, and catalyze research 
on the social determinants of health and healthcare delivery.
---------------------------------------------------------------------------

    We are proposing that the deadline for submission would be the end 
of the EQRS December data reporting month for the applicable 
performance period, which is consistent with current reporting 
deadlines for other ESRD QIP measures. For example, the deadline for 
submission in PY 2027 would be the end of the December data reporting 
month in CY 2025.
e. Review by the Measure Applications Partnership
    We included the Screening for Social Drivers of Health reporting 
measure as a measure under consideration for the

[[Page 42515]]

ESRD QIP on the publicly available 2022 MUC List, a list of measures 
under consideration for use in various Medicare programs.\277\ The CBE-
convened MAP Health Equity Advisory Group reviewed the MUC List and the 
Screening for Social Drivers of Health measure (MUC 2022-053) in detail 
and at the same time as the Screen Positive Rate for Social Drivers of 
Health measure on December 6-7, 2022 (discussed below).\278\ The Health 
Equity Advisory Group expressed support for the data collection related 
to social drivers of health, but raised concerns about public reporting 
of the data and redundancy in asking for the same information of 
patients. In addition, on December 8-9, 2022, the MAP Rural Health 
Advisory Group reviewed the 2022 MUC List and the MAP Hospital 
Workgroup did so on December 13-14, 2022.\279\ The Rural Health 
Advisory Group noted some potential reporting challenges including the 
potential masking of health disparities that are underrepresented in 
some areas and that sample size and populations served may be an issue, 
but expressed that the measure serves as a starting point to determine 
where screening is occurring. The MAP Hospital Workgroup expressed 
strong support for the measure but noted that interoperability will be 
important and cautioned about survey fatigue. The MAP Hospital 
Workgroup members conditionally supported the measure pending: (1) 
testing of the measure's reliability and validity; (2) endorsement by a 
consensus-based entity (CBE); (3) additional details on how potential 
tools map to the individual drivers, as well as best practices; (4) 
what resources may be available to assist patients; and (5) alignment 
with data standards, particularly the GRAVITY project.\280\ Thereafter, 
the MAP Coordinating Committee deliberated on January 24-25, 2023, and 
ultimately voted to conditionally support the Screening for Social 
Drivers of Health reporting measure for rulemaking with the same 
conditions.\281\
---------------------------------------------------------------------------

    \277\ Centers for Medicare & Medicaid Services. 2022. List of 
Measures Under Consideration for December 1, 2022. Available at: 
https://mmshub.cms.gov/sites/default/files/2022-MUC-List.xlsx.
    \278\ Centers for Medicare & Medicaid Services. 2022. 2022-2023 
MAP Preliminary Recommendations. Health Equity Advisory Group. 
Available at: https://www.qualityforum.org/ProjectMaterials.aspx?projectID=95514.
    \279\ Centers for Medicare & Medicaid Services. 2022. 2022-2023 
MAP Preliminary Recommendations, Rural Health Advisory Group. 
Available at https://www.qualityforum.org/MAP_Rural_Health_Advisory_Group.aspx and MAP Hospital Workgroup. 
Available at: https://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
    \280\ Centers for Medicare & Medicaid Services. (2022). 2022-
2023 MAP Final Recommendations. Available at https://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=98102. For Information on the 
GRAVITY project, please see https://thegravityproject.net/.
    \281\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
---------------------------------------------------------------------------

f. Consensus-Based Entity Endorsement
    Although section 1881(h)(2)(B)(i) of the Act generally requires 
that measures specified by the Secretary for the ESRD QIP be endorsed 
by the entity with a contract under section 1890(a) of the Act, section 
1881(h)(2)(B)(ii) of the Act states that in the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a feasible and practical measure has not been endorsed by the entity 
with a contract under section 1890(a) of the Act, the Secretary may 
specify a measure that is not so endorsed as long as due consideration 
is given to measures that have been endorsed or adopted by a consensus 
organization identified by the Secretary. We reviewed CBE-endorsed 
measures and were unable to identify any other CBE-endorsed measures on 
this topic, and, therefore, we believe the exception in section 
1881(h)(2)(B)(ii) of the Act applies.
g. Public Display
    We are proposing to publicly display the facility-specific results 
for the Screening for Social Drivers of Health measure on an annual 
basis through our Care Compare website at: https://www.medicare.gov/care-compare/. We anticipate making the first public report available 
in January 2027.
    We invite public comment on this proposal.

[[Page 42516]]

3. Proposal To Adopt the Screen Positive Rate for Social Drivers of 
Health Reporting Measure Beginning With PY 2027
a. Background
    The impact of social risk factors on health outcomes has been well-
established in the literature.282 283 284 285 286 The 
Physicians Foundation reported that 73 percent of the physician 
respondents to their annual survey agreed that social risk factors such 
as housing instability and food insecurity would drive health services 
demand in 2021.\287\ Recognizing the need for a more comprehensive 
approach to closing equity gaps, we have prioritized quality measures 
that identify social drivers of health among patients served in various 
care settings and, in turn, support providers in addressing the impact 
of these drivers on disparities in patient outcomes, healthcare 
utilization, and costs.288 289 290 Specifically, in the 
dialysis facility setting, we aim to encourage systematic 
identification of patients' HRSNs as part of treatment planning, with 
the intention of promoting linkages with relevant community-based 
services that address those needs. We also believe that the 
identification of HRSNs can help facilities devise strategies that 
improve the quality of care provided to all of their patients and lead 
to improved health outcomes following establishment of care at the 
facility.
---------------------------------------------------------------------------

    \282\ Institute of Medicine 2014. Capturing Social and 
Behavioral Domains and Measures in Electronic Health Records: Phase 
2. Washington, DC: The National Academies Press. Available at: 
https://doi.org/10.17226/18951.
    \283\ Centers for Medicare & Medicaid Services. 2021. 
Accountable Health Communities Model. Accountable Health Communities 
Model [bond] CMS Innovation Center. Available at: https://innovation.cms.gov/innovation-models/ahcm. Accessed November 23, 
2021.
    \284\ Kaiser Family Foundation. 2021. Racial and Ethnic Health 
Inequities and Medicare. Available at: https://www.kff.org/medicare/report/racial-and-ethnic-health-inequities-and-medicare/. Accessed 
November 23, 2021.
    \285\ Milkie Vu et al. Predictors of Delayed Healthcare Seeking 
Among American Muslim Women, Journal of Women's Health 26(6) (2016) 
at 58; Nadimpalli SB, Cleland CM, Hutchinson MK, Islam N, Barnes LL, 
Van Devanter N. (2016) The Association between Discrimination and 
the Health of Sikh Asian Indians. Health Psychology, 35(4), 351-355. 
https://doi.org/10.1037/hea0000268.
    \286\ Office of the Assistant Secretary for Planning and 
Evaluation (ASPE). 2020. Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Program (Second 
of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \287\ The Physicians Foundation. (2020) 2020 Survey of America's 
Patients, Part Three. Available at: https://physiciansfoundation.org/wp-content/uploads/2020/10/2020-Physicians-Foundation-Survey-Part3.pdf.
    \288\ Alley, D.E., C.N. Asomugha, P.H. Conway, and D.M. 
Sanghavi. 2016. Accountable Health Communities--Addressing Social 
Needs through Medicare and Medicaid. The New England Journal of 
Medicine 374(1):8-11. Available at: https://doi.org/10.1056/NEJMp1512532.
    \289\ Centers for Medicare & Medicaid Services. 2021. 
Accountable Health Communities Model. Accountable Health Communities 
Model [bond] CMS Innovation Center. Available at: https://innovation.cms.gov/innovation-models/ahcm. Accessed November 23, 
2021.
    \290\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
---------------------------------------------------------------------------

    While the proposed Screening for Social Drivers of Health reporting 
measure (discussed in section IV.D.2 of this proposed rule) enables 
facilities to identify patients with HRSNs, the Screen Positive Rate 
for Social Drivers of Health measure would allow facilities to capture 
the magnitude of these needs by reporting the rate of those patients 
who screen positive for HRSNs and even potentially estimate the impact 
of individual-level HRSNs on healthcare utilization when evaluating 
quality of care.291 292 293 These measures complement each 
other because they would require facilities to report both the 
percentage of patients they screened (under the proposed Screening for 
Social Drivers of Health measure) and the results of that screening 
(under the proposed Screen Positive Rate for Social Drivers of Health 
measure) in order to potentially identify gaps and develop sustainable 
solutions at a facility level and a community level. We note that our 
proposals to adopt these two separate, complementary measures align 
with other quality reporting programs. These two measures have been 
finalized for the Hospital Inpatient Quality Reporting Program in the 
fiscal year (FY) 2023 Inpatient Prospective Payment System (IPPS)/Long-
Term Care Hospital Prospective Payment System (LTCH PPS) final rule (87 
FR 49191 through 49220), and are currently proposed for the PPS-Exempt 
Cancer Hospital Quality Reporting Program in the FY 2024 IPPS/LTCH PPS 
proposed rule (88 FR 27122 through 27130) and the Inpatient Psychiatric 
Facility Quality Reporting Program in the FY 2024 IPF PPS proposed rule 
(88 FR 21279 through 21288).
---------------------------------------------------------------------------

    \291\ Baker, M.C., Alberti, P.M., Tsao, T.Y., Fluegge, K., 
Howland, R.E., & Haberman, M. (2021). Social Determinants Matter for 
Hospital Readmission Policy: Insights From New York City. Health 
Affairs, 40(4), 645-654. Available at: https://doi.org/10.1377/hlthaff.2020.01742.
    \292\ CMS. Accountable Health Communities Model. Accountable 
Health Communities Model [bond] CMS Innovation Center. Available at: 
https://innovation.cms.gov/innovation-models/ahcm. Accessed November 
23, 2021.
    \293\ Hammond, G., Johnston, K., Huang, K., Joynt Maddox, K. 
(2020). Social Determinants of Health Improve Predictive Accuracy of 
Clinical Risk Models for Cardiovascular Hospitalization, Annual 
Cost, and Death. Circulation: Cardiovascular Quality and Outcomes, 
13 (6) 290-299. Available at: https://doi.org/10.1161/CIRCOUTCOMES.120.006752.
---------------------------------------------------------------------------

    We are proposing to adopt this proposed measure under section 
1881(h)(2)(A)(iv) of the Act, which gives the Secretary broad authority 
to specify measures for the ESRD QIP. The Screen Positive Rate for 
Social Drivers of Health reporting measure would require facilities to 
screen all patients who are 18 years or older for food insecurity, 
housing instability, transportation needs, utility difficulties, and 
interpersonal safety and then report the resulting screen positive 
rates for each of those domains to CMS. These are the same five core 
HRSN domains that facilities would be required to screen for under the 
proposed Screening for Social Drivers of Health reporting measure, and 
facilities could use the same screening tool for purposes of both 
measures. Reporting the screen positive rate for social drivers of 
health for each domain could inform actionable planning by facilities 
by helping to enable the development of individual patient action plans 
for those patients who screen positive (including navigation and 
referral). Following a positive HRSN screening, facilities could 
analyze data to understand, for example, whether there are any HRSNs 
that may be affecting their patients' access to care or contributing to 
poor outcomes in their patient populations and, in turn, develop 
appropriate solutions to improve access and outcomes. Thus, this 
measure has the potential to improve patient outcomes by acknowledging 
patients' non-clinical needs that nevertheless greatly contribute to 
adverse clinical outcomes and providing the opportunity for additional 
support by linking providers with community-based organizations to 
enhance patient-centered treatment and discharge planning, although 
such reach out is not required.294 295 296 This measure may 
also prove useful to

[[Page 42517]]

patients by providing data transparency and signifying facilities' 
familiarity, expertise, and commitment regarding these issues. Finally, 
we believe this measure has the potential to facilitate data-informed 
collaboration with community-based services and focused community 
investments, including the development of pathways and infrastructure 
to more seamlessly connect patients to local community resources. Thus, 
the measure aims to support facilities in leveraging available data, 
pursuing focused quality improvement activities, and promoting 
efficient and effective use of their resources. While the measure does 
not require facilities to take specific actions, we expect that any 
solution a facility might develop to address a gap it identifies would 
comply with all applicable Federal non-discrimination laws. We also 
note that the proposed measure is intended to promote health equity for 
all patients and is not intended to create a conflict between a CMS 
requirement and a state's civil rights laws.
---------------------------------------------------------------------------

    \294\ The Physicians Foundation. 2020. Survey of America's 
Patients, Part Three. Available at: https://physiciansfoundation.org/wp-content/uploads/2020/10/2020-Physicians-Foundation-Survey-Part3.pdf.
    \295\ De Marchis, E., Knox, M., Hessler, D., Willard-Grace, R., 
Oliyawola, JN, et al. (2019). Physician Burnout and Higher Clinic 
Capacity to Address Patients' Social Needs. The Journal of the 
American Board of Family Medicine, 32 (1), 69 through 78.
    \296\ Kung, A., Cheung, T., Knox, M., Willard-Grace, R., 
Halpern, J., et al. (2019). Capacity to Address Social Needs Affect 
Primary Care Clinician Burnout. Annals of Family Medicine. 17 (6), 
487 through 494. Available at: https://doi.org/10.1370/afm.2470.
---------------------------------------------------------------------------

b. Overview of Measure
    The Screen Positive Rate for Social Drivers of Health measure would 
identify the proportion of patients at the facility who screened 
positive for each of the following five HRSNs: Food insecurity, housing 
instability, transportation needs, utility difficulties, and 
interpersonal safety. We would require facilities to report these data 
as five separate rates.\297\ We refer readers to section IV.D.2 of this 
proposed rule where we discussed our process for identifying these five 
domains, which we are also proposing to use for the proposed Screening 
for Social Drivers of Health reporting measure.
---------------------------------------------------------------------------

    \297\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at: https://doi.org/10.31478/201705b.
---------------------------------------------------------------------------

    Measure specifications for this measure are currently available on 
the QualityNet website at: https://qualitynet.cms.gov/esrd/esrdqip.
(1) Cohort
    The cohort for the Screen Positive Rate for Social Drivers of 
Health is a process measure that would provide information on the 
percentage of patients, aged 18 years or older who are treated at the 
facility during the applicable performance period and are not eligible 
to be excluded from the measure, who were screened by the facility for 
an HRSN, and who screened positive for one or more of the following 
five HRSNs: Food insecurity, housing instability, transportation needs, 
utility difficulties, or interpersonal safety.
(2) Numerator
    The numerator would consist of the number of patients at a dialysis 
facility who are 18 years or older who are treated at the facility 
during the applicable performance period and are not eligible to be 
excluded from the measure, who were screened for an HRSN, and for whom 
the facility reports the results of a screen asking whether they have a 
need in one or more of the following five HRSNs (calculated 
separately): Food insecurity, housing instability, transportation 
needs, utility difficulties or interpersonal safety.
(3) Denominator
    The denominator would consist of the number of patients at a 
dialysis facility who are 18 years or older who are treated at the 
facility during the applicable performance period and are not eligible 
to be excluded from the measure, and are screened for an HRSN (food 
insecurity, housing instability, transportation needs, utility 
difficulties and interpersonal safety). The following patients would be 
excluded from the denominator: (1) Patients who opt-out of screening; 
and (2) patients who are themselves unable to complete the screening 
and have no caregiver able to do so on the patient's behalf.
c. Measure Calculation
    The facility's measure rate for this measure would be calculated 
for a payment year as the number of eligible patients for whom the 
facility reports the screening results for all five HRSNs during the 
performance period over the total number of eligible patients who the 
facility screened for all five HRSNs during that performance period. To 
calculate the facility's score on the measure, we would multiply the 
results of that fraction by ten. The full equation is set forth here:
[GRAPHIC] [TIFF OMITTED] TP30JN23.033

    However, for purposes of public reporting only, we are proposing to 
display the facility's screen positive rate for each HRSN separately, 
for a total of five separate rates. Although we will not score 
facilities on the results of those five separate rates, we believe that 
making such data public may help to better inform patients and their 
caregivers about a facility. We are proposing a 12-month period of 
performance for the measure, and facilities would be required to report 
annually.
    We believe that these policies would encourage facilities to report 
the measure data appropriately without scoring facilities based on the 
results of such data, which may be based on circumstances beyond a 
facility's control. Although we believe that it is important to 
encourage facilities to screen their patients for HSRNs and to report 
data for screen positive rates, we want to avoid potential unintended 
consequences that may result from scoring facilities on the outcomes of 
the screen positive rates themselves. That is, we do not want to score 
a facility based on its patients' given socioeconomic factors, which 
may be based on circumstances beyond a facility's control.
d. Data Collection, Submission and Reporting
    We are proposing that facilities would be required to submit data 
necessary to calculate the numerator and the denominator for this 
measure once annually within the ESRD Quality Reporting System (EQRS), 
beginning with PY 2027. We are proposing that facilities would be 
required to submit data on this proposed measure using the same process 
we have finalized for the submission of data on other measures in the 
ESRD QIP within EQRS.

[[Page 42518]]

e. Review by the Measure Applications Partnership
    We included the Screen Positive Rate for Social Drivers of Health 
reporting measure for consideration in the ESRD QIP on the publicly 
available 2022 MUC List, a list of measures under consideration for use 
in various Medicare programs.\298\ The CBE-convened MAP Health Equity 
Advisory Group reviewed the Screen Positive Rate for Social Drivers of 
Health measure (MUC 2022-050) in detail and at the same time as the 
Screening for Social Drivers of Health measure on December 6-7, 
2022.\299\ The Health Equity Advisory Group expressed support for the 
collection of data related to social health drivers, but raised 
concerns regarding public reporting and the repetition of asking 
patients the same questions. In addition, on December 8-9, 2022, the 
MAP Rural Health Advisory Group reviewed the 2022 MUC List and was also 
reviewed by the MAP Hospital Workgroup on December 13-14, 2022.\300\ 
The Rural Health Advisory Group noted potential reporting challenges 
including the potential masking of health disparities that are 
underrepresented in some areas and that sample size and populations 
served may be an issue, but also expressed support that the measure 
seeks to advance the drivers of health and serves as a starting point 
to determine where screening is occurring. The MAP Hospital Workgroup 
recommended conditional support for the measure for rulemaking pending 
endorsement by a CBE to address reliability and validity concerns, 
attentiveness to how results are shared and contextualized for public 
reporting, and encouragement for CMS to examine any differences in 
reported rates by reporting process (to assess whether they are the 
same or different across dialysis facilities).\301\ Thereafter, the MAP 
Coordinating Committee deliberated on January 24-25, 2023, and 
ultimately voted to conditionally support the Screen Positive Rate for 
Social Drivers of Health measure for rulemaking with the same 
conditions.\302\
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    \298\ Centers for Medicare & Medicaid Services. 2022. List of 
Measures Under Consideration for December 1, 2022. Available at: 
https://mmshub.cms.gov/sites/default/files/2022-MUC-List.xlsx.
    \299\ Centers for Medicare & Medicaid Services. 2022. 2022-2023 
MAP Preliminary Recommendations, Health Equity Advisory Group. 
Available at: https://www.qualityforum.org/ProjectMaterials.aspx?projectID=95514.
    \300\ Centers for Medicare & Medicaid Services. 2022. MAP 
Preliminary Recommendations, Rural Health Advisory Group. Available 
at https://www.qualityforum.org/MAP_Rural_Health_Advisory_Group.aspx; See also, MAP Hospital 
Workgroup. Available at: https://www.qualityforum.org/Project_Pages/MAP_Hospital_Workgroup.aspx.
    \301\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
    \302\ Centers for Medicare & Medicaid Services. 2023. 2022-2023 
MAP Final Recommendations. Available at: https://mmshub.cms.gov/sites/default/files/2022-2023-MAP-Final-Recommendations-508.xlsx.
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f. Consensus-Based Entity Endorsement
    Although section 1881(h)(2)(B)(i) of the Act generally requires 
that measures specified by the Secretary for the ESRD QIP be endorsed 
by the entity with a contract under section 1890(a) of the Act, section 
1881(h)(2)(B)(ii) of the Act states that in the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a feasible and practical measure has not been endorsed by the entity 
with a contract under section 1890(a) of the Act, the Secretary may 
specify a measure that is not so endorsed as long as due consideration 
is given to measures that have been endorsed or adopted by a consensus 
organization identified by the Secretary. We reviewed CBE-endorsed 
measures and were unable to identify any other CBE-endorsed measures on 
this topic, and, therefore, we believe the exception in section 
1881(h)(2)(B)(ii) of the Act applies.
g. Public Display
    We are proposing to publicly display the ESRD QIP score and 
facility-specific rates for the Screen Positive Rate for Social Drivers 
of Health measure on an annual basis beginning in PY 2027 through our 
Care Compare website at: https://www.medicare.gov/care-compare/.
    We invite public comment on this proposal.
4. Performance Period for the PY 2027 ESRD QIP
    We continue to believe that our current policy of 12-month 
performance and baseline periods provide us sufficiently reliable 
quality measure data for the ESRD QIP. Under this policy, we would 
adopt CY 2025 as the performance period and CY 2023 as the baseline 
period for the PY 2027 ESRD QIP.
    We are not proposing any changes to this policy.
5. Performance Standards for the PY 2027 ESRD QIP
    Section 1881(h)(4)(A) of the Act requires the Secretary to 
establish performance standards with respect to the measures selected 
for the ESRD QIP for a performance period with respect to a year. The 
performance standards must include levels of achievement and 
improvement, as determined appropriate by the Secretary, 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 define the 
terms ``achievement threshold,'' ``benchmark,'' ``improvement 
threshold,'' and ``performance standard'' in our regulations at 42 CFR 
413.178(a)(1), (3), (7), and (12), respectively. For reporting 
measures, performance standards are the levels of data submission and 
completion of other actions specified by CMS that are used to award 
points to an ESRD facility on the measure (42 CFR 413.178(a)(12)).
a. Performance Standards for Clinical Measures in the PY 2027 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 2022 data. We intend to publish these numerical values, using 
CY 2022 data, in the CY 2024 ESRD PPS final rule.
b. Proposed Performance Standards for the Newly Proposed Reporting 
Measures Beginning With the PY 2027 ESRD QIP
    We are proposing to add the Screening for Social Drivers of Health 
reporting measure and the Screen Positive Rate for Social Drivers of 
Health reporting measure beginning with the PY 2027 ESRD QIP, which we 
discuss in IV.D.2 and IV.D.3 of this proposed rule. We are proposing a 
12-month period of performance for both the Screening for Social 
Drivers of Health reporting measure and the Screen Positive Rate for 
Social Drivers of Health reporting measure, and facilities would be 
required to report annually for both measures beginning with the PY 
2027 ESRD QIP.
6. Scoring the PY 2027 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

[[Page 42519]]

methodology for future payment years (83 FR 57011) and we codified 
these scoring policies at 42 CFR 413.178(e). In the CY 2023 ESRD PPS 
final rule, we updated our scoring methodology beginning with PY 2025 
(87 FR 67251 through 67254).
b. Scoring Facility Performance on Reporting Measures
    Our policy for scoring performance on reporting measures is 
codified at 42 CFR 413.178(e). In section IV.D.2 of this proposed rule, 
we are proposing to adopt the Screening for Social Drivers of Health 
reporting measure beginning with PY 2027. We are also proposing to 
adopt the Screen Positive Rate for Social Drivers of Health reporting 
measure, as discussed in section IV.D.3 of this proposed rule. We are 
proposing that a facility would be scored based on the equations 
proposed in sections IV.D.2.c and IV.D.3.c of this proposed rule. We 
are proposing a 12-month period of performance for the measures, and 
facilities would be required to report annually. We believe that these 
scoring policies would encourage facilities to report the measure data 
appropriately without penalizing facilities for the results of such 
data, which may be impacted by circumstances beyond a facility's 
control.
7. Proposed Revisions To Measure Domains and To Measure Weights Used To 
Calculate the Total Performance Score (TPS) Beginning With the PY 2027 
ESRD QIP
    Beginning with PY 2027, we are proposing to add the Screening for 
Social Drivers of Health reporting measure and the Screen Positive for 
Social Drivers of Health reporting measure to the Reporting Measure 
Domain. To accommodate the new number of measures in the Reporting 
Measure Domain, we are proposing to update the individual measure 
weights in this domain. We believe that these proposed updates would 
help to ensure that a facility's individual measure performance has an 
appropriately proportionate impact on a facility's TPS, while also 
continuing to further incentivize improvement on clinical measures 
through those individual measure weights. Consistent with our approach 
in the CY 2023 ESRD PPS final rule, we are proposing to assign 
individual measure weights to reflect the proposed updated number of 
measures in the Reporting Measure Domain so that each measure is 
weighted equally (87 FR 67251 through 67253). Since we are adding two 
new measures to the Reporting Measure Domain beginning with PY 2027, we 
would weight each measure within that domain equally at approximately 
1.43, which is consistent with our previously finalized approach to 
weight each measure in the Reporting Measure Domain equally. We note 
that although we are proposing to change the number of measures in the 
Reporting Measure Domain and weights of certain individual measures in 
that domain, we are not proposing to change the weights of the five 
domains themselves, because we believe the proposed updates to 
individual measures and measure weights do not significantly impact the 
measure domains themselves such that updating the weights of the 
measure domains would be required to accommodate the updated individual 
measure weights. The previously finalized and newly proposed measures 
that would be included in each domain, along with the proposed new 
measure weights, beginning with PY 2027 are depicted in Table 22.
BILLING CODE 4120-01-P

[[Page 42520]]

[GRAPHIC] [TIFF OMITTED] TP30JN23.034

BILLING CODE 4120-01-C
    We welcome public comment on these proposals.

V. End-Stage Renal Disease Treatment Choices (ETC) Model

A. Background

    Section 1115A of the Act authorizes the Innovation Center to test 
innovative payment and service delivery models expected to reduce 
Medicare, Medicaid, and Children's Health Insurance Program (CHIP) 
expenditures while preserving or enhancing the quality of care 
furnished to the beneficiaries of these programs. The purpose of the 
ETC Model is to test the effectiveness of adjusting certain Medicare 
payments to ESRD facilities and Managing Clinicians to encourage 
greater utilization of home dialysis and kidney transplantation, 
support Beneficiary modality choice, reduce Medicare expenditures, and 
preserve or enhance the quality of care. As described in the Specialty 
Care Models final rule (85 FR 61114), beneficiaries with ESRD are among 
the most medically fragile and high-cost populations served by the 
Medicare program. ESRD Beneficiaries require dialysis or kidney 
transplantation to survive, and the majority of ESRD Beneficiaries 
receiving dialysis receive hemodialysis in an ESRD facility. However, 
as described in the Specialty Care Models final rule, alternative renal 
replacement modalities to in-center hemodialysis, including home 
dialysis and kidney transplantation, are associated with improved 
clinical outcomes, better quality of life, and lower costs than in-
center hemodialysis (85 FR 61264).
    The ETC Model is a mandatory payment model. ESRD facilities and 
Managing Clinicians are selected as ETC Participants based on their 
location in Selected Geographic Areas--a set of 30 percent of Hospital 
Referral Regions (HRRs) that have been randomly selected to be included 
in the ETC Model, as well as HRRs with at least 20 percent of ZIP 
codes\TM\ located in Maryland.\303\ CMS excludes all U.S. Territories 
from the Selected Geographic Areas.
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    \303\ ZIP code\TM\ is a trademark of the United States Postal 
Service.

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[[Page 42521]]

    Under the ETC Model, ETC Participants are subject to two payment 
adjustments. The first is the Home Dialysis Payment Adjustment (HDPA), 
which is an upward adjustment on certain payments made to participating 
ESRD facilities under the ESRD Prospective Payment System (PPS) on home 
dialysis claims, and an upward adjustment to the Monthly Capitation 
Payment (MCP) paid to participating Managing Clinicians on home 
dialysis-related claims. The HDPA applies to claims with claim service 
dates beginning January 1, 2021 and ending December 31, 2023.
    The second payment adjustment under the ETC Model is the 
Performance Payment Adjustment (PPA). For the PPA, we assess ETC 
Participants' home dialysis rates and transplant rates during a 
Measurement Year (MY), which includes 12 months of performance data. 
Each MY has a corresponding PPA Period--a 6-month period that begins 6 
months after the conclusion of the MY. We adjust certain payments for 
ETC Participants during the PPA Period based on the ETC Participant's 
home dialysis rate and transplant rate, calculated as the sum of the 
transplant waitlist rate and the living donor transplant rate, during 
the corresponding MY.
    Based on an ETC Participant's achievement in relation to benchmarks 
based on the home dialysis rate and transplant rate observed in 
Comparison Geographic Areas during the Benchmark Year, and the ETC 
Participant's improvement in relation to their own home dialysis rate 
and transplant rate during the Benchmark Year, we would make an upward 
or downward adjustment to certain payments to the ETC Participant. The 
magnitude of the positive and negative PPAs for ETC Participants 
increases over the course of the Model. These PPAs apply to claims with 
claim service dates beginning July 1, 2022 and ending June 30, 2027.
    In the CY 2022 ESRD PPS final rule, we finalized a number of 
changes to the ETC Model. We made adjustments to the calculation of the 
home dialysis rate (86 FR 61951 through 61955) and the transplant rate 
(86 FR 61955 through 61959) and updated the methodology for attributing 
Pre-emptive Living Donor Transplant (LDT) Beneficiaries (86 FR 61950 
through 61951). We modified the achievement benchmarking and scoring 
methodology (86 FR 61959 through 61968), as well as the improvement 
benchmarking and scoring methodology (86 FR 61968 through 61971). We 
specified the method and requirements for sharing performance data with 
ETC Participants (86 FR 61971 through 61984). We also made a number of 
updates and clarifications to the kidney disease patient education 
services waivers and made certain related flexibilities available to 
ETC Participants (86 FR 61984 through 61994). In the CY 2023 ESRD PPS 
final rule (87 FR 67136) we finalized further changes to the ETC Model. 
We updated the PPA achievement scoring methodology beginning in the 
fifth Measurement Year (MY) of the ETC Model, which began on January 1, 
2023 (87 FR 67277 through 67278). We also clarified requirements for 
qualified staff to furnish and bill kidney disease patient education 
services under the ETC Model's Medicare program waivers (87 FR 67278 
through 67280), and finalized our intent to publish participant-level 
model performance information to the public (87 FR 67280).

B. Summary of the Proposed Provisions to the ETC Model

    In the Specialty Care Models final rule (85 FR 61114), we 
established our policies for targeted reviews of the calculation of an 
ETC Participant's Modality Performance Score (MPS). As described in 
Sec.  512.390(c), targeted reviews are limited to the calculation of 
the MPS and may not pertain to the methodologies used to calculate the 
MPS, home dialysis rate, transplant rates, achievement and improvement 
benchmarks, or the PPA amounts. ETC Participants have 90 days following 
the availability of the MPS to submit a targeted review request. CMS 
responds to each targeted review request that is received within the 
90-day time period. CMS may solicit additional information from the ETC 
Participant in support of the request after which a determination is 
made as to whether there was an error in the calculation of the ETC 
Participant's MPS that results in an incorrect PPA being applied during 
the PPA period. In such a scenario, CMS notifies the ETC Participant 
and resolves any resulting discrepancy in payment that arises from the 
application of an incorrect PPA.
    We are proposing revisions to our regulations at Sec.  512.390 to 
clarify the ability of the CMS Administrator to review targeted review 
determinations. In particular, we are proposing to add Sec.  512.390(d) 
to specify that the CMS Administrator may review targeted review 
requests when administrative review is requested by ETC Participants 
within 15-calendar days of a targeted review request determination made 
by CMS.
    We are proposing that within 45 days of the date of the ETC 
Participant's request for administrative review, the CMS Administrator 
may act as follows: (i) decline to review the targeted review request 
determination made by CMS, (ii) render a final decision based on the 
CMS Administrator's review of the targeted review request 
determination, or (iii) choose to take no action on the request for 
administrative review. We are proposing that targeted review request 
determinations made by the CMS Administrator are considered final if 
the CMS Administrator declines an ETC Participant's request for 
administrative review or if the CMS Administrator does not take any 
action on the ETC Participant's request for administrative review by 
the end of the 45-day period described.
    We are also proposing a conforming change to delete the existing 
provision in Sec.  512.390(c)(5), which states that decisions based on 
targeted review are final, and there is no further review or appeal.
    These proposed changes would ensure that accountability for the 
decisions of CMS is vested in a principal officer and would bring the 
targeted review process to a more similar posture as other CMS appeals 
entities that provide for CMS Administrator review. These proposed 
revisions would also ensure that ETC Participants are aware that 
administrative review is available to ETC Participants who wish to seek 
additional review of the results of a targeted review request.
    We seek comment on this proposal.

VI. Collection of Information Requirements

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

[[Page 42522]]

information collection requirements (ICRs).

A. ICRs Regarding the Proposed JW and JZ Reporting Requirements; 
Proposed Reporting Policy for Discarded Amounts of Renal Dialysis Drugs 
and Biological Products Paid for Under the ESRD PPS, Section II.B.1.h 
(OMB Control Number 0938-0997)

    As discussed in section II.B.1.h of this proposed rule, we are 
proposing to require that beginning January 1, 2024, ESRD facilities 
must report information on claims about the total number of billing 
units of any discarded amount of a renal dialysis drug or biological 
product from a single-dose container or single-use package that is paid 
for under the ESRD PPS, using the JW modifier (or any successor 
modifier that includes the same data). Additionally, we are proposing 
to require ESRD facilities to report the JZ modifier for all such drugs 
and biological products with no discarded amounts beginning no later 
than January 1, 2024. Based on our analysis of ESRD PPS claims as well 
as the billing guidance in sections 8 and 17 of the Medicare Claims 
Processing Manual, we have determined that the proposed JW modifier 
requirement reflects current practices for ESRD facilities, and would 
not significantly increase burden for ESRD facilities. Additionally, 
the proposed JZ modifier requirement is not expected to increase burden 
on ESRD facilities because under the guidance provided regarding use of 
the JW modifier, the ESRD facility should already have processes in 
place in order to determine, in the case of certain drugs and 
biological products, whether or not there are any discarded units from 
a single use container or package, record discarded amounts in the 
patient medical record, and specify administered and discarded amounts 
on the claim form. Additionally, as discussed in section II.B.1.h of 
this proposed rule, any separately payable drugs or biological products 
that ESRD facilities bill for using the AY modifier would already be 
subject to the JW and JZ modifier policies under Medicare Part B. 
Therefore, most ESRD facilities should already be set up to report the 
JW and JZ modifiers in such circumstances, and would reasonably be able 
to report these modifiers for renal dialysis drugs and biological 
products as well.

B. ICRs Regarding the Proposal to Require Time on Machine Data as a 
Recordkeeping and Cost Reporting Requirement for Outpatient Maintenance 
Dialysis; Section II.B.1.j (OMB Control Numbers 0938-0997)

    We are proposing to require ESRD facilities to submit data and 
information on ESRD PPS claims regarding the number of minutes of 
hemodialysis treatment received by a beneficiary in center in an ESRD 
facility. This patient-level reporting on resource use involved (that 
is, reporting on ESRD PPS patient claims the minutes of time on machine 
for each hemodialysis treatment) in furnishing renal dialysis services 
at ESRD facilities. We have developed monetary estimates of the amount 
of ESRD facility staff time required to report this information on 
claims in order to estimate the costs associated with the proposal to 
require the reporting of time on machine data. We have included those 
estimates in the Regulatory Impact Analysis section of this proposed 
rule. We acknowledge the burden associated with this proposed 
requirement, but we note that the burden associated with the CMS-1450 
institutional claim form already accounts for the variability in the 
number and type of codes submitted for each claim.

C. Additional Information Collection Requirements

1. ESRD QIP--Wage Estimates (OMB Control Numbers 0938-1289 and 0938-
1340)
    To derive wages estimates, we used data from the U.S. Bureau of 
Labor Statistics' May 2021 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 the ESRD Quality Reporting System (EQRS) 
(formerly, CROWNWeb) and the CDC's National Healthcare Safety Network 
(NHSN), as well as compiling and submitting patient records for the 
purpose of data validation studies. The most recently available median 
hourly wage of a Medical Records Specialist is $22.43 per hour.\304\ We 
also calculate fringe benefit and overhead at 100 percent. 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. These are necessarily rough adjustments, 
both because fringe benefits and overhead costs vary significantly from 
employer to employer and because methods of estimating these costs vary 
widely from study to study. Nonetheless, there is no practical 
alternative, and we believe that these are reasonable estimation 
methods. Therefore, using these assumptions, we estimated an hourly 
labor cost of $44.86 as the basis of the wage estimates for all 
collections of information calculations in the ESRD QIP.
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    \304\ https://www.bls.gov/oes/current/oes292072.htm. Accessed on 
January 3, 2023.
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    We used this updated wage estimate, along with updated facility and 
patient counts, to update our estimate for the total information 
collection burden in the ESRD QIP for PY 2026 that we discussed in the 
CY 2023 ESRD PPS final rule (87 FR 67281) and to estimate the total 
information collection burden in the ESRD QIP for PY 2027, which we 
discuss further in section VIII.C.3 of this proposed rule.
2. Estimated Burden Associated With the Data Validation Requirements 
for PY 2026 and PY 2027 (OMB Control Numbers 0938-1289 and 0938-1340)
    In the CY 2020 ESRD PPS final rule, we finalized a policy to adopt 
the EQRS (formerly, CROWNWeb) data validation methodology that we 
previously adopted for the PY 2016 ESRD QIP as the methodology we would 
use to validate EQRS data for all payment years, beginning with PY 2021 
(83 FR 57001 through 57002). Under this methodology, 300 facilities are 
selected each year to submit 10 records to CMS, and we reimburse these 
facilities for the costs associated with copying and mailing the 
requested records. The burden associated with these validation 
requirements is the time and effort necessary to submit the requested 
records to a CMS contractor. In this proposed rule, we are updating 
these burden estimates using a newly available wage estimate of a 
Medical Records Specialist. In the CY 2020 ESRD PPS final rule, we 
estimated that it would take each facility approximately 2.5 hours to 
comply with this requirement (84 FR 60787). If 300 facilities are 
requested to submit records, we estimated that the total combined 
annual burden for these facilities would be 750 hours (300 facilities x 
2.5 hours). Since we anticipate that Medical Records Specialists or 
similar administrative staff would submit these data, we estimate that 
the aggregate cost of the EQRS data validation each year would

[[Page 42523]]

be approximately $33,645 (750 hours x $44.86), or an annual total of 
approximately $112.15 ($33,645/300 facilities) per facility in the 
sample. The burden cost increase associated with these requirements 
will be submitted to OMB in the revised information collection request 
(OMB control number 0938-1289; Expiration date: November 30, 2025).
    In the CY 2021 ESRD PPS final rule, we finalized our policy to 
reduce the number of records that a facility selected to participate in 
the NHSN data validation must submit to a CMS contractor, beginning 
with PY 2023 (85 FR 71471 through 71472). 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 this policy for NHSN validation, we estimated that 
it would take each facility approximately 5 hours to comply with this 
requirement. If 300 facilities are requested to submit records each 
year, we estimated 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 Specialists or similar 
staff would submit these data, using the newly available wage estimate 
of a Medical Records Specialist, we estimate that the aggregate cost of 
the NHSN data validation each year would be approximately $67,290 
(1,500 hours x $44.86), or a total of approximately $224.30 ($67,290/
300 facilities) per facility in the sample. While the burden hours 
estimate would not change, the burden cost updates associated with 
these requirements will be submitted to OMB in the revised information 
collection request (OMB control number 0938-1340; Expiration date: 
November 30, 2025).
3. Estimated EQRS Reporting Requirements for PY 2026 and PY 2027 (OMB 
Control Number 0938-1289)
    To estimate the burden associated with the EQRS reporting 
requirements (previously known as 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 EQRS 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 EQRS, and the 
number of facilities submitting data to EQRS. In the CY 2023 ESRD PPS 
final rule, we estimated that the burden associated with EQRS reporting 
requirements for the PY 2026 ESRD QIP was approximately $220 million 
for approximately 4,908,291 total burden hours (87 FR 67282).
    We are proposing several changes to the ESRD QIP measure set in 
this proposed rule that would affect the burden associated with EQRS 
reporting requirements for PY 2026 or PY 2027. Beginning with PY 2026, 
we are proposing to remove two measures from the ESRD QIP measure set 
and to add one measure to the ESRD QIP measure set. For PY 2027 and for 
subsequent years, we are proposing to add two measures to the ESRD QIP 
measure set. We have re-calculated the burden estimate for PY 2026 to 
reflect the impact of these proposals if finalized, using updated 
estimates of the total number of ESRD facilities, the total number of 
patients nationally, and wages for Medical Records Specialists or 
similar staff, as well as a refined estimate of the number of hours 
needed to complete data entry for EQRS reporting. In this proposed 
rule, we estimate that the amount of time required to submit measure 
data to EQRS would be 2.5 minutes per element and did not use a rounded 
estimate of the time needed to complete data entry for EQRS reporting. 
We are further updating these estimates in this proposed rule. There 
are 126 data elements proposed for 514,406 patients across 7,847 
facilities, for a total of 64,815,156 elements (126 data elements x 
514,406 patients). At 2.5 minutes per element, this would yield 
approximately 344 hours per facility. Therefore, the PY 2026 burden 
would be 2,700,632 hours (344 hours x 7,847 facilities). Using the wage 
estimate of a Medical Records Specialist, we estimate that the PY 2026 
total burden cost is approximately $121.1 million (2,700,632 hours x 
$44.86).
    There would also be an incremental burden change from PY 2026 to PY 
2027 because we are proposing to add two new measures beginning with PY 
2027. For PY 2027, there are 136 data elements proposed for 514,406 
patients across 7,847 facilities. At 2.5 minutes per element, this 
would yield approximately 371 hours per facility. Therefore, the PY 
2027 burden would be 2,914,967 hours (371 hours x 7,847 facilities). 
Using the wage estimate of a Medical Records Specialist, we estimate 
that the PY 2027 total burden cost would be approximately $130.7 
million (2,914,967 hours x $44.86).
    If you comment on these information collection requirements, please 
submit your comments electronically as specified in the ADDRESSES 
section of this proposed rule.
    Comments must be received on/by August 25, 2023.

VII. Response to Comments

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

VIII. Regulatory Impact Analysis

A. Statement of Need

1. ESRD 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 percentage increase, reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. This proposed 
rule proposes updates and policy changes to the CY 2024 ESRD wage index 
values, the proposed combined wage index and TPEAPA budget-neutrality 
adjustment factor, the outlier payment threshold amounts, and the 
TPNIES offset amount. Failure to publish this proposed rule would 
result in ESRD facilities not receiving appropriate payments in CY 2024 
for renal dialysis services furnished to ESRD beneficiaries.
    This rule also has a number of proposed policy changes to improve 
payment stability and adequacy under the ESRD PPS. These include a 
proposed transitional add-on payment adjustment for pediatric patients 
and a proposed add-on payment adjustment for certain new renal dialysis 
drugs and biological products in existing ESRD

[[Page 42524]]

PPS functional categories after the end of the TDAPA. We are also 
proposing updates to the administrative process for the LVPA, requiring 
ESRD facilities to report on claims billing units of any discarded 
amounts of certain drugs and biological products, and requiring ESRD 
facilities to report ``time on machine'' data on ESRD PPS claims for 
all in-center hemodialysis treatments. We believe that each of these 
changes would improve payment stability and adequacy under the ESRD 
PPS.
2. AKI
    This proposed rule proposes updates to the payment for renal 
dialysis services furnished by ESRD facilities to individuals with AKI. 
As discussed in section III.B of this proposed rule, we are also 
proposing to apply to all AKI dialysis payments the updates to the ESRD 
PPS base rate and wage index. Failure to publish this proposed rule 
would result in ESRD facilities not receiving appropriate payments in 
CY 2024 for renal dialysis services furnished to patients with AKI in 
accordance with section 1834(r) of the Act.
3. ESRD QIP
    Section 1881(h)(1) of the Act requires CMS to reduce the payments 
otherwise made to a facility under the ESRD PPS by up to two percent if 
the facility does not satisfy the requirements of the ESRD QIP for that 
year. This proposed rule proposes updates for the ESRD QIP, including 
removing the Ultrafiltration Rate reporting measure from the ESRD QIP 
measure set beginning with PY 2026, removing the Standardized Fistula 
Rate clinical measure from the ESRD QIP measure set beginning with PY 
2026, updating the COVID-19 Vaccination Coverage Among HCP beginning 
with PY 2026, converting the Clinical Depression Screening and Follow-
Up reporting measure to a clinical measure beginning with PY 2026, and 
adding the Facility Commitment to Health Equity reporting measure to 
the ESRD QIP measure set beginning with PY 2026. This proposed rule 
also proposes to add the Screening for Social Drivers of Health 
reporting measure and the Screen Positive Rate for Social Drivers of 
Health reporting measure to the ESRD QIP measure set beginning with PY 
2027.
4. ETC Model
    We believe it is necessary to propose certain changes to the ETC 
Model to acknowledge the availability of administrative review of 
targeted review requests. This proposed revision is necessary to 
provide transparency to ETC Participants regarding the avenue available 
to them should they wish to seek additional review of the results of a 
targeted review request determination.

B. Overall Impact

    We have examined the impacts of this proposed rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), Executive Order 14094 on Modernizing 
Regulatory Review (April 6, 2023), the Regulatory Flexibility Act (RFA) 
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social 
Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 
(March 22, 1995; Pub. L. 104-4), and Executive Order 13132 on 
Federalism (August 4, 1999).
    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). Executive 
Order 14094 (Modernizing Regulatory Review) amends section 3(f)(1) of 
Executive Order 12866 (Regulatory Planning and Review). The amended 
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 $200 million or more in 
any 1 year (adjusted every 3 years by the Administrator of the Office 
of Information and Regulatory Affairs (OIRA) for changes in gross 
domestic product), or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
Tribal governments or communities; (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 legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive order, as 
specifically authorized in a timely manner by the Administrator of OIRA 
in each case.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with significant effects as 
per section 3(f)(1) of Executive Order 12866 ($200 million or more in 
any 1 year). Based on our estimates of the combined impact of the ESRD 
PPS, ESRD QIP, and ETC provisions in this proposed rule, OMB's Office 
of Information and Regulatory Affairs has determined this rulemaking is 
significant per section 3(f)(1) economic effect. Accordingly, we have 
prepared a Regulatory Impact Analysis that to the best of our ability 
presents the costs and benefits of the rulemaking. Therefore, OMB has 
reviewed this proposed rule, and the Department have provided the 
following assessment of its impact. We solicit comments on the 
regulatory impact analysis provided.

C. Impact Analysis

1. ESRD PPS
    We estimate that the proposed revisions to the ESRD PPS would 
result in an increase of approximately $130 million in Medicare 
payments to ESRD facilities in CY 2024, which includes the amount 
associated with updates to the outlier thresholds, payment rate update, 
updates to the wage index, the budget-neutral transitional pediatric 
ESRD add-on payment adjustment, the beginning of the proposed post-
TDAPA add-on payment adjustment, and continuation of the approved TDAPA 
from CY 2023 until March 31, 2024.
2. AKI
    We estimate that the proposed updates to the AKI payment rate would 
result in an increase of approximately $1 million in Medicare payments 
to ESRD facilities in CY 2024.
3. ESRD QIP
    We estimate that the proposed updates to the ESRD QIP will result 
in $20 million in estimated payment reductions across all facilities 
for PY 2026.
4. ETC Model
    We estimate that the proposed changes to the ETC Model would not 
impact the Model's projected direct savings from payment adjustments 
alone. As described in the CY 2023 ESRD PPS final rule, we estimate 
that the Model would generate $28 million in direct savings related to 
payment adjustments over 6.5 years (87 FR 67297 through 67299).
5. Summary of Impacts
    We estimate that the combined impact of the proposals in this rule 
on payments for CY 2024 is $131 million based on the estimates of the 
updates to the ESRD PPS and the AKI payment rates. We estimate an 
additional $4 million in costs associated with the

[[Page 42525]]

proposed policy to require ESRD facilities to report time on machine 
data. We estimate the impacts of the ESRD QIP for PY 2026 to be $121.1 
million in information collection burden and $20 million in estimated 
payment reductions across all facilities. Additionally, we estimate the 
impacts of the ESRD QIP for PY 2027 to be $130.7 million in information 
collection burden and $17.3 million in estimated payment reductions 
across all facilities. Finally, we estimate that the proposed changes 
to the ETC model in this proposed rule would not impact the Model's 
projected direct savings from payment adjustments alone.

D. Detailed Economic Analysis

    In this section, we discuss the anticipated benefits, costs, and 
transfers associated with the changes in this proposed rule. 
Additionally, we estimate the total regulatory review costs associated 
with reading and interpreting this proposed rule.
1. Benefits
    Under the CY 2024 ESRD PPS and AKI payment, ESRD facilities would 
continue to receive payment for renal dialysis services furnished to 
Medicare beneficiaries under a case-mix adjusted PPS. We continue to 
expect that making prospective Medicare payments to ESRD facilities 
would enhance the efficiency of the Medicare program. Additionally, we 
expect that updating the Medicare ESRD PPS base rate and rate for AKI 
treatments furnished at ESRD facilities by 1.7 percent based on the 
proposed CY 2024 ESRD PPS market basket percentage increase less the 
proposed CY 2024 productivity adjustment would improve or maintain 
beneficiary access to high quality care by ensuring that payment rates 
reflect the best available data on the resources involved in delivering 
renal dialysis services. We estimate that the overall payment rate for 
the ESRD PPS would increase by 1.6 percent.
2. Costs
a. ESRD PPS and AKI
    As discussed in section II.B.1.j of this proposed rule, we are 
proposing to require ESRD facilities to submit data and information on 
ESRD PPS claims for renal dialysis services regarding the number of 
minutes of hemodialysis treatment received by a beneficiary in center 
in an ESRD facility. This patient-level reporting on resource use would 
be used to apportion composite rate costs for use in the case-mix 
adjustment under the ESRD PPS. We estimate that there would be an 
increase in costs for ESRD facilities associated with this proposed 
reporting requirement; however, as we previously noted in the CY 2020 
ESRD PPS proposed rule (84 FR 38396 through 38400), we are aware that 
many ESRD facilities' electronic health records (EHR) systems 
automatically collect this information for every dialysis treatment, 
minimizing the additional burden of reporting this metric on claims. 
For those ESRD facilities that use EHRs, we estimate that there would 
be only very minimal additional staff time required to report such time 
on machine data on ESRD PPS claims for renal dialysis services. For 
those ESRD facilities that do not use EHRs, we estimate that additional 
staff time would be required to take note of the time at which 
hemodialysis began and the time at which hemodialysis ended, and 
subtract the start time from the end time to determine the total number 
of minutes of hemodialysis. Conservatively, we estimate this would 
require no more than 1 minute per treatment.
    To calculate the annual additional ESRD facility staff time that 
would be associated with reporting time on machine data on ESRD PPS 
claims for renal dialysis services, we multiply the estimated time per 
treatment by the number of dialysis treatments. Based on the most 
recent available CY 2022 ESRD PPS claims for this proposed rule, we 
estimate there were approximately 29.8 million treatments. However, as 
discussed in section II.B.1.j, we are proposing to limit this reporting 
requirement to in-center claims. We estimate that approximately 14.6 
percent of claims are for home dialysis, and therefore we reduce our 
estimate of the total number of treatments by 14.6 percent. 
Additionally, we believe it is reasonable to assume that LDOs would 
utilize existing systems and processes to document treatment duration 
in the EHR and send that information to the claim. Based on the latest 
available data as shown in Table 23, approximately 77.9 percent of 
treatments were furnished by LDOs. Therefore, we estimate that the 
additional costs associated with this proposed time on machine 
reporting requirement would be associated with approximately 5.6 
million in-center, non-LDO dialysis treatments per year.
    Additionally, ESRD facilities already report time on machine data 
on a monthly basis in the EQRS for a single dialysis session. This 
means that for a patient who receives 156 dialysis treatments per year, 
the duration of twelve of those sessions would already be reported in 
the EQRS. We do not believe there would be any additional staff time 
required to report time on machine data on ESRD PPS claims for the 
treatments already reported in EQRS. Therefore, we estimate that the 
additional staff time would be needed for reporting time on machine for 
144 out of 156 treatments per year for the typical patient. For our 
cost estimate, we multiplied our estimate of 5.6 million in-center 
dialysis treatments by a factor of (144/156), which equals 
approximately 5.2 million treatments per year.
    To derive wages estimates, we used data from the U.S. Bureau of 
Labor Statistics' May 2021 National Occupational Employment and Wage 
Estimates. We believe it is reasonable to assume that Medical Records 
and Health Information Technicians, who are responsible for organizing 
and managing health information data, are the individuals reporting 
time on machine data. As discussed in the CY 2016 ESRD PPS final rule 
(80 FR 69069), this is consistent with our assumptions about the types 
of employees tasked with submitting measure data to CROWNWeb (now EQRS) 
and NHSN, as well as compiling and submitting patient records for the 
purpose of data validation studies. The most recently available median 
hourly wage of a Medical Records and Health Information Technician is 
$23.67 per hour.\305\ We also calculate fringe benefit and overhead at 
100 percent. 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 note 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, there is no practical alternative, and we believe 
that these are reasonable estimation methods. Therefore, using these 
assumptions, we estimate an hourly labor cost of $47.34 as the basis of 
the wage estimates for the estimate of cost associated with the 
proposed requirement to report time on machine data on ESRD PPS claims 
for renal dialysis services.
---------------------------------------------------------------------------

    \305\ https://www.bls.gov/oes/current/oes292099.htm.
---------------------------------------------------------------------------

    Based on the figures discussed in the preceding paragraphs, we 
estimate that total additional staff time each year for ESRD facilities 
associated with the proposed requirement to report time on machine data 
is equal to 5.2 million x 1 minute = 5.2 million minutes = 86,667 
hours. We estimate the total annual cost associated with this proposed

[[Page 42526]]

requirement is equal to 86,667 hours x $47.34 = $4,102,815.78 per year.
    We recognize that some non-LDO ESRD facilities may also choose to 
adopt an automated process, rather than a manual process. Therefore, 
the estimate of $4,102,815.78, calculated based on 5.2 million 
treatments, represents the upper limit of our burden estimate. For ESRD 
facilities that choose to utilize existing systems and processes to 
document treatment duration in the EHR and send that data to the claim, 
we estimate the burden associated with our proposed requirement to 
report time on machine data would be minimal.
b. ESRD QIP
    For PY 2026 and PY 2027, we have updated the estimated costs 
associated with the information collection requirements under the ESRD 
QIP with updated estimates of the total number of ESRD facilities, the 
total number of patients nationally, wages for Medical Records 
Specialists or similar staff, and a refined estimate of the number of 
hours needed to complete data entry for EQRS reporting. We have made no 
changes to our methodology for calculating the annual burden associated 
with the information collection requirements for the EQRS validation 
study (previously known as the CROWNWeb validation study) or the NHSN 
validation study. We have updated our methodology for calculating the 
annual burden associated with the information collection requirements 
for EQRS reporting based on our proposed measure updates for PY 2026 
and PY 2027.
    We also updated the payment reduction estimates based on our 
proposals in this proposed rule, using more recent data for the 
measures in the ESRD QIP measure set. We estimate that as a result of 
our proposed and previously finalized policies for PY 2026, there would 
be approximately $121.1 million in information collection burden and an 
additional $20 million in estimated payment reductions across all 
facilities, for a total estimated impact of $141.1 million.
    For PY 2027, we estimate that as a result of our proposed and 
previously finalized policies for PY 2027, there would be approximately 
$130.7 million in information collection burden and $17.3 million in 
estimated payment reductions across all facilities, for a total 
estimated impact of $148 million.
3. Transfers
    We estimate that the updates to the ESRD PPS and AKI payment rate 
would result in a total in increase of approximately $130 million in 
Medicare payments to ESRD facilities in CY 2024, which includes the 
amount associated with updates to the outlier thresholds, and updates 
to the wage index. This estimate includes an increase of approximately 
$1 million in Medicare payments to ESRD facilities in CY 2024 due to 
the updates to the AKI payment rate, of which approximately 20 percent 
is increased beneficiary co-insurance payments. We estimate 
approximately $100 million in transfers from the Federal Government to 
ESRD facilities due to increased Medicare program payments and 
approximately $30 million in transfers from beneficiaries to ESRD 
facilities due to increased beneficiary co-insurance payments as a 
result of this proposed rule.
4. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the proposed rule, we assume that the total number of 
unique commenters on last year's proposed rule will be the number of 
reviewers of this proposed rule. We acknowledge that this assumption 
may understate or overstate the costs of reviewing this proposed rule. 
It is possible that not all commenters reviewed last year's rule in 
detail, and it is also possible that some reviewers chose not to 
comment on the proposed rule. For these reasons we thought that the 
number of past commenters would be a fair estimate of the number of 
reviewers of this proposed rule. We welcome any comments on the 
approach in estimating the number of entities which will review this 
proposed rule. We also recognize that different types of entities are 
in many cases affected by mutually exclusive sections of this proposed 
rule, and therefore for the purposes of our estimate we assume that 
each reviewer reads approximately 50 percent of the rule. We seek 
comments on this assumption.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this proposed rule is $115.22 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 will take approximately 206 
minutes (3.43 hours) for the staff to review half of this proposed 
rule, which has a total of approximately 103,000 words. For each entity 
that reviews the rule, the estimated cost is $395.20 (3.43 hours x 
$115.22). Therefore, we estimate that the total cost of reviewing this 
regulation is $115,003.20 ($395.20 x 291).
5. Impact Statement and Table
a. CY 2024 End-Stage Renal Disease Prospective Payment System
(1) Effects on ESRD Facilities
    To understand the impact of the changes affecting Medicare payments 
to different categories of ESRD facilities, it is necessary to compare 
estimated payments in CY 2023 to estimated payments in CY 2024. To 
estimate the impact among various types of ESRD facilities, it is 
imperative that the estimates of Medicare payments in CY 2023 and CY 
2024 contain similar inputs. Therefore, we simulated Medicare payments 
only for those ESRD facilities for which we are able to calculate both 
current Medicare payments and new Medicare payments.
    For this proposed rule, we used CY 2022 data from the Medicare Part 
A and Part B Common Working Files as of 2/17/2023, as a basis for 
Medicare dialysis treatments and payments under the ESRD PPS. We 
updated the 2022 claims to 2023 and 2024 using various updates. The 
updates to the ESRD PPS base rate are described in section II.B.1.d of 
this proposed rule. Table 23 shows the impact of the estimated CY 2024 
ESRD PPS payments compared to estimated Medicare payments to ESRD 
facilities in CY 2023.
BILLING CODE 4120-01-P

[[Page 42527]]

[GRAPHIC] [TIFF OMITTED] TP30JN23.035


[[Page 42528]]


[GRAPHIC] [TIFF OMITTED] TP30JN23.036

    Column A of the impact table indicates the number of ESRD 
facilities for each impact category and column B indicates the number 
of dialysis treatments (in millions). The overall effect of the 
proposed changes to the outlier payment policy described in section 
II.B.1.c of this proposed rule is shown in column C. For CY 2024, the 
impact on all ESRD facilities as a result of the proposed changes to 
the outlier payment policy would be a 0.1 percent decrease in estimated 
Medicare payments.
    Column D shows the effect of the proposed TPEAPA as described in 
section II.B.1.g of this proposed rule. This adjustment would be 
implemented in a budget neutral manner, so the total impact of this 
change would be 0.0 percent. However, there would be distributional 
impacts of this proposed change, primarily a 25.2 percent increase to 
payments to Pediatric ESRD facilities (with more than 50 percent of 
patients under age 18). This proposed policy change also corresponds to 
a 0.8 percent increase to hospital-based ESRD facilities. Because the 
budget neutrality factor for this proposed policy is so small, the 
impact analysis found no significant decrease to any ESRD facility as 
the total decrease in payments for ESRD facilities that predominantly 
serve adults would still be less than 0.05 percent.
    Column E shows the effect of year-over-year payment changes related 
to the proposed post-TDAPA add-on payment adjustment as described in 
section II.B.1.i of this proposed rule and current TDAPA payments. The 
post-TDAPA add-on payment adjustment would not be budget neutral; 
however, we estimate the difference between total payments in CY 2023 
during which time payment is made using the TDAPA under the ESRD PPS, 
and estimated total payments in CY 2024 under the proposed post-TDAPA 
add-on payment adjustment would be less than 0.1 percent. Therefore, 
the total impact of this change as compared to current TDAPA payments 
is 0.0 percent.
    Column F reflects the effect of the proposed update to the ESRD PPS 
wage index as described in section II.B.1.c of this proposed rule. This 
update would be budget neutral, so the total impact of this policy 
change is 0.0 percent. However, there would be distributional impacts 
of this change. The largest increase would be to mid-Atlantic ESRD 
facilities that would receive 0.8 percent higher payments as a result 
of the proposed updated ESRD PPS wage

[[Page 42529]]

index. The largest decrease would be to ESRD facilities with more than 
20 percent and less than 50 percent pediatric patients, who would 
receive 1.1 percent lower payments as a result of the proposed updated 
ESRD PPS wage index.
    Column G reflects the overall impact, that is, the effects of the 
proposed outlier policy changes, the TPEAPA, the post-TDAPA payment 
adjustment, the updated wage index, and the payment rate update as 
proposed in section II.B.1.d of this proposed rule. The proposed ESRD 
PPS payment rate update for CY 2024 is 1.7 percent, which reflects the 
proposed ESRDB market basket percentage increase for CY 2024 of 2.0 
percent and the proposed productivity adjustment of 0.3 percent. We 
expect that overall ESRD facilities would experience a 1.6 percent 
increase in estimated Medicare payments in CY 2024. The categories of 
types of ESRD facilities in the impact table show impacts ranging from 
a 1.1 percent increase to a 27.6 percent increase in their CY 2024 
estimated Medicare payments.
(2) 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 2024, we estimate that 
the ESRD PPS would have zero impact on these other providers.
(3) Effects on the Medicare Program
    We estimate that Medicare spending (total Medicare program 
payments) for ESRD facilities in CY 2024 would be approximately $6.4 
billion. This estimate considers a projected decrease in fee-for-
service Medicare ESRD beneficiary enrollment of 4.2 percent in CY 2024.
(4) Effects on Medicare Beneficiaries
    Under the ESRD PPS, beneficiaries are responsible for paying 20 
percent of the ESRD PPS payment amount. As a result of the projected 
1.6 percent overall increase in the CY 2024 ESRD PPS payment amounts, 
we estimate that there would be an increase in beneficiary co-insurance 
payments of 1.6 percent in CY 2024, which translates to approximately 
$30 million.
(5) Alternatives Considered
(i) Transitional Pediatric ESRD Add-On Payment Adjustment
    As discussed in section II.B.1.g.(4) of this proposed rule, we are 
proposing to implement a transitional add-on payment adjustment of 30 
percent for Pediatric ESRD Patients, which we would call the TPEAPA. We 
also considered, but did not propose, an alternative payment structure 
which would phase in the adjustment over 3 years starting at 10 percent 
for the first year and 20 percent for the second year.
(ii) Proposed Add-On Payment Adjustment for Certain Renal Dialysis 
Drugs and Biological Products After the TDAPA Period Ends
    As discussed in section II.B.1.i.(3) of this proposed rule, we are 
proposing an add-on payment adjustment for new renal dialysis drugs and 
biological products in existing ESRD PPS functional categories after 
the end of the TDAPA period. We also considered, but did not propose, 
an alternative methodology for calculating this payment adjustment 
which would incorporate a reconciliation of all the formerly separately 
billable drugs against the calculated post-TDAPA payment adjustment. 
Additionally, we considered but did not propose alternative approaches 
to applying and calculating this add-on payment adjustment for specific 
patient populations.
(iii) Proposal To Require Reporting Time on Machine Data on ESRD PPS 
Claims for Renal Dialysis Services
    As discussed in section II.B.1.j.(5) of this proposed rule, we are 
proposing to require ESRD facilities to submit data and information on 
ESRD PPS claims for renal dialysis services regarding the number of 
minutes of hemodialysis treatment received by a beneficiary in center 
in an ESRD facility. This patient-level reporting on resource use would 
be used to apportion composite rate costs for use in the case-mix 
adjustment. We also considered, but did not propose, to use dialysis 
duration data from EQRS to apportion composite rate costs for this 
purpose. We discuss why we did not propose this alternative in further 
detail in section II.B.1.j.(5) of this proposed rule.
b. Continuation of Approved Transitional Drug Add-On Payment 
Adjustments (TDAPA) for New Renal Dialysis Drugs or Biological Products 
for CY 2024
(1) KORSUVATM (difelikefalin)
    One renal dialysis drug for which the TDAPA was paid in CY 2022 and 
CY 2023 would continue to be eligible for the TDAPA in CY 2024. CMS 
Transmittal 11295,\306\ implemented the 2-year TDAPA period specified 
in Sec.  413.234(c)(1) for KORSUVATM (difelikefalin). The 
TDAPA payment period began on April 1, 2022 and will continue through 
March 31, 2024. As set forth in Sec.  413.234(c), TDAPA payment is 
based on 100 percent of average sales price (ASP). If ASP is not 
available, then the TDAPA is based on 100 percent of wholesale 
acquisition cost (WAC) and, when WAC is not available, the payment is 
based on the drug manufacturer's invoice.
---------------------------------------------------------------------------

    \306\ CMS Transmittal 11295 rescinded and replaced CMS 
Transmittal 11278, dated February 24, 2022 and is available at: 
https://www.cms.gov/files/document/r11295CP.pdf.
---------------------------------------------------------------------------

    We based the CY 2024 impacts on the most current 72x claims data 
from May 2022, when utilization first appeared on the claims, through 
February 2023. During that timeframe, the average monthly TDAPA payment 
amount for KORSUVATM was $575,000. In applying that average 
to the 3 remaining months of the TDAPA payment period in CY 2024, we 
estimate $1,725,000 in spending ($575,000 * 3 = $1,725,000) of which, 
approximately $345,000 ($1,725,000 * 0.20 = $345,000) would be 
attributed to beneficiary coinsurance amounts.
c. Payment for Renal Dialysis Services Furnished to Individuals With 
AKI
(1) Effects on ESRD Facilities
    To understand the impact of the proposed changes affecting Medicare 
payments to different categories of ESRD facilities for renal dialysis 
services furnished to individuals with AKI, it is necessary to compare 
estimated Medicare payments in CY 2023 to estimated Medicare payments 
in CY 2024. To estimate the impact among various types of ESRD 
facilities for renal dialysis services furnished to individuals with 
AKI, it is imperative that the Medicare payment estimates in CY 2023 
and CY 2024 contain similar inputs. Therefore, we simulated Medicare 
payments only for those ESRD facilities for which we are able to 
calculate both current Medicare payments and new Medicare payments.

[[Page 42530]]

    For this proposed rule, we used CY 2022 data from the Medicare Part 
A and Part B Common Working Files as of 2/17/2023, as a basis for 
Medicare for renal dialysis services furnished to individuals with AKI. 
We updated the 2022 claims to 2023 and 2024 using various updates. The 
proposed updates to the AKI payment amount are described in section 
III.B of this proposed rule. Table 24 shows the impact of the estimated 
CY 2024 Medicare payments for renal dialysis services furnished to 
individuals with AKI compared to estimated Medicare payments for renal 
dialysis services furnished to individuals with AKI in CY 2023.

[[Page 42531]]

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[[Page 42532]]


[GRAPHIC] [TIFF OMITTED] TP30JN23.038

    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 CY 2024 wage indices.
    Column D shows the overall impact, that is, the effects of proposed 
combined wage index and TPEAPA budget-neutrality adjustment factor, 
wage index updates, and the payment rate update of 1.7 percent, which 
reflects the proposed ESRDB market basket percentage increase for CY 
2024 of 2.0 percent and the proposed productivity adjustment of 0.3 
percentage point. We expect that overall ESRD facilities would 
experience a 1.6 percent increase in estimated Medicare payments in CY 
2024. The categories of types of ESRD facilities in the impact table 
show impacts ranging from an increase of -0.4 percent to 2.4 percent in 
their CY 2024 estimated Medicare payments.
(2) Effects on Other Providers
    Under section 1834(r) of the Act, as added by section 808(b) of 
TPEA, we are proposing to update the payment rate for renal dialysis 
services furnished by ESRD facilities to beneficiaries with AKI. The 
only two Medicare providers and suppliers authorized to provide these 
outpatient renal dialysis services are hospital outpatient departments 
and ESRD facilities. The patient and his or her physician make the 
decision about where the renal dialysis services are furnished. 
Therefore, this change would have zero impact on other Medicare 
providers.
(3) Effects on the Medicare Program
    We estimate approximately $70 million would be paid to ESRD 
facilities in CY 2024 as a result of patients with AKI receiving renal 
dialysis services in an 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.
(4) 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 coinsurance. Because the 
AKI dialysis payment rate paid to ESRD facilities is lower than the 
outpatient hospital PPS's payment amount, we expect beneficiaries to 
pay less co-insurance when AKI dialysis is furnished by ESRD 
facilities.
(5) 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 
adjustments is 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.
d. ESRD QIP
(1) Effects of the PY 2026 ESRD QIP on ESRD Facilities
    The ESRD QIP is intended to prevent reductions in the quality of 
ESRD dialysis facility services provided to beneficiaries. The general 
methodology that we use to calculate a facility's TPS is described in 
our regulations at 42 CFR 413.178(e).
    Any reductions in the ESRD PPS payments as a result of a facility's 
performance under the PY 2026 ESRD QIP will apply to the ESRD PPS 
payments made to the facility for services furnished in CY 2026, as 
codified in our regulations at 42 CFR 413.177.
    For the PY 2026 ESRD QIP, we estimate that, of the 7,847 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 31.56 percent or 2,477 of the facilities

[[Page 42533]]

that have sufficient data to calculate a TPS would receive a payment 
reduction for PY 2026. Among an estimated 2,477 facilities that would 
receive a payment reduction, approximately 64 percent or 1,585 
facilities would receive the smallest payment reduction of 0.5 percent. 
We are presenting an estimate for the PY 2026 ESRD QIP to update the 
estimated impact that was provided in the CY 2023 ESRD PPS final rule 
(87 FR 67293 through 67296). Based on our proposed policies, the total 
estimated payment reductions for all the 2,477 facilities expected to 
receive a payment reduction in PY 2026 would be approximately 
$20,040,827. Facilities that do not receive a TPS do not receive a 
payment reduction.
    Table 25 shows the overall estimated distribution of payment 
reductions resulting from the PY 2026 ESRD QIP.
[GRAPHIC] [TIFF OMITTED] TP30JN23.039

    To estimate whether a facility would receive a payment reduction 
for PY 2026, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from EQRS and Medicare claims. Payment 
reduction estimates are calculated using the most recent data available 
(specified in Table 19) in accordance with the policies proposed in 
this proposed rule. Measures used for the simulation are shown in Table 
26.
[GRAPHIC] [TIFF OMITTED] TP30JN23.040

    For all measures except the SHR clinical measure, the SRR clinical 
measure, and the STrR measure, measures with less than 11 patients for 
a facility were not included in that facility's TPS. For the SHR 
clinical measure and the SRR clinical measure, facilities were required 
to have at least 5 patient-years at risk and 11 index discharges, 
respectively, to be included in the facility's TPS. For the STrR 
clinical measure, facilities were required to have at least 10 patient-
years at risk 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 proposed policies outlined in 
section IV.C of this proposed rule. Facility reporting measure scores 
were estimated using available data from CY 2021. 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 2026 for each 
facility resulting from this proposed rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2021 and December

[[Page 42534]]

2021 by the facility's estimated payment reduction percentage expected 
under the ESRD QIP, yielding a total payment reduction amount for each 
facility.
    Table 27 shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2026. 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 2026 ESRD QIP, the actual 
impact of the PY 2026 ESRD QIP may vary significantly from the values 
provided here.
[GRAPHIC] [TIFF OMITTED] TP30JN23.041

(3) Effects of the PY 2027 ESRD QIP on ESRD Facilities
    For the PY 2027 ESRD QIP, we estimate that, of the 7,847 facilities 
(including those not receiving a TPS) enrolled in Medicare, 
approximately 29.29 percent or 2,299 of the facilities that have 
sufficient data to calculate a TPS would receive a payment reduction 
for PY 2027. Among an estimated 2,299 facilities that would receive a 
payment reduction, approximately 68.3 percent or 1,571 facilities would 
receive the smallest payment reduction of 0.5 percent. The total 
payment reductions for all the 2,299 facilities expected to receive a 
payment reduction is approximately $17,388,145. Facilities

[[Page 42535]]

that do not receive a TPS do not receive a payment reduction.
    Table 28 shows the overall estimated distribution of payment 
reductions resulting from the PY 2027 ESRD QIP.
[GRAPHIC] [TIFF OMITTED] TP30JN23.042

    To estimate whether a facility would receive a payment reduction in 
PY 2027, we scored each facility on achievement and improvement on 
several clinical measures we have previously finalized and for which 
there were available data from EQRS and Medicare claims. Payment 
reduction estimates were calculated using the most recent data 
available (specified in Table 26) in accordance with the policies 
proposed in this proposed rule. Measures used for the simulation are 
shown in Table 29.
[GRAPHIC] [TIFF OMITTED] TP30JN23.043

    For all measures except the SHR clinical measure, the SRR clinical 
measure, and the STrR measure, measures with less than 11 patients for 
a facility were not included in that facility's TPS. For the SHR and 
SRR measures, facilities were required to have at least 5 patient-years 
at risk and 11 index discharges, respectively, to be included in the 
facility's TPS. For the STrR clinical measure, facilities were required 
to have at least 10 patient-years at risk 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 proposed 
and previously finalized policies outlined in section IV.D of this 
proposed rule. Facility reporting measure scores were estimated using 
available data from CY 2021. 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 2027 for each 
facility resulting from this proposed rule, we multiplied the total 
Medicare payments to the facility during the 1-year period between 
January 2021 and December 2021 by the facility's estimated payment 
reduction percentage expected under the ESRD QIP, yielding a total 
payment reduction amount for each facility.
    Table 30 shows the estimated impact of the finalized ESRD QIP 
payment reductions to all ESRD facilities for PY 2027. 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 using for the PY 2027 ESRD QIP, the actual 
impact of the PY 2027 ESRD QIP may vary significantly from the values 
provided here.

[[Page 42536]]

[GRAPHIC] [TIFF OMITTED] TP30JN23.044

(4) Effects on Other Providers
    The ESRD QIP is applicable to ESRD 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 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.
(5) Effects on the Medicare Program
    For PY 2027, we estimate that the ESRD QIP would contribute 
approximately $17,388,145.07 in Medicare savings. For comparison, Table 
31 shows the payment reductions that we estimate will be applied by the 
ESRD QIP from PY 2018 through PY 2027.

[[Page 42537]]

[GRAPHIC] [TIFF OMITTED] TP30JN23.045

(6) Effects on Medicare Beneficiaries
---------------------------------------------------------------------------

    \307\ In the CY 2022 ESRD PPS final rule, we adopted a special 
scoring methodology and payment policy for PY 2022 due to 
significant impacts related to the COVID-19 public health emergency 
(86 FR 61918 through 61919). Under this policy, we did not apply any 
payment reductions to ESRD facilities for PY 2022.
---------------------------------------------------------------------------

    The ESRD QIP is applicable to ESRD facilities. Since the Program's 
inception, there is evidence of 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.
(7) Alternatives Considered
    In section IV.C.5 of this proposed rule, we are proposing to remove 
the Ultrafiltration Rate reporting measure and the Standardized Fistula 
Rate clinical measure, beginning with PY 2026. We considered not 
proposing to remove these measures. However, we concluded that 
proposing to remove these two measures was appropriate under our 
previously finalized measure removal factors. This approach would help 
to ensure that a facility's performance is assessed based on measures 
that continue to be meaningful parts of the ESRD QIP measure set.
e. ETC Model
(1) Overview
    The ETC Model is a mandatory payment model designed to test payment 
adjustments to certain dialysis and dialysis-related payments, as 
discussed in the Specialty Care Models final rule (85 FR 61114), the CY 
2022 ESRD PPS final rule (86 FR 61874), and the CY 2023 ESRD PPS final 
rule (87 FR 67136) for ESRD facilities and for Managing Clinicians for 
claims with dates of service from January 1, 2021, to June 30, 2027. 
The requirements for the ETC Model are set forth in 42 CFR part 512, 
subpart C. We are proposing to revise our regulations at Sec.  512.390 
to acknowledge the ability of the CMS Administrator to review the 
results of ETC Participants' targeted review requests. For the results 
of the detailed economic analysis of the ETC Model and a description of 
the methodology used to perform the analysis, please see the Specialty 
Care Models final rule (85 FR 61114).
(2) Data and Methods
    A stochastic simulation was created to estimate the financial 
impacts of the ETC Model relative to baseline expenditures, where 
baseline expenditures were defined as data from CYs 2018 and 2019 
without the changes applied. The simulation relied upon statistical 
assumptions derived from retrospectively constructed ESRD facilities' 
and Managing Clinicians' Medicare dialysis claims, transplant claims, 
and transplant waitlist data reported during 2018 and 2019, the most 
recent years of complete data available before the start of the ETC 
Model. Both datasets and the risk-adjustment methodologies for the ETC 
Model were developed by the CMS Office of the Actuary (OACT).
    Table 32 summarizes the estimated impact of the ETC Model when the 
achievement benchmarks for each year are set using the average of the 
home dialysis rates for year t-1 and year t-2 for the HRRs randomly 
selected for participation in the ETC Model. We estimate that the 
Medicare program would save a net total of $43 million from the PPA and 
HDPA between January 1, 2021, and June 30, 2027 less $15 million in 
increased training and education expenditures. Therefore, the net 
impact to Medicare spending is estimated to be $28 million in savings. 
This is consistent with the net impact to Medicare spending estimated 
for the CY 2022 ESRD PPS final rule, in which the net impact to 
Medicare spending was also estimated to be $28 million in savings (86 
FR 62014 through 62016). Our proposal to make administrative review 
available to ETC Participants who wish to seek additional review of a 
targeted review determination is not expected to change this estimate.
(3) Medicare Estimate--Primary Specification, Assume Rolling Benchmark

[[Page 42538]]

[GRAPHIC] [TIFF OMITTED] TP30JN23.046

    In Table 32, negative spending reflects a reduction in Medicare 
spending, while positive spending reflects an increase. The results for 
this table were generated from an average of 400 simulations under the 
assumption that benchmarks are rolled forward with a 1.5-year lag. For 
a detailed description of the key assumptions underlying the impact 
estimate, see the Specialty Care Models final rule (85 FR 61353) and 
the CY 2022 ESRD PPS final rule (86 FR 60214 through 60216).
(4) Effects on the Home Dialysis Rate, the Transplant Rate, and Kidney 
Transplantation
    The changes in this proposed rule would not impact the findings 
reported for the effects of the ETC Model on the home dialysis rate or 
the transplant rate described in the Specialty Care Models final rule 
(85 FR 61355) and the CY 2022 ESRD PPS final rule (86 FR 62017).
(5) Effects on Kidney Disease Patient Education Services and HD 
Training Add-Ons
    The changes in this proposed rule will not impact the findings 
reported for the effects of the ETC Model on kidney disease patient 
education services and HD training add-ons described in the Specialty 
Care Models final rule (85 FR 61355) and the CY 2023 ESRD PPS final 
rule (87 FR 67136).
(6) Effects on Medicare Beneficiaries
    Our proposal to provide the option for ETC Participants to seek 
administrative review of targeted review determinations will not impact 
the findings reported for the effects of ETC Model on Medicare 
beneficiaries in lieu of the ETC Model's likelihood of incentivizing 
ESRD facilities and Managing Clinicians to improve access to home 
dialysis and transplantation for Medicare beneficiaries. Further 
details on the impact of the ETC Model on ESRD Beneficiaries may be 
found in the Specialty Care Models final rule (85 FR 61357), the CY 
2022 ESRD PPS final rule (86 FR 61874), or the CY 2023 ESRD PPS final 
rule (87 FR 67136).
(7) Alternatives Considered
    In this proposed rule, we are proposing to revise our regulations 
at 42 CFR 512.390 to acknowledge the availability of administrative 
review of targeted review requests. We considered retaining our current 
process, in which targeted review determinations are final with no 
further review or appeal; however, we believe that providing for 
administrative review of targeted review determinations is important to 
provide ETC Participants with transparency regarding the avenue that is 
available should they wish to seek review of their targeted review 
determination, to vest accountability for the decisions of CMS in a 
principal officer, and to bring the

[[Page 42539]]

ETC Model into alignment with CMS programs.

E. Accounting Statement

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in 
Table 33 showing the classification of the impact associated with the 
provisions of this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP30JN23.047

BILLING CODE 4120-01-C

F. Regulatory Flexibility Act Analysis (RFA)

    The Regulatory Flexibility Act (RFA) requires agencies to analyze 
options for regulatory relief of small entities if a rule has a 
significant impact on a substantial number of small entities. For 
purposes of the RFA, small entities include small businesses, nonprofit 
organizations, and small governmental jurisdictions. 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. Therefore, the number of small entities estimated in this RFA 
analysis includes the number of ESRD facilities that are either 
considered small businesses or nonprofit organizations.
    According to the Small Business Administration's (SBA) size 
standards, an ESRD facility is classified as a small business if it has 
total revenues of less than $41.5 million in any 1 year. For the 
purposes of this analysis, we exclude the ESRD facilities that are 
owned and operated by LDOs and regional chains, which would have total 
revenues of more than $8.1 billion in any year when the total revenues 
for all locations are combined for each business (LDO or regional 
chain), and are not, therefore, considered small businesses. Because we 
lack data on individual ESRD facilities' receipts, we cannot determine 
the number of small proprietary ESRD facilities or the proportion of 
ESRD facilities' revenue derived from Medicare payments. Therefore, we 
assume that all ESRD facilities that are not owned by LDOs or regional 
chains are considered small businesses. Accordingly, we consider the 
451 facilities that are independent and 352 facilities that are 
hospital-based, as shown in the ownership category in Table 23, to be 
small businesses. These facilities represent approximately 10 percent 
of all ESRD facilities in our data set.
    Additionally, we identified in our analytic file that there are 806 
facilities that are considered nonprofit organizations, which is 
approximately 10 percent of all ESRD facilities in our data set. In 
total, accounting for the 364 nonprofit ESRD facilities that are also 
considered small businesses, there are 1,245 ESRD facilities that are 
either small businesses or nonprofit organizations, which is 
approximately 16 percent of all ESRD facilities in our data set.
    For the ESRD PPS updates in this proposed rule, a hospital-based 
ESRD facility (as defined by type of ownership, not by type of ESRD 
facility) is estimated to receive a 2.6 percent increase in Medicare 
payments for CY 2024. An independent facility (as defined by ownership 
type) is likewise estimated to receive a 2.2 percent increase in 
Medicare payments for CY

[[Page 42540]]

2024. As shown in Table 23, we estimate that the overall revenue impact 
of this proposed rule on all ESRD facilities is a positive increase to 
Medicare payments by approximately 1.6 percent.
    For AKI dialysis, we are unable to estimate whether patients would 
go to ESRD facilities, however, we have estimated there is a potential 
for $70 million in payment for AKI dialysis treatments that could 
potentially be furnished in ESRD facilities.
    For the ESRD QIP, we estimate that of the 2,477 ESRD facilities 
expected to receive a payment reduction as a result of their 
performance on the PY 2026 ESRD QIP, 393 are ESRD small entity 
facilities. We present these findings in Table 25 (``Estimated 
Distribution of PY 2026 ESRD QIP Payment Reductions'') and Table 27 
(``Estimated Impact of ESRD QIP Payment Reductions to ESRD Facilities 
for PY 2026'').
    Regarding the ETC Model, in the Specialty Care Models final rule, 
we described our assumption, for the purposes of the regulatory impact 
analysis, that the great majority of Managing Clinicians are small 
entities by nature of meeting the SBA definition of a small business, 
but that the greater majority of ESRD facilities are not, as they are 
owned, either partially or entirely, by organizations that do not meet 
the SBA definition of a small entity. We described the low volume 
threshold exclusions and aggregation policies used in the ETC Model and 
our assessment that, in conjunction with the fact that the ETC Model 
affects Medicare payment only for select services furnished to Medicare 
FFS beneficiaries; the ETC Model will not have a significant impact on 
spending for a substantial number of small entities. For the purposes 
of this proposed rule, we have determined that our proposal to clarify 
the ability of the CMS Administrator to review targeted review 
determinations will not change the assessment that the ETC Model will 
not have a significant impact on spending for a substantial number of 
small entities.
    In addition, section 1102(b) of the Social Security 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 proposed 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 121 rural 
hospital-based ESRD facilities, we do not know how many of them are 
based at hospitals with fewer than 100 beds. However, overall, the 121 
rural hospital-based ESRD facilities would experience an estimated 2.2 
percent increase in payments. Therefore, the Secretary has certified 
that this proposed rule would not have a significant impact on the 
operations of a substantial number of small rural hospitals. Our 
proposal to clarify the ability of the CMS Administrator to review ETC 
Model targeted review determinations is not expected to change the 
Secretary's assessment.

G. Unfunded Mandates Reform Act Analysis (UMRA)

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2023, that 
threshold is approximately $177 million. This proposed rule would not 
impose a mandate that will result in the expenditure by State, local, 
and Tribal governments, in the aggregate, or by the private sector, of 
more than $177 million in any 1 year. 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.

H. Federalism

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

IX. Files Available to the Public

    The Addenda for the annual ESRD PPS proposed and final rule will no 
longer appear in the Federal Register. Instead, the Addenda will be 
available only through the internet and will be posted on the CMS 
website under the regulation number, CMS-1782-P, at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices. In addition 
to the Addenda, limited data set files (LDS) are available for purchase 
at https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/EndStageRenalDiseaseSystemFile. Readers who 
experience any problems accessing the Addenda or LDS files, should 
contact CMS by sending an email to CMS at the following mailbox: 
[email protected].
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on June 15, 2023.

List of Subjects

42 CFR Part 413

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

42 CFR Part 512

    Administrative practice and procedure, Health care, Health 
facilities, Health insurance, Medicare, Penalties, Reporting and 
recordkeeping requirements.

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

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), 1395m, 1395x(v), 1395x(kkk), 1395hh, 1395rr, 1395tt, 
and 1395ww.

0
2. Section 413.178 is amended by revising paragraphs (a)(8) and (c) to 
read as follows:


Sec.  413.178  ESRD quality incentive program.

    (a) * * *
    (8) Minimum total performance score (mTPS) means, with respect to a

[[Page 42541]]

payment year except payment year 2023, the total performance score that 
an ESRD facility would receive if it performed at the 50th percentile 
of national ESRD facility performance on all clinical measures during 
the baseline period, and it performed at the median of national ESRD 
facility performance on all reporting measures using data from the most 
recently available year before the performance period.
* * * * *
    (c) ESRD QIP measure selection, retention, and removal--(1) ESRD 
QIP measure selection. CMS specifies measures for the ESRD QIP for a 
payment year and groups the measures into domains. The measures for a 
payment year include:
    (i) Measures on anemia management that reflect the labeling 
approved by the Food and Drug Administration for such management;
    (ii) Measures on dialysis adequacy;
    (iii) To the extent feasible, a measure (or measures) of patient 
satisfaction;
    (iv) To the extent feasible, measures on iron management, bone 
mineral metabolism, and vascular access (including for maximizing the 
placement of arterial venous fistula);
    (v) Beginning with the 2016 payment year, measures specific to the 
conditions treated with oral-only drugs and that are, to the extent 
feasible, outcomes-based; and
    (vi) Other measures that CMS specifies.
    (2) Use of endorsed measures--(i) General rule. Measures specified 
by CMS under paragraph (c)(1) of this section will be endorsed by the 
entity with a contract under section 1890(a) of the Social Security 
Act, unless the exception in paragraph (c)(2)(ii) of this section 
applies.
    (ii) Exception. CMS may specify a measure under paragraph (c)(1) of 
this section that does not meet the requirement in paragraph (c)(2)(i) 
of this section if:
    (A) CMS has determined that a specified area or medical topic is 
appropriate for inclusion in the ESRD QIP;
    (B) CMS has not identified a feasible and practical measure with 
respect to that specified area or medical topic that has been endorsed 
by the entity with a contract under section 1890(a) of the Social 
Security Act; and
    (C) CMS has given due consideration to measures that have been 
endorsed or adopted by a consensus organization.
    (3) Updating of measure specifications. CMS uses rulemaking to make 
substantive updates to the specifications of measures used in the ESRD 
QIP. CMS announces technical measure specification updates through the 
QualityNet website (https://qualitynet.cms.gov) and listserv 
announcements.
    (4) Measure retention. All measures specified for the ESRD QIP 
measure set remain in the measure set unless CMS, through rulemaking, 
removes or replaces them.
    (5) Measure removal factors--(i) General rule. CMS may remove or 
replace a measure based on one or more of the following factors:
    (A) Factor 1. Measure performance among the majority of ESRD 
facilities is so high and unvarying that meaningful distinctions in 
improvements or performance can no longer be made.
    (B) Factor 2. Performance or improvement on a measure does not 
result in better or the intended patient outcomes.
    (C) Factor 3. A measure no longer aligns with current clinical 
guidelines or practice.
    (D) Factor 4. A more broadly applicable (across settings, 
populations, or conditions) measure for the topic or a measure that is 
more proximal in time to desired patient outcomes for the particular 
topic becomes available.
    (E) Factor 5. A measure that is more strongly associated with 
desired patient outcomes for the particular topic becomes available.
    (F) Factor 6. Collection or public reporting of a measure leads to 
negative or unintended consequences.
    (G) Factor 7. It is not feasible to implement the measure 
specifications.
    (H) Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.
    (ii) Exception. CMS may retain a measure that meets one or more of 
the measure removal factors described in paragraph (c)(5)(i) of this 
section for reasons including, but not limited to, that the measure 
addresses a gap in quality that is so significant that removing the 
measure would lower the quality of care furnished by facilities, or 
that the measure is statutorily required.
    (iii) Patient safety exception. Upon a determination by CMS that 
the continued requirement for facilities to submit data on a measure 
raises specific patient safety concerns, CMS may elect to immediately 
remove the measure from the ESRD QIP measure set. CMS will, upon 
removal of the measure--
    (A) Provide notice to facilities and the public at the time CMS 
removes the measure, along with a statement of the specific patient 
safety concerns that would be raised if facilities continued to submit 
data on the measure; and
    (B) Provide notice of the removal in the Federal Register.
* * * * *
0
3. Section 413.198 is amended by revising paragraphs (a) and 
(b)(3)(iii) and adding paragraphs (b)(5) and (6) to read as follows:


Sec.  413.198  Recordkeeping and cost reporting requirements for 
outpatient maintenance dialysis.

    (a) Purpose and scope. This section implements sections 
1881(b)(2)(B)(i) and 1881(b)(14) of the Act by specifying recordkeeping 
and cost reporting requirements for ESRD facilities under part 494 of 
this chapter. The records and reports will enable CMS to determine the 
costs incurred in furnishing outpatient maintenance dialysis as defined 
in Sec.  413.170(a).
    (b) * * *
    (3) * * *
    (iii) Flow from the provision of luxury items or services (items or 
services substantially in excess of or more expensive than those 
generally considered necessary for the provision of needed health 
services); or
* * * * *
    (5) Each ESRD facility must submit data and information of the 
types and in the formats established by CMS for the purpose of 
estimating patient-level and facility-level variation in resource use 
involved in furnishing renal dialysis services. The data and 
information must include, but is not limited to:
    (i) Beginning January 1, 2025, information reported on ESRD 
prospective payment system (PPS) claims for renal dialysis services 
regarding the number of minutes of hemodialysis treatment received by a 
beneficiary in center in an ESRD facility;
    (ii) Information reported on ESRD PPS claims about the total number 
of billing units of any discarded amount of a renal dialysis drug or 
biological product from a single-dose container or single-use package 
that is paid for under the ESRD PPS, using the JW modifier (or any 
successor modifier that includes the same data); and
    (iii) Information reported on ESRD PPS claims about any renal 
dialysis drug or biological product from a single-dose container or 
single-use package that is paid for under the ESRD PPS for which there 
is no discarded amount, using the JZ modifier (or any successor 
modifier that includes the same data).
    (6) Each ESRD facility must document in the beneficiary's medical 
record any discarded amounts of a renal dialysis drug or biological 
product from a single-dose container or single-use package that is paid 
for under the ESRD PPS.

[[Page 42542]]

0
4. Section 413.230 is amended by revising paragraphs (d) and (e) and 
adding paragraph (f) to read as follows:


Sec.  413.230  Determining the per treatment payment amount.

* * * * *
    (d) Any transitional drug add-on payment adjustment under Sec.  
413.234(c);
    (e) Any transitional add-on payment adjustment for new and 
innovative equipment and supplies under Sec.  413.236(d); and
    (f) Any add-on payment adjustment for new renal dialysis drugs or 
biological products in existing ESRD PPS functional categories after 
the payment period for the transitional drug add-on payment adjustment 
has ended, as described in Sec.  413.234(c)(3) and (g).
0
5. Section 413.232 is amended by revising paragraphs (b)(1) and (2) and 
(g) introductory text and adding paragraphs (g)(5) and (6) to read as 
follows:


Sec.  413.232  Low-volume adjustment.

* * * * *
    (b) * * *
    (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 
paragraphs (g)(4) and (5) of this section) preceding the payment year; 
and
    (2) Has not opened, closed, or received a new provider number due 
to a change in ownership (except where the change in ownership results 
in a change in facility type) 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, except as specified in 
paragraph (g)(6) of this section.
* * * * *
    (g) To receive the low-volume adjustment, an ESRD facility must 
include in its 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 paragraphs (g)(4) and (5) of this 
section, for the 3 cost reporting years preceding the payment year to 
verify the number of treatments, except that:
* * * * *
    (5) For payment year 2024 and subsequent payment years, an ESRD 
facility may attest in the attestation specified in paragraph (e) of 
this section that it would have met the requirements of paragraph 
(b)(1) of this section, except that for one or more of the most recent 
3 cost reporting years the facility furnished 4,000 or more treatments 
because of temporary patient-shifting as a result of the closure or 
operational disruption of another ESRD facility due to a disaster or 
other emergency. For the purposes of the exception in this paragraph 
(g)(5), temporary patient-shifting is defined as providing renal 
dialysis services to one or more displaced patient(s) at any time 
through the end of the calendar year following the 12-month period 
beginning when an ESRD facility first begins providing renal dialysis 
services to one or more displaced patients. 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 cost reporting year due to 
temporary patient-shifting as a result of the closure or operational 
disruption of an ESRD facility resulting from a disaster or other 
emergency;
    (ii) The facility must request an exception under this paragraph 
(g)(5) from CMS, in the form and manner specified by CMS, no later than 
the attestation deadline specified in paragraph (e) of this section for 
each cost reporting year that the facility furnishes treatments equal 
to or in excess of 4,000 due to temporary patient-shifting as a result 
of the closure or operational disruption of an ESRD facility resulting 
from a disaster or other emergency;
    (iii) Within 30 days of CMS's receipt of the facility's request, 
CMS will review the request and either approve the request based on a 
determination that the ESRD facility furnished treatments equal to or 
in excess of 4,000 in the cost reporting year due to temporary patient-
shifting as a result of the closure or operational disruption of an 
ESRD facility resulting from a disaster or other emergency, or deny the 
request, and will notify the facility and the MAC of its decision;
    (iv) If CMS approves the request, the ESRD facility is paid the 
low-volume adjustment on claims for Medicare beneficiaries for up to 
the first 4,000 dialysis treatments, on the basis of the exception in 
this paragraph (g)(5), during the payment year in which the temporary 
patient-shifting occurred, so long as all other requirements for the 
low-volume adjustment are met. For any future payment year, the ESRD 
facility would not be prevented from receiving the low-volume 
adjustment if the ESRD facility meets or exceeds the 4,000 treatment 
threshold in a cost reporting year due to temporary patient-shifting as 
a result of the disaster or other emergency that resulted in another 
ESRD facility's closure or operational disruption, so long as all other 
requirements for the low-volume adjustment are met; and
    (v) The facility must maintain documentation of the number of 
displaced patients treated and information about the ESRD facility or 
facilities that closed or experienced operational disruptions due to a 
disaster or other emergency and previously treated those patients, and 
must provide such supporting documentation to CMS and the MAC upon 
request.
    (6) In the case of an ESRD facility that closes due to a disaster 
or other emergency and later reopens, the ESRD facility may attest in 
the attestation specified in paragraph (e) of this section that CMS has 
granted an exception to the requirements specified in paragraph (b)(2) 
of this section because it closed due to a disaster or other emergency. 
For any facility that so attests--
    (i) The ESRD facility would need to request such an exception from 
CMS, in the form and manner specified by CMS, within 60 days of the 
facility's closure, and the ESRD facility must inform the MAC of this 
request in writing;
    (ii) With 30 days of CMS's receipt of the facility's request, CMS 
will review the request and either approve the request based on a 
determination that the ESRD facility closed due to a disaster or other 
emergency, or deny the request, and will inform both the facility and 
the MAC of its decision; and
    (iii) If CMS approves the request, the exception under this 
paragraph (g)(6) will be applicable for a period consisting of the 
remainder of the cost reporting year (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) in which the 
closure occurred and the following full 2 cost reporting years. After 
this period the ESRD facility would follow the general attestation 
process for the low-volume adjustment specified in paragraphs (e) and 
(g) of this section.
    (iv) The ESRD facility that attests under this paragraph (g)(6) to 
have closed due to a disaster or other emergency would need to notify 
CMS and the MAC, in the form and manner specified by CMS, within 30 
days reopening and providing renal dialysis services. Within 30 days of 
CMS's receipt of the facility's notification, CMS will confirm receipt 
to the facility and the MAC of the facility's notification and the ESRD 
facility will be able to receive the low-volume adjustment as of the 
date of reopening, so long as all

[[Page 42543]]

other requirements for the low-volume adjustment are met.
    (v) The ESRD facility must maintain documentation regarding its 
closure, and must provide such supporting documentation to CMS and/or 
the MAC upon request.
* * * * *
0
6. Section 413.234 is amended by--
0
a. Adding paragraph (b)(1)(iii);
0
b. Revising paragraph (c)(1)(i); and
0
c. Adding paragraphs (c)(1)(ii), (c)(3), and (g).
    The additions and revision read as follows:


Sec.  413.234  Drug designation process.

* * * * *
    (b) * * *
    (1) * * *
    (iii) The new renal dialysis drug or biological product is paid for 
using the add-on payment adjustment described in paragraphs (c)(3) and 
(g) of this section, referred to as the post- transitional drug add-on 
payment adjustment (TDAPA) add-on payment adjustment.
* * * * *
    (c) * * *
    (1) * * *
    (i) Following payment of the transitional drug add-on payment 
adjustment, the new renal dialysis drug or biological product is paid 
the post-TDAPA add-on payment adjustment as set forth in paragraphs 
(c)(3) and (g) of this section.
    (ii) Following payment of the transitional drug add-on payment 
adjustment the ESRD PPS base rate will not be modified.
* * * * *
    (3) For any new renal dialysis drug or biological product that is 
eligible for payment using the transitional drug add-on payment 
adjustment described in paragraphs (b)(1)(iii) and (c)(1) of this 
section, CMS applies a post-TDAPA add-on payment adjustment to all ESRD 
PPS claims that is calculated using the methodology set forth in 
paragraph (g) of this section. CMS will apply the post-TDAPA add-on 
payment adjustment beginning 8 calendar quarters after the first 
calendar quarter in which the transitional drug add-on payment 
adjustment is paid for the applicable product, and ending 12 calendar 
quarters after the end of the last calendar quarter in which the 
transitional drug add-on payment adjustment is paid for the applicable 
product. If CMS stops receiving the latest full calendar quarter of ASP 
data for the applicable renal dialysis drug or biological product 
during the applicable time period specified in paragraph (c)(1) of this 
section or during the 3-year period following such applicable time 
period, CMS will not pay any post-TDAPA add-on payment adjustment for 
such product in any future year.
* * * * *
    (g) Post-TDAPA add-on payment adjustment methodology. CMS uses the 
following methodology to calculate the post-TDAPA add-on payment 
adjustment described in paragraph (c)(3) of this section:
    (1) CMS bases the calculation on the most recent 12-month period of 
utilization for the new renal dialysis drug or biological product and 
the most recent available full calendar quarter of ASP data. If the 
most recent full calendar quarter of ASP data reflects zero or negative 
sales, then the calculation is based on 100 percent of WAC and, when 
WAC is not available, the payment is based on the drug manufacturer's 
invoice.
    (2) CMS calculates the post-TDAPA add-on payment adjustment 
annually as the expenditure for the new renal dialysis drug or 
biological product divided by the total number of ESRD PPS treatments 
during the same period.
    (3) CMS applies a reduction factor to the post-TDAPA add-on payment 
adjustment for case mix standardization to reflect estimated increases 
resulting from the application of the patient-level adjustments as 
described in paragraph (g)(5) of this section. This reduction factor is 
calculated based on the patient-level adjustments (as described in 
Sec.  413.235) applicable to the most recent 12-month period of 
utilization of ESRD PPS claims.
    (4) The amount of the post-TDAPA add-on payment adjustment is equal 
to 65 percent of the amount calculated in paragraph (g)(2) of this 
section, multiplied by the reduction factor specified in paragraph 
(g)(3) of this section, and multiplied by the market basket increase 
factor under Sec.  413.220(a)(5).
    (5) The post-TDAPA add-on payment adjustment that is applied to an 
ESRD PPS claim is adjusted by any applicable patient-level case-mix 
adjustments under Sec.  413.235.
0
7. Section 413.235 is amended by revising paragraph (b) to read as 
follows:


Sec.  413.235  Patient-level adjustments.

* * * * *
    (b) CMS adjusts the per treatment base rate for Pediatric ESRD 
Patients in accordance with section 1881(b)(14) (D)(iv)(I) of the Act 
as follows:
    (1) To account for patient age and treatment modality; and
    (2) Beginning January 1, 2024, to provide a per-treatment 
transitional add-on payment adjustment of 30 percent of the per 
treatment payment amount under Sec.  413.230 for renal dialysis 
services furnished to Pediatric ESRD Patients during calendar years 
2024, 2025, and 2026.
* * * * *
0
8. Section 413.236 is amended by revising paragraph (b)(2) to read as 
follows:


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

* * * * *
    (b) * * *
    (2) Is new, meaning a complete application has been submitted to 
CMS under paragraph (c) of this section within 3 years of the date of 
the Food and Drug Administration (FDA) marketing authorization;
* * * * *

PART 512--RADIATION ONCOLOGY MODEL AND END STAGE RENAL DISEASE 
TREATMENT CHOICES MODEL

0
9. The authority citation for part 512 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1315a, and 1395hh.

0
10. Section 512.390 is amended by removing paragraph (c)(5) and adding 
paragraph (d) to read as follows:


Sec.  512.390  Notification, data sharing, and targeted review.

* * * * *
    (d) Review of targeted review decisions. The Administrator may 
review a targeted review request when administrative review is 
requested by an ETC Participant within 15-calendar days of a targeted 
review request determination made by CMS.
    (1) Administrative review. Within 45 days of the date of the ETC 
Participant's request for administrative review, the CMS Administrator 
may act as follows:
    (i) Decline to review a targeted review request determination made 
by CMS;
    (ii) Render a final decision based on the CMS Administrator's 
review of the targeted review request determination; or
    (iii) Choose to take no action on the request for administrative 
review.

[[Page 42544]]

    (2) Administrative review determinations. The targeted review 
determination made by the CMS Administrator is final if the CMS 
Administrator declines an ETC Participant's request for administrative 
review or if the CMS Administrator does not take any action on the ETC 
Participant's request for administrative review by the end of the 45-
day period described in paragraph (d)(1) of this section.

    Dated: June 23, 2023.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-13748 Filed 6-26-23; 4:15 pm]
 BILLING CODE 4120-01-P