[Federal Register Volume 89, Number 218 (Tuesday, November 12, 2024)]
[Rules and Regulations]
[Pages 89084-89213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25486]
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Vol. 89
Tuesday,
No. 218
November 12, 2024
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 410, 413, 494, et al.
Medicare Program; End-Stage Renal Disease Prospective Payment System,
Payment for Renal Dialysis Services Furnished to Individuals With Acute
Kidney Injury, Conditions for Coverage for End-Stage Renal Disease
Facilities, End-Stage Renal Disease Quality Incentive Program, and End-
Stage Renal Disease Treatment Choices Model; Final Rule
Federal Register / Vol. 89 , No. 218 / Tuesday, November 12, 2024 /
Rules and Regulations
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 413, 494, and 512
[CMS-1805-F]
RIN 0938-AV27
Medicare Program; End-Stage Renal Disease Prospective Payment
System, Payment for Renal Dialysis Services Furnished to Individuals
With Acute Kidney Injury, Conditions for Coverage for End-Stage Renal
Disease Facilities, 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: Final rule.
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SUMMARY: This final rule updates and revises the End-Stage Renal
Disease (ESRD) Prospective Payment System for calendar year 2025. This
rule also updates the payment rate for renal dialysis services
furnished by an ESRD facility to individuals with acute kidney injury.
In addition, this rule updates requirements for the Conditions for
Coverage for ESRD Facilities, ESRD Quality Incentive Program, and ESRD
Treatment Choices Model.
DATES: These regulations are effective on January 1, 2025.
FOR FURTHER INFORMATION CONTACT:
[email protected] or Nicolas Brock at (410) 786-5148 for
issues related to the ESRD Prospective Payment System (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).
[email protected], for issues related to the ESRD Quality
Incentive Program (QIP).
[email protected], for issues related to the ESRD Treatment
Choices (ETC) Model.
SUPPLEMENTARY INFORMATION:
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.
Current Procedural Terminology (CPT) Copyright Notice: Throughout
this final 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) 2025 End-Stage Renal Disease (ESRD)
Prospective Payment System (PPS)
A. Background
B. Provisions of the Proposed Rule, Public Comments, and
Responses to the Comments on the CY 2025 ESRD PPS
C. Transitional Add-On Payment Adjustment for New and Innovative
Equipment and Supplies (TPNIES) Applications and Technical Changes
for CY 2025
D. Continuation of Approved Transitional Add-On Payment
Adjustments for New and Innovative Equipment and Supplies for CY
2025
E. Continuation of Approved Transitional Drug Add-On Payment
Adjustments for CY 2025
III. Final CY 2025 Payment for Renal Dialysis Services Furnished to
Individuals With AKI
A. Background
B. Public Comments and Responses on the Proposal To Allow
Medicare Payment for Home Dialysis for Beneficiaries With AKI
C. Annual Payment Rate Update for CY 2025
D. AKI and the ESRD Facility Conditions for Coverage
IV. Updates to the End-Stage Renal Disease Quality Incentive Program
(ESRD QIP)
A. Background
B. Updates to Requirements Beginning With the PY 2027 ESRD QIP
C. Requests for Information (RFIs) on Topics Relevant to ESRD
QIP
V. End-Stage Renal Disease Treatment Choices (ETC) Model
A. Background
B. Provisions of the Proposed Rule
C. Request for Information
VI. Collection of Information Requirements
VII. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact Analysis
C. Detailed Economic Analysis
D. Accounting Statement
E. Regulatory Flexibility Act (RFA)
F. Unfunded Mandates Reform Act (UMRA)
G. Federalism
H. Congressional Review Act
VIII. Files Available to the Public via the Internet
I. Executive Summary
A. Purpose
This rule finalizes changes related to the End-Stage Renal Disease
(ESRD) Prospective Payment System (PPS), payment for renal dialysis
services furnished to individuals with acute kidney injury (AKI), the
Conditions for Coverage for ESRD facilities, the ESRD Quality Incentive
Program (QIP), and the ESRD Treatment Choices (ETC) Model.
Additionally, this rule finalizes and discusses 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 policies perpetuate or exacerbate systemic barriers to
opportunities and benefits for underserved communities. For example, we
are finalizing the proposal to allow Medicare payment for home dialysis
for beneficiaries with acute kidney injury, which would assist this
vulnerable population with transportation and scheduling issues and
allow them to have flexibility in their dialysis treatment modality.
Additionally, we discuss the incorporation of oral-only drugs into the
ESRD PPS bundled payment beginning January 1, 2025, which will expand
access to these drugs to the 21 percent of the ESRD PPS population who
do not have Part D coverage. Our internal data show that a significant
portion of ESRD beneficiaries who lack Part D coverage are African
American/Black patients with ESRD. Our policy objectives include a
commitment to advancing health equity, which stands as the first pillar
of the Centers for Medicare & Medicaid Services (CMS) Strategic
Plan,\1\ and reflect the goals of the Administration, as stated in the
President's 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
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health outcomes.'' \3\ In the calendar year (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, African American/Black, 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 final rule, we continue to address
health equity for beneficiaries with ESRD who are members of
underserved communities, including but not limited to those living in
rural communities, those who have disabilities, racial and ethnic
minorities, and American Indians and Alaska Natives. 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\
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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 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 rule finalizes updates to the
ESRD PPS for CY 2025.
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 final rule updates the AKI payment
rate for CY 2025. Additionally, this rule extends payment for home
dialysis and the payment adjustment for home and self-dialysis training
to renal dialysis services provided to beneficiaries with AKI.
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 rule finalizes our proposals to replace the Kt/V Dialysis Adequacy
Comprehensive clinical measure with a Kt/V Dialysis Adequacy measure
topic and to remove National Healthcare Safety Network (NHSN) Dialysis
Event reporting measure beginning with Payment Year (PY) 2027. This
rule also discusses feedback received in response to our requests for
public comment on two topics relevant to the ESRD QIP.
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). The ETC Model
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.'' Subsequently, the ETC Model has
been updated three times in the annual ESRD PPS final rules for
calendar year (CY) 2022 (86 FR 61874), CY 2023 (87 FR 67136), and CY
2024 (88 FR 76344).
This final rule makes certain changes to the methodology CMS uses
to identify transplant failure for the purposes of defining an ESRD
beneficiary and attributing an ESRD beneficiary to the ETC Model. We
also solicited input from the public through a Request for Information
(RFI) on topics pertaining to increasing equitable access to home
dialysis and kidney transplantation. Feedback we receive from the
public will be used to inform CMS' thinking regarding opportunities and
barriers the Innovation Center may address in potential successor
models to the ETC Model.
B. Summary of the Major Provisions
1. ESRD PPS
Update to the ESRD PPS base rate for CY 2025: The final CY
2025 ESRD PPS base rate is $273.82, an increase from the CY 2024 ESRD
PPS base rate of $271.02. This amount reflects the application of the
wage index budget-neutrality adjustment factor (0.988600), and a
productivity-adjusted market basket percentage increase of 2.2 percent
as required by section 1881(b)(14)(F)(i)(I) of the Act, equaling
$273.82 (($271.02 x 0.988600) x 1.022 = $273.82).
Modification to the wage index methodology: We are
finalizing a new ESRD-specific wage index that will be used to adjust
ESRD PPS payment for geographic differences in area wages on an annual
basis. Beginning for CY 2025, we will change our methodology to use
mean hourly wage data from the Bureau of Labor Statistics (BLS)
Occupational Employment and Wage Statistics (OEWS) program and full
time equivalent (FTE) labor and treatment volume data from freestanding
ESRD facility Medicare cost reports to produce an ESRD-specific wage
index for use, instead of using the hospital wage index values for each
geographic area, which are derived from hospital cost report data.
Additionally, we are finalizing updates to the wage index to reflect
the latest core-based statistical area (CBSA) delineations determined
by the Office of Management and Budget (OMB) to better account for
differing wage levels in areas in which ESRD facilities are located.
Annual update to the wage index: For CY 2025, we are
finalizing updates to the wage index using the new methodology based on
the latest available data. This is consistent with
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our past approach to updating the ESRD PPS wage index on an annual
basis but uses the new wage index methodology based on data from BLS
and freestanding ESRD facility Medicare cost reports.
Modifications to the outlier policy: We are finalizing
several proposed revisions to the outlier policy. For the outlier
payment methodology, we are finalizing the use of a drug inflation
factor based on actual spending on drugs and biological products rather
than the growth in the price proxy for drugs used in the ESRD Bundled
(ESRDB) market basket. We are also finalizing the use of the growth in
the ESRDB market basket price proxies for laboratory tests and supplies
to estimate CY 2025 outlier spending for these items. Additionally, we
are finalizing our proposal to account for the post-TDAPA add-on
payment adjustment amount for outlier-eligible drugs and biological
products during the post-TDAPA period. Lastly, we are finalizing the
expansion of the list of eligible ESRD outlier services to include
drugs and biological products that were or would have been included in
the composite rate prior to establishment of the ESRD PPS.
Annual update to the outlier policy: We are updating the
outlier policy based on the most current data and the final methodology
changes previously discussed. Accordingly, we are updating the Medicare
allowable payment (MAP) amounts for adult and pediatric patients for CY
2025 using the latest available CY 2023 claims data. We are updating
the ESRD outlier services fixed dollar loss (FDL) amount for pediatric
patients using the latest available CY 2023 claims data and updating
the FDL amount for adult patients using the latest available claims
data from CY 2021, CY 2022, and CY 2023. For pediatric beneficiaries,
the final FDL amount will increase from $11.32 to $234.26, and the MAP
amount will increase from $23.36 to $59.60, as compared to CY 2024
values. For adult beneficiaries, the final FDL amount will decrease
from $71.76 to $45.41, and the MAP amount will decrease from $36.28 to
$31.02. We note that the inclusion of composite rate drugs and
biological products will cause a significant increase in the final FDL
and MAP amounts for pediatric patients due to high-cost composite rate
drugs furnished to pediatric beneficiaries; this is discussed in
further detail in section II.B.3.e of this final rule. The 1.0 percent
target for outlier payments was achieved in CY 2023, as outlier
payments represented approximately 1.0 percent of total Medicare
payments.
Update to the offset amount for the transitional add-on
payment adjustment for new and innovative equipment and supplies
(TPNIES) for CY 2025: The final CY 2025 average per treatment offset
amount for the TPNIES for capital-related assets that are home dialysis
machines is $10.22. This final offset amount reflects the application
of the final productivity-adjusted ESRDB market basket update of 2.2
percent ($10.00 x 1.022 = $10.22). There are no capital-related assets
set to receive the TPNIES in CY 2025 for which this offset would apply.
Update to the Post-TDAPA Add-on Payment Adjustment
amounts: We calculate the post-TDAPA add-on payment adjustment in
accordance with Sec. 413.234(g). The final post-TDAPA add-on payment
adjustment amount for Korsuva[supreg] is $0.4601 per treatment, which
will be included in the calculation of the total post-TDAPA add-on
payment adjustment for each quarter in CY 2025. The estimated post-
TDAPA add-on payment adjustment amount for Jesduvroq is $0.0096 per
treatment, which will be included in the calculation for only the
fourth quarter of CY 2025. We are finalizing our proposal to publish
the final post-TDAPA add-on payment adjustment amount for drugs and
biological products that do not have a full year of utilization data at
the time of rulemaking after the publication of the final rule through
a Change Request (CR). For CY 2025, this will be the case for
Jesduvroq.
Update to the Low-Volume Payment Adjustment (LVPA): We are
finalizing our proposal to modify the LVPA policy to create a two-
tiered LVPA whereby ESRD facilities that furnished fewer than 3,000
treatments per cost reporting year will receive a 28.9 percent upward
adjustment to the ESRD PPS base rate and ESRD facilities that furnished
3,000 to 3,999 treatments will receive an 18.3 percent adjustment. We
are also finalizing that the tier determination would be based on the
median treatment count over the past 3 cost reporting years.
Inclusion of oral-only drugs in the ESRD PPS bundled
payment: Under 42 CFR 413.174(f)(6), payment to an ESRD facility for
oral-only renal dialysis service drugs and biological products is
included in the ESRD PPS bundled payment effective January 1, 2025. In
this final rule, we are providing information about how we will
operationalize the inclusion of oral-only drugs into the ESRD PPS as
well as budgetary estimates of the effects of this inclusion for public
awareness. After reviewing public comments, we are finalizing a $36.41
increase to the monthly TDAPA amount for claims which utilize phosphate
binders to account for operational costs related to ESRD facilities
providing phosphate binders that were not addressed when the ESRD PPS
base rate was developed for CY 2011.
2. Payment for Renal Dialysis Services Furnished to Individuals With
AKI
Update to the payment rate for individuals with AKI: We
are finalizing an update the AKI payment rate for CY 2025. The final CY
2025 payment rate is $273.82, which reflects the final CY 2025 ESRD PPS
base rate of $273.82 reduced by the home and self-dialysis training
add-on payment budget-neutrality adjustment of $0.00 (as detailed in
section III.C.3 of this final rule).
Payment for home dialysis for beneficiaries with AKI: We
are finalizing our proposal to allow Medicare payment for beneficiaries
with AKI to dialyze at home. Payment for home dialysis treatments
furnished to beneficiaries with AKI will be made at the same payment
rate as in-center dialysis treatments. We are finalizing our proposal
to permit ESRD facilities to bill Medicare for the home and self-
dialysis training add-on payment adjustment for beneficiaries with AKI,
and to implement this adjustment in a budget neutral manner with a
$0.00 reduction to the AKI base rate. We are finalizing modifications
to the ESRD facility conditions for coverage (CfCs) to implement this
policy change.
3. ESRD QIP
Beginning with PY 2027, we are finalizing our proposal to replace
the Kt/V Dialysis Adequacy Comprehensive clinical measure, on which
facility performance is scored on a single measure based on one set of
performance standards, with a Kt/V Dialysis Adequacy measure topic,
which would be comprised of four individual Kt/V measures and scored
based on a separate set of performance standards for each of those
measures. We are also finalizing our proposal to remove the National
Healthcare Safety Network (NHSN) Dialysis Event reporting measure from
the ESRD QIP measure set beginning with PY 2027. We are discussing
feedback received in response to our request for public comment on a
potential health equity payment adjustment and our request for public
comment on potential future updates to the data validation policy.
4. ETC Model
Beginning for CY 2025, we are finalizing the proposed modification
to
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the methodology used to attribute ESRD Beneficiaries to the ETC Model,
specifically, to the definition of an ESRD Beneficiary at 42 CFR
512.310. Under the ETC Model, CMS attributes ESRD beneficiaries to the
ETC Model that meet several criteria including having a kidney
transplant failure less than 12 months after the transplant date. We
are refining the methodology we use to identify ESRD Beneficiaries with
a kidney transplant failure to reduce the likelihood that CMS is
overestimating the true number of transplant failures for the purposes
of the model. We provide more detail on the finalized modification and
its rationale in section V.B of this final rule.
We also sought input from the public through a RFI on the future of
the ETC Model, potential successor Models and other approaches CMS may
consider to support beneficiary access to patient-centered modalities
for treatment of ESRD.
C. Summary of Costs and Benefits
In section VII.C.5 of this final rule, we set forth a detailed
analysis of the impacts that the final changes would have on affected
entities and beneficiaries. The impacts include the following:
1. Impacts of the Final ESRD PPS
The impact table in section VII.C.5.a of this final rule displays
the estimated change in Medicare payments to ESRD facilities in CY 2025
compared to estimated Medicare payments in CY 2024. The overall impact
of the CY 2025 payment changes is projected to be a 2.7 percent
increase in Medicare payments. Hospital-based ESRD facilities will have
an estimated 4.5 percent increase in Medicare payments compared with
freestanding ESRD facilities with an estimated 2.6 percent increase. We
estimate that the aggregate ESRD PPS expenditures will increase by
approximately $220 million in CY 2025 compared to CY 2024 as a result
of the proposed payment policies in this rule. Because of the projected
2.7 percent overall payment increase, we estimate there will be an
increase in beneficiary coinsurance payments of 2.7 percent in CY 2025,
which translates to approximately $40 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 final rule, since no new items
were approved for the TPNIES for CY 2024 (88 FR 76431) there are no
continuing TPNIES payments for CY 2025. In addition, since we did not
receive any applications for the TPNIES for CY 2025, there will be no
new TPNIES payments for CY 2025. As discussed in section II.E of this
final rule, the TDAPA payment periods for Jesduvroq and
DefenCath[supreg], will continue into CY 2025. As described in section
VII.C.5.b of this final rule, we estimate that the combined total TDAPA
payment amounts for Jesduvroq and DefenCath[supreg] in CY 2025 will be
approximately $25,633,599, of which, $5,126,719 will be attributed to
beneficiary coinsurance amounts.
2. Impacts of the Final Payment Rate for Renal Dialysis Services
Furnished to Individuals With AKI
The impact table in section VII.C.5.c of this final rule displays
the estimated change in Medicare payments to ESRD facilities for renal
dialysis services furnished to individuals with AKI compared to
estimated Medicare payments for such services in CY 2024. The overall
impact of the CY 2025 changes is projected to be a 2.3 percent increase
in Medicare payments for individuals with AKI. Hospital-based ESRD
facilities will have an estimated 3.4 percent increase in Medicare
payments compared with freestanding ESRD facilities that will have an
estimated 2.3 percent increase. The overall impact reflects the effects
of the final Medicare payment rate update and the final CY 2025 ESRD
PPS wage index, as well as the policy to extend payment for AKI
dialysis at home, which is not expected to have any impact on payment
rates. As discussed in section III.C.3, we are finalizing our proposal
to extend the ESRD PPS home and self-dialysis training add-on payment
adjustment to AKI patients; however, that adjustment is required to be
implemented in a budget neutral manner for AKI payments, so it will not
have any impact on the overall payment amounts for AKI renal dialysis
services and therefore is not included in these estimates. We estimate
that the aggregate Medicare payments made to ESRD facilities for renal
dialysis services furnished to individuals with AKI, at the final CY
2025 ESRD PPS base rate, will increase by $1 million in CY 2025
compared to CY 2024.
3. Impacts of the PY 2027 ESRD QIP
We estimate that, as a result of previously finalized policies and
changes to the ESRD QIP that we are finalizing in this final rule, the
overall economic impact of the PY 2027 ESRD QIP will be approximately
$154 million. The $154 million estimate for PY 2027 includes $136.1
million in costs associated with the collection of information
requirements and approximately $17.9 million in payment reductions
across all facilities.
4. Impacts of the Proposed Changes to the ETC Model
The final change to the definition of an ESRD Beneficiary for the
purposes of attribution in the ETC Model is not expected to have a net
effect on the model's projected economic impact.
II. Calendar Year (CY) 2025 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) (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 (Affordable Care Act)
(Pub. L. 111-148), 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 \5\ (excluding oral-only ESRD-
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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).
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\5\ As discussed in the CY 2019 ESRD PPS final rule (83 FR
56922), we began using the term ``biological products'' instead of
``biologicals'' under the ESRD PPS to be consistent with FDA
nomenclature. We use the term ``biological products'' in this final
rule except where referencing specific language in the Act or
regulations.
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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 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 an individual 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)(1)).
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 six 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)); (4) a TPNIES for certain new and innovative renal
dialysis equipment and supplies (Sec. 413.236(d)); (5) a transitional
pediatric ESRD add-on payment adjustment (TPEAPA) of 30 percent of the
per-treatment payment amount for renal dialysis services furnished to
pediatric ESRD patients (Sec. 413.235(b)(2)); and (6) a post-TDAPA
add-on payment adjustment for certain new renal dialysis drugs and
biological products after the end of the TDAPA period (Sec.
413.234(g)).
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 appeared in
the August 12, 2010, issue of 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.
Most recently, we published a final rule, which appeared in the
November 6, 2023, 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 2024 ESRD PPS final rule.'' In that rule, we updated the ESRD
PPS base rate, wage index, and outlier policy for CY 2024. We also
finalized a post-TDAPA add-on payment adjustment; a TPEAPA for
pediatric ESRD patients for CYs 2024, 2025, and 2026; administrative
changes to the LVPA eligibility requirements to allow additional
flexibilities for ESRD facilities impacted by a disaster or other
emergency; clarifications on TPNIES eligibility requirements; and,
effective January 1, 2025, requirements for ESRD facilities to report
time on machine for in-center hemodialysis treatments, and to report
discarded amounts of renal dialysis drugs and biological products from
single-dose containers or single-use packages. For further detailed
information regarding these updates and policy changes, see 88 FR
76344.
B. Provisions of the Proposed Rule, Public Comments, and Response to
the Comments on the CY 2025 ESRD PPS
The proposed rule, titled ``Medicare Program; End-Stage Renal
Disease Prospective Payment System, Payment for Renal Dialysis Services
Furnished to Individuals with Acute Kidney Injury, End-Stage Renal
Disease Quality Incentive Program, and End-Stage Renal Disease
Treatment Choices Model'' (89 FR 55760-55843), referred to as the ``CY
2025 ESRD PPS proposed rule,'' appeared in the July 5, 2024 issue of
the Federal Register, with a comment period that ended on August 26,
2024. In that proposed rule, we proposed to make a number of updates
and policy
[[Page 89089]]
changes for CY 2025, including annual updates to the ESRD PPS base
rate, a new ESRD PPS wage index methodology, changes to the list of
eligible ESRD outlier services, several methodological changes to the
outlier policy, changes to the LVPA structure, updates to the post-
TDAPA add-on payment adjustment amounts, and updates to the offset
amount for the TPNIES.
We received 212 public comments on our proposals, including
comments from kidney and dialysis organizations, such as large and
small dialysis organizations, for-profit and non-profit ESRD
facilities, ESRD networks, and dialysis coalitions. We also received
comments from patients; healthcare providers for adult and pediatric
ESRD beneficiaries; home dialysis services and advocacy organizations;
provider and legal advocacy organizations; administrators and insurance
groups; a non-profit dialysis association; a professional association;
alliances for kidney care and home dialysis stakeholders; drug and
device manufacturers; health care systems; a health solutions company;
and the Medicare Payment Advisory Commission (MedPAC). Of these 212
public comments, approximately 70 were unique and approximately 130
were either duplicative submissions or were solely a form letter. We
received approximately 110 comments from unique submitters, which
reflected a form letter expressing support for a piece of ESRD-related
draft legislation which would delay the inclusion of oral-only drugs
into the ESRD PPS. We note that we do not comment on draft legislation
in this rule will not be directly responding to the support for this
draft legislation in this rule, but we are interpreting these letters
as expressing support for a delay to the inclusion of phosphate binders
into the ESRD PPS bundled payment and have responded to comments which
express this sentiment in section II.B.7 of this final rule.
Additionally, we note that many of the form letters we received appear
to be duplicative submissions based on many names and contact
information repeating, so we wish to encourage organizers of these and
future campaigns in the future to avoid such duplication as it creates
additional operational considerations when reviewing comments.
We received numerous comments on policies for which we did not make
any proposals, including mandatory charity care requirements in
dialysis clinics, care for undocumented patients, staff assistance for
home dialysis, addressing disparities in the kidney transplant process,
elevating and integrating patient and caregiver perspectives through a
needs navigation model, dialysis commercials for ESRD and AKI, the
continuation of TPEAPA, removing the budget neutrality requirement for
TPEAPA, both replacing and preventing the replacement of nephrology
nurses with other health professionals for prolonged care, including
physician assistants or physician associates within the minimum
requirement for a dialysis facility's interdisciplinary team,
addressing the need for emergency planning for dialysis services in the
event of power outages or extreme weather conditions, removing the
prospective payment system for home dialysis patients, increasing
Medicare Advantage (MA) program payments to beneficiaries in certain
geographic areas, restructuring the functional categories for renal
dialysis drugs and biological products, aligning CMMI voluntary model
benchmarks with the ESRD PPS and its respective add-on payment
adjustments, recognizing the mandatory network fee in cost-reports for
independent dialysis facilities, removing or mitigating outdated
barriers to the use of digital health technology solutions in the ESRD
PPS, changing how ESRD patients pay copays, eliminating copays for home
dialysis, adding codes for dialysis training onto the telehealth list,
and the general need for statutory and regulatory refinements to the
ESRD PPS bundled payment. While we are not providing detailed responses
to these comments in this final rule because they are out of scope of
the proposed rule, we thank the commenters for their input and will
potentially consider the recommendations for future rulemaking.
We received several comments related to the requirement at Sec.
413.198(b)(5)(i) to report ``time on machine'' data effective January
1, 2025. These comments generally requested that CMS amend or eliminate
the requirement. Some commenters reiterated their concern that this
requirement would be burdensome and potentially hazardous. Commenters
also requested that CMS identify a consensus definition for time on
machine, define time on machine based on ``clock time,'' exclude home
dialysis claims from reporting requirements, and designate a claims-
based code for an inability to report time on machine data. We did not
include any proposals in the CY 2025 ESRD PPS proposed rule to modify
the time on machine reporting requirement, and therefore we are not
addressing these comments in this rule. We refer commenters to the CY
2024 ESRD PPS final rule (88 FR 76344 through 76507), and the
additional guidance CMS posted on November 22, 2023.\6\ However, we
will consider these comments for potential future refinements to the
requirement for reporting of ``time on machine'' data.
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We received several comments not related to policies we proposed
regarding the TDAPA, TPNIES, TPNIES for capital-related assets that are
home dialysis machines, the post-TDAPA add-on payment adjustment, or
other potential areas where commenters thought similar policies could
be beneficial. Several commenters expressed concern that the ESRD PPS
does not sufficiently incentivize innovation in dialysis care or
reimburse for innovative technologies. Commenters' suggestions included
extending the TDAPA and TPNIES payment periods from 2 years to 3 years,
extending the duration of the post-TDAPA add-on payment adjustment to
make it permanent, refining base rate-setting exercises based on TDAPA
utilization and price data, and adjusting the base rate at the end of
the TPNIES payment period. Commenters also suggested revisions to
existing TPNIES policies such as expanding the TPNIES for capital
related assets beyond home dialysis machines to include in-center
dialysis machines or other equipment and supplies that are capital
related assets. Commenters suggested that CMS further clarify the
TPNIES substantial clinical improvement criteria, clarify whether
software can be eligible for the TPNIES, and urged CMS to incentivize
more manufacturers to apply for TPNIES. Several commenters suggested
that CMS create a pathway for new clinical laboratory tests related to
the treatment of ESRD either through an expansion of TPNIES or adoption
of a parallel Transitional Laboratory Add-on Payment Adjustment, which
the commenters called TLAPA. Commenters suggested changes to the ESRD
facility cost reports and billing procedures that would allow for line-
item reporting of TDAPA, post-TDAPA, and TPNIES related costs. We
received several comments stating that the MA and ESRD PPS regulatory
processes should be coordinated to ensure that beneficiaries with ESRD
that are enrolled in MA can access items approved for the TDAPA and the
TPNIES under the ESRD PPS. Finally, we received several comments on
Medicare coverage for certain Humanitarian Use Devices.
[[Page 89090]]
We are not providing detailed responses to these comments in this final
rule because they are not related to the policy proposals of the CY
2025 ESRD PPS proposed rule. We thank the commenters for their input
and will potentially consider the recommendations for future
rulemaking.
Lastly, a commenter suggested that CMS had not allowed for a 60-day
comment period for the proposed rule because the beginning of the
comment period was calculated from the date the proposed rule was made
available for public inspection on the Federal Register website rather
than the date that it appeared in a print issue of the Federal
Register. The commenter stated that the public comment deadline should
have been September 4, 2024. We disagree with the commenter's assertion
that we did not allow for the appropriate comment period for this rule.
Section 1871(b) of the Act requires that we provide for notice of the
proposed regulation in the Federal Register and a period of not less
than 60 days for public comment thereon. The proposed rule was
available for public inspection on federalregister.gov (the website for
the Office of Federal Register) on June 27, 2024. We believe that
beginning the comment period for the proposed rule on the date it
became available for public inspection at the Office of the Federal
Register fully complied with the statute and provided the required
notice to the public and a meaningful opportunity for interested
parties to provide input on the provisions of the proposed rule.
1. CY 2025 ESRD Bundled (ESRDB) Market Basket Percentage Increase;
Productivity Adjustment; and Labor-Related Share
a. 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 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 quantity or mix of goods and services (that
is, intensity) purchased over time are not measured.
b. CY 2025 ESRD Market Basket Update
We proposed 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 CY 2025 ESRDB market basket percentage increase based on
the best available data. Consistent with historical practice, we
proposed 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.b.(3)
of this final rule, we are calculating the final market basket update
for CY 2025 based on the final market basket percentage increase and
the final productivity adjustment, following our longstanding
methodology.
(1) CY 2025 Market Basket Percentage Increase
Based on IGI's first quarter 2024 forecast of the 2020-based ESRDB
market basket, the proposed CY 2025 market basket percentage increase
was 2.3 percent. We also proposed that if more recent data became
available after the publication of the proposed rule and before the
publication of this 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 2025 market basket percentage increase
in the final rule. Accordingly, based on IGI's third quarter 2024
forecast of the 2020-based ESRDB market basket, the final CY 2025 ESRDB
market basket percentage increase is 2.7 percent.
(2) 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
fiscal year (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 United States 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 would not
affect the data or methodology.\7\ 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 refer readers to https://www.bls.gov/productivity/ for the BLS
[[Page 89091]]
historical published TFP data. A complete description of IGI's TFP
projection methodology is available on CMS's website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. In
addition, in the CY 2022 ESRD PPS final rule (86 FR 61879), we noted
that effective for CY 2022 and future years, we would 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 would continue to use the same methodology for deriving
the adjustment and rely on the same underlying data.
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\7\ Total Factor Productivity in Major Industries--2020.
Available at: https://www.bls.gov/news.release/prod5.nr0.htm.
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Based on IGI's first quarter 2024 forecast, the proposed
productivity adjustment for CY 2025 (the 10-year moving average of TFP
for the period ending CY 2025) was 0.5 percentage point. Furthermore,
we proposed that if more recent data became available after the
publication of the proposed rule and before the publication of this
final rule (for example, a more recent estimate of the productivity
adjustment), we would use such data, if appropriate, to determine the
CY 2025 productivity adjustment in the final rule. Accordingly, based
on IGI's third quarter 2024 forecast, the CY 2025 final productivity
adjustment remains unchanged at 0.5 percentage point.
(3) CY 2025 Market Basket Update
In accordance with section 1881(b)(14)(F)(i) of the Act, we
proposed to base the CY 2025 market basket percentage increase on IGI's
first quarter 2024 forecast of the 2020-based ESRDB market basket. We
proposed to then reduce the market basket percentage increase by the
estimated productivity adjustment for CY 2025 based on IGI's first
quarter 2024 forecast. Therefore, the proposed CY 2025 ESRDB market
basket update was equal to 1.8 percent (2.3 percent market basket
percentage increase reduced by a 0.5 percentage point productivity
adjustment). Furthermore, as noted previously, we proposed that if more
recent data became available after the publication of the proposed rule
and before the publication of this final rule (for example, a more
recent estimate of the market basket percentage increase or
productivity adjustment), we would use such data, if appropriate, to
determine the CY 2025 market basket percentage increase and
productivity adjustment in the final rule. Accordingly, the final CY
2025 ESRDB market basket update is calculated using the final CY 2025
ESRDB market basket percentage increase, based on IGI's third quarter
2024 forecast of the 2020-based ESRDB market basket, and the final
productivity adjustment, based on IGI's third quarter 2024 forecast.
Therefore, the final CY 2025 ESRDB market basket update is equal to 2.2
percent (2.7 percent market basket percentage increase reduced by a 0.5
percentage point productivity adjustment).
(4) 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 2025
ESRD PPS payment update, we proposed, and are finalizing, 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).
(5) Public Comments on the ESRDB Market Basket Increase Factor,
Productivity Adjustment, Annual Update and Labor-Related Share
We invited public comment on our proposals related to the ESRDB
market basket update and labor-related share. Approximately 25 unique
commenters including large dialysis organizations (LDOs); small
dialysis organizations (SDOs), patient advocacy organizations;
nonprofit dialysis associations; two coalitions of dialysis
organizations; professional organizations; and MedPAC commented on the
proposed update. The following is a summary of the public comments
received on these proposals and our responses.
Comment: Commenters generally supported increasing the ESRD PPS
base rate and the utilization of the most recent data available (for
example, a more recent estimate of the market basket or productivity
adjustment) to determine the final CY 2025 ESRD PPS update. MedPAC
recommended that the ESRD PPS base rate increase for CY 2025 should be
updated by the amount determined under current law, and commented that
analysis reported in the March 2024 Report to the Congress: Medicare
Payment Policy concluded that this increase is warranted based on its
analysis of payment adequacy (which includes an assessment of
beneficiary access, supply and capacity of facilities, facilities'
access to capital, quality, and financial indicators for the sector).
Most other commenters, however, expressed concerns regarding the
proposed productivity-adjusted ESRDB market basket update, the proposed
ESRD PPS base rate and payment adequacy under the ESRD PPS.
Response: We appreciate commenters' support for an increase to the
ESRD PPS base rate and MedPAC's support of the proposed update amount.
We acknowledge that many commenters expressed numerous concerns related
to the proposed payment rates and payment adequacy within the ESRD PPS.
We agree with MedPAC that increasing the payment rate according to the
established ESRD PPS methodology is the most appropriate course of
action. We have summarized and addressed commenters' specific concerns
regarding the payment rate and payment adequacy below.
Comment: Numerous commenters expressed concerns regarding payment
rates within the ESRD PPS and the CY 2025 ESRDB market basket update.
The general opinion of commenters was that the current ESRD PPS payment
rate was not adequate. Many of these comments specifically indicated a
belief that the proposed CY 2025 ESRDB market basket update was not a
sufficient increase given inflation, specifically pointing to rising
costs including labor costs. Many of these concerns were presented in
concert with a request for a ``forecast error adjustment,'' which we
discuss later in this section of the preamble. Some commenters included
comparisons between the ESRD PPS payment rates or ESRDB market basket
increases, and other figures not directly related to the furnishing of
renal dialysis services such as other Medicare payment systems, overall
healthcare costs and overall inflation. Most of these comments
requested that CMS take some action to alleviate the perceived concern
regarding payment rates. Commenters often cited certain costs which
have contributed to the rising costs faced by ESRD facilities including
costs related to labor and wages, costs related to training nurses and
technicians, supply costs often resulting from limited competition for
supplies or limited purchasing power for supplies, supply costs
associated with receiving goods in geographically isolated areas, and
costs of home dialysis supplies and equipment. Some commenters detailed
the potential implications of inadequate ESRD PPS payments including
worsened health outcomes, health equity concerns, access to care issues
often resulting from ESRD facility closures or reduction of shifts, and
inability for ESRD facilities to recruit and retain high quality staff.
Several comments quoted MedPAC's estimated 2024 Medicare margins for
ESRD facilities which were 0.0 percent as
[[Page 89092]]
published in the March 2024 Report to Congress.\8\
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Response: We thank commenters for their insight into the payment
adequacy of the ESRD PPS and the costs faced by ESRD facilities. We
recognize that the input prices that ESRD facilities face have
increased in recent years at a rate higher than the ESRDB market basket
forecasts have predicted. We address commenters' related requests for a
``forecast error adjustment'' later in this section of the preamble.
Payment rates under the ESRD PPS are established based on a methodology
dictated by statute, which means the CY 2025 ESRD PPS base rate
reflects the CY 2011 ESRD PPS base rate updated by each year's ESRDB
market basket update. The ESRD PPS base rate has also been routinely
adjusted by certain budget-neutrality factors, for example, budget
neutrality adjustment factors related to the annual update to the wage
index or related to various payment adjustments like the case mix
adjustments or the LVPA. However, we note that the construction of
these budget-neutrality factors is calculated to offset the effect of
certain other updates and adjustments on total spending under the ESRD
PPS and thereby maintain the level of overall payments, so we do not
believe that the budget-neutrality factors have had a negative impact
on the total payments under the ESRD PPS. Since CY 2011, the only time
the ESRD PPS base rate was increased other than as part of a routine
update or adjustment was in the CY 2021 ESRD PPS final rule, when we
first incorporated calcimimetics into the bundled payment and increased
the base rate by $9.93 (85 FR 71410). In summary, the ESRD PPS base
rate is based on a longstanding, data driven method provided for by
statute. We did not propose, and are not finalizing, any changes to the
ESRD PPS payment update methodology.
We agree with commenters that payment adequacy is important as it
has a wide variety of impacts both on ESRD facilities and ESRD
patients, many of which have been described by commenters. We intend to
continue monitoring the performance of the ESRD PPS, and any changes to
the ESRD PPS payment rate or ESRDB market basket would be made through
notice and comment rulemaking.
We recognize that MedPAC has found that the Medicare FFS margins
for ESRD facilities are projected to be 0.0 percent for 2024. We wish
to add that MedPAC found that Medicare marginal profit for ESRD
facilities was approximately 18 percent for 2022.\9\ We understand that
the Medicare FFS margin is lower than many interested parties may
believe would be appropriate; however, we believe that payments are
sufficiently high relative to marginal costs to support the profitable
operation of ESRD facilities generally. While we believe MedPAC margin
estimates are generally a reasonable metric, we note that the ESRD PPS
payment rate is based on the change in prices of a fixed bundle of
goods and services, not based on continuously re-aligning payment with
costs directly.
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Comment: Several commenters discussed the current difficulties of
recruiting and retaining healthcare workers. Commenters often
characterized this as a healthcare labor shortage and stated that the
accompanying increase in wage inflation was a major source of increased
costs for ESRD facilities. Many commenters indicated a belief that the
proposed CY 2025 ESRDB market basket update or the proposed CY 2025
ESRD PPS base rate were insufficient given this increase in labor
costs. One analysis cited by commenters found that labor costs for ESRD
facilities rose by 23.7 percent between 2017 and 2023 whereas the ESRD
PPS base rate rose by only 14.7 percent during that same period.
Response: We appreciate the commenters' evaluation of labor costs
for ESRD facilities. We acknowledge that many ESRD facilities are
having increased difficulty in hiring due to overall trends present in
the healthcare industry. We note that the ESRDB market basket includes
several price proxies for the various cost categories of the ESRDB
market basket, including labor. We agree with commenters that labor
costs are a significant driver of overall rising costs for ESRD
facilities; however, they are not the only costs faced by ESRD
facilities and, therefore, are not the only component of the ESRDB
market basket. As labor is a substantial driver of the overall input
price increase, generally the other input prices faced by ESRD
facilities are increasing less than labor prices, so the overall ESRDB
market basket increase for a given year is less than the amount by
which labor prices have increased. Our analysis of the ESRDB market
basket increases from 2017 to 2023 has found that the ESRDB market
basket forecasted compensation prices increased by a cumulative 20.9
percent over this time period. The actual ESRDB market basket
compensation price growth (based on historical data) over this time
period is 23.7 percent. This suggests the ESRDB market basket price
proxies are projecting the increased price of labor faced by ESRD
facilities with reasonable accuracy, and we believe that the data
presented by the commenters supports this belief.
Comment: Several commenters, representing numerous industry
interests, stated they believe that the ESRDB market basket is
systemically flawed, because the market basket fails to accurately
capture the changes over time in the prices in the goods and services
included in renal dialysis services. The commenters believed the flaws
are due to problems with the weights and price proxies used to assess
the changes in costs year-over-year.
The commenters cited analysis from a contractor that suggests
possible flaws in the market basket cost weights and price proxies.
First, the commenters noted that the cost weights for capital costs are
significantly higher in the ESRDB market basket compared to other CMS
market baskets. They suggested that while 31 percent of the overall
capital costs are determined to be labor-related, the price proxy for
capital costs does not use a labor-related price proxy. The commenters
suggested that the price proxy for capital costs should be a blended
proxy that also includes a price proxy for labor. Another area of
concern was that the weight for the ``All Other Goods and Services''
cost category is much larger than in other CMS market baskets--a weight
of 11.1 percent is assigned to this category in the ESRDB market
basket--and that similar categories under the inpatient prospective
payment system (IPPS) and skilled nursing facility (SNF) PPS have
weights of 1.2 percent and 0.3 percent, respectively. The commenters
stated that further refining the category's definition under the ESRD
PPS could reduce the weight and result in a more accurate update factor
reflective of ESRD-specific costs.
Response: We appreciate the commenters' suggestions for areas that
could benefit from technical improvements in the design and methodology
for the ESRDB market basket cost weights and price proxies. We did not
propose to rebase or revise the ESRDB market basket in the CY 2025 ESRD
PPS proposed rule and further note that we finalized the 2020-based
ESRDB market basket in the CY 2023 ESRD PPS final rule (87 FR 67141).
At the time of the CY 2023 rulemaking cycle, the 2020 Medicare cost
report data was the most recent, fully complete
[[Page 89093]]
cost data available and reflected cost data as submitted by
freestanding ESRD facilities.
The share of capital costs referenced by the commenter are related
to the allocation of a portion of the capital cost weight to the labor-
related share since fixed capital costs (for example, construction or
improvements to a building) would include costs associated with labor
to perform the construction in the initial price, and that price is
financed over time or incorporated with the lease contract. This
methodology of allocating a portion of the market basket capital cost
weight to the labor-related share is consistent across the other CMS
PPSs such as those for SNFs, inpatient rehabilitation facilities
(IRFs), inpatient psychiatric facilities (IPFs), and long-term care
hospitals. For the CY 2023 ESRD PPS final rule (87 FR 67141 through
67154), we finalized the continued use of the Producer Price Index
(PPI) Industry for Lessors of Nonresidential Buildings (BLS series code
#PCU531120531120), to measure the price growth of the Capital-Related
Building and Fixtures cost category. This PPI reflects the prices of
leases for nonresidential buildings (including professional and office
buildings). The North American Industrial Classification System (NAICS)
definition for this industry comprises establishments primarily engaged
in acting as lessors of buildings (except mini-warehouses and self-
storage units) that are not used as residences or dwellings. Included
in this industry are: (1) owner-lessors of nonresidential buildings;
(2) establishments renting real estate and then acting as lessors in
subleasing it to others; and (3) establishments providing full service
office space, whether on a lease or service contract basis. The
establishments in this industry may manage the property themselves or
have another establishment manage it for them. We continue to believe
that this is an appropriate price proxy, as it reflects the lease or
replacement value of nonresidential buildings that would be influenced
by both labor prices, such as those associated with construction costs,
as well as other nonlabor factors, such as building supplies and
interest rates.
In response to the concerns related to the ESRDB market basket cost
weight for All Other Goods and Services, as stated in the CY 2023 ESRD
PPS final rule (87 FR 67145), the All Other Goods and Services cost
weight was derived by disaggregating the Administrative and General
cost weight (calculated using the freestanding ESRD Medicare Cost
Report data) using the 2012 Service Annual Survey data, which was the
most recent year of detailed expense data (inflated to 2020 levels)
published by the Census Bureau for NAICS Code 621492: Kidney Dialysis
Centers. Though the resulting weight for this category may differ from
the weight calculated for other indices, it appropriately reflects the
cost distributions associated with providing ESRD services, as
prescribed by law.
We note that changing the composition of the ESRDB market basket or
changing the price proxies used for the ESRDB market basket would
likely not have had a significant impact on the past forecast errors of
the ESRDB market basket, since those forecast errors were calculated by
comparing the forecasted ESRDB market basket update available at the
time of rulemaking to the ``actual'' ESRDB market basket update based
on that same index. Any change to the weights or price proxies in the
ESRDB market basket would not by itself mitigate a forecast error. The
forecast error would only be different or mitigated if the forecasts of
alternative price proxies were more accurate than those for the current
price proxies used in the ESRDB market basket.
CMS is open to hearing from the commenters and discussing any data
or analysis the industry may provide regarding ways to ensure the
Medicare payments are appropriate and that the market basket price
proxies and weights are accurate. We welcome any publicly available and
representative input cost data that reflects total and category-
specific costs for the ESRD industry the commenters could provide. We
will consider the commenters' suggestions when we propose to rebase and
revise the ESRDB market basket in the future and note that any such
proposal would occur through notice and comment rulemaking. We rebase
and revise the CMS market baskets approximately every 4 to 5 years so
that the cost weights reflect recent changes in the mix of goods and
services that ESRD facilities purchase to furnish renal dialysis
services between base periods. We last rebased in the CY 2023 ESRD PPS
final rule (87 FR 67141 through 67153).
Comment: Several commenters expressed concern that the ESRDB market
basket updates are disproportionately lower than for all other Medicare
providers reimbursed under a PPS. The commenters stated they understand
that different cost structures influence this outcome; however, they
noted it is important to note these discrepancies given that all these
healthcare sectors draw from the same labor pools, and lower ESRD PPS
updates erode ESRD facilities' ability to attract caregivers in the
current labor market. One commenter noted that the price proxy for
buildings utilized by IPPS and SNF is the ``BEA--Chained Price Index
for Private Fixed Investment in Structures, Nonresidential, Hospitals
and Special Care--vintage weighted 27 years'' which the commenter
stated is growing at a faster rate than the price proxy ``PPI Industry
for Lessors of Nonresidential Buildings'' which is used by the ESRD
PPS.
Response: The 2020-based ESRDB market basket percentage increase is
equal to the weighted price change of the individual price proxies
based on their respective cost weights. The cost weights are primarily
derived using data from the freestanding ESRD facility Medicare cost
reports and reflect relative shares of input costs needed to provide
renal dialysis services to ESRD beneficiaries. Similarly, the other CMS
PPS market baskets, such as the 2022-based SNF market basket and 2018-
based IPPS market basket, reflect the relative share of input costs
needed to provide skilled nursing and hospital care to Medicare
beneficiaries based on the data reported on the respective provider
cost reports.
While we understand that commenters may compare the annual updates
in the ESRDB market basket to other Medicare payment system market
baskets, the ESRDB market basket is developed in accordance with
section 1881(b)(14)(F)(i) of the Act requiring that the index reflect
the composition of costs associated with providing renal dialysis
services. These costs (and the subsequent cost distributions) are
reported by ESRD facilities on the Medicare cost reports and may differ
(appropriately) from the relative distribution of costs of other
medical care providers, such as inpatient hospitals or skilled nursing
facilities. Additionally, the price proxies used in the ESRDB market
basket are intended to reflect the price pressures faced by ESRD
facilities. While some price proxies may be similar to those used
across other CMS market baskets, in most cases they are appropriately
different because they reflect the price pressures faced by ESRD
facilities. For example, the rate of increase in the ESRDB market
basket compensation category reflects the weighted average of the price
increase for occupations employed by ESRD facilities.
At the time of the CY 2025 ESRD PPS proposed rule, based on the
IGI's first quarter 2024 forecast with historical data through the
fourth quarter of 2023,
[[Page 89094]]
the 2020-based ESRDB market basket increase was forecasted to be 2.3
percent for CY 2025, reflecting forecasted compensation price growth of
3.6 percent. In the CY 2025 ESRD PPS proposed rule, we proposed that if
more recent data became available, we would use such data, if
appropriate, to derive the final CY 2025 ESRDB market basket update for
the final rule. For this final rule, we now have an updated forecast of
the price proxies underlying the market basket that incorporates more
recent historical data and reflects a revised outlook regarding the
U.S. economy and expected price inflation for CY 2025. Based on IGI's
third quarter 2024 forecast with historical data through the second
quarter of 2024, we are projecting a CY 2025 ESRDB market basket
increase of 2.7 percent (reflecting forecasted compensation price
growth of 3.8 percent). Therefore, for CY 2025 a final ESRDB
productivity-adjusted market basket update of 2.2 percent (2.7 percent
less 0.5 percentage point for the productivity adjustment) will be
applicable, compared to the 1.8 percent productivity-adjusted market
basket update that was proposed.
Comment: Several commenters raised concerns about the labor-related
share of the ESRD PPS. These commenters suggested that adjusting the
labor-related share could better recognize changes in labor costs and
result in a higher overall market basket update for the ESRD PPS. Some
commenters noted that the ESRD PPS labor-related share for CY 2025 is
55.2 percent while the labor-related share for SNF PPS is 70.1 percent
and 67.6 or 62 percent for IPPS.
Response: The purpose of the labor-related share is to reflect the
proportion of the national ESRD PPS base payment rate that is adjusted
by the wage index. CMS adjusts the labor-related portion of the base
rate to account for geographic differences in the area wage levels
using an appropriate wage index, which reflects the relative level of
wages and wage-related costs in the geographic area in which the ESRD
facility is located. The purpose of the labor-related share is to
allocate ESRD payment between a labor-related portion and non-labor-
related portion for purposes of geographic adjustment and the labor-
related share does not directly impact the market basket update.
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 costs that are related to,
influenced by, or vary with the local labor market. In the CY 2023 ESRD
PPS final rule (87 FR 67153 through 67154), we detailed the use of the
2020-based ESRDB market basket cost weights to determine the labor-
related share for ESRD facilities. Specifically, effective for CY 2023,
a labor-related share of 55.2 percent was determined based on the sum
of Wages and Salaries, Benefits, Housekeeping, Operations &
Maintenance, 87 percent of the weight for Professional Fees, and 46
percent of the weight for Capital-related Building and Fixtures
expenses, which, with the exception of the Professional Fees (0.7
percent) cost weight, were derived from the ESRD Medicare cost reports
(CMS Form 265-11, OMB NO. 0938-0236).
While the conceptual definition of the labor-related share used for
the ESRD PPS is similar to that used for SNF PPS and IPPS, the cost
structures for the various providers differ substantially. Thus, we
believe the ESRD labor-related share of 55.2 percent is appropriate,
and we are finalizing our proposal to continue to use this labor-
related share for CY 2025 ESRD PPS payments.
We note that the labor-related share, as previously discussed, is
used to determine the portion of the ESRD PPS base rate which is
related to labor for the purposes of applying the ESRD PPS wage index.
We believe some of the commenters who requested a higher labor-related
share may have believed that increasing the labor-related share would
change the proportion of the ESRDB market basket to which price proxies
related to labor are applied. As discussed in the CY 2023 ESRD PPS
final rule, the ESRDB market basket cost weights are derived from cost
report data and, therefore, are the most appropriate measures of the
proportion of the ESRDB to which we apply each pricy proxy. It would
not be appropriate to apply one of the labor price proxies to other
non-labor cost weights in the ESRDB market basket.
Comment: One commenter stated that while they understand CMS does
not have authority to waive the application of the productivity
adjustment, they were concerned that applying a one-size-fits-all
approach in an effort to incentivize efficiencies fails to recognize
the unique challenges facing ESRD facilities.
Response: Section 1881(b)(14)(F)(i) of the Act requires the
application of the productivity adjustment described in section
1886(b)(3)(xi)(II) of the Act. As required by statute, the CY 2025
productivity adjustment is derived based on the 10-year moving average
growth in economy-wide productivity for the period ending CY 2025. We
recognize the concerns of the commenters regarding the appropriateness
of the productivity adjustment; however, we are required pursuant to
section 1881(b)(14)(F)(i) of the Act to apply the specific productivity
adjustment described here and do not believe it can be removed from the
calculation of the market basket update. As such, we are not finalizing
any changes to the use of the productivity adjustment in the CY 2025
ESRDB market basket update.
As stated in the CY 2025 ESRD PPS proposed rule (89 FR 55765), the
United States Department of Labor's Bureau of Labor Statistics (BLS)
publishes the official measures of annual economy-wide, private nonfarm
business total factor productivity (previously referred to as annual
economy-wide, private nonfarm business multifactor productivity). IGI
forecasts total factor productivity consistent with BLS methodology by
forecasting the detailed components of TFP. A complete description of
IGI's TFP projection methodology is available on the CMS website at
https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. We believe our methodology for the productivity adjustment
is consistent with sections 1881(b)(14)(F)(i)(II) and
1886(b)(3)(B)(xi)(II) of the Act, the latter of which states the
productivity adjustment is equal to the 10-year moving average of
changes in annual economy-wide private nonfarm business multi-factor
productivity (as projected by the Secretary for the 10-year period
ending with the applicable fiscal year, year, cost reporting period, or
other annual period).
The CY 2025 proposed productivity adjustment of 0.5 percent was
based on IGI's forecast of the 10-year moving average of annual
economy-wide private nonfarm business TFP, reflecting historical data
through 2022 as published by BLS and forecasted TFP for 2023 through
2025. The final productivity adjustment for CY 2025 is also 0.5
percentage point for this final rule and is slightly higher than the
productivity adjustment for CY 2024 (0.3 percent). This higher
productivity adjustment is primarily a result of incorporating BLS
revised historical data through 2022, the preliminary historical growth
rate in TFP for 2023, and an updated forecast for TFP growth for 2024
reflecting higher expected growth in economic output.
Comment: Commenters reported that the IGI forecast continues to
significantly underestimate the increasing costs ESRD facilities incur
when providing services to Medicare
[[Page 89095]]
beneficiaries and that the market basket increases provided by CMS have
not kept up with the rising costs of doing business, particularly labor
costs. Commenters stated that while they recognize that updates to the
ESRDB market basket are set prospectively, and some degree of forecast
error is thus inevitable, they also believe that ESRD facilities should
not be financially disadvantaged as a result of CMS market basket
forecasting errors. Many commenters urged CMS to reconsider its
decision not to adopt a forecast error policy. They stated that a
forecast error adjustment for the ESRD PPS would be needed to ensure
the funding that the Congress intended ESRD facilities to receive would
be available to support patient care and help address health
inequities.
The commenters stated that the CMS contractor that determines
forecasted price growth for the bundled ESRD PPS market basket has
failed to provide an accurate update for the last 4 years resulting in
an approximately negative 7 percent forecast error since 2019. They
further stated that they believe that the existing methodology will
produce an inaccurate annual payment update for CY 2025. Furthermore,
they stated that the forecast errors in the ESRD PPS are
disproportionately worse than the forecast errors in the other Medicare
payment systems and continue to urge CMS to address what they describe
as the past underfunding of the payment system.
A few commenters stated that the failure to correct the known
forecast errors over the last several years is contrary to the
statutory requirement at section 1881(b)(14)(F)(i) of the Act to update
the ESRD PPS payment rate based on the change in prices of the ESRDB.
The commenters stated that the CMS response in the CY 2024 ESRD PPS
final rule was that its market basket update forecast ``misses'' for CY
2021 and CY 2022 were largely due to unanticipated inflationary and
labor market pressures as the economy emerged from the COVID-19 Public
Health Emergency (PHE) and that an analysis of the forecast error of
the ESRDB market basket over a longer period shows the forecast error
has been both positive and negative. The commenters highlighted our
past statement that the difference between the projected and actual
market basket increases can be both positive and negative. The
commenters claimed that this is not the reality of the current
situation, and that it would be unlikely that the forecast errors would
``miss'' to the same extent in the future. The commenters also noted
that it appears that the under-forecast of the ESRDB market basket
updates have continued into 2023, and they stated that preliminary
evidence shows even into 2024.
The commenters requested that CMS reconsider its decision not to
adopt a forecast error adjustment for the ESRD PPS to account for the
underestimates from CMS' forecasted market basket updates in prior
calendar years, and to eliminate the risk of further substantial
forecast errors going forward by adopting a forecast error adjustment
policy for future years modeled after the forecast error adjustment
policy in the SNF PPS. Some commenters supported CMS finalizing a
forecast error adjustment in this final rule effective for CY 2025,
whereas other commenters supported CMS proposing a forecast error
adjustment effective for CY 2026. The commenters further stated that
addressing these forecast errors is essential to fulfill CMS's
statutory obligation to ensure that the ESRD PPS market basket update
reflects actual changes over time in the prices of an appropriate mix
of goods and services included in renal dialysis services.
Several commenters noted that when CMS first introduced the
forecast error adjustment for SNFs, the agency explicitly determined
that this type of adjustment would not be providing a source of new
industry funding. Instead, the commenters noted that CMS stated that we
were correcting an under-forecast of pricing levels that resulted in
lower payments than we would otherwise have made if actual, instead of
forecast, data were used. One commenter further stated that on the
contrary in the CY 2024 ESRD PPS final rule, CMS justified not
implementing stakeholder calls for a forecast error adjustment for the
ESRD PPS by explaining that the cumulative under-forecast of the SNF
market basket increases was not due to a PHE, which was the case for
the ESRD PPS's under-forecast in recent years. However, the same
commenter noted that CMS finalized a forecast error adjustment for the
SNF payment system due to the rapid increase in the price of labor and
because CMS concluded that a forecast error adjustment was appropriate
for payment accuracy for SNFs. The commenter further rationalized that
while the forces driving the under-forecast of the ESRDB market basket
today may differ from those impacting the SNF market basket in 2003,
the outcomes for providers are presenting in the same manner.
Commenters stated that they believe implementation of a retroactive
cumulative forecast error adjustment and continued forecast error
adjustment in the future is within CMS's existing statutory authority
under section 1881(b)(14)(F)(i) of the Act. Commenters referenced
perceived similarities between this statutory language for the ESRD PPS
and the statutory language for the SNF PPS annual update at section
1395rr(b)(F)(i)(I) of the Act, which CMS utilized when finalizing the
SNF PPS forecast error adjustment.
Based on what the commenters characterized as the same statutory
obligation and an even larger and longer record of forecast errors, the
commenters requested CMS adopt the same retrospective forecast error
adjustment and future forecast error adjustment process for the ESRD
PPS. They provided further context for this request by referencing the
justification of the forecast error adjustment policy in the SNF PPS as
precedent.
Some commenters urged CMS to implement a one-time retrospective
adjustment to the ESRD PPS base rate in the amount of the current
cumulative forecast error calculated from the beginning of the ESRD
PPS, while others requested such an adjustment for the period of 2019
or 2020 through 2023. Additionally, most commenters also supported the
implementation of a forecast error correction policy for future years
that would be triggered when the absolute (positive or negative) error
is equal to or exceeds a 0.5 percentage point threshold. One commenter
also requested that CMS acknowledge that the current forecast
methodology has failed to produce accurate updates for 4 years and work
with IGI to minimize forecast misses in the future. One commenter
requested more transparency regarding the methodology for developing
the price forecasts that are used in the CMS market baskets.
Response: The 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. For instance, the CY 2025 market basket update
in this final rule reflects historical data through the second quarter
of CY 2024 and forecasted data through the fourth quarter of CY 2025.
While there is no precedent to adjust for market basket forecast error
in the ESRD PPS payment update, a forecast error can be calculated by
comparing the actual market basket increase for a given year to the
forecasted market basket increase. Due to the uncertainty regarding
future price trends, forecast errors can be both positive and negative,
as has occurred
[[Page 89096]]
since the implementation of the ESRD PPS in CY 2011. Over most of this
history the forecast errors were small in magnitude, with the largest
error (in absolute terms) prior to 2021 being an over-forecast (the
actual market basket increase was less than the forecasted market
basket increase) of 0.8 percentage point in 2017. More recently the
ESRDB market basket has been under-forecast, as noted by the
commenters, with larger errors occurring for 2021 through 2023. The
cumulative forecast error since ESRD PPS inception (CY 2012 to CY 2023)
is an under-forecast of 4.3 percent.\10\ These recent forecast errors
were largely a function of uncertainty in the overall economy and the
health sector specifically due to the nature of the COVID-19 PHE and
the unforeseen inflationary environment.
---------------------------------------------------------------------------
\10\ This figure does not include a forecast error for CY 2015,
as section 1881(b)(14)(F)(i)(III) of the Act required a 0.0 percent
update for that year.
---------------------------------------------------------------------------
We thank the commenters for their continued feedback on the ESRDB
market basket. In the CY 2024 ESRD PPS proposed rule we explained why
we did not believe a forecast error adjustment was appropriate at that
time. We did not propose a forecast error adjustment in the CY 2025
ESRD PPS proposed rule for these same reasons and are not finalizing a
forecast error adjustment at this time. Specifically, predictability in
Medicare payments is important to enable ESRD facilities to budget and
plan their operations, and forecast error calculations are
unpredictable (88 FR 76356 through 76358). Historically, the positive
differences between the actual and forecasted market basket increase
have offset negative differences over time. Although we acknowledge
that this has not been the case in recent years, we note that it may
take a longer period of time for forecast errors to balance out. For
example, in CY 2016 the cumulative forecast error for the ESRDB market
basket since CY 2012 was 0.4 percent, and in each year from CY 2012 to
CY 2016, the cumulative forecast error was positive, ranging from 0.2
percent to 0.5 percent. Then, beginning in CY 2017, the cumulative
forecast error was negative, which continued through CY 2020, ranging
from -0.4 percent to -0.6 percent. These examples illustrate that over
time positive and negative differences between the actual and
forecasted market basket increase have tended to balance out.
Therefore, in accordance with our longstanding ESRD PPS payment update
methodology, we are finalizing to update the CY 2025 ESRD PPS base rate
without the application of a forecast error adjustment to the ESRDB
market basket.
Given the concerns raised by the commenters, we intend to continue
to monitor the pattern of the ESRDB market basket forecast errors to
observe if the historical experience (where errors have balanced out)
continues. Any changes to the ESRD PPS payment update methodology,
including any forecast error adjustment policy, would be proposed
through notice and comment rulemaking. We acknowledge the commenter's
request for more transparency regarding the ESRDB market basket
forecast methodology and have shared details in prior and this year's
rules on these methods; however, we are limited in the amount of
information we can provide regarding the forecast methodology, which is
proprietary to IGI.
Comment: Some commenters expressed concern about whether CMS was
adhering to Social Security Act and the Administrative Procedure Act
requirements in declining to adopt a forecast error adjustment. One
commenter stated that, given the past forecast errors, they did not
believe our methodology fulfilled the requirement to update the payment
system based on the change in prices of the ESRDB market basket. This
commenter further stated a belief that because CMS had determined that
a forecast error adjustment was appropriate for the SNF PPS in 2004, we
would be in violation of the ESRD PPS's similarly worded statute unless
we were to implement a forecast error adjustment for the ESRD PPS, due
to the similarities between the circumstances of SNF PPS in 2004 and
the ESRD PPS presently.
Response: We strongly disagree with the commenter's assertion that
CMS's position regarding an ESRD PPS forecast error payment adjustment
conflicts with any of the statutory requirements for the ESRD PPS. As
we have discussed previously, we believe that the ESRDB market basket
forecast reflects the change in prices of an appropriate mix of goods
and services included in renal dialysis services, as required by
statute. We note that the circumstances of the ESRD PPS in the present
are not identical to the circumstances of the SNF PPS when we finalized
a forecast error adjustment. The cumulative under-forecast of the SNF
market basket increases in 2004 was based on a rapid increase in the
price of labor, not due to a PHE that rapidly increased the price of
most of the goods and services in the ESRDB market basket.
Additionally, the increase in the price of labor uniquely impacted the
SNF PPS at that time as the SNF PPS had only existed for a few years
and had numerous under-forecasts in that short timeframe. This is
unlike the current ESRD PPS environment, where the ESRD PPS had a
decade of reasonably accurate forecasts, followed by a PHE resulting in
multiple Medicare payment systems facing similar forecast errors. We
continue to believe these differences in circumstances are relevant in
evaluating the forecast errors in the ESRD PPS in recent years and
their implications for the future performance of the payment system. We
note that when CMS finalized a forecast error adjustment for the SNF
payment system, we concluded that a forecast error adjustment was
appropriate for payment accuracy for SNFs; not that it was required
under the statute (68 FR 46057). For these reasons, we disagree with
the commenter's stated belief that a forecast error adjustment would be
required to fulfill the ESRD PPS statutory requirements, and, at this
time, for the reasons discussed previously, we do not believe that a
forecast error payment adjustment would be appropriate for the ESRD
PPS. We also disagree with the commenter's assertion that by not
implementing a forecast error adjustment we are in violation of the
Administrative Procedure Act; as discussed previously, our established
ESRDB market basket methodology has been set and revised through notice
and comment rulemaking (75 FR 49151 through 49162, 79 FR 66129 through
66136, 83 FR 56951 through 56964, 87 FR 67141 through 67154). For the
CY 2025 ESRD PPS proposed rule we provided a 60-day comment period, and
we have considered and responded to all relevant comments in this final
rule explaining our reasoning for the policies we are finalizing.
Comment: One coalition of dialysis organizations disagreed with
CMS's evaluation that a forecast error adjustment would make ESRD PPS
payments less predictable. The commenter stated that under the current
payment system providers are uncertain whether the ESRDB market basket
forecast would be accurate for a given year.
Response: We appreciate this commenter's perspective on
predictability within the ESRD PPS as we work to improve the payment
system. Our current view on predictability is that it is important for
ESRD facilities to be able to plan for future years with the most
complete information possible, which we believe would likely not be the
case if the ESRD PPS base rate would be lowered in a given year due to
an over-forecast in the prior year. We will take this input into
consideration for future rulemaking.
[[Page 89097]]
Final Rule Action: We did not propose and are not finalizing any
changes to the ESRDB market basket methodology for CY 2025. Thus, the
final ESRDB market basket update for CY 2025 is 2.2 percent,
representing a ESRDB market basket percentage increase of 2.7 percent
reduced by a 0.5 percentage point productivity adjustment.
2. CY 2025 ESRD PPS Wage Indices
a. 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, we established a policy to adjust 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.
Under current policy, 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 are 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 have computed the average wage index value of all
hospitals in urban areas within the State to serve as a reasonable
proxy for the wage index of that urban CBSA. For rural areas with no
hospital data, we have computed the wage index using the average
hospital 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 the use of 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 2025, as discussed in section II.B.1.b.(4) of this
final rule, the final labor-related share to which the wage index would
be applied is 55.2 percent.
In the CY 2011 ESRD PPS final rule (75 FR 49116) and the CY 2011
final rule on Payment Policies Under the Physician Fee Schedule (PFS)
and Other Revisions to Part B (75 FR 73486) we established an ESRD PPS
wage index methodology to use the most recent pre-floor, pre-
reclassified hospital wage data collected annually under the hospital
inpatient prospective payment system (IPPS). The ESRD PPS wage index
values have historically been calculated without regard to geographic
reclassifications authorized for acute care hospitals under sections
1886(d)(8) and (d)(10) of the Act and utilize pre-floor hospital data
that are unadjusted for occupational mix.
b. Methodology Changes for the CY 2025 ESRD PPS Wage Index
CMS has received feedback on our longstanding ESRD PPS wage index
methodology from interested parties through comments on routine wage
index updates in the annual ESRD PPS proposed rules. Commenters often
suggested specific improvements for the ESRD PPS wage index. In the CY
2024 ESRD PPS final rule (88 FR 76359 through 76361), we discussed the
comments on the routine wage index proposals from the CY 2024 ESRD PPS
proposed rule (88 FR 42436); commenters, including MedPAC, suggested
that we establish an ESRD PPS wage index for all ESRD facilities using
wage data that represents all employers and industry-specific
occupational weights, rather than the hospital wage data currently
used. MedPAC specifically suggested that CMS implement the
recommendations discussed in its June 2023 Report to Congress,\11\
which recommended moving away from the current IPPS wage index
methodology in favor of a methodology based on all employer wage data
for all Medicare PPSs with industry specific occupational weights.
Additionally, MedPAC suggested that the new methodology reflect local
area level differences in wages between and within metropolitan
statistical areas and statewide rural areas and smooth wage index
differences across adjacent local areas. MedPAC stated that, compared
to the current IPPS wage index methodology, a methodology based on all
employer wage data with industry-specific occupational weights would
improve the accuracy and equity of payments for provider types other
than inpatient acute care hospitals, such as ESRD facilities.
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\11\ https://www.medpac.gov/wp-content/uploads/2023/06/Jun23_MedPAC_Report_To_Congress_SEC.pdf.
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In past years some interested parties have contended that the
methodology used to construct the current ESRD PPS wage index does not
accurately reflect the ESRD facility labor market. These interested
parties have noted that the ESRD PPS wage index has been based on the
IPPS wage index, which uses hospital data, which commenters have stated
may not be applicable for ESRD facilities. More specifically,
commenters have suggested that the types of labor used in ESRD
facilities differ significantly from the types of labor used by
hospitals, which may result in the use of relative wage values across
the United States that do not accurately match the actual relative
wages paid by ESRD facilities. For example, if ESRD
[[Page 89098]]
facilities have a different proportion of registered nurses (RNs),
technicians and administrative staff compared to hospitals, and if
wages for each of those labor categories vary differentially across the
country, it is possible that relative wages for ESRD facilities, given
their occupational mix, would vary differently from relative wages for
hospitals across CBSAs. Because of this, some commenters have
specifically requested that CMS develop an ESRD PPS wage index based
only on data from ESRD facilities. Additionally, some commenters have
criticized the time lag associated with using the IPPS wage index,
which is generally based on data from four FYs prior to the rulemaking
year (see, for example, 88 FR 58961).
(1) December 2019 Technical Expert Panel (TEP)
In response to feedback from interested parties on the ESRD PPS
wage index, CMS's data contractor hosted a Technical Expert Panel (TEP)
in December of 2019.\12\ During this TEP, the contractor presented a
potential alternative approach to the wage index, which utilized BLS
data to address the concerns of commenters, to initiate a discussion on
the ramifications of a potential new ESRD PPS wage index that would
combine two sources of existing data to more closely reflect the
occupational mix in ESRD facilities. The methodology presented at this
TEP utilized publicly available wage data for selected occupations from
the BLS OEWS survey and occupational and fulltime equivalency (FTE)
data from freestanding ESRD facility cost reports (Form CMS 265-11, OMB
No. 0938-0236). Specifically, this approach used the freestanding ESRD
facility cost reports to determine the national average occupational
mix and relative weights for ESRD facilities. Next, the contractor
applied the estimated county-level wages based on BLS OEWS \13\ to
obtain occupation-specific wages in each county. The BLS OEWS data is
updated annually using sample data collected in six semiannual survey
panels over the prior 3-year period, which allows for the inclusion of
more recent data than the hospital cost report data that is utilized by
the IPPS wage index. Therefore, as noted during the TEP, this new
methodology would allow CMS to adjust wage index values to reflect
relative changes in wage conditions in a timelier fashion compared to
the current ESRD PPS wage index methodology. Additionally, as noted
during the TEP, by utilizing FTE data reported on the freestanding ESRD
facility cost reports, this methodology is likely more reflective of
the occupational mix employed by ESRD facilities than the hospital wage
index.
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\12\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-may-2020.pdf.
\13\ The OEWS program produces estimates of employment and wages
by occupation based on a survey of business establishments. OEWS
data are released annually with a May reference date. Each set of
OEWS estimates is based on data from six semiannual survey panels
collected over a 3-year period. For example, the May 2022 OEWS wage
estimates are based on six semiannual survey panels from November
2019 through May 2022. We note that we use a crosswalk between
counties and MSAs, non-MSAs and NECTAs to get county level wage
estimates.
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Panelists at this TEP generally indicated their preference for the
presented alternative wage index methodology, because it utilized more
recent wage data from the BLS OEWS program. Panelists also favored how
the alternative methodology was more targeted to ESRD facilities by
utilizing FTE data from ESRD facility cost reports in determining the
occupational mix. Some panelists voiced concerns about using publicly
available BLS geographic area data, as the data do not disaggregate
wages by health care sector, and therefore wages from acute care
hospitals are not differentiated from outpatient care centers and other
non-hospital health care settings. Some panelists noted that this would
result in a wage index based on the publicly available BLS OEWS data
having some of the same limitations for which the use of the IPPS wage
index has been criticized--mainly that it includes wage data from
hospitals.
(2) Proposed New Methodology for Using BLS Data To Calculate the ESRD
PPS Wage Index
Based on feedback we received in response to past ESRD PPS proposed
rules and from the December 2019 TEP, we developed a new ESRD PPS wage
index methodology that we believe better reflects the ESRD facility
labor market, which we proposed in the CY 2025 ESRD PPS proposed rule
(89 FR 55766 through 55782). Similar to the methodology presented in
the December 2019 TEP, this new methodology utilizes two data sources:
one for occupational mix and one for geographic wages. First, we
determine a national ESRD facility occupational mix (NEFOM) based on
cost report data from freestanding ESRD facilities. Second, we extract
and use data from the publicly available BLS OEWS survey on the average
wages in each CBSA for each labor category present in the NEFOM. We
note that because the publicly available BLS data are available at the
Metropolitan Statistical Area (MSA), non-MSA and New England City and
Town Area (NECTA) levels, and the wage index is designated at the CBSA
level (which uses MSAs and other area designations that differ from
non-MSAs and NECTAs), we use the area definition dataset \14\ that
accompanies the BLS data to assign wages at the county level, and map
counties to CBSAs using a crosswalk. This crosswalk is included in
Addendum B, 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.
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\14\ For more information on MSAs and non-MSAs please see:
https://www.bls.gov/oes/current/msa_def.htm. For more information on
the most recent CBSA delineations (as discussed later in this
section) please see: https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.
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(a) Description of Data Sources Utilized in the Proposed Methodology
In the CY 2025 ESRD PPS proposed rule we discussed the data sources
which we utilized for the proposed new ESRD PPS wage index methodology.
We described the data sources in detail alongside explanations of the
ways in which we proposed to use the data, potential benefits and
weaknesses compared to the IPPS wage index data, and the lag associated
with the data.
(i) Data From the BLS OEWS Metropolitan and Nonmetropolitan Area
Occupational Employment and Wage Estimates
The BLS OEWS program publishes annual estimates of employment and
wages by occupation. Each set of OEWS estimates is based on data from
six semiannual survey panels collected over a 3-year period. For
example, the May 2022 OEWS wage estimates, published in April 2023, are
based on six semiannual survey panels from November 2019 to May 2022.
We proposed to use publicly available mean hourly wage data at the MSA
level,\15\ which is available online at https://www.bls.gov/oes/. OEWS
wage data collected in earlier survey panels are ``aged'' or updated to
the reference date of the estimates based on adjustment factors derived
from the OEWS survey data using a regression model. The BLS OEWS mean
hourly wage data that was presented in the CY 2025 ESRD PPS proposed
rule and was utilized for the proposed new wage index methodology
described in detail later in this section of this final rule reflect
these wage aging adjustments. Table 1 shows the
[[Page 89099]]
occupation codes based on the Standard Occupational Classification
(SOC) and the corresponding occupational title for each SOC, alongside
the common name that we use to refer to workers in specific occupations
throughout this final rule. The ESRD PPS common names match the FTE
categories captured on Worksheet S-1, lines 23 through 30 of the
freestanding ESRD facility cost report form. The SOC System is a United
States government system for classifying occupations. It is used by
Federal Government agencies collecting occupational data, enabling
comparison of occupations across data sets. When we considered the use
of BLS data we had to determine which occupation code was appropriate
for each occupation in the NEFOM. For many of these occupations, the
corresponding BLS code was straightforward. For example, BLS code 29-
1141 is for ``Registered Nurses'' which matches the category on the
cost reports from which the NEFOM is derived exactly. For the
occupations that were not necessarily specific to the healthcare field,
for example administrative staff, we used BLS codes that were specific
for healthcare, such as code 43-6013 for ``Medical Secretaries and
Administrative Assistants.'' In the proposed rule, we explained that we
believe that these are the most appropriate codes, as a more general
code may not capture the specifics of the healthcare labor market.
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\15\ We use the territory-level data for Guam and Virgin
Islands, since the MSA and non-MSA level data is not available.
[GRAPHIC] [TIFF OMITTED] TR12NO24.000
The BLS OEWS data used for the analysis presented in the proposed
rule included mean wages by occupation for all industries combined
located in a MSA (or non-MSA area or NECTA), including the hospital
industry. While interested parties have criticized the current ESRD PPS
wage index methodology's sole reliance on hospital data, we stated that
inpatient hospital data is appropriate to include in this analysis for
several reasons. Principally, as explained later in this section, the
wage data is being weighted based on an occupational mix that is
specific to ESRD facilities, which makes this methodology more accurate
to the wage environment of ESRD facilities regardless of the source of
the wage data. Additionally, ESRD facility data is included in the BLS
data, while ESRD facilities generally are not included in the hospital
cost report data used in the IPPS wage index (with the exception of
hospital-based ESRD facilities). Lastly, hospitals are a major
contributor to labor markets, and it is reasonable to believe that ESRD
facilities compete with hospitals (as well as other healthcare
facilities) when it comes to hiring labor; as such, the inclusion of
hospital data would provide additional insight into the labor markets
of these areas.
In the proposed rule, we discussed that a limitation of the
publicly available BLS OEWS data is that the survey only includes
information on the wages that employers paid to their employees.
Therefore, the OEWS does not include self-employed contract labor wages
or benefits paid to employees, which are reflected in the IPPS wage
index. Nevertheless, we believed, and we continue to believe, that this
data source would be an improvement over the use of the IPPS wage index
for the ESRD PPS, as its purpose is to identify geographic differences
in wages. In the proposed rule, we noted that assuming wages spent on
self-employed contract labor wages and employee benefits vary similarly
to employee wages, we would not expect any significant difference
arising from this limitation of the BLS data. We anticipated that most
traveling nurses and technicians would be employed by a staffing
agency, and therefore would be included in the OEWS estimates; however,
as worksite location reporting is optional,\16\ we note it is possible
that some of the wages for these traveling nurses and technicians could
be included in the MSA in which their employing agency is located,
rather than the MSA in which they worked. However, we noted that we
would not anticipate that this would have an appreciable impact on the
OEWS estimates used for this methodology. Additionally, we noted that
the OEWS would only include the wages paid by the contract agency to
these contract workers, so the OEWS estimates would likely not include
the full cost of the contract labor paid by the ESRD facilities to the
contracting agency. We could not separately estimate the prevalence of
self-employed contract labor at ESRD facilities from the rest of
contract labor, which we believe would still provide some insight into
the potential limitation of the exclusion of self-employed contract
labor wages from the BLS OEWS. We noted that all contract labor costs
represent approximately 5 percent of compensation costs in the 2020-
based ESRDB market basket (87 FR 67143). As discussed in the CY 2025
ESRD PPS proposed rule, our analysis of freestanding ESRD facility cost
report FTE data indicated that approximately 1.3 percent of RN hours
and 1.1 percent
[[Page 89100]]
of technician hours were contract labor in 2022. Additionally, our data
showed that the share of contract labor hours has been relatively
stable over time but has increased slightly over the past few years.
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\16\ https://www.bls.gov/respondents/oes/instructions.htm#online.
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In the proposed rule, we discussed that one potential concern about
use of the BLS OEWS data is that in some cases, the BLS OEWS may not
have usable data for a county for an occupation, which is used in the
construction of the new ESRD PPS wage index according to the
methodology presented later in this section. This occurs when BLS is
unable to publish a wage estimate for a specific occupation and area
because the estimate does not meet BLS quality or confidentiality
standards.\17\ For reference, among the 25,808 unique county-occupation
combinations in the May 2022 BLS OEWS data used in the analysis in the
proposed rule, the wage information missing rate was 5.2 percent. To
impute the missing data for the methodology presented in the proposed
rule, we performed a regression using the most similar (by mean hourly
wage) occupation (of the occupations we proposed to include in the wage
index methodology, presented in Table 1) for which there was no missing
data. For dietitians we used RNs, for technicians we used LPNs and for
nurses' aides we used administrative staff. The regression included
controls for whether the county is rural, the census region in which
the county is located, and the natural logarithm of the treatment count
of the county. For the wage index presented in the CY 2025 ESRD PPS
proposed rule, we only had to impute missing county-level data for
dietitians, technicians, and nurses' aides; however, for future years,
we noted that we may have to impute data for other occupations and will
be sure to note any imputations through notice and comment rulemaking.
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\17\ https://www.bls.gov/oes/oes_ques.htm.
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In the proposed rule, we presented an analysis on historical BLS
OEWS data for the occupations presented in Table 1.\18\ We found that
mean hourly wages for these categories are increasing over time,
consistent with what we would expect given the ESRD PPS market basket
increases. Given this analysis, we stated that the BLS OEWS data are
reasonably stable and appropriately reflect general wage inflation
trends that ESRD facilities face.
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\18\ We note that the BLS OEWS wage data is not intended to be
used as a time-series analysis, but rather as cross-sectional
estimate of wages in a geographic area (https://www.bls.gov/oes/oes_ques.htm#other). We reviewed and presented this data primarily
to demonstrate the stability of the methodology by evaluating the
robustness of the input data source.
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(ii) Data From Freestanding ESRD Facility Cost Reports
Under Sec. 413.198(b)(1), all ESRD facilities must submit the
appropriate CMS-approved cost report in accordance with Sec. Sec.
413.20 and 413.24, which provide rules on financial data and reports,
and adequate cost data and cost finding, respectively. Generally, these
cost reports have a time range of January 1 to December 31 of a given
year, but they can represent any 12-month period. Included in these
cost reports is information on the number of full-time equivalent (FTE)
positions employed by the ESRD facility. FTEs are stratified by
occupation type, such as RNs, LPNs, technicians, and administrative
staff. For the purpose of these cost reports, an FTE represents a 40-
hour work week averaged across the year. Specifically, the cost reports
define FTEs as the sum of all hours for which employees were paid
during the year divided by 2080 hours. The cost reports also state
personnel involved in more than one activity must have their time
prorated among those activities. For example, an RN who provided
professional services and administrative services is counted in both
the RN line and the administrative line according to the number of
hours spent in each activity.
For the methodology presented in the proposed rule, we proposed to
use FTEs to calculate the occupational mix for all freestanding ESRD
facilities. For the purposes of this proposal, we used the term
``freestanding ESRD facilities'' to mean ESRD facilities that complete
the independent renal dialysis facility cost report (Form CMS 265-11,
OMB No. 0938-0050). We noted that these ESRD facilities are a subset of
``independent'' facilities as defined at Sec. 413.174(b), as cost-
reporting is only one of 5 criteria used in the determination of
whether an ESRD facility is independent or hospital-based as listed at
Sec. 413.174(c). For the purposes of this proposal, we referred to
ESRD facilities that complete the hospital cost report (Form CMS 2552-
10, OMB No. 0938-0050) as ``ESRD facilities that are financially
integrated with a hospital,'' per the criteria at Sec. 413.174(c)(5).
The occupational mix data presented in the proposed rule represented
the average proportion of hours spent on the duties of that occupation
at all freestanding ESRD facilities nationally for CY 2022. This
national mix includes FTE data on both staff and contract labor from
freestanding ESRD facility cost reports for each occupational category.
Table 2 presents the NEFOM calculated from the freestanding ESRD
facility cost report data from cost reporting periods beginning on or
after January 1, 2022, and before December 31, 2022 (2022 cost report
data), with four decimal places of precision. For the purposes of
comparison, Table 2 includes both the occupational mix we presented in
the CY 2025 ESRD PPS proposed rule, as well as an updated version of
this occupational mix with more complete CY 2022 cost report data. In
the proposed rule, we noted that CY 2022 would be the most recent
complete year of cost reporting data for both the proposed rule and for
this CY 2025 ESRD PPS final rule, as the latest 2022 cost reports could
have begun in December 2022 and ended in December 2023, although some
2022 cost reports were not yet available at the time of the analysis
for the proposed rule. For the approximately 1.7 percent of
freestanding ESRD facilities without 2022 cost report data available at
the time of rulemaking for the proposed rule, 2021 cost report data was
used. At the time of proposed rulemaking, we anticipated that we would
have complete CY 2022 cost report data; however, this has proved not to
be the case. For this final rule, some CY 2022 cost report data was
still not available, so 2021 cost report data was used for 126 ESRD
facilities. The occupational mix weights used in the proposed new wage
index methodology are presented in terms of the number of FTEs per 1000
treatments, although we note that the specific denominator does not
impact the calculation, as these are relative weights. Table 2 also
includes percentages that represent the percent of FTEs for each
occupation in the NEFOM. For example, RNs represent approximately 30
percent of the NEFOM, which means that across the nation, 30 percent of
all hours worked by employees at freestanding ESRD facilities are
worked by RNs. We note that we did not include FTEs that were reported
as ``other'' occupations in the cost reports in this occupational mix,
because we could not determine what occupation(s) this represented and,
therefore, could not get appropriate wage estimates. ``Other''
occupations would have accounted for 3.8 percent of the NEFOM if
included.
[[Page 89101]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.001
We note that the NEFOM is calculated as a part of the proposed wage
index methodology described in detail later in this section of this
final rule, from freestanding ESRD facilities cost reports, and that
the NEFOM is not an input in the wage index calculation. However, we
presented the NEFOM in the proposed rule to inform the calculation
process for any interested parties which wish to replicate the
calculation.
For this methodology, we proposed to only utilize data from
freestanding ESRD facilities, which comprise the vast majority of ESRD
facilities. ESRD facilities that are financially integrated with a
hospital represent approximately 4.5 percent of ESRD facilities. It was
necessary to make this distinction, as ESRD facilities that are
financially integrated with a hospital complete a different cost report
form (Form CMS 2552-10, OMB No. 0938-0050), which does not include all
the occupational categories included on the freestanding facility cost
report (Form CMS 265-11, OMB No. 0938-0050). Specifically, ESRD
facilities that are financially integrated with a hospital do not
include administrative and management staff hours in their cost
reports. FTE data for administrative and management staff are necessary
for this analysis, so we proposed to exclude hospital-integrated cost
reports. We stated that we believe that the occupational mix for
freestanding ESRD facilities is likely similar to the mix for ESRD
facilities that are financially integrated with a hospital (which, as
noted earlier, make up a small proportion of all ESRD facilities), such
that we would not expect significantly different results if we were
able to include ESRD facilities that are financially integrated with a
hospital in this analysis.
As discussed in the proposed rule, we conducted additional analyses
to ensure that this occupational mix data would be appropriate for the
construction of an ESRD facility wage index. First, we reviewed the
occupational mix for ESRD facilities on a regional level to determine
if the use of a single national occupational mix was appropriate. While
we found some variation across regions, the variation was relatively
small between regions, with the weight values for each occupation being
within a few percentage points. The main exceptions to this were in the
United States Territories, which had higher variation in occupational
mix, likely due in large part to the relatively few ESRD facilities in
those regions. Additionally, we found that lower volume ESRD facilities
tended to have slightly different occupational mixes, requiring
relatively more administrative and management staff FTEs, likely due to
the lack of economies of scale for these occupations at lower treatment
volume levels. Second, we conducted an analysis on the change in the
national occupational mix over the past 5 years and found little
variation over this time period. Both of these analyses indicate that
the use of a single national occupational mix is appropriate for
constructing an ESRD facility wage index as the occupational mix is
reasonably similar to most region's occupational mixes and relatively
stable over time.
Additionally, we proposed to use treatment volume data from
freestanding ESRD facilities as reported on freestanding ESRD facility
cost reports. This treatment volume data is used in the proposed wage
index methodology as a weight on the county level wages when
calculating the wages for a CBSA. The calculation is described in
further detail in section II.B.2.b.(2)(b) of this final rule.
In the proposed rule, we emphasized the importance of accurate cost
report data for this proposed policy as well as other current and
potential policies under the ESRD PPS, such as facility-level or case-
mix adjustment refinement. We strongly urged ESRD facilities to
carefully review cost report data to ensure continued accuracy so that
future refinements to the ESRD PPS are based on the best data possible.
(iii) IPPS Hospital Wage Index
As discussed in the proposed rule, the proposed new wage index
methodology used the established ESRD PPS wage index methodology, which
is based on the IPPS hospital wage index, for the purposes of
standardizing the new wage index (step 6 in the methodology described
in section II.B.2.b.(2)(b)). Consistent with our established ESRD PPS
methodology, we use the most recent pre-floor, pre-reclassified
hospital wage data collected annually under the IPPS. For the purposes
of the proposed new wage index methodology, we referred to this older
wage index methodology as the ``ESRD PPS legacy wage index.'' The ESRD
PPS wage index values under the legacy methodology are calculated
without regard to geographic reclassifications authorized for acute
care hospitals under sections
[[Page 89102]]
1886(d)(8) and (d)(10) of the Act and utilize pre-floor hospital data
that are unadjusted for occupational mix. For CY 2025, the updated wage
data are generally for hospital cost reporting periods beginning on or
after October 1, 2020, and before October 1, 2021 (FY 2021 cost report
data). 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). Consistent with our established policy of updating
wage indices in the final rule, we stated in the CY 2025 ESRD PPS
proposed rule that we intend to use the most recent IPPS wage index for
the construction of the CY 2025 ESRD PPS legacy wage index for the
final rule (89 FR 55771). We noted that the purpose of calculating the
ESRD PPS legacy wage index is solely for standardizing the new ESRD PPS
wage index, ensuring that the treatment weighted average of the new
ESRD PPS wage index is the same as it would have been under the
established methodology. This would ensure that the changes associated
with the proposed new wage index methodology are contained to the wage
index, whereas changes associated with shifts in utilization would be
reflected in the wage index budget neutrality factor. For example, if
the new methodology resulted in a significant increase in the number of
high-wage index facilities, the standardization factor would decrease
wage index values across the board to keep the treatment-weighted
average of the legacy and new wage index methodologies the same; in
contrast, if utilization trends resulted in a significant increase in
the number of treatments furnished by ESRD facilities in high-wage
index areas, the treatment weighted average of both the legacy and new
wage index methodologies would increase, which would need to be
accounted for by the wage index budget neutrality adjustment factor.
This is described in more detail in step 6 of the proposed new wage
index methodology described in section II.B.2.b.(2)(b) of this final
rule.
(iv) Time Lag Associated With New Data Sources
One concern expressed by interested parties about the current ESRD
PPS wage index methodology is that the IPPS wage index, used as its
basis, uses data from approximately 4 fiscal years prior. Interested
parties have opined that this delay makes the ESRD PPS wage index less
responsive to certain changes in wages, such as inflation.\19\ In the
proposed rule, we noted that the purpose of the wage index is to
reflect geographic difference in the area wage levels, and that
national trends in wages, including wage inflation, are accounted for
by the ESRDB market basket percentage increase. We noted that the IPPS
wage index is generally responsive to geographic variation in wages,
including variation stemming from local or regional inflation. However,
as interested parties have raised concerns about the time lag
associated with our use of the IPPS wage data, we discussed the
difference between the time lag associated with our use of the IPPS
wage index for the ESRD PPS and the proposed new ESRD PPS wage index
methodology.
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\19\ In accordance with section 1886(d)(14)(E)(1) of the Act,
the IPPS wage index is required to employ data based on ``a survey
conducted by the Secretary (and updated as appropriate) of the wages
and wage-related costs of subsection (d) hospitals in the United
States.'' The IPPS is based on the most current audited hospital
wage data from Worksheet S-3, Parts II, III and IV of the Medicare
cost report, CMS Form 2552-10 (OMB Control Number 0938-0050 with an
expiration date of September 30, 2025) (see, for example, 88 FR
58961).
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As previously discussed in this section, the new ESRD PPS wage
index methodology that we proposed would use data from BLS OEWS and
freestanding ESRD facility cost reports. BLS publishes OEWS data
annually with a May reference date, with estimates typically released
in late March or early April of the following year. Each set of OEWS
estimates is based on six semi-annual survey samples spanning the prior
3 years. Wages collected in earlier survey panels are updated to the
reference date of the estimates based on wage adjustment factors
derived from the OEWS survey data using a regression model. The
freestanding ESRD facility cost report data that can be analyzed at the
time of rulemaking are generally from 2 CYs prior. Specifically, for
the proposed wage index presented in Addendum A of the ESRD PPS
proposed rule, the BLS OEWS data represent wages as of May 2022 (based
on survey panels collected from November 2019 through May 2022), and
the cost report data generally covered cost reporting periods beginning
on or after January 1, 2022, and before December 31, 2022.\20\ The
publicly available BLS OEWS data is an average using data collected
over a 3-year period due to the large sample involved in the survey.
This pooled sampling improves stability and predictability of the OEWS
estimates over time. In the CY 2025 ESRD PPS proposed rule (89 FR
55772), we noted that, should the proposed methodology be finalized, we
would use the most recent update of BLS OEWS data for the ESRD PPS
final rule. Under this new proposed methodology, BLS OEWS estimates for
May 2023 would be utilized for the final CY 2025 ESRD PPS wage index.
---------------------------------------------------------------------------
\20\ In cases where 2022 freestanding cost report data were not
available at the time of the proposed rule, 2021 data was used. This
was the case for 131 ESRD facilities, approximately 1.7 percent of
the ESRD facilities in this analysis. In calculating the wage
indices for this final rule there were 126 ESRD facilities for which
2021 cost report data was used.
---------------------------------------------------------------------------
Both the ESRD facility cost report data and the BLS OEWS data are
more recent than the data used for the IPPS wage index. Additionally,
the purpose of using the freestanding ESRD facility cost report data in
this proposed methodology would be to establish a national occupational
mix for ESRD facilities, which we are calling the NEFOM. In the
proposed rule, we stated that we intend to present the NEFOM annually
to reflect the latest complete year of cost report data at the time of
rulemaking to inform the public of the relative weights assigned to
each occupation. Given that freestanding facility cost reports are
submitted on a rolling basis, the most recent data would generally be
obtained from cost reports beginning in the CY three years prior to the
CY for which we are setting rates (that is, for the CY 2025 proposed
rule, the latest complete year of cost report data are from cost
reports beginning in CY 2022). Based on our analysis of prior years'
cost report data, we did not anticipate that the national occupational
mix would change much from year-to-year. Additionally, we noted that
the use of a single national occupational mix for all ESRD facilities
would limit the impact of changes in employment patterns on the wage
index, as all ESRD facilities would be similarly impacted by a change
in the NEFOM. As the wage index is a relative value, the main way that
a change in the NEFOM would impact an ESRD facility's wage index would
be if the CBSA in which that ESRD facility is located has relatively
high or low wages for an occupation that experiences growth or
shrinkage in the NEFOM. Thus, the main driver in changes from year-to-
year under the proposed new wage index methodology likely would be the
BLS OEWS data, which, for the final rule, would be based on estimates
with a reference date of the May prior to the rulemaking year.
We noted that, at the time of the analysis conducted for the
proposed rule, the May 2023 BLS OEWS estimates were not yet available;
however, they were available at the time of the analysis conducted for
this final rule. As previously discussed, some ESRD
[[Page 89103]]
facilities' CY 2022 cost reports were not available for the proposed
rule but are available now for the final rule; however, we still do not
have complete CY 2022 data, so we must utilize some CY 2021 cost
reports for this final rule. In the proposed rule, we stated that
should the proposed new wage index methodology be finalized, we would
update the wage index values based on the most recent BLS OEWS data
available. We also proposed to use most recent cost report data
available for cost reporting periods beginning in CY 2022 and update
the NEFOM in Table 2 accordingly in the final rule (89 FR 55772). Using
the most recent 2022 data available for the calculation of the new ESRD
PPS wage index methodology in the final rule would be consistent with
our established ESRD PPS wage index methodology of updating ESRD
facility wage indices between the proposed and final rules.
In the proposed rule, we noted that our proposed new wage index
methodology does use the IPPS wage index to create the ESRD PPS legacy
wage index, which is used to standardize the results of the new ESRD
PPS wage index methodology. We recognized the concerns we have heard
regarding the data lag associated with our use of the IPPS wage index
for the ESRD PPS. However, as the ESRD PPS legacy wage index would only
be used to calculate a treatment-weighted average of the legacy wage
index to standardize the wage index values derived under the proposed
new methodology, the proposed new ESRD PPS wage index would continue to
reflect the relative differences in area wages based on the more recent
BLS OEWS data. Therefore, any effect of any data lag of the ESRD PPS
legacy wage index on the proposed new ESRD PPS wage index would be
minimal.
(v) Comparison Between Proposed New Wage Index Methodology Data Sources
and Hospital Wage Index Data
The other main concern that interested parties have raised about
our current ESRD PPS wage index methodology is that the IPPS wage index
is based on hospital cost report data. As previously discussed,
interested parties have stated that hospital cost report data is not
necessarily the most appropriate source for estimating geographic
differences in wages paid by ESRD facilities. These interested parties
predominantly point to the different occupational mix employed by ESRD
facilities as the main differentiator between inpatient hospitals and
ESRD facilities; however, there may also be differences in wages paid
for the same occupational labor category in the two settings.
Differences in wages within the same occupation could arise from any
number of factors, including differences in duties, hours, required
experience, or desirability of the position.
In the proposed rule we presented Table 3 in the context of the
proposed new wage index methodology. Table 3 compares the national
average occupational mix and corresponding wages for occupations
employed by freestanding ESRD facilities to that of hospitals from IPPS
data. The source of average wages used here for ESRD facilities is the
BLS OEWS mean hourly wage data, which is then weighted by ESRD PPS
treatment count in the geographical area. Average IPPS wages are
derived from the IPPS occupational survey (Form CMS-10079) as presented
in the fiscal year (FY) 2024 IPPS Public Use File (PUF),\21\
representing data from 2019. The mean hourly wage data from BLS is from
the May 2022 OEWS estimates, which are based on six panels of survey
data from November 2019 through May 2022.
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\21\ Files related to the FY 2024 IPPS final rule are available
online at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2024-ipps-final-rule-home-page.
[GRAPHIC] [TIFF OMITTED] TR12NO24.002
In discussing this data in the proposed rule, we noted that the
hospital wage data (column F) in Table 3 presents the wages paid by
hospitals to employees, as derived from the IPPS occupational survey
data, for the purposes of comparing to the BLS data. This data is used
to adjust the hospital average hourly wage, calculated using hospital
cost report data, based on the provider-specific occupational mix. This
differs from the hospital cost report
[[Page 89104]]
data used for the IPPS wage index, as that does not break down all
wages and related costs by occupation.
Compared to hospitals, ESRD facilities generally use slightly
higher proportions of RNs and LPNs and significantly fewer nurse aides
and medical aides (column B). Additionally, the freestanding ESRD
facility cost reports include additional occupational categories to
reflect the labor mix employed by ESRD facilities.
(b) Construction of the New ESRD PPS Wage Index
In the proposed rule, we presented these general steps, which we
stated we would use when constructing a wage index based on the
proposed new ESRD PPS wage index methodology; for a more detailed look
at the specific computational steps we execute in the code to calculate
the wage index according to the proposed methodology, including steps
related to data collection and cleaning, we provided the supplementary
document Addendum C of the proposed rule.
1. We calculate the treatment count-weighted mean hourly wage for
each occupation for each CBSA by multiplying the mean hourly wage data
from the BLS OEWS by the treatment count for each county within that
CBSA and dividing by the total treatment count of all counties within
the CBSA. We weight mean hourly wage by treatment count to ensure that
the mean hourly wage for the CBSA is proportional with the actual wages
paid by ESRD facilities in the CBSA. This avoids a situation where a
particularly high or low wage county within a CBSA has no ESRD
facilities but still has a large impact on the wage index for that
CBSA. This reasoning extends to each instance in which we weight values
by treatment counts. We use a crosswalk that relates counties to MSAs,
non-MSAs and NECTAs.
2. We calculate the ESRD facility mean hourly wage in each CBSA by
multiplying the treatment count-weighted mean hourly wage (from step 1)
for each occupation for a given CBSA with the corresponding weight of
the NEFOM for each occupation and then sum each category's amount to
get the total.
3. We calculate the treatment count-weighted mean hourly wage for
each occupation at the national level by multiplying the mean hourly
wage for the occupation in each CBSA by the treatment count of that
CBSA and dividing by the aggregated treatment count nationally.
4. We calculate the national ESRD facility mean hourly wage by
multiplying the national mean hourly wage (from step 3) for each
occupation by the corresponding weight of the NEFOM for each occupation
and then sum each category's amount to get the total.
5. We divide the ESRD facility mean hourly wage for each CBSA by
the national ESRD facility mean hourly wage to create a raw wage index
level (that is, a wage index that has not been normalized as described
in step 6).
6. We multiply the raw wage index level for each CBSA by a
treatment weighted average of the CY 2025 ESRD PPS legacy wage index
constructed using the established ESRD PPS methodology based on IPPS
Medicare cost report data and divide the product by the treatment
weighted average of raw wage indices, which equals 1 by
construction.\22\ This is to ensure that the treatment-weighted average
of new BLS-based wage indices is the same as the weighted average of
the current wage indices. By ensuring the weighted average of the new
wage index is the same as the weighted average of the pre-floor pre-
reclassification IPPS wage index we have normalized the new wage index
such that it is more comparable to the former ESRD PPS wage index
methodology. This prevents the possibility that the treatment-weighted
average of the new wage index is significantly different than the
treatment-weighted average of the established methodology. We include
this step because our goal in establishing the proposed new wage index
methodology is not to alter the significance of the wage index in
determining each ESRD facility's payment, but rather to ensure that the
wage index values better reflect relative labor costs that affect ESRD
facilities specifically. We note that because we apply a wage index
budget neutrality adjuster (discussed in section II.B.4.b), the new
wage index methodology would not increase total payments to ESRD
facilities even absent this step.
---------------------------------------------------------------------------
\22\ Treatment weighted averages of wage indices are calculated
by multiplying the wage index value for each CBSA by the treatment
count in the CBSA and dividing by the aggregate national treatment
count.
---------------------------------------------------------------------------
7. We apply the 0.6000 floor to the wage index by replacing any
wage index values that fall below 0.6000 with a value of 0.6000, which
is the wage index floor for the ESRD PPS as established in the CY 2023
ESRD PPS final rule (87 FR 67166).
After following these steps, we would obtain the wage index values
for each CBSA (based on the new OMB delineations as discussed later in
this section of the preamble) according to the proposed ESRD PPS wage
index methodology described previously. In the proposed rule, we noted
that the 5 percent cap in year-over-year decreases in wage index values
would be applied for each ESRD facility after the new wage index is
calculated based on the proposed methodology for the CBSA in which the
ESRD facility is located and, therefore, is not reflected in the
proposed wage index value for a CBSA in Addendum A of the proposed
rule, 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 under the page for CMS-1805-P.
This was necessary as this cap protects ESRD facilities in the rare
circumstances when changes in policy related to the wage index
methodology or CBSA delineations cause an ESRD facility to be in a
significantly lower wage index area in a given year when compared to
the previous year (87 FR 67161). As discussed later in this section,
for CY 2025 we proposed to adopt new OMB delineations of CBSAs relative
to those used in the CY 2024 ESRD PPS wage index. As this 5 percent cap
applies to an ESRD facility, and not to a CBSA, it would protect any
ESRD facility that is delineated into a much lower wage-index CBSA for
CY 2025.
(c) Methodological Alternatives Considered
While developing the proposed new wage index methodology, we
considered several different alternatives regarding both data sources
used for the new wage index methodology and construction of the wage
index itself. We considered the feasibility of requesting the use of
confidential BLS OEWS data. This was one suggestion from the December
2019 TEP. Confidential data would have some benefits over public data,
primarily that it would provide greater disaggregation of wages by
employer type, such as wages paid by ESRD facilities. Additionally,
confidential BLS data could have a timeframe other than the 3-year
pooled sample used in the public data, for example, using only the most
recent year's data. However, we noted that the OEWS survey sample is
designed to be statistically representative only when all 3 years of
the sample are combined, so the use of an alternative or shorter
timeframe may not be appropriate. We determined that the publicly
available BLS data would be the most appropriate for our wage index, as
it still provides precise estimates of wages and would allow for far
better transparency. Additionally, we
[[Page 89105]]
stated that we believed that the inclusion of data from other employers
(meaning employers that are not ESRD facilities) would improve the
robustness of the methodology, as ESRD facilities compete for labor
against these other employers.
When considering the use of BLS data we had to determine which
occupation code was appropriate for each occupation in the NEFOM. As
discussed previously, for many of these occupations, the corresponding
BLS code was straightforward as many of the occupations present in the
freestanding ESRD facility cost reports matched a single BLS code.
However, for technicians employed by ESRD facilities we gave further
consideration to two different BLS codes. As presented in Table 1, we
proposed to use code 29-2099 for ``Health Technologists and
Technicians, All Other'' for the construction of the methodology to
account for the labor costs of technicians. This is the most
appropriate category, as ``technicians'' in the freestanding ESRD
facility cost reports generally refers to dialysis technicians, which
do not fall into any of the other BLS codes for health technologists
and technicians. Additionally, we noted that the SOC uses ``dialysis
technician'' as an illustrative example for code 29-2099.\23\ However,
we had some concerns about using this category, as it does not
specifically represent dialysis technicians, but rather all health
technicians that do not fit in the other categories. Because the
category is non-specific, also known as a ``residual'' category, we
were concerned with the impact of the inclusion of other, non-dialysis
technicians in this category. To avoid any issues arising from the use
of a residual category, we considered using code 29-2010 for ``Clinical
Laboratory Technologists and Technicians.'' Although this category does
not fit dialysis technicians as well, it had the benefit of not being a
residual category, and it had fewer counties with missing data.
However, we determined that it was most appropriate to use the most
similar category for dialysis technicians, being the category in which
data for dialysis technicians would be included, which is code 29-2099
``Health Technologists and Technicians, All Others.''
---------------------------------------------------------------------------
\23\ https://www.bls.gov/soc/2018/major_groups.htm.
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As an alternative to using a single national occupational mix for
ESRD facilities we considered using regional or state-level
occupational mixes. The considered alternative would use a similar
methodology to the construction of the NEFOM, but with a different
occupational mix for each census region or state and would apply the
occupational mix in the same way in the construction of the wage index.
That is, the BLS data for a CBSA would be weighted by the occupational
mix for the region or state in which that CBSA is located. This
alternative was considered, in part, because of a suggestion from a
panelist at the December 2019 TEP who pointed out that different states
have different laws regarding staffing requirements for ESRD
facilities, which was not reflected in the methodology presented at the
TEP. We conducted an analysis comparing a state-level occupational mix
wage index to the national occupational mix wage index methodology
presented previously. This analysis found some notable differences,
including higher wage index values for ESRD facilities in the Pacific
census region, but many regions experienced little change. We decided
against the use of state-level or regional occupational mixes for three
main reasons. The first is that the use of different occupational mixes
for different ESRD facilities made the methodology significantly more
complicated and difficult to understand. The second is that this
methodology made it so that one ESRD facility could be in an area with
higher wages for all occupations compared to another ESRD facility but
receive a lower wage index value due to having an occupational mix
which favored lower-paying occupations. In the proposed rule, we noted
that this could be perceived as being inconsistent with the intent of
the wage index to recognize differences in ESRD facility resource use
for wages specific to the geographic area in which facilities are
located (83 FR 56967). Lastly, we were concerned about the possibility
that, should we use anything other than a national occupational mix,
the state-level or regional occupational mix could be manipulated. This
would be especially relevant for states or regions with few ESRD
facilities and, therefore, individual ESRD facilities would have an
outsized impact on the occupational mix for that state or region.
Accordingly, we did not propose this alternative because we believed
that the use of a single national occupational mix is the most
appropriate for this new ESRD facility wage index methodology.
We considered proposing a ``phase-in'' policy for this wage index
methodology change, which could be implemented in addition to the 5
percent cap on wage index decreases. One potential example of a phase-
in policy could be a 50/50 blended methodology, where an ESRD facility
would receive the average of their wage indices from the proposed new
and legacy methodologies for the first year of implementation. However,
we decided that such a phase-in policy was unnecessary in light of the
5 percent cap on year-to-year wage index decreases for ESRD facilities.
We believed that an additional, or alternative, phase-in policy would
further complicate this change. Additionally, a phase-in policy could
hurt ESRD facilities that would receive a higher wage-index under the
new methodology, which we do not believe would be appropriate, as we
believe the new methodology based on BLS data is the best approximation
of the labor costs those ESRD facilities face.
We considered setting the NEFOM through rulemaking separately from
the routine wage index update. Under this alternative, we would
periodically update the NEFOM, for example every 2 years, with
potentially more years of freestanding ESRD facility cost report data.
This would mean that the NEFOM would be a rounded input in the wage
index methodology, rather than a figure precisely calculated as an
intermediary step in the methodology. This would slightly simplify the
calculation steps and would allow for complete transparency on the
NEFOM. However, we have decided to instead derive the FTEs per 1,000
treatments for each occupation as the weights as a part of the wage
index calculation as that would increase the precision of this
calculation. Additionally, given the transparency of the FTE data
derived from publicly available cost reports, we noted that we could
still publish the NEFOM for the coming year in rulemaking alongside the
updated wage index; however, we note that the NEFOM we publish would
have a lower precision so replications using the published NEFOM as an
input may be slightly off. Furthermore, compared to setting the NEFOM
through rulemaking less frequently than annually, the proposed
methodology to calculate the NEFOM as a part of the wage index
methodology annually would be more responsive to national trends in
occupational mix for ESRD facilities.
Finally, we considered whether it was most appropriate to use
something other than the mean hourly wage for the BLS OEWS data for the
construction of the wage index. We noted that there were always
concerns when using the mean of a data set that the figure could be
unduly influenced by outliers. One potential alternative would be to
use the
[[Page 89106]]
median hourly wage data instead. The median hourly wage is available by
occupation in publicly available BLS data, and the median is not as
influenced by outliers as the mean. We also considered using the
geometric mean, instead of arithmetic mean, as that is also less
influenced by outliers; however, the geometric mean is not provided in
publicly available BLS data. Ultimately, we determined that the mean
hourly wage is the most appropriate for this new wage index
methodology, as any outliers are relevant data points insofar as some
ESRD facilities may pay wages significantly higher than the average.
c. Example Calculation Using the Proposed New Wage Index Methodology
Table 4 is an example of a calculation of the wage index for a
hypothetical ESRD facility in a hypothetical CBSA under the proposed
new methodology which was presented in the CY 2025 ESRD PPS proposed
rule. This CBSA contains three counties, each with a different mean
hourly wage and treatment count. Table 4 presents the mean hourly wage
and treatment count used in the calculation.
[GRAPHIC] [TIFF OMITTED] TR12NO24.003
Step 1. Calculate the treatment count-weighted mean hourly wage for
each occupation for each CBSA by multiplying the mean hourly wage data
from the BLS OEWS by the treatment count for each county within that
CBSA and dividing by the total treatment count of all counties within
the CBSA.
RN wage = [(200 * $45) + (300 * $40) + (500 * $50)]/1000 = $46.0
LPN wage = [(200 * $30) + (300 * $30) + (500 * $35)]/1000 = $32.5
Nurse aide wage = [(200 * $15) + (300 * $20) + (500 * $10)]/1000 =
$14.0
Technicians wage = [(200 * $30) + (300 * $35) + (500 * $25)]/1000 =
$29.0
Social worker wage = [(200 * $30) + (300 * $25) + (500 * $35)]/1000 =
$31.0
Administration wage = [(200 * $20) + (300 * $25) + (500 * $20)]/1000 =
$21.5
Dietitian wage = [(200 * $35) + (300 * $30) + (500 * $30)]/1000 = $31.0
Management wage = [(200 * $60) + (300 * $65) + (500 * $50)]/1000 =
$56.5
Step 2. Calculate the ESRD facility mean hourly wage in the CBSA by
multiplying the treatment count-weighted mean hourly wage (from step 1)
for each occupation for the CBSA with the corresponding weight of the
NEFOM for each occupation and sum each category's amount to get the
total. The NEFOM for CY 2025 that we presented in the CY 2025 ESRD PPS
proposed rule is presented again in Table 5. For the purposes of
ensuring the calculation in this section is as easy to understand as
possible we are using the percentage values from the NEFOM rounded to
the nearest tenth of a percent. This makes the wage values calculated
in this step and step 4 more intuitive as they would represent a
weighted average of the wages in the CBSA. We note that in the actual
calculation of the wage index, as described in Addendum C, we calculate
the number of FTEs per 1000 treatments for each occupation and use
those as the weights, so that the weights have a higher level of
precision.
[GRAPHIC] [TIFF OMITTED] TR12NO24.004
[[Page 89107]]
ESRD facility mean hourly wage for this CBSA = (0.300 * $46.0) + (0.040
* $32.5) + (0.024 * $14.0) + (0.381* $29.0) + (0.047 * $31.0) + (0.107
* $21.5) + (0.045 * $31.0) + (0.055 * $56.5) = $34.75
Step 3. Calculate the treatment count-weighted mean hourly wage for
each occupation at the national level by multiplying the mean hourly
wage for the occupation in each CBSA by the treatment count of that
CBSA and dividing by the aggregated treatment count nationally.
To simplify this calculation, assume there are 3 CBSAs as presented
in Table 6:
[GRAPHIC] [TIFF OMITTED] TR12NO24.005
Step 4. Calculate the national ESRD facility mean hourly wage by
multiplying the national mean hourly wage (from step 3) for each
occupation by the corresponding weight of the NEFOM for each occupation
and sum each category's amount to get the total. Similarly to step 2,
we are using the percentages from the NEFOM as weights for the purposes
of this example calculation.
National average ESRD facility wage = (0.300 * $46.90) + (0.040 *
$32.58) + (0.024 * $18.67) + (0.381 * $32.28) + (0.047 * $32.61) +
(0.107 * $19.52) + (0.045 * $31.49) + (0.055 * $56.64) = $36.27
Step 5. Divide the ESRD facility mean hourly wage for each CBSA by
the national ESRD facility mean hourly wage to create a raw wage index
level.
Raw wage index value = $34.75/$36.27 = 0.95809
Step 6. Multiply the raw wage index for each CBSA by a treatment
weighted average of the CY 2025 ESRD PPS legacy wage index constructed
using the established ESRD PPS methodology based on IPPS data and
divide the product by the treatment weighted average of raw wage
indices (which equals 1 by construction). This is to ensure that the
treatment-weighted average of new BLS-based wage indices is the same as
the weighted average of the current wage indices (for the purpose of
this hypothetical calculation we have used a value of 1.00679).
Pre-floor wage index value = 0.95809 * 1.00679/1 = 0.9646
Step 7. Apply the 0.6000 floor to the wage index by replacing any
wage index values which fall below 0.6000 with 0.6000.
Final wage index value = 0.9646
d. Estimated Impacts of Change to Wage Index Methodology
In the proposed rule, included a discussion on the estimated
impacts of the new wage index methodology (89 FR 55778 through 55780).
We discussed that this methodological change would be associated with
significant changes in wage index values, and therefore payment
amounts, for ESRD facilities. Full impacts for the final CY 2025 ESRD
PPS wage index, alongside the updated CBSA delineations and rural
transition policy discussed in section II.B.2.f of this final rule, are
presented in Table 19 in section VII.C.5.a of this final rule,
including application of the 5 percent cap on year-to-year wage index
decreases. In the proposed rule we presented a table which included the
impacts of this change with and without the 5 percent cap on wage index
decreases. This table demonstrated how the application of the 5 percent
cap mitigates negative changes for CY 2025 associated with the new wage
index methodology.
We noted that the 5 percent cap on wage index decreases would apply
to ESRD facilities that are located in a CBSA (based on CY 2025 CBSA
delineations) with a wage index value 5 percent lower than the CY 2024
wage index value for their CBSA (based on CY 2024 CBSA delineations).
The table in the proposed rule was presented for the sole purpose of
illustrating the potential long-term ramifications of the proposed new
wage index methodology once sufficient time has passed such that the 5
percent cap on year-over-year decreases would no longer constrain the
overall effect of this new methodology on wage index values.
In the proposed rule, we discussed our analysis comparing the
hypothetical results of applying this new wage index methodology in
past years to the actual ESRD PPS wage index methodology based on the
IPPS wage index for those years. We found that the application of the
new wage index methodology consistently yields mean and median wage
index values slightly higher than the actual mean and median wage index
values used for those years, implying that the wage index resulting
from this new methodology is relatively stable. Additionally, we found
that the payment impacts based on facility type did not change much
when using data from claim years 2019 through 2022, with most facility
types that are projected to receive a payment increase for CY 2025
associated with the new wage index methodology seeing a payment
increase in past years. Similarly, most facility types that are
projected to receive a payment decrease in CY 2025 associated with the
proposed new wage index methodology were found to have received payment
decreases in our hypothetical analysis of past years. Therefore, we
determined that this new wage index methodology is relatively stable
when analyzing the differences between the new proposed wage index and
the ESRD PPS legacy wage index.
[[Page 89108]]
e. CY 2025 ESRD PPS Wage Index
For CY 2025, we are updating the wage indices to account for
updated wage levels in areas in which ESRD facilities are located. We
proposed to use the new wage index methodology described previously, in
subpart b of this section, according to the most recent available data.
We believe that the use of this new wage index methodology is
appropriate and responds to the feedback we have received from
interested parties regarding the limitations of the current wage index.
Specifically, the use of BLS OEWS data would allow for this new wage
index methodology to be more responsive to differences in ESRD facility
wage levels across the country. Additionally, by using occupational mix
data from the freestanding ESRD facility cost reports, this new wage
index methodology would better reflect the actual wage costs incurred
by ESRD facilities and be most appropriate to use for the ESRD PPS due
to several reasons specific to ESRD facilities. First, freestanding
ESRD facility cost reports contain detailed occupational FTE data,
which allows CMS to create a wage index that is tailored to the wage
costs faced by ESRD facilities based on their unique staffing needs.
Dissimilarities between hospital occupation mix and ESRD facility
occupational mix make the use of the IPPS data less appropriate for
ESRD facilities. In addition, the ESRD PPS has a lower labor-related
share than most other Medicare payment systems.\24\ This new ESRD PPS
wage index methodology addresses these specific circumstances.
---------------------------------------------------------------------------
\24\ For example, under section 1886(d)(3)(E) of the Act, the
IPPS applies a labor-related share of 62 percent for each hospital
unless this would result in lower payments to the hospital than
would otherwise be made.
---------------------------------------------------------------------------
In the proposed rule, we recognized that there were several
methodological limitations to using a wage index based on publicly
available BLS OEWS data. Specifically, the BLS OEWS data source lacks
information on employee benefits and the full cost of contract labor
and includes information from hospitals and other healthcare providers.
However, we stated that we believed that the benefits of using this new
wage index methodology would outweigh these limitations, as the use of
BLS OEWS wage data weighted by an occupational mix derived from
freestanding ESRD facility cost report data would allow for a wage
index that is more representative of the geographic variation in wages
faced by ESRD facilities.
For CY 2025, we also proposed to use OMB's most recent CBSA
delineations as published in OMB Bulletin No. 23-01, which are based on
the data from the 2020 decennial census, for the purposes of the CY
2025 ESRD PPS wage index and rural facility adjustment. This was
consistent with our historical practice of updating the CBSA
delineations periodically according to the most recent OMB
delineations, most recently in the CY 2021 ESRD PPS final rule (85 FR
71430 through 71434). We discuss this policy in greater detail in
section II.B.2.f of this final rule. For more information on the OMB
delineations, we refer readers to the OMB Bulletin No. 23-01: https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.
To implement the proposed change in wage index methodology, we
proposed to amend the regulations at 42 CFR 413.196(d)(2) and
413.231(a). Effective January 1, 2025, the amended Sec. 413.196(d)(2)
would state that CMS updates on an annual basis ``[t]he wage index
using the most current wage data for occupations related to the
furnishing of renal dialysis services from the Bureau of Labor
Statistics and occupational mix data from the most recent complete
calendar year of Medicare cost reports submitted in accordance with
Sec. 413.198(b).'' The amended Sec. 413.231(a) would state that ``CMS
adjusts the labor-related portion of the base rate to account for
geographic differences in the area wage levels using an appropriate
wage index (established by CMS) which reflects the relative level of
wages relevant to the furnishing of renal dialysis services in the
geographic area in which the ESRD facility is located.''
For CY 2025, we proposed to update the ESRD PPS wage index to use
the most recent BLS OEWS wage data and the most recent CY 2022
freestanding ESRD facility cost report occupational mix and treatment
volume data available. At the time the analysis was conducted for the
proposed rule, the most recent BLS OEWS wage data available represented
May 2022. We proposed that if more recent data become available after
the development of this ESRD PPS rule and before the publication of the
ESRD PPS final rule (for example, the April 2024 release of May 2023
OEWS data, which was published after the analysis performed for the
proposed rule), we would use such data, if appropriate, to determine
the CY 2025 ESRD PPS wage index in the ESRD PPS final rule.
(1) Alternative CY 2025 ESRD PPS Wage Index Using Established
Methodology
In the proposed rule, we presented a version of the current ESRD
PPS wage index constructed using our established methodology with the
most recent available data, which we referred to as the ESRD PPS legacy
wage index methodology. The purpose of presenting the legacy
methodology with modifications was to illustrate an alternative to the
new methodology described previously for consideration by interested
parties to facilitate comments on the proposed rule. The inclusion of a
CY 2025 version of the ESRD PPS legacy wage index methodology allowed
for interested parties to compare wage index values under the current
methodology and proposed new methodology. For the reasons previously
discussed, we believed and continue to believe that the proposed new
wage index methodology based on BLS OEWS data and ESRD Medicare cost
report data is the most appropriate for ESRD facilities; however, we
considered commenters' input on this proposal and the alternative wage
index based on the established methodology (updated with the most
recent data) when making a determination about the best approach in
this final rule.
In the CY 2025 ESRD PPS proposed rule we presented the ESRD PPS
legacy wage index, which is based on the most recent pre-floor, pre-
reclassified hospital wage data collected annually under the IPPS, as
an alternative wage index. Please see the proposed rule (89 FR 55781)
for a detailed description of this alternative wage index, which
followed our legacy methodology.
(2) Request for Comments on This Proposal
In the proposed rule, we explained our belief that our new ESRD PPS
wage index methodology more accurately estimates the geographic
variation in wages paid by ESRD facilities when compared to the current
ESRD PPS wage index based on the IPPS wage index. We acknowledged that
this new methodology would represent a significant change to the
established ESRD PPS wage index methodology, both by changing the data
sources and the calculations for the wage index. We requested comments
on all aspects of the new methodology, including the use of BLS OEWS
data for CBSA-level wage estimates, the use of mean hourly wage (rather
than median hourly wage), the use of freestanding ESRD facility cost
reports for deriving occupational mix weights based on FTEs for each
occupation per 1000 treatments as presented in the NEFOM, the use of
the ESRD PPS legacy wage index for standardization, and the
computational steps used to calculate the wage index.
[[Page 89109]]
We welcomed any insights into potential methodological improvements,
particularly related to some of the limitations of the new data sources
discussed previously, including the absence of the cost of employee
benefits and the full cost of contract labor in the BLS data, and the
inability of this methodology to capture differences in ESRD facility
occupational mix across different geographic areas. In the proposed
rule we stated that we would consider modifying the methodological
steps used to calculate the wage index in the final rule, depending on
the comments we received. Additionally, we requested comments on the
proposed use of the new wage index methodology compared to the
established wage index methodology based on the IPPS wage index which
was used to create the alternative ESRD PPS legacy wage index. We also
requested comments on the distributional implications of this wage
index proposal, with specific consideration to rural areas and remote
or isolated areas such as the United States Territories in the Pacific.
Lastly, we requested comments on our proposal to begin using our new
wage index methodology beginning on January 1, 2025.
We invited public comment on our proposal for our new ESRD PPS wage
index methodology and its use for CY 2025. Approximately 20 commenters
including LDOs, SDOs, provider advocacy organizations, coalitions of
dialysis organizations, a professional organization, several ESRD
facilities, and MedPAC commented on the proposed new ESRD PPS wage
index methodology. The following is a summary of the public comments
received on these proposals and our responses.
Comment: Most commenters who expressed an opinion on the new ESRD
PPS wage index methodology, including a coalition of kidney
organizations, several LDOs and MedPAC, stated that the use of the IPPS
wage index within the ESRD PPS was flawed. Some commenters specified
reasons why the IPPS methodology was not appropriate for the ESRD PPS
including data lag and the fact that it is based on hospital cost
report data. The majority of these commenters indicated that they
believed the new wage index methodology would be an improvement over
the IPPS wage index for the ESRD PPS. Many commenters supported the
wage index proposal and requested that CMS finalize the proposal for CY
2025.
Response: We thank commenters for their opinions on the proposed
new wage index methodology as well as their opinions on the ESRD PPS's
current use of the IPPS wage index. We agree that the ESRD PPS wage
index proposed for CY 2025 has advantages over use of the IPPS wage
index when applied to the ESRD PPS. We appreciate the support for the
new ESRD PPS wage index methodology, which we are finalizing in this
rule.
Comment: Many commenters expressed concerns over some of the
impacts of the proposed new ESRD PPS wage index methodology. Among
these comments, the most frequently mentioned impact was the wage index
budget neutrality adjustment factor. Multiple commenters requested that
we implement this new wage index methodology in a non-budget neutral
manner. Several commenters noted that there was no statutory
requirement for budget neutrality for the ESRD PPS wage index. Some
commenters expressed concerns about payment adequacy within the ESRD
PPS and stated a belief that the corresponding decrease to the ESRD PPS
base rate would lead to inadequate payments. One commenter attributed
the budget neutrality reduction to the occupational mix used in
calculating the new wage index methodology.
Response: We appreciate the thoughtful comments on the impacts of
the proposed new ESRD PPS wage index methodology. We acknowledge that
the new wage index methodology, implemented budget neutrally, would
decrease the ESRD PPS base rate for CY 2025 relative to use of the
legacy wage index methodology for CY 2025. However, as discussed in the
proposed rule, we note that this decrease to the CY 2025 ESRD PPS base
rate is predominantly due to the application of the 5 percent cap on
year-over-year wage index decreases under Sec. 413.231(c), which
raises the average ESRD PPS wage index. Although the ESRD PPS base rate
would be decreased for CY 2025, as this cap becomes less impactful
(that is, in future years, as fewer facilities would quality for the
application of the 5 percent cap as a result of the change in wage
index methodology), the ESRD PPS base rate would increase over time,
eventually attaining the level at which it would have been otherwise.
The occupational mix has minimal impact on the budget neutrality
adjustment factor, as the NEFOM serves as weights for the wage index,
which are applied equally to the individual CBSA wages and national
wages in the wage index calculation and, therefore, are essentially
cancel out concerns on their impact on the average wage index value.
Although there is no explicit statutory requirement to implement
the ESRD PPS wage index in a budget neutral manner, our longstanding
philosophy within the ESRD PPS is that when we adjust for relative
resource use and the costs for which we are adjusting are already
included in the ESRD PPS base rate, those adjustments should be
implemented budget neutrally. Under section 1881(b)(14)(A) of the Act
our payment system is based on total costs from ESRD facility cost
reports from 2007 and is increased annually based on the ESRDB market
basket reflecting the changes over time in the prices of an appropriate
mix of goods and services included in renal dialysis services. Labor-
related costs, including wages and benefits, were included in the cost
reports used in the initial analysis (75 FR 49071 through 49083);
therefore, we generally believe it is appropriate to implement any
adjustment factors which are based on the allocation of those costs in
a budget neutral manner.
We have received many comments regarding concerns about payment
adequacy in response to our proposed rule, many of which were combined
with calls to implement the new ESRD PPS wage index in a non-budget
neutral manner. While we acknowledge commenters' concerns about payment
adequacy and address them in section II.B.1.b and below in section
II.B.4 of this final rule, we note that the purpose of the ESRD PPS
wage index is to estimate geographic variation in wages. It would not
be appropriate to make changes to the ESRD PPS wage index methodology
to attempt to increase total payments to address the commenters'
perceived inadequacies. We note that the construction of the wage index
budget neutrality factor ensures that the change in the CY 2024 and CY
2025 wage indices does not result in an increase or decrease of
estimated aggregate payments. Although for CY 2025 the wage index
budget neutrality factor is lower than it has been in the past years,
resulting in a larger decrease to the ESRD PPS base rate, this does not
change the fact that aggregate payments are estimated to be unchanged
implementing the wage index methodology for CY 2025. As noted
previously, the main driver of the lower-than-typical budget neutrality
factor is the application of the 5 percent cap in wage index decreases,
which raises the average wage index value for CY 2025. Although each
year's wage index budget neutrality factors are independent, they are
derived using the prior year's wage index. The higher-than-typical
average wage index value of CY 2025 results in
[[Page 89110]]
a smaller budget-neutrality factor. The smaller budget-neutrality
factor results in a larger decrease to the ESRD PPS base rate.
Consequently, this would likely lead to a higher budget-neutrality
factor in future years where the average wage index value would be
lower than in CY 2025, as ESRD facilities that received the 5 percent
cap in CY 2025 would receive lower wage index values in CY 2026. This
will likely result in an increase to the ESRD PPS base rate in CY 2026
related to the wage index budget neutrality factor.
Comment: MedPAC reiterated support for their wage index
methodology, which was described in the June 2023 Report to Congress,
as discussed earlier.\25\ MedPAC noted that their recommended
methodology would include two features which our proposed new wage
index methodology lacked: a methodology to smooth wage index values
across adjacent CBSAs and a methodology to allow for variation in wage
index values within a single CBSA.
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\25\ https://www.medpac.gov/wp-content/uploads/2023/06/Jun23_MedPAC_Report_To_Congress_SEC.pdf.
---------------------------------------------------------------------------
Response: We thank MedPAC for their recommendations. We did not
propose a smoothing methodology across CBSAs because we do not believe
it would serve the purpose of the ESRD PPS wage index, which is to
estimate geographic differences in area wages. Furthermore, a smoothing
methodology would increase the complexity of the methodology and likely
involve parameter choices that could be seen as arbitrary. The fact
that ESRD facilities which are near each other but located in different
CBSAs would have different wage index values is unavoidable and
persists within the ESRD PPS legacy wage index. Under the stated
rationalization for a smoothing methodology, ESRD facilities in
different CBSAs which are geographically near each other would compete
for labor. We agree with this evaluation of local labor markets, but we
note that should these ESRD facilities and other healthcare employers
in the area be competing for labor, their wages would likely reflect
that, which would in turn be reflected in the BLS OEWS data and used in
the new wage index methodology. As for the recommendation to allow
variation within a single CBSA, we acknowledge that such a fine level
of detail would have certain advantages if the precision of the wage
index could be maintained. However, we do not believe that there is any
way to allow such variation without using data sources which would be
lower quality, when applied to the ESRD PPS, than the BLS OEWS. In
addition, MedPAC recommends the use of American Community Survey (ACS)
data, which could allow for some information on average wages, but that
information would not be specific to the types of labor used in ESRD
facilities. We proposed this new wage index methodology to create a
wage index that is specific to ESRD facilities, so the use of such
nonspecific data, like the ACS data, would not align with our goals of
creating an ESRD-specific PPS wage index. Additionally, similar to the
smoothing methodology, utilizing ACS data to allow for further
variation of wage index values would increase the complexity of an
already complex methodology. We believe that our new ESRD PPS wage
index methodology as proposed, without either of these methodological
steps (that is, not incorporating either smoothing across CBSAs or
variation within CBSAs), strikes a balance between simplicity and
accuracy by estimating geographic wages at the CBSA level using the
highest quality, publicly-available data, without arbitrary model
parameters. We did not propose and, for the reasons stated previously,
we are not finalizing in this rule either of the commenter's
suggestions of smoothing across CBSAs or accounting for variation
within CBSAs.
Comment: Several commenters expressed support for the use of the
IPPS wage index for the ESRD PPS. Some commenters highlighted the lack
of hospital-based ESRD facility data used in constructing the NEFOM and
stated a belief that due to this lack of data the IPPS wage index would
be more appropriate for hospital-based ESRD facilities. One commenter
stated that this omission would unfairly penalize hospital-based ESRD
facilities, particularly pediatric hospital-based ESRD facilities. One
commenter requested we make changes to the methodology to utilize
hospital-based ESRD facilities' cost report data in the occupational
mix, as hospital-based ESRD facilities have hiring practices and
occupational mixes more similar to hospitals. One commenter stated that
the omission of hospital-based ESRD facility data would have
distributional implications due to varying ranges of hospital-based
ESRD facilities in different geographical areas.
Response: We appreciate commenters' insight into the extent to
which the ESRD PPS legacy wage index based on IPPS data is appropriate
for ESRD facilities. We note that we generally agree that the use of
the IPPS wage index for the ESRD PPS has historically been reasonably
appropriate for estimating geographic variation in wages for many of
the reasons the commenters stated, however, this does not change our
belief that the new ESRD PPS wage index is more appropriate for the
ESRD PPS moving forward compared to the legacy methodology based on the
IPPS wage index. Many of the objections these commenters raised to the
new methodology revolved around the fact that the NEFOM was based
solely on freestanding ESRD facility cost reports and, therefore, did
not include data from hospital-based ESRD facilities. While we agree
that including data from hospital-based ESRD facilities into the NEFOM
would be an improvement, we could not incorporate data from hospital-
based ESRD facility cost reports into the NEFOM in an appropriate way.
As we explained in the proposed rule (89 FR 55770), hospital-based ESRD
facilities lacked certain occupational categories which are present in
freestanding ESRD facility cost reports, and therefore, in the NEFOM.
The omission of these categories not only means that we do not have
data on those occupations for hospital-based ESRD facilities, but it
also makes it impossible to appropriately incorporate any data on
occupations present in the hospital-based ESRD facility cost reports,
since it would not be an appropriate comparison. We would have absolute
numbers on the clinical staff of the hospital-based ESRD facility,
which would be useful for other analyses, but without knowing the
proportion of labor costs spent on the omitted hospital cost report
categories, any attempt to incorporate the present data would rely on
an assumption that the data reported for the categories not present in
the cost report is comparable to that reported for those categories in
freestanding ESRD facility cost reports. We did not believe that such
an assumption was necessary as hospital-based ESRD facilities are a
significant minority of the total population of ESRD facilities (about
5 percent), meaning their inclusion in the NEFOM would not have a
substantial impact; furthermore, we believe freestanding ESRD
facilities are a good proxy for the average national occupational mix
for hospital-based ESRD facilities. Since the NEFOM only serves as
weights for the mean wages for the occupations, we believe that the
lack of hospital-based data would not unfairly disadvantage hospital-
based ESRD facilities, or hospital-based pediatric ESRD facilities,
since they would receive the same wage index as freestanding ESRD
facilities in the same
[[Page 89111]]
area. Furthermore, any shift to the NEFOM associated with the
hypothetical inclusion of hospital-based ESRD facility cost report
data, should it be possible, would not have any specific impact on
hospital-based ESRD facilities compared to other ESRD facilities, as
the NEFOM would be applied in the wage index calculation for all ESRD
facilities in the same way. Additionally, we note that our analysis
shows that hospital-based ESRD facilities would, on average, receive
increased payments under this proposed new methodology.
We disagree with the claim that the IPPS wage index would be more
appropriate for hospital-based ESRD facilities. Although hospital-based
ESRD facilities' cost report data could not be incorporated into the
NEFOM, we still believe that the freestanding ESRD facility cost report
data is a reasonable proxy for hospital-based ESRD facilities.
Furthermore, the new wage index methodology uses mean wage data from
the BLS OEWS for occupations related to the furnishing of renal
dialysis services, which we believe makes the new wage index
methodology more appropriate for hospital-based ESRD facilities when
compared to the IPPS wage index. While it is true that hospital-based
ESRD facility data would be included in the IPPS wage index there are
many other departments (including but not limited to the adults and
pediatric unit, intensive care unit and surgical intensive care unit)
included in the hospital cost reports which we would anticipate would
be less similar to hospital-based ESRD facilities than freestanding
ESRD facilities are. As we do not have comprehensive occupational mix
data from hospital-based ESRD facilities, we cannot directly evaluate
the claim about hospital-based ESRD facilities having more similar
occupational mixes to hospitals overall than freestanding ESRD
facilities, but we would not anticipate that this would be the case
because of the unique types of labor required in furnishing renal
dialysis services compared to other hospital services. Lastly, we would
not anticipate the omission of hospital-based ESRD facilities from the
NEFOM as having any geographic distributional implications, because the
NEFOM only serves as a set of weights in the new wage index
methodology, so any change to the NEFOM that could potentially arise
from including hospital-based cost reports (if that were operationally
feasible) would change the weights in the same way for all ESRD
facilities.
Comment: One commenter suggested allowing pediatric hospital-based
ESRD facilities to continue using the IPPS-based legacy wage index.
Response: We do not believe it would be appropriate for hospital-
based pediatric ESRD facilities to be allowed to receive a different
wage index value, as we believe that this new wage index methodology is
the most appropriate for all ESRD facilities, including pediatric and
hospital-based ESRD facilities, for the reasons discussed previously.
We do not believe that the IPPS wage index is more applicable for
hospital-based pediatric ESRD facilities. We believe these ESRD
facilities are likely more similar to freestanding ESRD facilities than
other divisions of hospitals because the provision of renal dialysis
services likely dictates the occupational mix more than the location of
the ESRD facility. That is, pediatric hospital-based ESRD facilities
utilize the occupations for which we have utilized BLS OEWS data, as
those are the occupations relevant in furnishing renal dialysis
services. Furthermore, as the ESRD PPS wage index is intended to
reflect the wages in the geographic area in which an ESRD facility is
located, it generally would not be appropriate for two ESRD facilities
in the same geographic areas to have different methodologies determine
their wage index values, as they would generally draw from the same
geographic labor market.
Comment: Several commenters expressed concerns with the BLS OEWS
data used in the construction of the new ESRD PPS wage index
methodology. An LDO and a coalition of dialysis organizations expressed
concerns with the BLS OEWS data centered around the lack of data on
employee benefits and limitations on traveling contract labor data.
These comments emphasized both the importance of benefits in attracting
staff and the necessity of using contract labor, which would include
labor contracted across CBSAs. Another coalition of dialysis
organizations suggested that we study these costs to ensure they are
accounted for in this policy. One commenter noted that the BLS OEWS
data was not based solely on ESRD facility wage costs and that BLS
geographic area estimates do not stratify data by healthcare sector.
One commenter noted that evidence shows that wages and benefits vary
across labor markets. One commenter expressed a preference for a wage
index derived only from ESRD facility wage data from ESRD facility cost
reports.
Response: We appreciate these detailed evaluations of the potential
limitations of the data sources used in the proposed methodology. In
the proposed rule we acknowledged that a lack of information on
employee benefits was a limitation of using the BLS OEWS data source.
However, we note that the omission of benefits would only have a
significant impact on the resulting wage index if the geographic
variation in benefit costs is different from the geographic variation
in wages. We note that this condition is different from the
consideration one commenter raised that wages and benefits both vary
geographically. While we cannot say for certain whether the geographic
variation in wages is exactly the same as the geographic variation in
benefits, we believe that ESRD facility wages are likely a fair proxy
for the way ESRD facility benefits vary geographically, particularly
when compared to the IPPS wage index, which is based on many factors
unrelated to the furnishing of renal dialysis services. Our analysis of
cost report data indicates that the percentage of labor costs
associated with benefits does not vary substantially by geographic
region, with all census regions' shares being between 22 and 24
percent. This is what we would expect to see if wages and benefits vary
similarly across geographic regions. We agree with the commenter that
benefits are an important tool in recruiting and retaining staff, but
we note that wages are also an important tool, so we believe that
generally ESRD facilities which need to expend additional money to
attract more staff would likely use both increased wages and increased
non-wage benefits. We note that employee benefits represent 9.5 percent
of the cost weights in the 2020-based ESRDB (87 FR 67146) and, on
average, represent approximately 23 percent of all compensation costs.
We note that contract labor is directly included in this policy in
two ways, both as a part of the NEFOM and in the BLS OEWS data,
although we note that self-employed contract workers are not captured
by the OEWS. However, we understand the concern that the commenters
raised regarding traveling contract laborers that may be included in
the data for a different CBSA from where the ESRD facility is located.
We anticipate that many contract laborers would be included in the BLS
OEWS survey data for the CBSA in which the ESRD facility where they
work is located. We note that the BLS OEWS data allows for the
reporting of a worker's site of work; however, we wish to clarify that
worksite reporting does not change the CBSA for which an employee would
be counted. That is, a contract worker employed by an agency that is
physically located in one CBSA but works in a different CBSA would be
included in the wage estimates for the
[[Page 89112]]
CBSA in which their employing agency is located. We wish to reiterate
that, as the wage index is relative, this would only have a significant
impact on the wage index methodology if the way in which traveling
contract labor is utilized varies geographically from other wages. We
intend to continue to monitor and evaluate the performance of the new
wage index methodology, including the extent to which contract labor is
utilized and would consider making changes to the methodology in future
rulemaking, if warranted. We believe the BLS OEWS wage data would
better approximate the labor costs of ESRD facilities even if the
omitted traveling contract labor differed greatly compared to the
included wages, because contract labor hours are generally a small
portion of total hours for ESRD facilities. Our data suggest that
contract labor hours accounted for 1.3 percent and 1.1 percent of RN
and Technician hours in 2022, respectively.
We recognize that the BLS OEWS data used in this methodology is not
based solely on ESRD facility wage data; however, we note that this is
also true for the IPPS wage index. We have decided on several
occupations related to furnishing renal dialysis services for which to
utilize BLS OEWS data. We believe it is appropriate to include data
from other healthcare employers, as it is likely that ESRD facilities
compete with other employers for labor. It is technically correct to
say that BLS OEWS does not stratify their geographic area data by
healthcare sector; however, we do not believe this is a flaw in the
methodology, as the occupations we have chosen to utilize are,
generally, healthcare specific. Table 1 in this final rule describes
the full occupation titles for all of the occupations included in this
wage index methodology. Many of these are inherently healthcare
specific, such as nurses or health technologists and technicians.
However, for those categories that may not be healthcare specific, such
as administrative staff, we are using BLS data from the category that
is healthcare specific (that is, Medical Secretaries and Administrative
Assistants (SOC code 43-6013)). We believe that these categories are
the most appropriate for the types of labor employed by ESRD
facilities. Insofar as these categories do not separate data by type of
healthcare facility, we believe this is appropriate, as different
healthcare employers likely compete with each other for labor.
Similarly, we do not believe a wage index based only on ESRD facility
cost report data would be appropriate, because ESRD facilities compete
against other healthcare employers and, furthermore, in certain CBSAs
the number of ESRD facilities could be very small, leading to the ESRD
facilities present having a very large impact on the cost report data
and, therefore, the wage data for that CBSA.
Comment: Some commenters expressed an opinion that the data sources
used in the proposed methodology were appropriate despite some of the
limitations we discussed in the proposed rule. Several commenters
stated that the omission of hospital-based ESRD facility cost report
data from the NEFOM was reasonable and did not jeopardize the
methodology as a whole. Other commenters stated that the OEWS data
provided a better estimation of geographic wages even if it did not
include benefit data and certain contract labor wages. Some commenters
supported the occupations we have chosen and stated they were
appropriate for the ESRD PPS. Some commenters, including MedPAC,
suggested that we continue to monitor the validity of data sources and
the resulting wage indices.
Response: We thank commenters for their support and agree that the
data sources used in the new wage index methodology are generally
appropriate for such a methodology. We intend to continue to monitor
both the data sources and the ESRD PPS wage index to ensure they remain
appropriate for use in the ESRD PPS.
Comment: Several commenters, including MedPAC and a coalition of
dialysis organizations noted that several adjustments used in the ESRD
PPS, such as the case-mix adjustments, are derived from a model which
might be influenced by a change in the ESRD PPS wage index. MedPAC and
one LDO requested that we conduct analysis in future years to determine
whether some of the adjustment factors should be changed.
Response: We appreciate the commenters' thoughts on the
interconnected relationship between the ESRD PPS wage index and the
other adjustments used within the ESRD PPS. We note that we have not
routinely updated the case-mix or facility-level adjustment factors
when we have made updates to the ESRD PPS wage index in the past.
However, we acknowledge that the new wage index methodology would
result in more significant facility-level changes than past routine
updates to the ESRD PPS wage index. We did not propose any changes to
the ESRD PPS case-mix adjustments or facility-level adjustments for CY
2025. One reason for this was because the proposed new wage index
methodology would represent a substantial change to the ESRD PPS, and
we believe it is appropriate to avoid making multiple significant
methodological changes to the wage index and other adjustment factors
concurrently as payments to ESRD facilities could change substantially
in multiple different ways. We generally believe it is most appropriate
to update all of the case-mix and facility-level adjustment factors
concurrently because of the interconnected nature of the factors. By
this we mean that the case-mix and facility-level adjustment factors
are originally derived from a cost-regression from the CY 2011 ESRD PPS
final rule, and updated in the CY 2016 ESRD PPS final rule, which
includes all such adjustments. By including multiple variables in the
regression as adjustment factors we can derive the appropriate
adjustment factor for each of the facility-level and case-mix
adjustment, as the regression isolates the marginal impact of that
facility-level or case-mix characteristic on the cost variable. This
does not mean that it is inappropriate to update only one of these
adjustment factors, but when we do so we generally intend to be
cautious as not to change the adjustment factor in a way that would
lead to duplicative payment from other adjustment factors, which could
theoretically happen if there were two independent variables which are
highly correlated. This is part of the reason why we proposed to update
the LVPA adjustment factors in a manner which was budget neutral within
the LVPA, rather than reduce the ESRD PPS base rate. We are considering
how to update the case-mix and facility-level adjustment factors in a
way which would best align relative payments with resource use and
cost. We did not propose to update the case-mix and facility-level
adjustment factors in the CY 2025 ESRD PPS proposed rule because we did
not believe we had the proper data to make the most appropriate updates
to the case-mix and facility-level adjustment factors at that time. As
we explained in the CY 2024 ESRD PPS final rule, additional data would
serve to provide moredata to better inform CMS's pursuit of equitable
payment policies in the future by helping us evaluate and monitor the
accuracy of our patient-level adjustment factors (88 FR 76397).
Specifically, we do not yet have the data from either the updated
reporting requirement effective January 1, 2025, for time on machine or
the updates to the cost reports to better capture data on the costs for
pediatric patients. We believe it is most appropriate to wait until we
have these additional data sources and update the
[[Page 89113]]
case-mix and facility-level adjustment factors at that time as these
additional data sources may allow us to better allocate resource use.
Although sometimes substantial changes are unavoidable, they can create
challenges for ESRD facilities when planning for future payment years,
so we believe it is most prudent to make such a substantial change when
we have the most appropriate data. We are not finalizing any changes to
the case-mix or facility-level adjustment factors related to the new
ESRD PPS wage index methodology, but we intend to consider whether such
changes would be appropriate in future years.
Comment: Some commenters expressed concerns with the use of a
single national occupational mix for all ESRD facilities. Several
interested parties expressed concerns with the application of a wage
index based on a national occupational mix to the U.S. Territories in
the Pacific, stating that they believed a regional occupational mix
would be more appropriate. One commenter suggested CMS allow some ESRD
facilities to continue to receive the legacy wage index based on the
IPPS wage index.
Response: The NEFOM's purpose in the wage index methodology is to
weight the BLS OEWS mean wage data so that the resulting wage index
would be more representative of the actual wage costs faced by ESRD
facilities. We believe that a single national occupational mix achieves
this goal in the most straightforward way. The new wage index
methodology is the most appropriate estimation of wages for ESRD
facilities. Although some types of ESRD facilities, such as ESRD
facilities located in U.S. Territories, may have some other costs that
are higher due to their location, if these costs are not directly
related to wages it would not be appropriate for them to be reflected
in the wage index methodology. As discussed earlier, we do not believe
it would be appropriate for different ESRD facilities in a given CBSA
to receive different wage index values, so we are not finalizing any
exceptions to the new wage index methodology that would allow certain
ESRD facilities or facility types to receive the legacy wage index.
Comment: One commenter stated that it would not be appropriate to
apply a different wage index value to hospital-based ESRD facilities
compared to other units of the hospital as they would have the same
hiring practices.
Response: We recognize that hospital-based ESRD facilities likely
share some practices with the hospital in which they are located.
However, we do not agree with this assertion. We believe it is
reasonable for a hospital-based ESRD facility to receive a different
wage index from other units in the hospital, as the labor employed by
ESRD facilities is different from the labor employed by other parts of
a hospital. We note that under the current payment systems, hospitals
functionally receive different payment rates for labor for different
units, as the payment rates are based on more than the wage index,
including the labor-related share and the base payment rate.
Furthermore, we do not believe it would be appropriate for hospital-
based ESRD facilities to receive different payment rates from similar
ESRD facilities in the same CBSA, as we would generally expect ESRD
facilities in the same CBSA to face similar labor costs both in mean
hourly wage and in the types of labor employed.
Comment: One commenter stated a concern that the NEFOM had a large
portion of dialysis technicians which, according to the commenter,
would hurt independent ESRD facilities.
Response: We believe the commenter is saying that independent ESRD
facilities utilize dialysis technicians at a lower rate than LDOs, and
therefore would likely utilize more nurse labor. Our analysis of
occupational mix data does not indicate that this statement is true.
Our analysis showed that independent ESRD facilities had a slightly
lower ratio of nurses to technicians compared to LDOs. The largest
difference we found between independent ESRD facilities and LDOs was
that independent ESRD facilities had higher rates of administrative
staff and management, likely due to economies of scale for these
occupations leading to larger organizations requiring relatively fewer
of these staff compared to direct patient care staff. We would note
that our analysis did find that regional dialysis organizations
utilized significantly fewer technicians compared to both LDOs and
independent facilities, instead hiring significantly more nurse aides
(which are more similar in wages to technicians than RNs). Separate
from this analysis, we acknowledge the commenter's stated belief that
some ESRD facilities would have an occupational mix that differs from
the NEFOM, but we disagree with the statement that this would ``hurt''
those ESRD facilities. The purpose of the ESRD PPS wage index is to
best estimate the geographic variation in wages and, to that point,
this new wage index better estimates how wages faced by ESRD facilities
vary across different geographic areas. In this methodology, the NEFOM
serves to weight the BLS OEWS wage data in a way that is generally
appropriate for ESRD facilities. While some ESRD facilities would
certainly have occupational mixes that differ from the NEFOM, we do not
believe it would be more appropriate to pay according to each ESRD
facility's occupational mix. ESRD facilities make hiring decisions
based on their local labor market and other relevant factors, which may
result in occupational mixes that differ from the NEFOM. This is
consistent with the philosophy behind a PPS where we provide payment to
ESRD facilities, which they can allocate to costs in the most efficient
and appropriate manner for them.
Comment: One commenter stated that CMS did not adequately
demonstrate that the proposed new wage index methodology would more
accurately reflect ESRD facilities' labor markets. This commenter
believed that implementing the new wage index methodology would be
detrimental for some ESRD facilities.
Response: We understand the commenter's apprehension regarding such
a significant methodological change. We believe that we have adequately
explained why the proposed new ESRD PPS wage index methodology better
estimates the realities of the labor markets for ESRD facilities. With
respect to the commenter's desire for CMS to ``demonstrate'' the
accuracy of the wage index methodology, we note that by its nature the
wage index reflects an estimate of the general economic conditions in a
labor market, and there is no more objective measure of those
conditions against which its accuracy could be measured. We conducted
an analysis of the cost versus payment ratio under the proposed new
ESRD PPS wage index methodology and the legacy wage index methodology
which found that, on average, ESRD facilities had a cost versus payment
ratio of 0.997 under the proposed new methodology (without the
application of the 5 percent cap) and 0.991 under the legacy
methodology. Using this metric, the proposed new wage index methodology
better aligns payment with resource use compared to the legacy
methodology.
Comment: Several commenters expressed support for the 5 percent cap
on wage index decreases. Some of these commenters stated that they
believed the 5 percent cap would help smooth the transition between the
legacy and proposed new methodologies. One LDO stated that they did not
believe any other sort of transition would be necessary given the 5
percent cap. MedPAC reiterated support for a symmetrical cap on wage
index increases. Another LDO suggested that a
[[Page 89114]]
symmetric cap on wage index increases could ameliorate some of the
impact of this new wage index methodology on the ESRD PPS base rate
resulting from budget neutrality.
Response: We appreciate the continued support for the cap on year-
over-year wage index decreases. We agree that this 5 percent cap would
help mitigate the negative impacts of this policy on certain ESRD
facilities in certain years, allowing for a transition period for these
ESRD facilities to adjust their business planning. We did not propose
any changes to the 5 percent cap policy for CY 2025 and are not
finalizing any changes. When we finalized the 5 percent cap in the CY
2023 ESRD PPS final rule (87 FR 67161), we explained why we did not
believe a symmetrical cap on increases would be appropriate. We still
believe that capping increases in wage index values would be
inappropriate, as the new wage index value is the most appropriate for
these ESRD facilities. The purpose of the cap is to increase the
predictability of ESRD PPS payment for ESRD facilities and mitigate
instability and significant negative impacts to ESRD facilities
resulting from significant changes to the wage index. In the CY 2023
ESRD PPS final rule we explained that the transition policies are not
intended to curtail the positive impacts of certain wage index changes,
so it would not be appropriate to also apply the 5 percent cap to wage
index increases (87 FR 67159). Although, we appreciate the suggestion
for ameliorating the other commenters' budget neutrality concerns, as
discussed, we do not believe that a cap on increases to wage index
values would be appropriate, and we are not finalizing a cap on
increases to wage index values.
Comment: One commenter raised concerns that the ESRD PPS wage index
methodology did not include overtime wages. Specifically, the commenter
emphasized that some geographic areas have laws which dictate rates for
overtime, for example time-and-a-half, which would lead to higher
relative costs compared to ESRD facilities in areas which did not have
such legislation.
Response: We acknowledge that the BLS OEWS mean hourly wage data is
not intended to capture overtime by its definition of wages. However,
we do not believe that this is an issue with the methodology. Our goal
in designing the new ESRD PPS wage index methodology was to better
estimate geographic variation in wages, which this new methodology
does. We interpret the commenter's main concern to be that because some
geographic areas have legislation which dictates certain overtime
rates, overtime costs would likely vary differently from non-overtime
wages. Although the commenter is accurate in noting that regulations
regarding overtime differ across the country, since overtime rates are
generally based on non-overtime hourly wages, we believe it's
reasonable to assume that on average places with higher non-overtime
wages would generally have higher overtime wages. While non-overtime
wages paid by ESRD facilities may not be a perfect proxy for overtime
wages paid by ESRD facilities, we believe that they are a fairly good
proxy and that use of the BLS OEWS data is nonetheless superior to
using the IPPS wage index. In other words, we believe that most
variation between geographic areas is captured by the variation in base
wages utilized by the proposed new wage index methodology.
We appreciate the commenter raising this concern, and we have
considered how we could incorporate overtime labor costs into this
methodology. There are some technical limitations to the inclusion of
overtime labor costs into this methodology, as overtime is not included
in the BLS OEWS data source, and the source of the increased cost
resulting from overtime could derive from either different overtime
payment rates or different overtime utilization amounts. We did not
propose to include overtime in the mean wage data used in the proposed
new wage index methodology, and we are not finalizing any such changes
in this final rule. We will consider proposing changes to account for
overtime wages, if appropriate and feasible, in future rulemaking
years.
Comment: One commenter expressed concern that we did not present
the uncapped wage index value for each ESRD facility.
Response: The uncapped wage index value for each ESRD facility was
available in Addendum A to the CY 2025 ESRD PPS proposed rule, as the
uncapped wage index value for an ESRD facility is simply the wage index
value for the CBSA in which the ESRD facility is located. We did not
include that value in Addendum B, as that could have caused confusion,
since the wage index after the application of the 5 percent cap would
apply for CY 2025.
Comment: One commenter expressed support for the 0.6000 wage index
floor. Several commenters requested CMS perform further analysis on the
wage index floor and expressed a belief that such analysis would
support an increase in the wage index floor. Commenters specifically
suggested that a wage index floor of 0.7000 would be appropriate. These
commenters specifically highlighted Puerto Rico and enumerated certain
labor costs which they stated contributed to the cost of care in Puerto
Rico.
Response: We thank commenters for the continued support of the wage
index floor. We did not propose to change the wage index floor for CY
2025 and are not finalizing any changes in this final rule. We will
continue to monitor the appropriateness of the current wage index
floor, as well as the extent to which ESRD facilities in U.S.
Territories may face certain higher costs and will consider any further
changes through notice-and-comment rulemaking in future years.
Comment: MedPAC reiterated concerns that a wage index floor is not
appropriate, as it distorts area wage indices.
Response: We appreciate the continued evaluation of the impact of
the wage index floor. We did not propose, and are not finalizing, any
changes to the wage index floor. We will take these concerns into
consideration when determining whether further changes to the wage
index floor are needed in future rulemaking.
Comment: Several commenters, including one letter from several
interested parties concerning the U.S. Pacific Territories, expressed
concerns over the impact of the proposed wage index methodology on the
U.S. Pacific Territories. This letter from the interested parties
stated that they believed that this new wage index methodology was a
``one-size fit all'' approach that would have negative impacts on
marginalized communities. This letter expressed some support for the
alternative state-level occupational mix which we discussed in the
proposed rule, which would result in higher payments to for ESRD
facilities in the Pacific Census region and expressed criticism for our
choice to propose the simpler methodology using a national occupation
mix. One ESRD facility located in the Northern Marianas Island noted
that ESRD facilities in these regions face higher costs due to the
nature of the isolated regions requiring importation of goods,
including medication. This commenter requested that we develop a new
methodology that would better account for actual wages rather than
state-level wages.
Response: We thank the commenters for their insight on the impact
of the proposed wage index policy on ESRD facilities in the U.S.
Pacific Territories. We note that the purpose of the wage
[[Page 89115]]
index is to reflect the geographic variation in wages faced by ESRD
facilities. We believe that this new wage index methodology achieves
this goal, especially when compared to the legacy methodology based on
the IPPS wage index. We recognize that this new policy will lead to a
decrease in payment to ESRD facilities in the U.S. Pacific Territories.
However, we note that the BLS OEWS data indicates that this is
appropriate, as the new ESRD PPS wage index methodology represents the
most recently available BLS OEWS mean wage estimates for the U.S.
Pacific Territories. We do not agree with the characterization of this
policy as a ``one size fits all'' approach, as this methodology uses
BLS OEWS data which is CBSA specific.
We considered as an alternative state-level or regional
occupational mixes rather than the proposed NEFOM reflecting the
national occupational mix. Our concern with the state-level
occupational mix policy was that it was a significantly more
complicated alternative to a policy that already represented a
significant increase in complexity to the legacy methodology. In
addition, the use of a state-level occupational mix for weighting the
mean hourly wage data would allow it to be possible that an area could
have lower average hourly wages for all occupations but receive a
higher wage index when compared to another area. It is accurate that
the state-level occupational mix alternative would lead to higher
payments to ESRD facilities in the U.S. Pacific Territories compared to
the proposed methodology, but we wish to clarify that payments to these
ESRD facilities would decrease under either methodology, because the
main driver of the decrease in wage index values is the OEWS mean
hourly wage data. The difference between payments for ESRD facilities
in the U.S. Pacific Territories using state-level occupational mix data
and the proposed national occupational mix was less than one percent.
We acknowledge that for the U.S. Pacific Territories the CBSA-level
OEWS data serves functionally as a territory-level wage measure due to
each of these territories containing exactly one CBSA; however we
believe that this is appropriate. We note that the current IPPS wage
index is also determined at the CBSA level and, therefore, combines the
wages for the entire territory for each of Guam, American Samoa and the
Northern Marianas Islands. Lastly, we appreciate the insight into
additional costs paid by ESRD facilities in the U.S. Pacific
Territories. We note that many of the additional costs listed were non-
labor costs, and that the wage index serves to estimate the geographic
difference in wages. We acknowledge that there is some evidence that
non-labor costs may be relatively higher in regions which require
importation of most goods, including the U.S. Pacific Territories;
however, it would not be appropriate to address these higher costs
through the wage index. We intend to carefully evaluate both the labor
and non-labor costs for the U.S. Pacific Territories and other outlying
regions of the United States and will consider whether any additional
policies are warranted in future rulemaking.
Comment: One association commented that they commissioned an
analysis of the impacts of the proposed new wage index methodology,
which found that independent and small ESRD facilities would be worse
off within industry segments under the new wage index methodology.
Response: Our analysis does not concur exactly with the conclusion
the commenter drew about the new wage index methodology. As we
presented in Table 6 of the proposed rule, our analysis showed that
small ESRD facilities would receive higher payments under the new wage
index methodology. Our analysis does show that independent ESRD
facilities would receive lower payments. However, since the new wage
index methodology is derived from the best available wage data, we
believe this is appropriate, as the underlying BLS OEWS mean wage data
indicates that the areas in which these independent ESRD facilities are
located have lower relative mean wages compared to the legacy wage
index.
Comment: One commenter expressed concerns that hospital cost report
data was excluded from the calculation of the wage index budget
neutrality factor.
Response: We wish to clarify that hospital cost reports were not
included in the analysis for the NEFOM because of differences in the
labor categories between the hospital-based and freestanding ESRD
facility cost reports. Hospital-based ESRD facilities were included in
the claims data that were used for determining the budget neutrality
adjustment factor for the CY 2025 ESRD PPS wage index. We agree with
the commenter that it is important to include hospital-based ESRD
facilities in any impacts analysis, including the analysis used to
determine average payments under the final CY 2025 ESRD PPS wage index,
which was used to determine the wage index budget-neutrality factor.
Omitting these hospital-based ESRD facilities would reduce the accuracy
of the analysis without any good reason.
Comment: A few commenters recommended CMS allow ESRD facilities to
reclassify their CBSA for the wage index, similar to the IPPS, which
allows hospitals to reclassify.
Response: We appreciate this suggestion, and we recognize that many
ESRD facilities stated that they would be better suited for an adjacent
CBSA. However, our belief is that allowing reclassifications would not
be appropriate for the ESRD PPS, as we believe the most appropriate
wage index for an ESRD facility is for the CBSA in which it is located.
We believe our new wage index methodology better estimates the actual
wages paid by ESRD facilities in a given CBSA by utilizing data from
the BLS OEWS. We did not propose to allow reclassifications under the
proposed new wage index methodology, similar to how we did not allow
reclassifications under the legacy methodology, and we are not
finalizing any such changes in this final rule. We discuss our
reasoning for not allowing reclassifications for the wage index for the
ESRD PPS in further detail in the CY 2024 ESRD PPS final rule (88 FR
76360 through 76361).
Comment: One commenter, while discussing the proposed wage index
budget-neutrality adjustment factor, stated an expectation that we
would adjust the base rate down in future years according to this
policy.
Response: We want to clarify that we do not anticipate significant
repeated downward adjustments to the ESRD PPS base rate as a result of
this proposal. The lower-than-typical wage index budget-neutrality
adjustment factor is primarily a result of the application of the 5
percent cap on year-over-year wage index decreases, which is
particularly impactful in CY 2025 due to the significant proposed
change to the wage index methodology. We note that although this 5
percent cap could apply for multiple years in a row as a result of the
adoption of the new wage index methodology, each year it is applied,
the affected ESRD facilities' wage index values would become closer to
the wage index values for their CBSAs, until their wage index values
would be equal their CBSA's wage index value. In future years we
anticipate the 5 percent cap would cause fewer ESRD facilities to
receive wage index values higher than that of their CBSA, so the wage
index budget-neutrality factor for CY 2026 would be higher than the
wage index budget-neutrality factor for CY 2025. We note that the wage
index budget-neutrality adjustment factor is multiplicative, so a
``higher'' value would lead to either a smaller decrease in the ESRD
PPS base rate, should the
[[Page 89116]]
value still remain below 1, or to an increase to the ESRD PPS base
rate, should the value rise above 1.
Comment: One commenter generally supported the idea of the proposal
but noted the complexity of the proposal and requested additional time
to review the new wage index methodology and impacts. One LDO suggested
further analysis and potentially another TEP to continue to refine and
test the methodology.
Response: We believe the 60-day timeframe provided a sufficient
opportunity for interested parties to review the proposed rule and
provide comments. To help interested parties understand the
complexities and impacts of this proposal we included 3 addenda to the
proposed rule. Addendum B included facility level impacts for all of
our proposed policies, including the proposed change in the wage index
methodology, as well as a side-by-side comparison of wage index values
under the proposed new wage index and the legacy wage index based on
IPPS data. Addendum C included a detailed methodological breakdown for
this proposed new wage index methodology. We believe that this provided
the public with ample information to thoroughly review the policy in
the time available. In the proposed rule, we explained that we believe
it would be beneficial to implement this proposed new wage index
methodology alongside the more-routine updates to the CBSA delineations
according to OMB 23-01. Additionally, we believe that this new wage
index methodology is more appropriate for ESRD facilities and,
therefore, should be implemented as soon as feasible. Similarly, we
believe that we have sufficient information to determine that this
policy is an improvement to the use of the IPPS wage index for the ESRD
PPS and that holding another TEP would be an unnecessary delay for this
policy. We are not finalizing any delay to the implementation date for
this new wage index methodology, but we intend to carefully monitor the
new ESRD PPS wage index, maintain a dialogue with interested parties,
and consider further modifications to the methodology in future
rulemaking.
Final Rule Action: After considering the comments received on this
proposal, we are finalizing the use of the new ESRD PPS wage index
methodology for CY 2025 without modification. Consistent with prior
years, we are updating the CY 2025 proposed ESRD PPS wage index with
the most recent available data. Most notably, this includes the release
of the May 2023 BLS OEWS data as well as updated CY 2022 cost report
data. We note that, contrary to our expectation, some CY 2022 cost
report data was still not available at the time of the analysis
conducted for this final rule, so we are finalizing to use CY 2021 cost
report data where necessary. We believe that omitting these ESRD
facilities without CY 2022 cost report data would be inappropriate, and
CY 2021 cost report data is the most reasonable proxy for this missing
data. Additionally, we are finalizing the proposed updates to 42 CFR
413.196(d)(2) and 413.231(a) to codify the new ESRD PPS wage index
methodology with one change. To avoid confusion in connection with the
use of the phrase ``most recent complete year of Medicare cost
reports,'' as some CY 2022 freestanding ESRD facility cost reports are
not available, we are finalizing to instead revise 413.196(d)(2) to
read ``most recent full year of Medicare cost reports.'' This change
clarifies our original intention to use the most recent completed cost-
reporting CY, which is CY 2022 because CY 2023 cost reports beginning
in November of 2023 (and ending November of 2024) would not be finished
at the time of this final rule's publishing. This avoids confusion
insofar as the word ``complete'' could refer either to the year (as
intended) or the dataset of cost reports (which is not complete, as
some CY 2022 cost reports were still not available at the time of this
final rulemaking).
The final CY 2025 ESRD PPS wage index is set forth in Addendum A to
this final rule 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 2024 wage index and the proposed CY
2025 wage index. Addendum B to this final rule 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.
f. Implementation of New OMB Labor Market Delineations
(1) Background
As previously discussed in this final rule, the wage index used for
the ESRD PPS was historically calculated using the most recent pre-
floor, pre-reclassified hospital wage data collected annually under the
IPPS and is assigned to an ESRD facility based on the labor market area
in which the ESRD facility is geographically located. In the CY 2025
ESRD PPS proposed rule, we proposed a new wage index methodology that
would similarly be based on the labor market in which an ESRD facility
is located. ESRD facility labor market areas are delineated based on
the CBSAs established by OMB. In accordance with our established
methodology, we have historically adopted through rulemaking CBSA
changes that are published in the latest OMB bulletin. Generally, OMB
issues major revisions to statistical areas every 10 years, based on
the results of the decennial census. However, OMB occasionally issues
minor updates and revisions to statistical areas in the years between
the decennial censuses.
In the CY 2015 ESRD PPS final rule (79 FR 66137 through 66142), we
finalized changes to the ESRD PPS wage index based on the newest OMB
delineations, as described in OMB Bulletin No. 13-01 \26\ issued on
February 28, 2013. We implemented these changes with a 2-year
transition period (79 FR 66142). OMB Bulletin No. 13-01 established
revised delineations for United States Metropolitan Statistical Areas,
Micropolitan Statistical Areas, and Combined Statistical Areas based on
the 2010 Census. OMB Bulletin No. 13-01 also provided guidance on the
use of the delineations of these statistical areas using standards
published on June 28, 2010, in the Federal Register (75 FR 37246
through 37252).
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On July 15, 2015, OMB issued OMB Bulletin No. 15-01,\27\ which
updated and superseded OMB Bulletin No. 13-01 issued on February 28,
2013. These updates were based on the application of the 2010 Standards
for Delineating Metropolitan and Micropolitan Statistical Areas to the
United States Census Bureau population estimates for July 1, 2012, and
July 1, 2013.
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On August 15, 2017, OMB issued OMB Bulletin No. 17-01,\28\ which
updated and superseded OMB Bulletin No. 15-01 issued on July 15, 2015.
These updates were based on the application of the 2010 Standards for
Delineating Metropolitan and Micropolitan Statistical Areas to the
United States Census Bureau population estimates for July 1, 2014, and
July 1,
[[Page 89117]]
2015. In OMB Bulletin No. 17-01, OMB announced a new urban CBSA, Twin
Falls, Idaho (CBSA 46300).
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On April 10, 2018, OMB issued OMB Bulletin No. 18-03 \29\ which
updated and superseded OMB Bulletin No. 17-01 issued on August 15,
2017. On September 14, 2018, OMB issued OMB Bulletin No. 18-04,\30\
which updated and superseded OMB Bulletin No. 18-03 issued on April 10,
2018. OMB Bulletin Numbers 18-03 and 18-04 established revised
delineations for Metropolitan Statistical Areas, Micropolitan
Statistical Areas, and Combined Statistical Areas, and provided
guidance on the use of the delineations of these statistical areas.
These updates were based on the application of the 2010 Standards for
Delineating Metropolitan and Micropolitan Statistical Areas to the
United States Census Bureau population estimates for July 1, 2015, and
July 1, 2016. In the CY 2021 ESRD PPS final rule (85 FR 71430 through
71434), we finalized changes to the ESRD PPS wage index based on the
most recent OMB delineations from OMB Bulletin No 18-04. This was the
most recent time we have updated the labor market delineations used for
the ESRD PPS and, therefore, reflects the labor market delineations we
used for CY 2024 (88 FR 76360).
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In the July 16, 2021, Federal Register (86 FR 37777), OMB finalized
a schedule for future updates based on results of the decennial Census
updates to commuting patterns from the American Community Survey, an
ongoing survey conducted by the Census Bureau. In accordance with that
schedule, on July 21, 2023, OMB released Bulletin No. 23-01. A copy of
OMB Bulletin No. 23-01 may be obtained at https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf. According to OMB,
the delineations reflect the 2020 Standards for Delineating Core Based
Statistical Areas (``the 2020 Standards''), which appeared in the
Federal Register on July 16, 2021 (86 FR 37770 through 37778), and the
application of those standards to Census Bureau population and journey-
to-work data (that is, 2020 Decennial Census, American Community
Survey, and Census Population Estimates Program data).
In the CY 2025 ESRD PPS proposed rule, we explained that we believe
it is important for the ESRD PPS to use, as soon as reasonably
possible, the latest available labor market area delineations to
maintain a more accurate and up-to-date payment system that reflects
the reality of population shifts and labor market conditions. We
believe that using the most current OMB delineations would increase the
integrity of the ESRD PPS wage index system by creating a more accurate
representation of geographic variations in wage levels, especially
given the proposed new wage index methodology discussed previously. We
carefully analyzed the impacts of adopting the new OMB delineations and
found no compelling reason to delay implementation. Therefore, we
proposed to adopt the updates to the OMB delineations announced in OMB
Bulletin No. 23-01 effective for CY 2025 under the ESRD PPS for use in
determining both the wage index and the rural adjustment for ESRD
facilities. We proposed that this would be implemented along with the
new ESRD PPS wage index methodology, if finalized, or along with the
alternative ESRD PPS legacy wage index based on IPPS data, should the
proposed new wage index methodology not be finalized.
As previously discussed, we finalized a 5 percent cap on any
decrease to a provider's wage index from its wage index in the prior
year in the CY 2023 ESRD PPS final rule (87 FR 67161). We did not
propose any additional transition policy for the CY 2025 wage index as
we believe the 5 percent cap effectively mitigates the negative impact
of large wage index decreases for an ESRD facility in a single year. In
addition, we proposed to phase out the rural adjustment for ESRD
facilities that are transitioning from rural to urban based on these
CBSA revisions, as discussed in section II.B.2.f.(2) of this final
rule. For a further discussion of changes to OMB's CBSA delineations,
including a list of changes to specific CBSAs, see the FY 2025 IPPS
proposed rule (89 FR 36139).
We invited public comment on our proposal to use the updated CBSA
delineations. We received four comments regarding our proposal to use
the updated CBSA delineations. The following is a summary of the public
comments received on this proposal and our responses.
Comment: One commenter expressed specific support for our use of
the updated CBSA delineations according to the most recent OMB
delineations set forth in OMB Bulletin No. 23-01. Several other
comments referenced our proposal to update the CBSA delineations;
however, no other comment expressed a strong opinion on this policy.
These comments that referenced the proposal generally included it
alongside other proposals that appeared to be the focus of the comment,
such as the new wage index methodology.
Response: We appreciate the commenters for reviewing the proposal
to update CBSA delineations and appreciate the commenter for expressing
support for the updated delineations.
Final Rule Action: After reviewing the comments received, we are
finalizing our use of the most recent CBSA delineations from OMB
Bulletin 23-01 for ESRD PPS wage index and rural adjustment for CY 2025
and beyond, consistent with prior updates to CBSA delineations.
(2) Proposal To Phase Out the Rural Facility Adjustment for Facilities
Affected by Changes to CBSAs
In the CY 2016 ESRD PPS final rule (80 FR 69001), we established a
policy to provide a 0.8 percent payment adjustment to the base rate for
ESRD facilities located in a rural area. This adjustment was based on a
regression analysis, which indicated that the per diem cost of
providing renal dialysis services for rural facilities was 0.8 percent
higher than that of urban facilities after accounting for the influence
of the other variables included in the regression. This 0.8 percent
adjustment has been part of the ESRD PPS each year since it was
finalized beginning for CY 2016, and its inclusion in the ESRD PPS is
codified at Sec. 413.233.
As previously discussed in this final rule, we proposed a change to
the ESRD PPS wage index methodology as well as changes to the CBSA
delineations. In the CY 2023 ESRD PPS final rule, we finalized a policy
to cap year-to-year decreases in the wage index for any ESRD facility
at 5 percent (87 FR 67161). The primary purpose of this change was to
mitigate the negative effect associated with an ESRD facility being
reclassified into a lower wage index CBSA as a result of changes in
OMB's most recent CBSA delineations. We anticipated that the proposed
change to the CBSA delineations and the changes to the wage index
methodology, if finalized, would lead to numerous ESRD facilities
having a significant decrease in wage index value in CY 2025 compared
to CY 2024.
As previously discussed, we are finalizing the adoption of OMB
Bulletin No. 23-01, which will determine whether an ESRD facility is
classified as urban or rural for purposes of the rural facility
adjustment in the ESRD PPS.
[[Page 89118]]
Although the rural facility adjustment is not directly related to the
wage index, the application of both is determined by the CBSA in which
an ESRD facility is located and, therefore, is potentially subject to
significant changes associated with the new CBSA delineations. It is
reasonable to conclude that these proposed shifts in the CBSA
delineations, in combination with the wage index methodological changes
finalized in this final rule, could lead to a year-over-year decrease
in payment greater than what a 5 percent decrease to the wage index
would cause even if the decrease in the wage index value alone would be
less than 5 percent. To mitigate the scope of changes that would impact
ESRD facilities in any single year, we proposed to implement a 3-year
phase out of the rural facility adjustment for ESRD facilities that are
located in a CBSA that was categorized as rural in CY 2024 and is
recategorized as urban in CY 2025, as a result of the updates to the
CBSA delineations associated with the proposed adoption of OMB Bulletin
No. 23-01.
We stated that overall, we believe implementing updated OMB
delineations would result in the rural facility adjustment being
applied where it is appropriate to adjust for higher costs incurred by
ESRD facilities in rural locations. However, in the proposed rule we
recognized that implementing these changes would have different effects
among ESRD facilities and that the loss of the rural facility
adjustment could lead to some hardship for ESRD facilities that had
anticipated receiving the rural facility adjustment in CY 2025.
Therefore, we stated it would be appropriate to consider whether a
transition period should be used to implement these changes. For ESRD
facilities located in a county that transitioned from rural to urban in
OMB Bulletin 23-01, we considered whether it would be appropriate to
phase out the rural facility adjustment for affected ESRD facilities.
Adoption of the updated CBSAs in OMB Bulletin 23-01, which we are
finalizing as proposed, will change the status of 44 ESRD facilities
currently designated as ``rural'' to ``urban'' for CY 2025 and
subsequent CYs. As such, these 44 newly urban ESRD facilities would no
longer receive the 0.8 percent rural facility adjustment. Consistent
with the rural transition policy proposed for IPFs and IRFs for FY 2025
(89 FR 23188, 89 FR 22267 through 22268) we proposed a 3-year, budget
neutral phase-out of the rural facility adjustment for ESRD facilities
located in the 54 rural counties that would become urban under the new
OMB delineations, given the potentially significant payment impacts for
these ESRD facilities. We believed that a phase-out of the rural
facility adjustment transition period for these 44 ESRD facilities
would be appropriate, because we expected these ESRD facilities would
experience a steeper and more abrupt reduction in their payments
compared to other ESRD facilities. We proposed to adopt these new CBSA
delineations in a year in which we also proposed substantial
methodological changes to our wage index. We noted that, while these
proposed changes, would increase payment accuracy across the ESRD PPS,
we also recognize that some ESRD facilities could lose the rural
facility adjustment and receive a significantly lower wage index value
in the same year. We stated that it would be appropriate for this
transition policy to be budget-neutral compared to ending the rural
adjustment for these facilities in CY 2025 because it is an extension
of the rural facility adjustment, which was implemented budget-
neutrally, and a result of the change in CBSA delineations, which was
proposed to be implemented budget-neutrally alongside the wage index
changes. The reasoning behind this proposal is similar to the reasoning
behind the 5 percent cap on year-to-year decreases in wage index
values, which was finalized in the CY 2023 ESRD PPS final rule (87 FR
67161), as it would ameliorate unexpected negative impacts to certain
ESRD facilities. This rural phase-out in combination with the 5 percent
cap policy would best reduce the negative effects on any single ESRD
facility resulting from changes to the CBSA delineations. Therefore, we
proposed to phase out the rural facility adjustment for these
facilities to reduce the impact of the loss of the CY 2024 rural
facility adjustment of 0.8 percent over CYs 2025, 2026, and 2027,
consistent with the similar IPF and IRF proposals previously discussed.
This policy would allow ESRD facilities that are classified as rural in
CY 2024 and would be classified as urban in CY 2025 to receive two-
thirds of the rural facility adjustment for CY 2025, or a 0.53 percent
adjustment. For CY 2026, these ESRD facilities would receive one-third
of the rural facility adjustment, or a 0.27 percent adjustment. For CY
2027, these ESRD facilities would not receive a rural facility
adjustment. We believed, and continue to believe, that a 3-year budget-
neutral phase-out of the rural facility adjustment for ESRD facilities
that transition from rural to urban status under the new CBSA
delineations would best accomplish the goals of mitigating the loss of
the rural facility adjustment for existing CY 2024 rural ESRD
facilities. The purpose of the gradual phase-out of the rural facility
adjustment for these ESRD facilities is to mitigate payment reductions
and promote stability and predictability in payments for existing rural
ESRD facilities that may need time to adjust to the loss of their CY
2024 rural payment adjustment or that experience a reduction in
payments solely because of this re-designation. This policy would be
specifically for the 44 ESRD facilities that are rural in CY 2024 that
become urban in CY 2025. We did not propose a transition policy for
urban ESRD facilities that become rural in CY 2025 because these ESRD
facilities will receive the full rural facility adjustment of 0.8
percent beginning January 1, 2025, so they would not experience the
same adverse effects as an ESRD facility that unexpectedly loses the
rural facility payment adjustment. We noted that we understand that
compared to rural payment adjustments in other Medicare payment
systems, the ESRD PPS rural facility adjustment is not large in
magnitude (for example, the rural adjustments for IPFs and IRFs are 17
percent and 14.9 percent, respectively), but we stated that it is
important for ESRD facilities to be able to reasonably predict what
their payments from the ESRD PPS would be in the next year.
We invited public comment on our proposal for a rural transition
policy. One interested party commented on this proposal. The following
is a summary of the public comment received on this proposal and our
response.
Comment: One commenter expressed support for the rural transition
policy and stated that this policy would avoid disruption of patient
care.
Response: We thank the commenter and agree that this policy would
help to stabilize payments for ESRD facilities in CBSAs which are
losing their rural status for CY 2025.
Final Rule Action: After reviewing the comments on this proposal,
we are finalizing the rural transition phase-out policy as proposed.
For ESRD facilities that were in CBSAs designated as rural for CY 2024,
but that would be designated as urban for CY 2025, claims for renal
dialysis services provided to all adult ESRD patients would receive 2/
3rds of the rural adjustment, or a 0.53 percent adjustment factor, for
CY 2025 and 1/3rd of the rural adjustment, or a 0.27 percent adjustment
factor, for CY 2026. Similarly, this transition would be applied for
the current rural facility adjustment factor of 0.978 used for the
[[Page 89119]]
MAP calculation to determine the outlier payment made under Sec.
413.237 for any eligible adult ESRD patient. This 0.978 adjustment
factor represents a 2.2 percent reduction to the predicted MAP amount,
so we will apply 2/3rds of the adjustment factor for CY 2025 and 1/3rd
of the adjustment factor for CY 2026. For CY 2025 the rural transition
adjustment factor applied to the outlier MAP calculation will be 0.9853
and for CY 2026 the rural facility transition adjustment factor applied
to the outlier MAP calculation will be 0.9927.
3. CY 2025 Update to the Outlier Policy
a. 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 are 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.\31\
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\31\ 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.
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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.\32\ 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.
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\32\ 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. In past years, the MAP
amount has reflected 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 per treatment plus the fixed dollar
loss (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 final 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.
Lastly, 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 explained that for
several years, outlier payments had consistently landed below the
target of 1.0 percent of total ESRD PPS payments (87 FR 67169).
Commenters raised concerns that the methodology we used to calculate
the outlier payment adjustment since CY 2011 results in underpayment to
ESRD facilities, as the base rate has been reduced by 1.0 percent since
the establishment of the ESRD PPS to balance the outlier payment (85 FR
71409, 71438 through 71439; 84 FR 60705 through 60706; 83 FR 56969). In
response to these
[[Page 89120]]
concerns, beginning with CY 2023, we began calculating 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. We stated in the CY 2023 ESRD PPS final rule that we would
continue to calculate the adult and pediatric MAP amounts for CY 2023
and subsequent years following our established methodology. In that
same CY 2023 ESRD PPS final rule, we provided a detailed discussion of
the methodology we use to calculate the MAP amounts and FDL amounts (87
FR 67167 through 67169).
For CY 2025, we proposed several methodological and policy changes
to the ESRD PPS outlier policy to address a number of concerns that
interested parties have raised in recent years. We noted that although
the 1.0 percent outlier target was achieved in CY 2023, it was not
achieved in the majority of the years since the establishment of the
ESRD PPS in 2011. We stated that we expect each of these proposed
changes would support the ability of the ESRD PPS to continue targeting
outlier payments at 1.0 percent in CY 2025 and subsequent years. We
discuss each of these proposed changes in detail in the following
sections.
b. Expansion of ESRD Outlier Services
(1) Background and Current Issues
In the CY 2011 ESRD PPS final rule we finalized a policy that only
renal dialysis services that were or would have been separately
billable prior to the inception of the ESRD PPS would be eligible for
the outlier payment. In the CY 2011 ESRD PPS proposed rule we explained
that we believed that any unusual variation in the cost of the renal
dialysis services comprising the base rate under the ESRD PPS would
likely to be due to variation in the items and services that were, at
that time, separately billable under Part B or renal dialysis service
drugs and biological products that were then covered under Part D (74
FR 49988). We received some comments at that time that requested CMS
consider alternative ways to determine outlier eligibility, including
expanding eligibility to all renal dialysis services. However, we noted
that we did not have adequate data at that time to include all
Composite Rate Services (that is, renal dialysis services 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, as defined in
regulation at Sec. 413.171) in the outlier calculation (74 FR 49989,
75 FR 49135).
In the CY 2019 ESRD PPS proposed rule we issued a comment
solicitation on the potential expansion of outlier payments to
composite rate supplies, drugs, and biological products (83 FR 34332).
In this RFI, we detailed that such a change could promote appropriate
payment for composite rate drugs once the TDAPA period has ended.
Commenters' responses to this comment solicitation were mixed (83 FR
56969 through 56970). One commenter expressed that such a change would
promote and incentivize the development of innovative new therapies and
devices to treat the highly vulnerable ESRD adult and pediatric patient
populations. Some commenters responded specifically regarding the TDAPA
that extending availability of outlier payments would be particularly
important when no additional money is being added to the base rate for
the drug, as is the case with most drugs and biological products
receiving the TDAPA. However, some commenters, including MedPAC, did
not agree that such an expansion of the outlier eligible services would
improve care, generally indicating that expanding the list of ESRD
outlier services would hamper the outlier payment's functionality. One
commenter stated that the purpose of the outlier adjustment was to pay
for unusually costly patients, not new drugs and biological products,
which the commenter noted the outlier payment was unable to do
adequately. MedPAC commented that an outlier policy should act as a
stop-loss insurance for medically necessary care, and outlier payments
are needed when the ESRD PPS' payment adjustments do not capture all of
the factors affecting providers' costs of delivering care. To that end,
MedPAC stated that to develop an effective outlier policy, CMS must
first develop accurate patient-level and facility-level payment
adjustments. MedPAC further cautioned that should CMS expand the list
of eligible ESRD outlier services, we should be clear as to what would
qualify for the outlier payment.
In subsequent years, we took steps to expand the outlier policy to
include certain potentially costly renal dialysis services that would
have been included in the composite rate prior to the ESRD PPS. In the
CY 2020 ESRD PPS final rule we finalized that any new and innovative
renal dialysis equipment or supply would be eligible for the outlier
adjustment after the end of the TPNIES period, regardless of whether it
would have been separately billable prior to 2011 (84 FR 60697). In
that rule, we explained that we believed allowing these items to be
outlier eligible after the end of the TPNIES period would allow for
these new and innovative supplies to be competitive with the other
equipment and supplies also accounted for in the ESRD PPS base rate by
establishing a level playing field where products could gain market
share by offering the best practicable combination of price and quality
(84 FR 60693). In the CY 2021 ESRD PPS final rule, we finalized that
capital-related assets that are home dialysis machines will not become
ESRD outlier services at the end of the TPNIES payment period (85 FR
71399). We explained that as assets, capital-related home dialysis
machines are distinct from operating expenses such as the disposable
supplies and leased equipment with no conveyed ownership rights. Unlike
assets, these latter items are generally accounted for on a per patient
basis and therefore, when used in excess of the average, constitute
outlier use, which makes them eligible for outlier payments (85 FR
71424).
The definition of ESRD outlier services is codified at Sec.
413.237(1)(a). Currently, drugs and biological products that were or
would have been paid under the composite rate are not considered ESRD
outlier services, and costs for these drugs are not included in the
calculation for outlier payments on ESRD PPS claims. Current
regulations at Sec. 413.171 define Composite Rate Services as: ``Items
and services used in the provision of outpatient maintenance dialysis
for the treatment of ESRD and included in the composite payment system
established under section 1881(b)(7) and the basic case-mix adjusted
composite payment system established under section 1881(b)(12) of the
Act.'' Under our longstanding policy, drugs and biological products
that are substitutes for composite rate drugs and biological products
are considered to be included in the composite rate portion of the ESRD
PPS. In the CY 2011 ESRD PPS final rule (75 FR 49048), we cited
existing guidance in the Medicare Benefit Policy Manual, Pub. 100-02,
chapter 11, section 30.4.1, which explicitly stated, ``drugs used in
the dialysis procedure are covered under the facility's composite rate
and may not be billed separately. Drugs that are used as a substitute
for any of these items, or are used to accomplish the same effect, are
also covered under the composite rate.'' This guidance remains in
effect and was subsequently re-designated to section 20.3.F of the same
chapter.
In the CY 2024 ESRD PPS final rule (88 FR 76391), we finalized a
policy to
[[Page 89121]]
pay, beginning for CY 2024, a post-TDAPA add-on payment adjustment for
any new renal dialysis drug or biological product that is considered
included in the ESRD PPS base rate that has previously been paid for
using the TDAPA under Sec. 413.234(c)(1). This post-TDAPA add-on
payment adjustment generally will be applied for a period of 3 years
following the end of the TDAPA period for those products. We finalized
that the post-TDAPA add-on payment adjustment amount will be calculated
based on the most recent available 12 months of claims data and the
latest available full calendar quarter of average sales price (ASP)
data (88 FR 76396). We explained that we divide the total expenditure
of the new renal dialysis drug or biological product by the total
number of ESRD PPS treatments furnished during the same 12-month
period. In addition, we finalized that we adjust the post-TDAPA add-on
payment adjustment amount paid on claims by the patient-level case-mix
adjustment factors; accordingly, we apply a reduction factor to the
post-TDAPA add-on payment adjustment amount to account for the
application of the patient-level case-mix adjustment factors. We
codified these policies 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 describe the post-TDAPA add-on payment adjustment and the
calculation we use to determine the post-TDAPA add-on payment
adjustment amount. In addition, we amended Sec. 413.230 by adding
reference to the post-TDAPA add-on payment adjustment in the
calculation of the ESRD PPS per treatment payment amount.
In the same CY 2024 ESRD PPS final rule, we summarized comments
regarding the outlier policy as it pertains to the post-TDAPA add-on
payment adjustment (88 FR 76396). One commenter pointed out that the CY
2024 ESRD PPS proposed rule did not indicate whether the ESRD PPS
outlier adjustment would apply to products for which a post-TDAPA add-
on payment adjustment is calculated. In response, CMS stated that under
current policy, after the end of the TDAPA period, a drug or biological
product is considered an eligible outlier service only if it meets the
requirements of Sec. 413.237(a)(1). We clarified that any renal
dialysis drug or biological product included in the calculation of the
post-TDAPA add-on payment adjustment would be considered an eligible
ESRD outlier service only if it meets the requirements of Sec.
413.237(a)(1). However, we further clarified that under current policy,
Korsuva[supreg], the only renal dialysis drug with a TDAPA period
ending in CY 2024, would not be considered an eligible ESRD outlier
service after the end of its TDAPA period, because it is a substitute
for diphenhydramine hydrochloride, which was included in the composite
rate prior to 2011, and therefore does not meet the requirements of
Sec. 413.237(a)(1) (that is, it would not have been, prior to January
1, 2011, separately billable under Medicare Part B).
Most recently, we have heard concerns from interested parties that
excluding drugs and biological products that are substitutes for--or
are used to achieve the same effect as--composite rate drugs and
biological products from the definition of ESRD outlier services could
limit the ability of the ESRD PPS outlier adjustment to appropriately
recognize the drivers of cost for renal dialysis services. We
considered these concerns, as well as the comments we received in
response to prior rulemaking, to develop proposed changes to the
definition of ESRD outlier services.
(2) Definition of ESRD Outlier Services
Effective for CY 2025, we proposed to change the definition of ESRD
outlier services at Sec. 413.237(a)(1) to include drugs and biological
products that were or would have been included in the composite rate
prior to the establishment of the ESRD PPS. We noted that this proposal
would expand outlier eligibility to longstanding drugs and biological
products that were historically included in the composite rate, as well
as newer drugs and biological products that are currently included in
the calculation of the post-TDAPA add-on payment adjustment. As
discussed in section II.B.3.c of this final rule, we proposed and are
finalizing technical changes to the calculation of outlier payments
that will appropriately account for the post-TDAPA add-on payment
adjustment for ESRD outlier services that are drugs and biological
products.
In the CY 2025 ESRD PPS proposed rule, we stated that we considered
the original intent behind the policy to limit outlier payments to
drugs that were or would have been separately billable prior to 2011,
which was that these drugs were likely the main drivers of the
variation in the costs of treatment (74 FR 49988). We explained that we
continue to believe an important aspect of the outlier adjustment
should be its ability to target ESRD cases that are unusually costly.
We noted that if the outlier adjustment methodology failed to recognize
the main drivers of variation in the costs of ESRD treatment, then it
could result in cases that are not unusually costly qualifying for the
outlier adjustment, which would mean the impact of the outlier
adjustment would be diluted. We also noted that many of the responses
to the comment solicitation in the CY 2019 ESRD PPS proposed rule
expressed concerns that expanding the scope of ESRD outlier services
would potentially dilute the impact of the outlier adjustment. We
explained that for CY 2025 we considered the potential impact of
expanding the definition of ESRD outlier services to include additional
drugs and biological products not currently included. We stated that we
agree with the commenters who noted that the purpose of the outlier
payment is not to pay for new drugs and biological products (83 FR
56969). We further stated that in the CY 2011 ESRD PPS final rule (75
FR 49134), CMS established the current outlier policy, including the
1.0 percent outlier target, because it struck an appropriate balance
between our objective of paying an adequate amount for the costliest,
most resource-intensive patients while providing an appropriate level
of payment for those patients who do not qualify for outlier payments.
We noted that under our current policy, new renal dialysis drugs and
biological products that are paid for using the TDAPA are not
considered ESRD outlier services. As we explained in the CY 2016 ESRD
PPS final rule (80 FR 69023), this is because during the TDAPA period
we make a payment adjustment for the specific drug in addition to the
base rate, whereas outlier services have been incorporated into the
base rate. In contrast, we noted that the post-TDAPA add-on payment
adjustment is paid on all claims, and drugs that are included in the
post-TDAPA add-on payment adjustment amount are considered included in
the ESRD PPS base rate. We explained that as a result, the amount paid
under the post-TDAPA add-on payment adjustment does not correspond to
the amount of a drug or biological product used on a claim, which would
not be accounted for in any existing payment adjustment other than the
outlier adjustment. For example, we stated that our analysis shows that
patients using Korsuva[supreg] have costs of approximately $150 per
treatment; however, because this drug is not recognized as an ESRD
outlier service, these costs are not accounted for in determining the
payment amount for the claim. Beginning April 1, 2024, the CY 2024
post-TDAPA add-on payment adjustment for Korsuva[supreg]
[[Page 89122]]
increases the payment amount per treatment by approximately $0.25,
which is adjusted by the patient-level case-mix adjusters applicable to
the claim. In aggregate, the post-TDAPA add-on payment adjustment
accounts for 65 percent of the cost of furnishing Korsuva[supreg];
however, this payment is spread across all ESRD PPS treatments.
In the proposed rule, we explained that we did not propose to
expand outlier eligibility to drugs and biological products that are
paid for using the TDAPA during the TDAPA period, as the TDAPA amount
is based on the full price (100 percent of ASP) for the amount of such
drugs that is utilized and billed on the claim.
We further explained that we considered only expanding the
definition of ESRD outlier services to include drugs and biological
products that were previously paid for using the TDAPA. We noted the
suggestion of past commenters that new renal dialysis drugs and
biological products are likely to be drivers of cost, because these
drugs are typically more expensive. We explained that we recognized the
importance of supporting access to new renal dialysis drugs and
biological products under the ESRD PPS through the establishment of the
post-TDAPA add-on payment adjustment beginning in CY 2024 (88 FR
76391). We further noted that in the CY 2024 ESRD PPS final rule we
agreed with commenters who expressed concerns that the ESRD PPS'
current mechanisms may not fully account for the costs of these new
drugs (88 FR 76388). We noted that several commenters stated that the
outlier adjustment and the ESRDB market basket updates cannot
adequately account for these costs, and several organizations noted
that if additional renal dialysis drugs and biological products with
significant costs were incorporated into the outlier payment
calculation, the threshold to qualify for outlier payments would
increase dramatically, thus adversely affecting access to products
traditionally eligible for the outlier payment adjustment. We described
comments which 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 recognized 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 TDAPA period, then ESRD
facilities might be incentivized to avoid treating costlier
beneficiaries.
We stated that we believe it would be appropriate for the
definition of ESRD outlier services to include all drugs and biological
products that previously were paid for using the TDAPA. We explained
that the inclusion of these drugs and biological products would help
ensure appropriate payment when a patient's treatment is exceptionally
expensive due to an ESRD facility furnishing such drugs or biological
products to the patient whose treatment requires them. In the CY 2011
ESRD PPS proposed rule, we explained that significant variations in
formerly separately billable items and services could impair access to
appropriate care, as an ESRD facility may have a disincentive to
provide adequate treatment to those ESRD patients likely to have
significantly higher than average costs (74 FR 49988). We stated in the
CY 2025 ESRD PPS proposed rule that we believe ESRD facilities may face
similar disincentives for furnishing drugs and biological products that
previously received payment under the TDAPA. We further stated that we
believe this change would also align with the statutory authority for
the outlier adjustment under section 1881(b)(14)(D)(ii) of the Act by
protecting patients' access to medically necessary care through a
payment adjustment that more fully recognizes unusual variations in the
type or amount of such care. Specifically, we explained that we believe
this change would encourage ESRD facilities to take on ESRD patients
who would potentially require expensive new drugs and biological
products, promoting health equity for these patients who require
costlier care. Additionally, we noted that the technical changes we
proposed, and which we are finalizing in section II.B.3.c of this final
rule, would limit the impact of such drugs and biological products on
the outlier threshold calculation, thereby enabling the ESRD PPS
outlier adjustment to continue to protect access for beneficiaries
whose care is unusually costly.
We stated that in light of the past comments that we described in
the proposed rule, we further considered whether expanding eligibility
to all renal dialysis drugs and biological products that are Composite
Rate Services, as defined at Sec. 413.171, would be appropriate. We
reiterated that the purpose of the outlier adjustment is to protect
access for beneficiaries whose care is unusually costly. We stated that
although we continue to expect that the main drivers of cost would be
drugs and biological products that were previously separately billable
under Part B or Part D, or were previously paid for using the TDAPA, we
nevertheless recognize that some patients could require higher
utilization of composite rate drugs and biological products, which may
result in the overall cost of their renal dialysis care being unusually
high. For example, as we noted in section II.B.3.e of the proposed
rule, our analysis identified that certain composite rate drugs are
significant drivers of cost for pediatric patients, and therefore the
proposed inclusion of those drugs as ESRD outlier services would
improve the ability of the ESRD PPS outlier adjustment to target
payment for pediatric patients whose care is exceptionally costly. We
stated that including composite rate drugs and biological products in
the calculation of the outlier adjustment could appropriately support
care for such ESRD patients, because payments under the outlier
adjustment would better align with resource use.
We explained that we also considered the comments from MedPAC in
response to the CY 2019 ESRD PPS proposed rule. Specifically, MedPAC
stated that to develop an effective outlier policy, CMS must first
develop accurate patient-level and facility-level payment adjustments.
As we stated in the CY 2024 ESRD PPS final rule, 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 (88 FR 76399). We noted that
we finalized the collection of time on machine data, beginning for CY
2025, which we stated 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 (88 FR 76400).
We stated that we believe expanding the definition of ESRD outlier
services could further support our understanding of the costs of
Composite Rate Services, because it would encourage more comprehensive
reporting of renal dialysis drugs and biological products that were
formerly included in the composite rate for the purposes of calculating
outlier payments. We further stated that this increased reporting would
in turn support future revisions to patient-level adjustment factors
that consider more complete information about costs at the patient
level.
We stated that we do not agree that the proposed inclusion of
composite rate drugs and biological products would dilute the impact of
the outlier
[[Page 89123]]
adjustment, as some commenters in response to the CY 2019 ESRD PPS
proposed rule suggested. Rather, we explained that our analysis
indicates the inclusion of these drugs and biological products would
appropriately recognize the situations when the provision of these
services is unusually costly, which we estimate would increase the
amount of outlier payment per outlier-eligible claim, thereby more
effectively protecting access for beneficiaries whose care is
exceptionally costly. We stated that if we made no changes to our
outlier methodology or the definition of ESRD outlier services for CY
2025, the average outlier payment for outlier-eligible cases among
pediatric patients would be $25.02, and the average outlier payment for
adult patients would be $53.45. We noted that under the proposed
changes to outlier eligibility, the average outlier payment for
pediatric and adult patients would increase to $73.24 and $57.16,
respectively. Furthermore, we explained that the inclusion of composite
rate drugs and biological products would increase the pediatric MAP
amount by a large amount, reflecting the utilization of certain high-
cost composite rate drugs. We explained that although the proposed CY
2025 adult MAP amount was lower than the final CY 2024 adult MAP
amount, the proposed adult MAP amount for CY 2025 was approximately
$0.79 higher than it would have been absent the proposed policy changes
in this rule, which we stated demonstrates that the inclusion of
composite rate drugs and biological products would result in a higher
MAP amount for adults.
In summary, we stated that the inclusion of composite rate drugs
and biological products as ESRD outlier services would include more
costs in the calculation of the ESRD PPS outlier adjustment for each
case. We explained that as a result, fewer claims would qualify for
outlier payments, but the amount of outlier payment per claim would be
higher. Therefore, we stated that rather than diluting the impact of
the outlier adjustment, these proposed changes would increase the
impact of the outlier adjustment.
We proposed to amend the language at 42 CFR 413.237 by adding a new
paragraph (a)(1)(vii), which would add to the list of renal dialysis
services defined as ESRD outlier services the following: ``Renal
dialysis drugs and biological products that are Composite Rate Services
as defined in Sec. 413.171.''
We invited public comment on our proposal to include renal dialysis
drugs and biological products that are composite rate services in the
definition of ESRD outlier services. Approximately 13 commenters
commented on this proposal. These commenters included LDOs, drug
manufacturers, a nonprofit dialysis organization, a nonprofit kidney
care alliance, a professional organization of nephrologists, a
coalition of dialysis organizations, and MedPAC. The following is a
summary of the public comments received on this proposal and our
responses.
Comment: Several commenters expressed support for the proposed
definition of ESRD outlier services. One LDO stated its belief that new
drugs regardless of their status as a former composite rate service
should be eligible for outlier payment. Similarly, a professional
organization of nephrologists stated that if the proposed definition of
ESRD outlier services is finalized, it would educate its members about
this change and the importance of pediatric dialysis units
appropriately billing for use of alteplase and other qualifying drugs
to collect the outlier payment when appropriate. This commenter
requested that CMS highlight any specific requirements for billing.
MedPAC likewise expressed support for expanding ESRD outlier
services to include drugs and biological products that were or would
have been included in the composite rate prior to the ESRD PPS. MedPAC
reiterated its position that CMS should develop an outlier policy that
addresses variation in the total cost of providing the entire ESRD PPS
payment bundle, thereby avoiding the potential for misidentifying
outliers (for example, a patient with very high costs for outlier-
eligible services may have offsetting, lower costs for outlier-
ineligible services). MedPAC further explained that considering the
cost of the full ESRD PPS payment bundle would be more patient-centric
and would align the ESRD PPS outlier policy with the policies that
Medicare uses for other PPSs. One commenter expressed that CMS's
continued reliance upon a distinction between ``composite rate'' and
other products continues to confound the goals of moving the ESRD PPS
toward a modern standard of care.
Response: We appreciate the comments in support of the proposed
change to the definition of ESRD outlier services. We agree with
commenters that the proposed definition would more broadly recognize
ESRD PPS patients whose care is costlier. Regarding the commenter's
statement that the distinction between renal dialysis drugs and
biological products that were formerly separately billable and those
that were or would have been historically paid under the composite rate
does not best serve the goals of the ESRD PPS, we note that this
distinction derives from the statutory definition of renal dialysis
services in section 1881(b)(14)(B)(iii) of the Act. However, we
recognize that providing payment under the ESRD PPS outlier adjustment
for former composite rate and non-composite rate services would better
serve CMS's goals, specifically CMS's longstanding efforts to develop a
comprehensive patient cost model for the purposes of considering future
refinements to the ESRD PPS adjustment factors.
In response to the request for specific billing guidance, we direct
readers to the Medicare Claims Processing Manual (CPM), Chapter 8. ESRD
facilities are instructed to report all renal dialysis drugs and
biological products on the claim. Specific information about revenue
codes and other billing requirements are found in section 50.2 of
Chapter 8 of the CPM.
Comment: Several commenters, including LDOs, drug manufacturers, a
nonprofit dialysis organization, a coalition of dialysis organizations,
and a professional organization of nephrologists expressed that the
proposed change to the definition of ESRD outlier services does not
address what commenters stated is an underlying lack of payment
adequacy for new drugs that are renal dialysis services. One LDO
acknowledged that access to outlier funds is a small step in the right
direction but stated that CMS policy for incorporating such drugs into
the PPS is insufficient to adequately compensate dialysis providers.
This commenter further stated that new drugs that represent a
substantial clinical improvement should be incorporated into the
bundled payment with new money regardless of their placement in a
functional category. As an example of how the commenter believes the
current policy is flawed, this commenter noted that lack of adequate
payment has artificially depressed access to Korsuva[supreg] treatment
and that nephrologists are reluctant to prescribe a therapy that does
not have adequate long-term funding. Several commenters stated that
approximately 16 percent of the ESRD patient population has severe
pruritus for which Korsuva[supreg] is indicated. These commenters noted
that if all of these patients were to receive Korsuva[supreg], the
total outlier payment for that one drug would be $350 million for CY
2025, more than three times the current outlier pool. Another commenter
stated that changes still need to be made to fix the base rate and
support innovation in
[[Page 89124]]
new drugs, biological products, and devices for pediatric kidney
patients.
Several commenters stated that CMS should not finalize the proposed
definition of ESRD outlier services but should instead advance funding
mechanisms that would appropriately safeguard patient access to new
drugs and biological products after the two-year TDAPA period expires.
Response: We appreciate the commenters' concerns regarding payment
for new renal dialysis drugs and biological products under the ESRD
PPS. As the commenters pointed out, and as we have previously stated,
the purpose of the ESRD PPS outlier adjustment is not to pay for new
drugs and biological products. Rather, the purpose of the ESRD PPS
outlier adjustment is to protect access to care for beneficiaries whose
care is exceptionally costly. In the proposed rule, we stated that
including new renal dialysis drugs that previously received payment
using the TDAPA would help ensure appropriate payment when a patient's
treatment is exceptionally expensive due to an ESRD facility furnishing
such drugs or biological products to the patient whose treatment
requires them.
We disagree with commenters who stated that lack of adequate
payment has artificially depressed access to Korsuva[supreg] treatment
and that nephrologists are reluctant to prescribe a therapy that the
commenters stated does not have adequate long-term funding.
Nephrologists and ESRD patients make decisions about which drugs and
biological products best serve the patients' needs, and these decisions
depend on a number of factors including but not limited to
considerations about the efficacy for the individual patient, side
effects and interactions with other drugs and biological products the
patient may be taking, and considerations related to affordability for
the patient. As we explained in the CY 2019 ESRD PPS final rule, the
purpose of providing the TDAPA for drugs that fall into an existing
functional category is to help ESRD facilities to incorporate new drugs
and make appropriate changes in their businesses to adopt such drugs;
provide additional payment for such associated costs, as well as
promote competition among drugs and biological products within the ESRD
PPS functional categories (83 FR 56935). A new renal dialysis drug or
biological product must demonstrate to patients and nephrologists that
it presents value relative to existing treatment options, and the TDAPA
further allows new products to become competitive by providing payment
at 100 percent of ASP for the new drug or biological product. We expect
that nephrologists and patients would consider all relevant factors and
all available treatment options, and make the most appropriate decision
for each patient. We do not believe we can infer that utilization of
Korsuva[supreg] was depressed due to lack of adequate payment during
the TDAPA period, because payment under the TDAPA for Korsuva[supreg]
was based on 100 percent of ASP. Furthermore, in the CY 2024 ESRD PPS
final rule, we finalized a policy to pay a post-TDAPA add-on payment
adjustment for a period of 3 years following the payment of TDAPA. We
stated that one goal of the 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 (88 FR 76393).
Therefore, we believe that ESRD PPS policy provides appropriate and
adequate payment in the short term during the 2-year TDAPA period, in
the medium term during the 3 years of payment under the post-TDAPA add-
on payment adjustment following the payment of TDAPA, and during the
long term when such new renal dialysis drugs and biological products
are paid for under the ESRD PPS base rate with no adjustment and are
expected to compete with other drugs and biological products in the
ESRD PPS.
We also cannot assume that utilization of Korsuva[supreg] should be
higher than it was during the TDAPA period or that it would increase in
response to the proposed outlier policy changes. We note that
utilization of Korsuva[supreg] during the TDAPA period was
significantly lower than the 16 percent figure cited by the commenters.
We anticipate that the utilization of Korsuva[supreg] in CY 2025 would
align with the levels of utilization observed during the TDAPA period,
as these levels best reflect the actual prescribing patterns of
nephrologists for that drug. Nevertheless, if utilization for
Korsuva[supreg] were to increase significantly in CY 2025, then under
our longstanding outlier methodology we would take such changes in
utilization into consideration when establishing the FDL and MAP
amounts prospectively in future years. As we have stated, we establish
the outlier FDL and MAP amounts each year at a level that our analysis
indicates would effectively protect access for the costliest
beneficiaries while maintaining an appropriate ESRD PPS base rate for
all other beneficiaries.
Lastly, we do not believe that the current definition of ESRD
outlier services better supports payment for new renal dialysis drugs
and biological products than the proposed definition, because it
excludes new renal dialysis drugs and biological products that are
substitutes for drugs and biological products that were included in the
composite rate. That is, the current definition of ESRD outlier
services excludes certain new renal dialysis drugs and biological
products that may be significant drivers of cost, and therefore we do
not believe it would be more appropriate to maintain the existing
definition of ESRD outlier services. We believe our proposed definition
of ESRD outlier services would be more appropriate, because it would
recognize all renal dialysis drugs and biological products that are
significant drivers of cost for ESRD patients. Therefore, as discussed
later in this final rule, we are finalizing our proposed revision to
the definition of ESRD outlier services. We refer readers to section
II.B.4 of this CY 2025 ESRD PPS final rule for a discussion about
payment for innovation and the ESRD PPS base rate.
Comment: MedPAC reiterated its prior concerns from the CY 2019 ESRD
PPS proposed rule about how CMS estimates the ESRD PPS's case-mix
adjustments, including patient-level adjustments, and the accuracy of
the adjustments' coefficients. MedPAC stated that these coefficients
are used to calculate the Medicare allowable payment amount, which when
combined with the fixed dollar loss amount, determines which treatments
will receive an outlier payment. Therefore, MedPAC stated that to
ensure the ability of the outlier policy to account for beneficiaries
with high costs, the agency must improve the accuracy of the ESRD PPS's
patient- and facility-level payment adjustments.
Response: We agree with MedPAC's assessment of the importance of
accurate ESRD PPS case-mix adjustments for the ESRD PPS outlier
adjustment. As we noted in the proposed rule, we believe expanding the
definition of ESRD outlier services could further support our
understanding of the costs of Composite Rate Services, because it would
encourage more comprehensive reporting of renal dialysis drugs and
biological products that were formerly included in the composite rate
for the purposes of calculating outlier payments. In addition, we
anticipate that this increased reporting would support future revisions
to patient-level adjustment factors that consider more
[[Page 89125]]
complete information about the cost of furnishing renal dialysis
services to a patient.
Comment: One commenter stated that a smaller outlier percentage on
the order of 0.5 percent would be preferable to maintaining the
existing 1.0 percent outlier percentage. This commenter encouraged CMS
to consider exercising its discretion to set a lower outlier
percentage.
Response: While we agree that section 1881(b)(14)(D)(ii) of the Act
provides the Secretary with discretion to set an appropriate outlier
percentage under the ESRD PPS, we note that we continue to believe the
1.0 percent target is more appropriate than a lower outlier percentage.
As discussed in the CY 2011 ESRD PPS final rule (75 FR 49134), we
established the 1.0 percent outlier percentage because it struck an
appropriate balance between our objective of paying an adequate amount
for the costliest, most resource-intensive patients while providing an
appropriate level of payment for those patients who do not qualify for
outlier payments. We continue to believe the 1.0 percent target strikes
the appropriate balance, and as we further noted in the CY 2023 ESRD
PPS final rule (87 FR 67171), a reduced outlier percentage may not
provide the appropriate level of payment for outlier cases and may not
protect access for beneficiaries whose care is unusually costly. This
is because if we were to decrease the target outlier percentage, we
would need to significantly increase the FDL amounts, which would make
it more difficult for ESRD facilities to receive outlier payment based
on their claims. We did not propose to reduce the outlier percentage
for CY 2025, and we are not finalizing any such reduction in this rule.
Comment: Several commenters expressed concern about the burden of
reporting renal dialysis drugs and biological products that were or
would have been paid under the composite rate before the establishment
of the ESRD PPS, and about the reliability of such reported data. One
commenter stated that these drugs would not make any difference in a
facility getting an outlier payment because of the relatively
inexpensive cost of such drugs compared to new high-cost drugs on the
market now or in the future. Other commenters acknowledged that the
reporting of information on composite rate drugs is not as
comprehensive as other data elements but stated that this is because
ESRD facilities have never been required to report information about
composite rate drugs and biological products because such information
does not serve any ESRD PPS-related purpose. Several commenters stated
that the observed disparity in alteplase utilization described in the
CY 2025 ESRD PPS proposed rule is a difference in reporting and not a
meaningful clinical or operational difference. An LDO and a coalition
of dialysis organizations expressed concerns about CMS's ability to
calculate MAP and FDL amounts for CY 2025 given the lack of complete
information about utilization of composite rate drugs and biological
products.
Response: We appreciate the concerns that commenters raised about
the completeness of data on the utilization of composite rate drugs and
the perceived burden associated with reporting these drugs on ESRD PPS
claims. We disagree with the commenters who stated that composite rate
drugs and biological products would not make any difference in a
facility receiving payment under the outlier adjustment. As we
explained in the proposed rule, we found that certain composite rate
drugs such as alteplase were significant drivers of cost for pediatric
patients. Although we acknowledge that some composite rate drugs and
biological products are relatively low-cost, our analysis has found
that this is not generally true of all composite rate drugs. We believe
it would be most appropriate to make payment under the outlier
adjustment for any renal dialysis drugs and biological products that do
cause a patient's ESRD treatment to be exceptionally costly.
We further disagree with the commenters who stated that the
proposed definition of ESRD outlier services would expand reporting
burden for ESRD facilities. Section 60.2 of Chapter 8 of the CPM states
that effective January 1, 2011, section 153b of the MIPPA requires that
all drugs and biologicals used in the treatment of ESRD are included in
the ESRD PPS payment amount and must be billed by the ESRD facility.
Although we acknowledge that many ESRD facilities have not historically
included composite rate drugs and biological products on ESRD PPS
claims, we remind readers that ESRD facilities have long been
encouraged to report all renal dialysis drugs and biological products
on ESRD PPS claims, including composite rate drugs. In the CY 2016 ESRD
PPS final rule (80 FR 69033), we clarified that ESRD facilities should
begin reporting on their monthly claims those composite rate drugs that
are on the consolidated billing list. Therefore, the proposal to change
the definition of ESRD outlier services would not change the
requirements for ESRD facilities to report composite rate drugs on ESRD
PPS claims. In fact, we observe in our analysis of ESRD PPS claims data
that hospital-based ESRD facilities are already more consistently
reporting composite rate items and services, which in part explains the
outsized impact of composite rate drugs and biological products on the
FDL and MAP amounts for pediatric patients, who more frequently receive
renal dialysis services from hospital-based ESRD facilities. In
addition to reporting differences, we believe the differential rates of
alteplase utilization between pediatric patients and adult patients
could be related to higher rates of catheter use among pediatric
patients.
Lastly, we do not agree with the concerns that commenters
articulated about CMS's ability to calculate MAP and FDL amounts for CY
2025 given the lack of complete information about utilization of
composite rate drugs and biological products. Our longstanding
methodology for prospectively setting the MAP and FDL amounts uses the
best available year of ESRD PPS claims, which is generally the most
recent available year, to simulate claims for the upcoming CY.
Additionally, we use the three most recent years to calculate the FDL
amount which would have achieved the 1 percent outlier target. In any
given year, changes in utilization of ESRD outlier services from the
historical claims data to the upcoming CY can result in over- or under-
estimates of the outlier percentage. CMS relies on the information
reported by ESRD facilities for accurate modeling of ESRD PPS outlier
payments. To the extent that the proposed change to the definition of
ESRD outlier services further encourages ESRD facilities to report when
composite rate drugs and biological products are used, we believe this
would result in future claims data that is more complete and better fit
for not only estimating future outlier payments, but also for analyzing
comprehensive patient-level cost information to potentially inform
future revisions to ESRD PPS adjustment factors.
Comment: Several commenters, including LDOs, drug manufacturers, a
nonprofit dialysis organization, and a coalition of dialysis
organizations, expressed concern that the proposed change to the
definition of ESRD outlier services could result in outlier payments
that exceed the 1.0 percent outlier percentage. Some commenters stated
that since the 1.0 percent outlier percentage was achieved in CY 2023,
CMS should use caution before making
[[Page 89126]]
further changes to the outlier policy. One commenter suggested that CMS
might be required to reduce the ESRD PPS base rate if the 1.0 percent
outlier percentage is exceeded in future years.
Response: We are reiterating that our longstanding methodology
establishes FDL and MAP amounts prospectively. That is, we establish
the outlier FDL and MAP amounts each year at a level that our analysis
indicates will effectively protect access for the costliest
beneficiaries while maintaining an appropriate ESRD PPS base rate for
all other beneficiaries. If our analysis indicates that the FDL and MAP
amounts would result in outlier payments that are below 1.0 percent, we
would reduce the FDL and MAP amounts accordingly in the subsequent
year. Alternatively, if our analysis indicates that the FDL and MAP
amounts would result in outlier payments that are above 1.0 percent, we
would increase the FDL and MAP amounts accordingly in the subsequent
year. In this methodology, we do not make modifications to the base
rate in response to either exceeding or falling short of the 1.0
percent outlier percentage target.
Final Rule Action: After consideration of the comments, we are
finalizing our proposal to amend the language at 42 CFR 413.237 by
adding a new paragraph (a)(1)(vii), which adds the following to the
list of renal dialysis services defined as ESRD outlier services:
``Renal dialysis drugs and biological products that are Composite Rate
Services as defined in Sec. 413.171.'' The final CY 2025 FDL and MAP
amounts are discussed in section II.B.3.e of this final rule.
c. Changes to Predicted MAP Calculation for Outlier Eligibility
As we discussed in the CY 2023 ESRD PPS final rule (87 FR 67169), a
claim is eligible for outlier payment when its imputed MAP amount
exceeds the sum of the predicted MAP amount and the fixed dollar loss
threshold. The predicted MAP amount for a claim is based on the
national average MAP amount, adjusted by the case-mix adjustment
factors that apply for that claim's patient-level and facility-level
characteristics. As a result, when a claim's adjustment factors
increase the payment amount per treatment, the claim's predicted MAP is
also increased. This is because we expect that more complex patients
would require a higher amount of spending for outlier services.
However, this higher expected cost is recognized through a higher per
treatment payment amount. In other words, a more complex patient must
have even higher costs than are already accounted for in the adjustment
factors compared to a less complex patient to be considered unusually
costly. By increasing the predicted MAP based on the case-mix
adjustment factors, the ESRD PPS outlier policy ensures that only cases
that are unusually costly are considered for outlier payment.
As previously discussed in this final rule, we finalized a post-
TDAPA add-on payment adjustment in the CY 2024 ESRD PPS final rule. The
post-TDAPA add-on payment adjustment for certain new renal dialysis
drugs and biological products is generally applied for 3 years after
the end of the TDAPA period (88 FR 76388 through 76397). The amount of
this 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, and this adjusted amount is added to
the payment amount for each ESRD PPS treatment billed. We explained in
the CY 2024 ESRD PPS final rule that during this 3-year post-TDAPA add-
on payment period, a drug or biological product would be eligible for
the outlier add-on payment if it met all of the other criteria for the
outlier payment (88 FR 76396). The only drug or biological product
which was set to end its TDAPA period in CY 2024 (and therefore would
receive the post-TDAPA add-on payment adjustment that year) was
Korsuva[supreg], which is a substitute for a composite rate drug and,
therefore, not outlier eligible under existing Sec. 413.237(a)(1) (88
FR 76396). Accordingly, we did not propose any changes to the ESRD PPS
outlier methodology to account for the post-TDAPA add-on payment
adjustment in the CY 2024 ESRD PPS proposed rule as that would not have
affected payments for CY 2024.
As discussed in section II.B.3.b of this final rule, we are
finalizing our proposal to expand outlier eligibility to include renal
dialysis drugs and biological products that are Composite Rate Services
as defined in Sec. 413.171. This means that new drugs and biological
products that are included in the calculation of the post-TDAPA add-on
payment adjustment amount will become outlier eligible after the end of
the TDAPA period, regardless of whether they are substitutes for
composite rate drugs or biological products.
Accordingly, in the CY 2025 ESRD PPS proposed rule, we also
proposed changes to the ESRD PPS outlier methodology to account for any
future drugs and biological products which are outlier eligible during
the post-TDAPA period. We proposed to add the case-mix adjusted post-
TDAPA add-on payment adjustment amount to the predicted MAP for a
patient. We stated that this is appropriate because the post-TDAPA add-
on payment adjustment amount represents average utilization of a drug
or biological product, and is added to the payment amount, adjusted by
the case-mix adjusters for the patient. We stated that this proposal
would prevent duplicate payment for these drugs and biological products
by accounting for the portion of the cost for these drugs or biological
products which is included in the ESRD PPS bundled payment. We noted
that this change would not affect the calculation of the imputed MAP
for a claim, because a claim's imputed MAP would include the actual
utilization of the drug or biological product that is included in the
calculation of the post-TDAPA add-on payment adjustment, if that drug
or biological product is billed on the claim.
We explained that we considered modifying the average MAP amount to
account for outlier eligible drugs and biological products that are
already included in the calculation of the post-TDAPA add-on payment
adjustment amount, rather than proposing to modify the predicted MAP
amount for each claim. However, we noted two main limitations with
taking such an approach. First, the average MAP is set annually for an
entire year and does not change from quarter to quarter; in contrast,
the post-TDAPA add-on payment adjustment amount can change from quarter
to quarter depending on when a drug or biological product's TDAPA
period ends, and depending on the number of drugs and biological
products included in the calculation. Second, our longstanding
methodology for calculating the predicted MAP for outlier payments
applies the outlier services multipliers to the average MAP. However,
when we calculate the post-TDAPA add-on payment adjustment amount for a
claim, we apply the ESRD PPS case-mix adjusters, which are different
from the outlier services multipliers. We stated that we believe it
would be most appropriate to continue to apply the ESRD PPS case-mix
adjusters to the post-TDAPA add-on payment adjustment amount for the
purposes of outlier calculation, so that the estimate of a claim's
expected spending would align with the calculation used for the post-
TDAPA add-on payment adjustment. For these reasons, we stated that we
believe that it is more appropriate and more operationally feasible to
apply the case-mix adjusted post-TDAPA add-on payment adjustment amount
to the predicted MAP for claims during the
[[Page 89127]]
quarters in which the drug or biological product is receiving the post-
TDAPA add-on payment adjustment, rather than publishing different
average MAPs for different quarters of a single year.
For CY 2025, we explained that the impact of this technical
modification would be a small increase to the pediatric and adult FDL
amounts, due to the small post-TDAPA add-on payment adjustment amount
calculated for each quarter of CY 2025, which is discussed in section
II.B.6 of this final rule. We noted that without this proposed
methodological change, the pediatric FDL amount would increase by
$0.68. Likewise, we noted that the adult FDL amount would increase by
$0.89. We stated that this proposed methodological change would avoid
those increases, resulting in the proposed CY 2025 adult and pediatric
MAP and FDL amounts shown in Table 7 of the proposed rule. We noted
that although the effect would be small for CY 2025, the increase would
be larger in potential future situations when utilization of a drug or
biological product during the post-TDAPA period could be higher.
We invited public comment on our proposal to apply the case-mix
adjusted post-TDAPA add-on payment adjustment amount to the predicted
MAP for claims during the quarters in which the drug or biological
product is receiving the post-TDAPA add-on payment adjustment. Two
commenters commented on this proposal. The following is a summary of
the public comments received on these proposals and our responses.
Comment: MedPAC reiterated its concerns about how CMS estimates the
ESRD PPS case-mix adjustments and recommended that CMS must improve the
accuracy of the patient- and facility-level adjustments.
Response: We appreciate the recommendation, and as discussed
earlier in this final rule, we believe that the proposed change to the
definition of ESRD outlier services, combined with the collection of
time on machine data beginning January 1, 2025, will contribute to
CMS's ability to develop a patient cost model for the purposes of
considering future refinements to the patient- and facility-level
adjustments. We believe the application of the case-mix adjusted post-
TDAPA add-on payment adjustment to the predicted MAP is the most
technically appropriate methodology for calculating the predicted MAP
in CY 2025 and future years. We would incorporate any relevant
revisions to the patient-level case-mix adjustments into this
calculation in future years, as appropriate.
Comment: One commenter stated that CMS should not include TDAPA or
TPNIES values in outlier calculation for any future drugs or equipment
and supplies that may be eligible for these adjustments as they are
clearly not eligible for outlier services during the TDAPA or TPNIES
period.
Response: We agree that under our longstanding policy, which CMS
established in the CY 2016 ESRD PPS final rule (80 FR 69023), it would
not be appropriate to include the payment amount for a new drug or
biological product in the outlier calculation during the TDAPA period.
Accordingly, we have excluded drugs that are receiving the TDAPA from
the outlier calculation, and our calculations of the FDL and MAP
amounts do not include TDAPA utilization as outlier-eligible
utilization for drugs and biological products that will be paid under
the TDAPA in the upcoming CY. However, we note that under Sec.
413.220(b)(4), we established the outlier percentage is 1.0 percent of
total payments (75 FR 49142 through 49143). By definition, total ESRD
PPS expenditures for the non-outlier components include the base rate,
TDAPA, TPNIES, post-TDAPA add-on payment adjustment, and other
applicable adjustments. Additionally, since the TPNIES and TDAPA are
components of the non-outlier portion of the total ESRD PPS spending,
to remove them would shrink the base for which the total outlier target
payment amount is calculated, and therefore increase the FDL and
outlier threshold. In addition, as we finalized in the CY 2023 ESRD PPS
final rule, we rely on historical TDAPA and TPNIES spending amounts to
calculate the ``alternative'' retrospective FDL calculations for ESRD
outlier services, which allows our projection of the FDL to
appropriately account for increased utilization of ESRD outlier
services in years when a new renal dialysis drug or biological product
becomes an ESRD outlier service after the end if its TDAPA period (87
FR 67172 through 67175).
We are clarifying that we did not propose to include TDAPA or
TPNIES values in the outlier calculation for CY 2025. Rather, the
proposed incorporation of the post-TDAPA add-on payment adjustment to
the predicted MAP would apply only for ESRD outlier services if the
TDAPA period for such drugs or biological products has already ended,
as they are excluded from the outlier calculation during the TDAPA
period based on our longstanding policy, as discussed in the prior
paragraph.
Final Rule Action: After consideration of the comments received, we
are finalizing our proposal to apply the case-mix adjusted post-TDAPA
add-on payment adjustment amount to the predicted MAP for claims during
the quarters in which the drug or biological product is receiving the
post-TDAPA add-on payment adjustment.
d. Technical Modifications to the Inflation Factors Used for the
Outlier Calculations
(1) Background
In the CY 2011 ESRD PPS final rule we finalized our ESRD PPS
outlier methodology, which included our methodology for updating data
from past years to the CY for which CMS is establishing payment rates
(75 FR 49134). 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) by prospectively
calculating 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. In that final rule we also
clarified our longstanding methodology for updating data from prior
years for the purposes of the outlier calculations (87 FR 67167). For
drugs and biological products, we use a blended 4-quarter moving
average of the ESRDB market basket price proxies for pharmaceuticals to
inflate drug prices to the CY for which CMS is establishing payment
rates. For laboratory tests, we inflate prices to the CY for which CMS
is establishing payment rates using a CPI forecast to estimate changes
for years in which a new data reporting period will take place for the
purpose of setting Clinical Laboratory Fee Schedule (CLFS) rates.\33\
For supplies, we apply a 0 percent inflation factor, because these
prices are based on predetermined fees or prices established by the
Medicare contractor.
---------------------------------------------------------------------------
\33\ Since 2018, there has been no updated reporting for most
clinical diagnostic laboratory tests; therefore, the forecast
estimate used since CY 2018 for the ESRD PPS outlier methodology has
been 0.
---------------------------------------------------------------------------
In the CY 2023 ESRD PPS final rule (87 FR 67173), we noted that
MedPAC supported the proposed revisions to the FDL methodology, but
also urged CMS to refine its approach for applying the pricing data
that the agency uses to project future spending for outlier services,
particularly for drugs. Specifically, MedPAC suggested CMS use a drug
price inflation factor based on ASP values and noted that the ASP data
that CMS uses to determine
[[Page 89128]]
facilities' actual outlier payments might be a more accurate data
source on drug prices than the ESRDB market basket pharmaceutical price
proxies that are currently used.
For CY 2025, we stated that we have undertaken analysis of prices
for ESRD outlier services and proposed several technical changes to the
inflation factors, which are discussed in the following sections.
(2) Changes to the Inflation Factor for Outlier Eligible Drugs and
Biological Products
As described earlier, we use a blended 4-quarter moving average of
the ESRDB market basket price proxy for Pharmaceuticals to inflate drug
prices to the upcoming CY for the purpose of estimating spending for
outlier drugs and biological products in that CY. In the proposed rule,
we explained that historically, this 4-quarter moving average is a
positive factor, meaning that our longstanding methodology for modeling
outlier spending amounts assumes that prices for ESRD outlier drugs and
biological product will increase. For example, we noted that the
projection of the CY 2025 price growth for ESRD outlier drugs and
biological products, based on the ESRDB market basket price proxy for
Pharmaceuticals for the CY 2025, was 1.9 percent, based on the IGI 1st
quarter 2024 forecast with historical data through the 4th quarter of
2023.
We explained that to compare the actual changes in prices for ESRD
outlier drugs and biological products against the assumed rate of
change derived from the ESRDB market basket price proxies, we
constructed an index of prices for ESRD outlier drugs and biological
products. As we discussed in section II.B.3.b of the proposed rule, we
proposed to expand the definition of ESRD outlier services to include
renal dialysis drugs and biological products that were or would have
been included in the composite rate prior to the establishment of the
ESRD PPS. Accordingly, our constructed drug price index included these
drugs and biological products as well as drugs and biological products
that have historically been included in the definition of ESRD outlier
services.
We stated that because the list of ESRD outlier drugs and
biological products changes over time, we proposed to derive a chained
Laspeyres price index of the drugs and biological products included in
the definition of the ESRD outlier services. We explained that a
chained Laspeyres price index does not require a fixed basket of drugs
and biological products during the observation window. We explained
that we constructed and then trended forward the year-over-year change
in price index levels for this outlier drug index to calculate a
projected inflation factor for ESRD outlier drugs and biological
products for CY 2025, using the following steps:
Step 1: We obtained the annual list of ESRD outlier service drugs
and biological products that appear in ESRD PPS claims during the CYs
2017 through 2023. These include both composite rate and formerly
separately billable drugs and biological products.
Step 2: We obtained quarterly ASP for each drug and biological
product during the same period 2017 through 2023, substituting annual
ASP when quarterly information was not available.
Step 3: We obtained quarterly utilization data for each drug and
biological product for the period 2017 through 2023.
Step 4: For each quarter, we established the base period as the
prior quarter and held utilization fixed at the base period. We then
constructed a Laspeyres price index based on all drugs and biological
products that had price information in that quarter and the prior
quarter.
Step 5: We chained together the quarterly indices starting from the
1st quarter 2017 through the 4th quarter 2023 to express price changes
in the 4th quarter 2017 relative to the 1st quarter 2017. This step was
repeated for all prior quarters, keeping the starting period fixed at
the 1st quarter 2017.
Step 6: We calculated the percentage change between the current and
prior 4th quarter chained price index for each year for CY 2021, 2022,
and 2023, which we used as the annual drug price inflation factor for
each year.
Step 7: Using the chained price indexes for the three most recent
CYs (2021, 2022, and 2023), we used a linear regression to project
forward these three historical inflation factors to determine the CY
2025 inflation factor.
Using this methodology, we calculated a projected inflation factor
of -0.7 percent, meaning that prices for ESRD outlier drugs and
biological products were projected to be 0.7 percent lower in CY 2025
relative to the prices of the ESRD outlier drugs and biological
products in than in CY 2024. We noted that our analysis of year-over
year changes in prices for ESRD outlier drugs and biological products
shows a consistent, downward trend in prices, which stands in contrast
to the positive inflation factors we have historically used to model
outlier payments. As a result, we stated that our modeling of outlier
spending in prior years has assumed that outlier prices will increase,
when the ASP data shows that, overall, the prices have decreased.
Based on the results of our analysis, we stated that we believe
applying an inflation factor based on the actual change in prices for
ESRD outlier drugs and biological products would enable the ESRD PPS
outlier adjustment to better target 1.0 percent of outlier payments in
CY 2025, because such an inflation factor would better reflect the
observed historical trend in spending and utilization for such drugs
and biological products. We noted that although we have historically
used the ESRDB market basket price proxy for Pharmaceuticals as the
basis of our inflation assumptions for outlier modeling, and we believe
that market basket price proxies would continue to be a reasonable and
technically appropriate source for such assumptions, the market basket
price proxies serve a distinctly different purpose than the inflation
factors used in the outlier modeling. As we explained in the CY 2023
ESRD PPS final rule (87 FR 67147), we select the most appropriate wage
and price proxies currently available to represent the rate of price
change for each cost category in the ESRDB market basket. In contrast,
we explained that the purpose of the inflation factors used in our
outlier modeling is to represent the expected rate of change in price
and utilization, so that we can prospectively set accurate FDL and MAP
amounts that will result in outlier payments that equal 1.0 percent of
total ESRD PPS payments. We stated that decreasing our estimates of
future outlier spending, as we proposed to do, would result in lower
FDL and MAP amounts, thereby increasing the number of claims that could
be eligible for the outlier payment adjustment and the amount of
outlier payments that would be paid on each claim. We stated that
revising our assumptions about future spending for ESRD outlier drugs
and biological products would improve the ability of the ESRD outlier
adjustment to pay for the costliest ESRD PPS claims. Therefore, we
proposed to use the projected inflation factor for ESRD outlier
services that are drugs and biological products derived from the
historical trend in prices and utilization for ESRD outlier drugs, as
described in the previous paragraph.
(3) Changes to the Inflation Factors for Outlier Eligible Laboratory
Tests and Supplies
In the proposed rule, we explained that CMS uses different
methodologies for the inflation factors for laboratory
[[Page 89129]]
tests and supplies. We explained that we inflate laboratory test prices
to the upcoming CY using a CPI forecast to estimate changes for years
in which a new data reporting period will take place for the purpose of
setting CLFS rates; however, the forecast estimate used since CY 2018
for the ESRD PPS outlier methodology has been 0, because there has been
no updated reporting for most clinical diagnostic laboratory tests
since the CY 2018 CLFS. We further explained that for supplies, we
apply a 0 percent inflation factor, because these prices are based on
predetermined fees or prices established by the Medicare contractor. In
the CY 2011 ESRD PPS proposed rule, we explained that we chose to use
these factors so that the MAP would be based on pricing mechanisms
currently in place for these services (74 FR 49991).
In the CY 2025 ESRD PPS proposed rule, we noted that the ESRDB
market basket uses price proxies for goods and services included in
furnishing renal dialysis services to determine the ESRDB market basket
update. For example, we stated that the market basket price proxy for
laboratory services is the PPI Industry for Medical and Diagnostic
Laboratories (BLS series code #PCU621511621511) representing the change
in the price of laboratory services conducted by medical and diagnostic
laboratories reported on the ESRD facility cost reports. Similarly, we
stated that the market basket price proxy for supplies is the PPI
Commodity for Surgical and Medical Instruments (BLS series code
#WPU1562) representing the change in the price of medical supplies
reported on the ESRD facility cost reports.
We stated that we considered whether these longstanding assumptions
about price changes for laboratory tests and supplies would be
appropriate for modeling changes in spending for outlier-eligible
laboratory tests and supplies. Unlike with drugs and biological
products, we explained that we do not have detailed historical pricing
data for ESRD outlier laboratory tests and supplies to permit us to
perform a similar analysis for these services as we did for drugs and
biological products. However, we stated that we can compare the
historical inflation factors we have used to the growth in the market
basket price proxies for these categories of renal dialysis services.
For supplies, we noted that we would typically assume a 0 percent
update; however, we noted that the average 10-year historical growth in
the PPI Commodity for Surgical and Medical Instruments is 0.9 percent.
Likewise, we stated that in years when there is a CLFS data reporting
period, we would typically use an inflation factor for laboratory tests
based on a CPI projection, reduced by the productivity adjustment,
through June of the year prior to the update year; however, we noted
that the average 10-year historical annual growth for the PPI Industry
for Medical and Diagnostic Laboratories was -0.4 percent.
Beginning for CY 2025, we proposed to use the ESRDB market basket
price proxies for laboratory tests and supplies for the purpose of
calculating the growth in estimated spending for these outlier services
in the upcoming CY. We stated that these would replace the current
inflation factors which are used for laboratory tests and supplies.
Compared to the current inflation factors we use, we stated that we
anticipate the market basket price proxies for laboratory tests and
supplies would more appropriately reflect the change in prices of the
laboratory tests and supply costs that are used by ESRD facilities. We
stated that we believe using the market basket price proxies would
better allow the ESRD PPS to estimate the changes in the prices of
laboratory tests and supplies, which would improve the ability for CMS
to target outlier payments at 1.0 percent of total ESRD PPS payments.
We noted that decreasing our estimates of future outlier spending would
result in lower FDL and MAP amounts, thereby increasing the number of
claims that could be eligible for the outlier payment adjustment and
the amount of outlier payment that would be paid on each claim. We
further stated that revising our assumptions about future spending for
ESRD outlier drugs and biological products would improve the ability of
the ESRD PPS outlier adjustment to pay for the costliest ESRD PPS
claims.
We invited public comments on our proposed changes to the inflation
factors for outlier eligible drugs and biological products, laboratory
tests, and supplies. Approximately 4 commenters including MedPAC, a
non-profit kidney organization, a coalition of dialysis organizations,
and one LDO commented on these proposed technical changes. The
following is a summary of the public comments received on these
proposals and our responses.
Comment: MedPAC expressed support for CMS's proposal to modify its
method for calculating the increase in future spending for outlier
drugs and biological products. MedPAC stated that this proposal is
consistent with the Commission's comment letter on the CY 2024 proposed
rule, in which the Commission urged CMS to use a drug price inflation
factor based on ASP values to project future spending for outlier
services. MedPAC further noted that the ASP data used by CMS to
determine facilities' actual outlier payments might be a more accurate
data source for drug prices than the ESRDB market basket pharmaceutical
price proxies that are currently used.
Response: We appreciate the support for the proposed technical
changes to the inflation factors.
Comment: Some commenters stated that since the 1.0 percent outlier
percentage was achieved in CY 2023, CMS should not finalize the
proposed changes to the inflation factors. In particular, commenters
expressed concern that the proposed inflation factor for drugs and
biological products is negative as compared to the ESRDB price proxy
that CMS has historically used. Commenters suggested that CMS might be
required to reduce the ESRD PPS base rate if the 1.0 percent outlier
percentage is exceeded in future years.
Response: We appreciate the concerns of commenters about these
proposed technical modifications. CMS's analysis of year-over-year
price changes for ESRD outlier drugs and biological products reveals a
consistent downward trend. However, should prices for outlier drugs and
biological products begin to increase as reflected in the ASP prices,
such changes would be reflected in future updates to the chained
Laspeyres drug price index.
We are reiterating that our longstanding methodology establishes
FDL and MAP amounts prospectively. That is, we establish the outlier
FDL and MAP amounts each year at a level that our analysis indicates
will effectively protect access for the costliest beneficiaries while
maintaining an appropriate ESRD PPS base rate for all other
beneficiaries. If our analysis indicates that the FDL and MAP amounts
would result in outlier payments that are below 1.0 percent, we would
reduce the FDL and MAP amounts accordingly in the subsequent year.
Alternatively, if our analysis indicates that the FDL and MAP amounts
would result in outlier payments that are above 1.0 percent, we would
increase the FDL and MAP amounts accordingly in the subsequent year. In
this methodology, we do not make modifications to the base rate in
response to either exceeding or falling short of the 1.0 percent
outlier percentage.
Final Rule Action: After consideration of the comments, we are
finalizing our proposed changes to the inflation factors for outlier
eligible drugs and biological products, laboratory tests, and supplies.
For ESRD outlier drugs and biological
[[Page 89130]]
products, we will use the projected inflation factor for ESRD outlier
services that are drugs and biological products derived from the
historical trend in ASP prices and utilization for ESRD outlier drugs.
For ESRD outlier laboratory tests and supplies, we will use the growth
in the PPI Industry for Medical and Diagnostic Laboratories and the PPI
Commodity for Surgical and Medical Instruments, respectively. In
section II.B.3.e of this final rule, we present the final CY 2025 MAP
and FDL amounts calculated using these inflation factors.
e. CY 2025 Update to the Outlier Services MAP Amounts and FDL Amounts
For CY 2025, we proposed to update the MAP amounts for adult and
pediatric patients using the latest available CY 2023 claims data. We
proposed to update the ESRD outlier services FDL amount for pediatric
patients using the latest available CY 2023 claims data, and to update
the ESRD outlier services FDL amount for adult patients using the
latest available claims data from CY 2021, CY 2022, and CY 2023, in
accordance with the methodology finalized in the CY 2023 ESRD PPS final
rule (87 FR 67170 through 67174). We stated that the latest available
CY 2023 claims data showed outlier payments represented approximately
1.0 percent of total Medicare payments. We did not receive any comments
on this proposal, and we are finalizing the CY 2025 FDL and MAP amounts
based on the latest available data.
We are updating the ESRD outlier services FDL amount for pediatric
patients using the latest available CY 2023 claims data and updating
the ESRD outlier services FDL amount for adult patients using the
latest available claims data from CY 2021, CY 2022, and CY 2023, in
accordance with the methodology finalized in the CY 2023 ESRD PPS final
rule (87 FR 67170 through 67174). The latest available CY 2023 claims
data shows that outlier payments represented approximately 1.0 percent
of total Medicare payments.
The impact of this final update is shown in Table 7, which compares
the outlier services MAP amounts and FDL amounts used for the outlier
policy in CY 2024 with the updated estimates for this final rule for CY
2025. The estimates for the final CY 2025 MAP amounts, which are
included in column II of Table 7, are inflation adjusted to reflect
projected 2025 prices for ESRD outlier services, in accordance with the
final changes to the inflation factors discussed in section II.B.3.d of
this final rule.
[GRAPHIC] [TIFF OMITTED] TR12NO24.006
As demonstrated in Table 7, the estimated FDL per treatment that
determines the CY 2025 outlier threshold amount for adults (column II;
$45.41) is lower than that used for the CY 2024 outlier policy (column
I; $71.76). The lower threshold is accompanied by a decrease in the
adjusted average MAP for outlier services from $36.28 to $31.02. For
pediatric patients, there is an increase in the FDL amount from $11.32
to $234.26. There is a corresponding increase in the adjusted average
MAP for outlier services among pediatric patients, from $23.36 to
$59.60. We note that this substantial increase in the outlier threshold
for pediatric patients reflects the inclusion of certain composite rate
drugs for outlier consideration, notably Healthcare Common Procedure
Coding System (HCPCS) code J2997 (Injection, alteplase recombinant, 1
mg). As a result, we estimate that a smaller proportion of pediatric
patients will receive outlier payments, but the
[[Page 89131]]
average outlier payment amounts will be significantly higher.
We estimate that the percentage of patient months qualifying for
outlier payments in CY 2025 will be 7.05 percent for adult patients and
6.09 percent for pediatric patients, based on the 2023 claims data and
methodology changes in sections II.B.3.c and II.B.3.d of this final
rule.
f. 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 1.0 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 1.0 percent target (87 FR 67170
through 67174). Based on the CY 2023 claims, outlier payments
represented approximately 1.0 percent of total payments, which has been
our policy goal since the establishment of the ESRD PPS outlier
adjustment. We believe the methodological changes to the outlier
calculation and the change to the definition of ESRD outlier services,
which we are finalizing for CY 2025, will continue to effectively set
the outlier MAP and FDL amounts for CY 2025 and future years, enabling
the ESRD PPS to continue targeting outlier payments at 1.0 percent of
total payments. We also note that the recalibration of the FDL amounts
will result in no change in payments to ESRD facilities for
beneficiaries with renal dialysis items and services that are not
eligible for outlier payments.
4. Final Impacts to the CY 2025 ESRD PPS Base Rate
a. 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 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, the
TDAPA, the TPNIES, the post-TDAPA add-on payment adjustment, and the
TPEAPA for CYs 2024, 2025 and 2026.
b. Annual Payment Rate Update for CY 2025
We are finalizing an ESRD PPS base rate for CY 2025 of $273.82.
This will be a 1.0 percent increase from the CY 2024 ESRD PPS base rate
of $271.02. This final 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 2025, we did not propose 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 CY
2025 wage index budget-neutrality adjustment factor using treatment
counts from the 2023 claims and facility-specific CY 2024 payment rates
to estimate the total dollar amount that each ESRD facility would have
received in CY 2024. The total of these payments became the target
amount of expenditures for all ESRD facilities for CY 2025. Next, we
computed the estimated dollar amount that would have been paid for the
same ESRD facilities using the proposed CY 2025 ESRD PPS wage index and
proposed labor related share for CY 2025. As discussed in section
II.B.2 of this final rule, the ESRD PPS wage index for CY 2025 includes
the new wage index methodology based on BLS data, and the use of the
most recent OMB delineations based on 2020-census data.\34\ The total
of these payments becomes the new CY 2025 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 2025
amount. When we multiplied the wage index budget-neutrality factor by
the applicable CY 2025 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 the wage index updates and
revisions do not increase or decrease aggregate Medicare payments. The
final CY 2025 wage index budget-neutrality adjustment factor is
0.988600. This final CY 2025 wage index budget-neutrality adjustment
factor reflects the impact of all final wage index policy changes,
including the CY 2025 ESRD PPS wage index using the new ESRD PPS wage
index methodology based on BLS data, the 5 percent cap on year-to-year
decreases in wage index values, the updated CBSA delineations, the 3
year rural phase-out for ESRD facilities in currently-rural CBSAs that
will become urban under the new delineations, and the labor-related
share (which we did not propose to change from CY 2024). We note that
the application of the 5 percent cap on wage index decreases has a
sizable impact on the budget-neutrality factor this year due to the new
wage index methodology. That is, because a substantial number of ESRD
facilities would have experienced a greater than 5 percent decrease in
their wage index value as a result of the new wage index methodology,
the budget-neutrality adjustment factor needed to offset the effect of
limiting those decreases to 5 percent is larger than we expect it would
be in a typical year. We note that the final CY 2025 wage index budget-
neutrality factor does not include any impacts associated with the
TPEAPA, as was the case with last year's combined wage index-TPEAPA
budget-neutrality factor. This is consistent with how we have
historically applied budget neutrality for case-mix adjusters,
including pediatric case-mix adjusters. We do not routinely apply a
budget-neutrality factor to account for changes in overall payment
associated with changes in patient case-mix in years in which we do not
propose any changes to the case-mix adjustment amount. Although the
TPEAPA was established under the authority in section
1881(b)(14)(D)(iv) of the Act, which does not require budget
neutrality, we stated in the CY 2024 ESRD PPS final rule that we were
implementing the TPEAPA in a budget neutral manner because it was
similar to the pediatric case-mix adjusters, and it accounts for costs
which 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 (88
[[Page 89132]]
FR 76378). Because the adjustment to maintain budget neutrality
associated with the TPEAPA was accounted for in the CY 2024 combined
wage index and TPEAPA budget neutrality factor, it would not be
appropriate to apply a budget-neutrality factor for the TPEAPA for CY
2025.
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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 an ESRD market basket percentage
increase. As discussed in section II.B.1.b.(1) of this final rule, the
latest CY 2025 projection of the ESRDB market basket percentage
increase is 2.7 percent. In CY 2025, 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
previously discussed in section II.B.1.b.(2) of this final rule, the
latest CY 2025 projection of the productivity adjustment is 0.5
percentage point, thus yielding a final CY 2025 productivity-adjusted
ESRDB market basket update of 2.2 percent for CY 2025. Therefore, the
final CY 2025 ESRD PPS base rate is $273.82 (($271.02 x 0.988600) x
1.022 = $273.82). In the CY 2025 ESRD PPS proposed rule (89 FR 55766),
the productivity-adjusted ESRDB market basket update was 1.8 percent
(reflecting a 2.3 percent market basket percentage increase reduced by
a 0.5 percentage point productivity adjustment). We proposed that if
more recent data became available after the publication of the proposed
rule and before the publication of the final rule (for example, a more
recent estimate of the market basket percentage increase or
productivity adjustment), we would use such data, if appropriate, to
determine the CY 2025 ESRDB market basket update in the final rule.
We invited public comment on our proposed CY 2025 ESRD PPS base
rate. Approximately 25 unique commenters including LDOs; SDOs, patient
advocacy organizations; nonprofit dialysis associations; two coalitions
of dialysis organizations; professional organizations; and MedPAC
commented on the proposed payment rate. Many of these comments
primarily focused on the proposed CY 2025 productivity-adjusted ESRDB
market basket update, which we discuss and respond to in section
II.B.1.b.(5) of this final rule. The following is a summary of the
other public comments received on the proposed CY 2025 ESRD PPS base
rate and our responses.
Comment: All commenters supported increasing the ESRD PPS base
rate. Most commenters indicated a belief that the proposed CY 2025 ESRD
PPS payment rates were too low. Commenters generally stated that the
cause of these lower-than-appropriate payment rates was a combination
of the proposed CY 2025 ESRDB market basket percentage increase and
prior ESRDB market basket percentage increases being lower-than-
appropriate. Only MedPAC stated a belief that the proposed CY 2025 ESRD
PPS payment rate was appropriate.
Response: We appreciate the support for increasing payments under
the ESRD PPS. We agree with MedPAC that payment rates under the ESRD
PPS are generally appropriate. We concur with the commenters' general
consensus that perceived inadequacies in the proposed CY 2025 ESRD PPS
base rate are related to the perceived inadequacies of the ESRDB market
basket. We have primarily addressed commenters' concerns related to the
ESRDB market basket update in section II.B.1.b.(5) of this final rule.
We wish to reiterate that the ESRD PPS base rate is calculated annually
using the ESRDB market basket update and applying any applicable
budget-neutrality factors, so the ESRD PPS base rate for a given year
is constructed using several factors which are each derived from the
best available data, as described in section II.B.1 and in section
II.B.4. While we understand the concerns of commenters regarding the
payment rates, we strongly believe that any change to this methodology
should be data driven. We will take commenters' concerns into
consideration for future rulemaking years to determine if any changes
to the ESRD PPS base rate calculation or ESRDB market basket
methodology are appropriate. Any changes to the ESRD market basket
methodology or ESRD PPS base rate calculation would be made through
notice and comment rulemaking.
Comment: Several commenters stated a belief that increasing the
ESRD PPS base rate by 0.8 percent was not sufficient.
Response: We note that the proposed ESRDB productivity-adjusted
market basket increase for CY 2025 was 1.8 percent (reflecting a
proposed ESRDB market basket increase of 2.3 percent reduced by the
statutorily-mandated proposed productivity adjustment estimated to be
0.5 percentage point). The proposed 0.8 percent increase to the ESRD
PPS base rate was lower than the market basket increase as it also
reflected the application of the proposed wage index budget-neutrality
adjustment factor of 0.990228. Since the wage index budget neutrality
factor is calculated to ensure that the changes between the CY 2024 and
CY 2025 wage indices do not result in an increase or decrease of
estimated aggregate payments, the application to the ESRD PPS base rate
does not result in a decrease to total ESRD PPS payments.
Comment: One commenter noted that the proposed CY 2025 ESRD PPS
base rate of $273.20 is only $43.57 more than the CY 2011 ESRD PPS base
rate of $229.63. This commenter stated a belief that this has
contributed to the ongoing net closures of ESRD facilities in recent
years.
Response: We acknowledge that the ESRD PPS base rate has not
increased as much as costs have for ESRD facilities; however, we note
that the ESRD PPS base rate is not meant to be interpreted as an
average or typical payment rate for renal dialysis services furnished
to ESRD patients, because the ESRD PPS base rate is adjusted by several
factors including the wage index and several case-mix and facility-
level adjusters. Generally, these adjusters are implemented in a
budget-neutral manner, which usually decreases the ESRD PPS base rate
to account for the usually positive adjustment factor. For example,
when we updated the case-mix adjustment factors in the CY 2016 ESRD PPS
final rule, we applied a refinement budget-neutrality adjustment factor
of 0.960319, which decreased the ESRD PPS base rate by approximately
nine and a half dollars without reducing total estimated payments for
CY 2016 (80 FR 69013). Thus, we do not believe it is appropriate to
judge the payment adequacy of the ESRD PPS based on the base rate alone
without accounting for the other adjustment factors, which heavily
influence the actual payment amount received by ESRD facilities. The
actual payment rate is generally higher than the unadjusted ESRD PPS
base rate. The ESRD PPS base rate incorporates offsetting adjustments
to maintain budget neutrality which, as discussed, have generally
reduced the ESRD PPS base rate, so it should not be evaluated in
isolation. As these adjustment factors have generally increased since
the inception of the ESRD PPS in CY 2011, we believe that this increase
in the ESRD PPS base rate from CY 2011 to CY 2025 is appropriate.
Comment: Many commenters who opined that the current payments under
the ESRD PPS were too low included potential implications of a lower-
than-appropriate payment rate. These implications included concerns
related to quality of care, ability for ESRD facilities to remain open,
ability for ESRD facilities to remain staffed, reduction of the hours
of operation at ESRD facilities, and access concerns.
[[Page 89133]]
One commenter highlighted potential health equity concerns related to
what they characterized as lower-than-appropriate payments. This
commenter stated that dialysis patients are disproportionately African
American/Black, live in medically underserved areas and are low income,
so lower-than-appropriate payments would risk perpetuating health
disparities.
Response: We appreciate the commenter's concerns regarding the wide
range of potential implications of the proposed payment rate update. We
note that we are statutorily required to increase the ESRD PPS base
rate by a ESRDB market basket increase factor that reflects the
forecasted change in prices of an appropriate mix of goods and services
included in renal dialysis services. The final CY 2025 market basket
update is 2.2 percent according to the latest available projection of
the ESRDB market basket and productivity adjustment, which we note is
0.4 percentage point higher than the proposed ESRDB market basket
update. We recognize that many commenters are concerned about payment
adequacy, and we agree that it is important to ensure payments to ESRD
facilities are adequate. We note that MedPAC's 2024 Report to Congress
\35\ projected a 2024 aggregate FFS Medicare margin for ESRD facilities
of 0.0 percent. While we understand why interested parties may perceive
these margins as being too low, we note that they indicate that in
general ESRD facilities are being paid a reasonable amount given their
costs.
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We appreciate the thoughtful comments on the health equity
implications of the ESRD PPS payment rate. We agree with the commenters
that appropriate payments for renal dialysis services are important due
to the potential vulnerability of many ESRD beneficiaries and the
health disparities they may experience. We did not propose any changes
to the ESRD PPS payment update methodology to further account for
health equity, and we are statutorily required to update ESRD PPS
payments based on the change in prices as measured by the ESRDB market
basket. We intend to continue to consider a wide range of potential
options for how we can address health equity concerns, for example,
through refined case-mix and facility-level adjustment factors, in
future rulemaking.
Comment: We received some comments which specifically discussed
ESRD facilities in Puerto Rico and the appropriateness of the current
ESRD PPS base rate there. One comment stated that relative rates
between MA and FFS Medicare were larger than in the mainland United
States. This commenter also mentioned several cost factors that were
unique to Puerto Rico, including energy issues, laboratory costs, costs
related to the importations of goods to areas outside the mainland
United States, local legislation on administrative staff at ESRD
facilities, and high property insurance rates.
Response: We appreciate the insight into the specific costs related
to operating ESRD facilities in Puerto Rico. We believe that the ESRDB
market basket appropriately accounts for all of the costs which the
commenters described; however, we acknowledge that there could be
geographic variation in these costs which would not be captured by the
ESRDB market basket update. We understand that MA payment is critical
for many ESRD facilities; however, MA payment rates are not the subject
of this ESRD PPS rulemaking, and we are not substantively responding to
any comments regarding MA payment rates in this final rule. We may
consider how we could address the unique costs associated with the
geographic isolation of U.S. Territories in the ESRD PPS in future
policymaking.
Comment: Several commenters stated that the ESRD PPS does not
adequately support innovation. These commenters generally expressed
that payments under the ESRD PPS are not enough to incentivize new
products, drugs, biological products, or other efficiencies to be
developed for treatment of ESRD. Many of these comments were combined
with more specific concerns regarding outlier payments for renal
dialysis drugs that received the TDAPA after the end of the TDAPA
period and the post-TDAPA add-on payment adjustment amounts, which we
address in sections II.B.3 and II.B.6 respectively.
Response: Under section 1881(b)(14)(A)(ii) of the Act, the ESRD PPS
is based on a fixed bundle of goods and services using data from 2007,
2008 or 2009, whichever had the lower per-patient utilization.
Therefore, in the CY 2011 ESRD PPS final rule, we derived the ESRD PPS
base rate from 2007 cost report data (75 FR 49152) which has been, and
continues to be, annually updated based on the ESRDB market basket,
reflecting the changes over time in the prices of an appropriate mix of
the goods and services involved in furnishing renal dialysis services.
Per this statutory scheme, the ESRD PPS is not designed to provide
additional payment for new and innovative good or services through the
ESRD PPS base rate. To promote innovation and achieve other objectives,
we have finalized several policies using the statutory authority at
section 1881(b)(14)(D)(iv) of the Act to provide temporarily increased
payment to ESRD facilities that use certain new and innovative renal
dialysis services. These include the TDAPA for certain new renal
dialysis drugs and biological products (80 FR 69023), the TPNIES for
certain new and innovative renal dialysis equipment and supplies (84 FR
60684), the TPNIES for certain capital related assets that are home
dialysis machines when used in the home for a single patient (85 FR
71416) and, most recently, the post-TDAPA add-on payment adjustment for
certain new drugs and biological products after the TDAPA period ends
(88 FR 76388 through 76397). All of these add-on payment adjustments
serve to provide increased payment compared to the ESRD PPS base rate,
which we believe appropriately recognizes innovation through increased
payment. As the statute specifically requires that the ESRD PPS be
based on a fixed bundle of goods and services, we do not believe it
would be appropriate to directly increase the ESRD PPS base rate for
new goods and services which are broadly similar to goods and services
within the ESRDB market basket, such as drugs and biological products
in existing ESRD PPS functional categories.
Final Rule Action: We are not finalizing any changes to our
methodology for calculating the ESRD PPS base rate. The final CY 2025
ESRD PPS base rate is $273.82, as described previously in this final
rule.
5. 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
[[Page 89134]]
rate. For purposes of this final rule, we 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 CYs.
There are currently no capital-related assets that are home
dialysis machines set to receive TPNIES for CY 2025, as the TPNIES
payment period for the Tablo[supreg] System ended on December 31, 2023,
and there are no TPNIES applications for CY 2025. However, as required
by Sec. 413.236(f)(3)(v), we proposed to update the TPNIES offset
amount annually according to the methodology described previously.
We are finalizing a CY 2025 TPNIES offset amount for capital-
related assets that are home dialysis machines of $10.22, based on the
final CY 2025 ESRDB productivity-adjusted market basket update of 2.2
percent (final 2.7 percent market basket percentage increase reduced by
the final 0.5 percentage point productivity adjustment). Applying the
final update factor of 1.022 to the CY 2024 offset amount resulted in
the CY 2025 offset amount of $10.22 ($10.00 x 1.022 = $10.22). This is
slightly higher than the proposed CY 2025 TPNIES offset amount for
capital related assets that are home dialysis machines of $10.18. We
did not receive any comments on our proposal to update the TPNIES
offset for capital-related assets for CY 2025.
6. Post-TDAPA Add-On Payment Adjustment Updates
a. Updates to the Post-TDAPA Add-On Payment Adjustment Amounts for CY
2025
In the CY 2024 ESRD PPS final rule we finalized an add-on payment
adjustment for certain new renal dialysis drugs and biological
products, which would be applied for 3 years after the end of the TDAPA
period (88 FR 76388 through 76397). This adjustment, known as the post-
TDAPA add-on payment adjustment, is adjusted by the patient-level case-
mix adjuster and is applied to every ESRD PPS claim. In that final rule
we also clarified that for each year of the post-TDAPA period we would
update the post-TDAPA add-on payment adjustment amounts based on
utilization and ASP of the drug or biological product. For CY 2024
there is one drug, Korsuva[supreg] (difelikefalin), included in the
calculation of the post-TDAPA add-on payment adjustment. In the CY 2024
ESRD PPS final rule (88 FR 76397), we finalized that the post-TDAPA
add-on payment adjustment amount for Korsuva[supreg] would be $0.2493
and would begin on April 1, 2024.
For CY 2025, we will have two drugs included in the calculation of
the post-TDAPA add-on payment adjustment. The post-TDAPA add-on payment
adjustment period for one of these drugs, Korsuva[supreg], began on
April 1, 2024, so, conditional upon the continued receipt of the latest
full calendar quarter of ASP data as described in Sec. 413.234(c)(3),
Korsuva[supreg] will be included in the calculation for the post-TDAPA
add-on payment adjustment for the entirety of CY 2025. The other drug,
Jesduvroq (daprodustat), began its 2-year TDAPA period on October 1,
2023, so its post-TDAPA add-on payment adjustment period will begin on
October 1, 2025, conditional upon the continued receipt of the latest
full calendar quarter of ASP data.
In the CY 2025 ESRD PPS proposed rule we presented the proposed
post-TDAPA add-on payment adjustment amounts for Korsuva[supreg] and
Jesduvroq based on the most recently available utilization data at the
time. Consistent with the methodology finalized in the CY 2024 ESRD PPS
final rule (88 FR 76388 through 76389), we proposed to update these
calculations with the most recent available data in the final rule.
Based on the most recent utilization data, and following the
calculation explained in the CY 2024 ESRD PPS final rule (88 FR 76388
through 76389) and Sec. 413.234(g), the final post-TDAPA add-on
payment adjustment amount for Korsuva[supreg] is $0.4601 for all 4
quarters of CY 2025, an increase from the proposed post-TDAPA add-on
payment adjustment amount of $0.4047. Under that same methodology, the
current estimate of the post-TDAPA add-on payment adjustment amount for
Jesduvroq is $0.0096 for only the last quarter of CY 2025, an increase
from the proposed post-TDAPA add-on payment adjustment amount of
$0.0019. We note that utilization data available for Jesduvroq
available at the time the analysis was conducted for this final rule
includes only data from October 2023 through June 2024. Table 8 shows
the final post-TDAPA add-on payment adjustment amounts for each quarter
of CY 2025.
[GRAPHIC] [TIFF OMITTED] TR12NO24.007
[[Page 89135]]
We invited public comment on our proposed CY 2025 post-TDAPA add-on
payment adjustment amounts. Approximately 8 commenters including
coalitions of dialysis organizations and several drug manufacturers
commented on the proposed post-TDAPA add-on payment adjustment amounts.
The following is a summary of the public comments received on these
proposals and our responses.
Comment: We received several comments that reiterated concerns
about the post-TDAPA add-on payment adjustment calculation that we
addressed in the CY 2024 ESRD PPS final rule, in which we finalized the
post-TDAPA add-on payment adjustment (88 FR 76388 through 76397).
Commenters requested CMS calculate the post-TDAPA add-on payment
adjustment amount based only on TDAPA claims that included the drug or
biological product and then only apply the post-TDAPA add-on payment
adjustment to claims with that drug or biological product. Commenters
generally stated that this methodology would better support innovation
and expressed access concerns for expensive drugs and biological
products with low utilization after the TDAPA period. Some commenters
included figures that they believed would be more appropriate amounts
for the post-TDAPA add-on payment adjustment amount for
Korsuva[supreg], generally calculated using the suggested
methodological changes.
Response: We did not propose a new methodology for the calculation
of the post-TDAPA add-on payment adjustment for the same reasons we did
not finalize the requested methodology in the CY 2024 ESRD PPS final
rule (88 FR 76395). Specifically, calculating the post-TDAPA add-on
payment adjustment amount by dividing the total payment for the drug or
biological product across only those patients who utilize it would
directly incentivize utilization of a particular drug or biological
product, which can result in overutilization. We note that in future
rulemaking we may propose changes to the case-mix adjustment factors,
which could result in higher payments for treatments provided to some
patients who utilize drugs or biological products that previously
received the TDAPA, should the analysis show that treating these
patients is more costly.
Final Rule Action: After reviewing the comments, we are finalizing
a post-TDAPA addon payment adjustment amount of $0.4601 for
Korsuva[supreg] that would be included in the calculation of the post-
TDAPA add-on payment adjustment amount for all four quarters of CY
2025. Additionally, we are presenting an estimated post-TDAPA add-on
payment adjustment amount of $0.0096 for Jesduvroq, which would be
included in the calculation of the post-TDAPA add-on payment adjustment
amount for the fourth quarter of CY 2025. As discussed later in this
section of the final rule, this presented post-TDAPA add-on payment
adjustment amount for Jesduvroq will be updated in a CR once we have a
full year's worth of utilization data available for the analysis.
a. Proposal To Publish Post-TDAPA Add-On Payment Adjustment Amounts
After the Final Rule in Certain Circumstances
As discussed in the CY 2024 ESRD PPS final rule (88 FR 76393) and
codified at 42 CFR 413.234(g), we have finalized a post-TDAPA add-on
payment adjustment, which is based on the most recent year of
utilization data and is calculated annually in each rulemaking cycle.
Under Sec. 413.234(g)(1), CMS bases the post-TDAPA add-on payment
adjustment 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. However,
when a drug or biological product begins its TDAPA period in the fourth
quarter of a CY, and, therefore, would be included in the post-TDAPA
add-on payment adjustment calculation beginning in the fourth quarter 2
CYs later, there would likely not be a full year's worth of utilization
data available at the time of proposed or final rulemaking for that CY
due to the time-lag associated with collecting and processing
utilization data for the final rule. For example, at the time of
rulemaking for last year's ESRD PPS final rule, we had data available
through June 2023 when calculating the post-TDAPA add-on payment
adjustment amount for Korsuva[supreg] (88 FR 73697). However, for a
drug or biological product that began its TDAPA period in October of
the prior year, data from October through June would only represent 9
months of data. We believe it is important to have a full year's
utilization data when determining the post-TDAPA add-on payment
adjustment amount so that the post-TDAPA add-on payment adjustment
appropriately captures the utilization of the drug or biological
product as required by Sec. 413.234(g)(1).
We proposed that when there is insufficient data at the time of
rulemaking, we will publish the post-TDAPA add-on payment adjustment
amount via CR once we have a full 12 months of data. Specifically, we
will publish the post-TDAPA add-on payment adjustment amount in a CR
under the following circumstances: (1) a drug or biological product is
ending its TDAPA period during the CY, and therefore under Sec.
413.234(c)(1) will begin being included in the post-TDAPA add-on
payment adjustment amount calculation during that CY; and (2) that drug
or biological product does not have at least 12 full months of
utilization data at the time the final rule is developed. Under this
proposal, we would still include an estimated post-TDAPA add-on payment
adjustment amount in the proposed rule and update that estimated amount
in the final rule, but we would note that the estimated amount
presented in the final rule is subject to change. We note that the
final post-TDAPA add-on payment adjustment amount published after the
final rule could be higher or lower than the estimated amount presented
in the final rule. We do not anticipate having less than a full year's
utilization data at the time of rulemaking for drugs and biological
products that begin receiving TDAPA payments in quarters other than the
fourth quarter of the year; however, should such an instance arise, we
would similarly publish the post-TDAPA add-on payment adjustment amount
in a CR once 12 months of utilization data are available. We would
indicate the quarterly release CR in which we intend to publish the
final post-TDAPA add-on payment adjustment amount.
For CY 2025, there is one TDAPA drug, Jesduvroq, which is ending
its TDAPA period in CY 2025 and for which, at the time of proposed
rulemaking, we did not anticipate having a full 12 months' worth of
utilization data at the time of final rulemaking. As such, we stated
that under this proposal we would indicate in the final rule that we
intend to publish the post-TDAPA add-on payment adjustment amount for
CY 2025 for Jesduvroq once we have a full year of utilization data. We
generally intend to publish this updated post-TDAPA add-on payment
adjustment amount two calendar quarters prior to the end of the TDAPA
period, as this would allow for sufficient time to gather and analyze a
year's worth of utilization data. We stated that for this drug, and for
any drug or biological product that begins its TDAPA period in the
fourth quarter of a CY, we would generally publish the post-TDAPA add-
on payment adjustment amount at the beginning of the second quarter of
the last CY of that drug or biological product's TDAPA period (that is,
two
[[Page 89136]]
calendar quarters before the drug is included in the post-TDAPA add-on
payment adjustment amount). However, should circumstances arise that
prevent us from calculating a post-TDAPA add-on payment adjustment
amount at that time, we would publish the final post-TDAPA add-on
payment adjustment amount at a later time.
We noted that this approach to publishing the post-TDAPA add-on
payment adjustment amount calculation would not impact any drug or
biological product that has at least one full year's worth of
utilization data at the time when the analysis for the final rule is
developed, nor would it impact any drug or biological product that is
already included in the post-TDAPA add-on payment adjustment
calculation for a given CY. We do not intend to routinely update post-
TDAPA add-on payment adjustment amounts quarterly, as we believe this
will make it more difficult for ESRD facilities to estimate payments.
However, for drugs or biological products that lack a full year's worth
of utilization data at the time when the analysis for the final rule is
developed, we believe it is appropriate to take this additional step to
ensure that their post-TDAPA add-on payment adjustment is based on 12
months of utilization data as required by Sec. 413.234(g)(1).
We invited public comment on our proposal to update post-TDAPA add-
on payment adjustment amounts after the final rule is published in
situations where 12 months of utilization data is not available at the
time of the analysis calculated for the ESRD PPS final rule. We did not
receive any comments on this proposal.
Final Rule Action: We are finalizing our proposal to publish the
post-TDAPA add-on payment adjustment amount after the final rule in
certain circumstances, as we believe it is most consistent with Sec.
413.234(g)(1), which requires that the post-TDAPA add-on payment
adjustment amount be calculated using 12 months of utilization data.
7. Inclusion of Oral-Only Drugs Into the ESRD PPS Bundled Payment
a. Background
Section 1881(b)(14)(A)(i) of the Act requires the Secretary to
implement a payment system under which a single payment is made to a
provider of services or a renal dialysis facility for renal dialysis
services in lieu of any other payment. Section 1881(b)(14)(B) of the
Act defines renal dialysis services, and subclause (iii) of that
section states that these services include other drugs and biologicals
\36\ that are furnished to individuals for the treatment of ESRD and
for which payment was made separately under this title, and any oral
equivalent form of such drug or biological.
---------------------------------------------------------------------------
\36\ As discussed in the CY 2019 ESRD PPS final rule (83 FR
56922), we began using the term ``biological products'' instead of
``biologicals'' under the ESRD PPS to be consistent with FDA
nomenclature. We use the term ``biological products'' in this final
rule except where referencing specific language in the Act or
regulations.
---------------------------------------------------------------------------
When we implemented the ESRD PPS in 2011 (75 FR 49030), we
interpreted this provision as including not only injectable drugs and
biological products used for the treatment of ESRD (other than ESAs and
any oral form of ESAs, which are included under clause (ii) of section
1881(b)(14)(B) of the Act), but also all oral drugs and biological
products used for the treatment of ESRD and furnished under title XVIII
of the Act. We also concluded that, to the extent oral-only drugs or
biological products used for the treatment of ESRD do not fall within
clause (iii) of section 1881(b)(14)(B) of the Act, such drugs or
biological products would fall under clause (iv) of that section, and
constitute other items and services used for the treatment of ESRD that
are not described in clause (i) of section 1881(b)(14)(B) of the Act.
We finalized and issued payment policies for oral-only renal
dialysis service drugs or biological products in the CY 2011 ESRD PPS
final rule (75 FR 49038 through 49053). In that rule, we defined renal
dialysis services at Sec. 413.171 as including drugs and biological
products with only an oral form. We also finalized a policy to delay
payment for oral-only drugs under the ESRD PPS until January 1, 2014.
Accordingly, we codified the delay in payment for oral-only renal
dialysis service drugs and biological products at Sec. 413.174(f)(6),
and provided that payment to an ESRD facility for renal dialysis
service drugs and biological products with only an oral form would be
incorporated into the ESRD PPS payment rates effective January 1, 2014,
once we had collected and analyzed adequate pricing and utilization
data. Since oral-only drugs are generally not a covered service under
Medicare Part B, this delay of payment under the ESRD PPS also allowed
coverage to continue under Medicare Part D for those beneficiaries with
such coverage.
In the CY 2011 ESRD PPS proposed rule (74 FR 49929), we noted that
the only oral-only drugs that we identified were phosphate binders and
calcimimetics, specifically, cinacalcet hydrochloride, lanthanum
carbonate, calcium acetate, sevelamer hydrochloride, and sevelamer
carbonate. All of these drugs fall into the ESRD PPS functional
category for bone and mineral metabolism.
Since then, the Congress has acted three times to further delay the
inclusion of oral-only renal dialysis service drugs and biological
products in the ESRD PPS. Specifically, as discussed in section II.A.1
of this final rule, ATRA in 2013, as amended by PAMA in 2014, and
amended by ABLE in 2014, ultimately delayed the inclusion of oral-only
drugs into the ESRD PPS until January 1, 2025.
Section 217(c)(1) of PAMA also required us to adopt a process for
determining when oral-only drugs are no longer oral-only and to
incorporate them into the ESRD PPS bundled payment. 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. In the CY
2016 ESRD PPS proposed rule (80 FR 37839), we noted that when the
existing oral-only drugs (which were, at that time, only phosphate
binders and calcimimetics) were determined no longer to be oral-only
drugs, we would pay for them using the TDAPA. We stated that this would
allow us to collect data reflecting current utilization of both the
oral and injectable or intravenous forms of the drugs, as well as
payment patterns and beneficiary co-pays, before we add these drugs to
the ESRD PPS bundled payment.
In 2017, when an injectable calcimimetic became available, CMS
issued a Change Request \37\ to add all calcimimetics, including oral
and injectable forms, to the ESRD PPS bundled payment beginning in CY
2018. CMS paid the TDAPA for calcimimetics for a period of 3 years (CY
2018 through CY 2020). When the TDAPA period ended, we went through
rulemaking (85 FR 71410) to increase the ESRD PPS base rate beginning
in CY 2021 to incorporate the cost of calcimimetics.
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\37\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/mm10065.pdf and
https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2018downloads/r1999otn.pdf.
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Most recently, in the CY 2023 ESRD PPS final rule (87 FR 67185
through 67186), we finalized a revision to the regulatory definition of
an oral-only drug, effective January 1, 2025, to clarify our
longstanding policy by specifying that an oral-only drug has no
injectable functional equivalent. The effective date of this revised
definition will coincide
[[Page 89137]]
with the January 1, 2025, incorporation of oral-only drugs into the
ESRD PPS under Sec. 413.174(f)(6). The revised definition of oral-only
drugs reflects that drugs with similar end-action effects are treated
as equivalent under the ESRD PPS, consistent with our approach to
designating drugs into ESRD PPS functional categories.
b. Current Policy for Oral-Only Drugs in CY 2025
Existing regulations at Sec. 413.174(f)(6) state that effective
January 1, 2025, oral-only drugs will be paid for under the ESRD PPS.
Although oral-only drugs are excluded from the ESRD PPS bundled payment
until January 1, 2025, they are currently recognized as renal dialysis
services as defined in regulation at Sec. 413.171. Accordingly, CMS is
planning to incorporate oral-only drugs into the ESRD PPS bundled
payment beginning January 1, 2025, using the TDAPA, as described in the
CY 2016 ESRD PPS final rule (80 FR 69027) and subsequent rules.
As we stated in the CY 2023 ESRD PPS final rule (87 FR 67180), if
an injectable equivalent or other form of administration of phosphate
binders were to be approved by FDA prior to January 1, 2025, the
phosphate binders would no longer be considered oral-only drugs and
would no longer be paid for outside the ESRD PPS. We stated that we
would pay for the oral and any non-oral version of the drug using the
TDAPA under the ESRD PPS for at least 2 years, during which time we
would collect and analyze utilization data. We stated that if no other
injectable equivalent (or other form of administration) of phosphate
binders is approved by the FDA prior to January 1, 2025, we would pay
for these drugs using the TDAPA under the ESRD PPS for at least 2 years
beginning January 1, 2025. CMS will use the same process that it used
for calcimimetics to incorporate phosphate binders into the ESRD PPS
beginning January 1, 2025. CMS discussed its process for incorporating
calcimimetics in CMS Transmittal 1999, dated January 10, 2018, and in
MLN Matters Number: MM10065.38 39 We stated that pricing for
phosphate binders under the TDAPA would be based on pricing
methodologies available under section 1847A of the Act. A new renal
dialysis drug or biological product is paid for using the TDAPA, which
is based on 100 percent of ASP. If ASP is not available then the
transitional drug add-on payment adjustment 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. In such cases, CMS
will undertake rulemaking to modify the ESRD PPS base rate, if
appropriate, to account for the cost and utilization of phosphate
binders in the ESRD PPS bundled payment.
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\38\ https://www.cms.gov/Regulations-and-Guidance/Guidance/
Transmittals/2018Downloads/R1999OTN.pdf.
\39\ https://www.cms.gov/Outreach-and-Education/Medicare-
Learning-Network-MLN/MLNMattersArticles/Downloads/MM10065.pdf.
---------------------------------------------------------------------------
We note that on October 17, 2023, a new oral phosphate lowering
agent received FDA marketing approval. According to the FDA-approved
labeling for this drug, XPHOZAH[supreg] (tenapanor) is indicated to
reduce serum phosphorus in adults with chronic kidney disease who are
on dialysis as add-on therapy in patients who have an inadequate
response to phosphate binders or who are intolerant of any dose of
phosphate binder therapy. CMS has identified XPHOZAH[supreg] to be a
renal dialysis service because it is used to treat or manage a
condition associated with ESRD, per its approved indication.
XPHOZAH[supreg] tablets are taken orally, usually twice a day with
meals. CMS has also determined that XPHOZAH[supreg] meets the current
regulatory definition of an oral-only drug as defined at Sec.
413.234(a), and therefore, in accordance with Sec. 413.174(f)(6), is
not paid for under the ESRD PPS until January 1, 2025. Consistent with
policies adopted in the CY 2016 and CY 2023 ESRD PPS final rules (see
80 FR 69025 and 87 FR 67183), XPHOZAH[supreg] will be included in the
ESRD PPS effective January 1, 2025, using the drug designation process
under Sec. 413.234.
As set forth in Sec. 413.174(f)(6), effective January 1, 2025,
payment to an ESRD facility for renal dialysis service drugs and
biological products with only an oral form furnished to ESRD patients
will be incorporated within the prospective payment system rates
established by CMS in Sec. 413.230, and separate payment will no
longer be provided. As noted earlier in this section, we have recently
published operational guidance, including information about the TDAPA
amount, HCPCS codes, and ASP reporting requirements and timelines for
phosphate binders at https://www.cms.gov/files/document/including-oral-only-drugs-esrd-pps-bundled-payment.pdf. We note that we will use the
same process that we used for calcimimetics to incorporate phosphate
binders into the ESRD PPS beginning January 1, 2025, and that we will
not be following this process for any other oral drugs or biological
products. Manufacturers would need to apply for a HCPCS code and the
TDAPA for any other oral drugs or biological products to be eligible
for the TDAPA.
Finally, we note that the TDAPA amount is not applied to claims for
renal dialysis services provided to beneficiaries with acute kidney
injury.\40\ When ESRD facilities were paid the TDAPA for calcimimetics
and the latter were incorporated into the ESRD PPS bundled payment for
patients with ESRD, the TDAPA was not paid for claims for renal
dialysis services provided to beneficiaries with acute kidney injury.
Similarly, ESRD facilities will not be paid the TDAPA for phosphate
binders for renal dialysis services provided to beneficiaries with
acute kidney injury. This is discussed below in section III.E of this
final rule.
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\40\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/mm102811.pdf and https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R1941OTN.pdf.
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We note that for any other oral-only drugs, such as
XPHOZAH[supreg], we will apply our drug designation process as we do
for all new renal dialysis drugs and biological products, consistent
with Sec. 413.234 and the policy finalized in CY 2016 ESRD PPS final
rule (80 FR 69027) and reiterated in the CY 2023 ESRD PPS final rule
(87 FR 67180).
c. Operational Considerations Related to the Incorporation of Oral-Only
Drugs
In the CY 2011 ESRD PPS final rule (75 FR 49043), we explained that
there were certain advantages to delaying the implementation of payment
for oral-only drugs and biological products under the ESRD PPS. These
advantages included allowing ESRD facilities additional time to make
operational changes and logistical arrangements to furnish oral-only
renal dialysis service drugs and biological products to their patients.
In November 2023, in accordance with section 632(d) of ATRA, the
Government Accountability Office (GAO) published a Report to
Congressional Committees titled, ``End-Stage Renal Disease: CMS Plans
for including Phosphate Binders in the Bundled Payment.'' (GAO-24-
106288).\41\ The report summarized the current status of payment for
the phosphate binders as well as identifying areas of operational
concerns. These include challenges related to hiring the staff needed
for ESRD facilities to provide phosphate binders to patients,
complexities relating to system updates needed to accommodate the
volume and broad array of phosphate binders, and costs related to
dispensing, storage, and
[[Page 89138]]
transportation. The considerations identified in the GAO report
generally align with the comments we have received on past ESRD PPS
proposed rules. The GAO also interviewed dialysis organization
representatives who stated that they are preparing to make the
anticipated adjustments needed to dispense the phosphate binders.
---------------------------------------------------------------------------
\41\ https://www.gao.gov/assets/d24106288.pdf.
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With respect to considerations related to staffing, we note that
the ESRD PPS includes payment for staffing related to the provision of
renal dialysis services. We believe there are several strategies that
ESRD facilities could employ to efficiently use available staff time to
provide phosphate binders. There are parallels between the
administration of phosphate binders and the administration of oral
calcimimetics, which are also typically taken every day. First, we
expect that patients with ESRD generally receive treatment for at least
3 hours per session, typically three times per week. We believe that
during this treatment window there is generally staff availability to
provide the patient with pre-packaged medication, which we note could
include medication for multiple days. Second, ESRD facilities could
maximize the efficiency of staff time by mailing the prescriptions, to
the extent that doing so is consistent with state pharmacy laws. For
example, the GAO report identified that one large dialysis organization
only mails oral prescriptions to patients' homes, while others mail the
medication to either the ESRD facility or the patient's home. Third,
the GAO report identified that some ESRD facilities contract with
outside pharmacies rather than operating their own pharmacy. By
contracting with outside pharmacies, ESRD facilities could reduce or
avoid the need to hire additional pharmacists and pharmacy staff to
manage the volume of prescriptions.
Another challenge identified by the dialysis organizations was the
complexity of dispensing phosphate binders because of the broad array
of phosphate binders and the high volume of pills.\42\ We acknowledge
there are six common types of phosphate binders as compared to only one
type of calcimimetics. The GAO report also noted that unlike
calcimimetics, phosphate binders are typically taken with every meal
and snack. We note that although Medicare will begin paying for
phosphate binders under the ESRD PPS beginning January 1, 2025, we are
not establishing any requirements regarding how or where patients take
these medications. These decisions are made and will continue to be
made by the patient, nephrologist, and care team.
---------------------------------------------------------------------------
\42\ Ibid.
---------------------------------------------------------------------------
We recognize that updates may be required to ESRD facilities'
systems, including electronic medical records, billing systems, and
inventory management systems to accommodate new procedures for
dispensing phosphate binders. As we previously noted, we initially
delayed the incorporation of oral-only drugs into the ESRD PPS in 2011,
in part to allow ESRD facilities to make such operational changes and
logistical arrangements. In addition, we have provided operational
guidance on the CMS website at https://www.cms.gov/files/document/including-oral-only-drugs-esrd-pps-bundled-payment.pdf that addresses
HCPCS coding, billing, and price information. We expect that ESRD
facilities will be able to make these system changes in advance of
January 1, 2025.
As discussed in the CY 2025 ESRD PPS proposed rule, dialysis
organizations have expressed concerns surrounding CMS using ASP to
determine the TDAPA amount added to the ESRD PPS base rate for
phosphate binders, which they believe does not adequately provide for
dispensing cost.\43\ Under current TDAPA policy, CMS intended to pay
the TDAPA based on 100 percent of ASP for phosphate binders for at
least 2 years. However, as noted in the CY 2025 ESRD PPS proposed rule
(89 FR 55797), CMS recognized that updates may be required to ESRD
facilities' systems, including electronic medical records, billing
systems, and inventory management systems to accommodate new procedures
for dispensing phosphate binders. In addition, we recognized the high
percentage of ESRD beneficiaries that have at least one phosphate
binder prescription and the large volume of phosphate binder
prescriptions and stated that we were considering whether it may be
appropriate to make additional payment to account for incremental
operational costs in excess of 100 percent of ASP, such as dispensing
fees, when paying the TDAPA for phosphate binders. Unlike drugs and
biological products for which payment is already included in the ESRD
PPS base rate, including all other drugs and biological products in
existing functional categories, dispensing fees and other costs are not
currently included in the ESRD PPS base rate for phosphate binders.
Therefore, in the CY 2025 ESRD PPS proposed rule, we also stated that
we were considering whether a potential change in TDAPA amount policy
for phosphate binders to account for such costs would be consistent
with the TDAPA policy as finalized in the CY 2019 and CY 2020 ESRD PPS
final rules (83 FR 56948 and 84 FR 60673 through 60676). In the
proposed rule, we noted one potential example we could consider would
be paying 106 percent of ASP for 2 years as we did for calcimimetics.
As discussed in the CY 2011 ESRD PPS final rule, the amounts added to
the ESRD PPS base rate for oral drugs at that time were based on data
from Part D, which included dispensing fees (75 FR 49043). We solicited
comments on the extent to which 100 percent of ASP is an appropriate
TDAPA amount for phosphate binders and whether there are any costs
associated with the inclusion of phosphate binders into the ESRD PPS
bundled payment that may not be accounted for by 100 percent of ASP. In
the proposed rule we noted that CMS may finalize a change in the TDAPA
amount for phosphate binders after considering comments on this topic.
---------------------------------------------------------------------------
\43\ Ibid.
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As noted earlier, we have issued guidance \44\ about the process we
will use for paying the TDAPA for the phosphate binders and for their
incorporation into the ESRD PPS bundled payment. This guidance
addresses several key topics including billing information, information
about the discarded drug policy, and information for manufacturers
about reporting timelines for ASP data.
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\44\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd and https://www.cms.gov/files/document/including-oral-only-drugs-esrd-pps-bundled-payment.pdf.
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We invited public comment on the TDAPA payment methodology for the
January 1, 2025, incorporation of oral-only drugs in the ESRD PPS.
Approximately 162 commenters including LDOs; provider advocacy
organizations; nonprofit dialysis associations; coalitions of dialysis
organizations; a network of dialysis organizations; professional
organizations; long-term care pharmacy association; ESRD facilities;
ESRD beneficiaries, a trade association and pharmaceutical
manufacturers, along with MedPAC, commented on the TDAPA payment
methodology for the January 1, 2025, incorporation of oral-only drugs
in the ESRD PPS. Of the 162 comments on oral-only drugs, we received 22
responses directly pertinent to the TDAPA methodology for the January
1, 2025, incorporation of oral-only drugs in the ESRD PPS. The
remaining comments were out-of-scope, including 133 form letters, of
which approximately 110 were from a unique
[[Page 89139]]
submitter. The following is a summary of the public comments received
on these proposals and our responses.
Comment: Multiple commenters expressed appreciation that CMS
recognized the operational concerns and associated costs that were
raised by ESRD facilities in the 2023 GAO report.\45\ However, they
expressed concern that CMS does not fully understand the costs and
burdens associated specifically with staff time and dispensing of these
drugs. Numerous commenters expressed concerns regarding the incremental
operational costs and burden of incorporating phosphate binders into
the ESRD PPS bundled payment. The commenters' concerns included, but
were not limited to, distribution fees, mailing fees, storage fees, and
increases in labor costs.
---------------------------------------------------------------------------
\45\ ``End-Stage renal Disease: CMS Plans for Including
Phosphate Binders in the Bundled Payment.'' (GAO-24-106288, Nov.
2023).
---------------------------------------------------------------------------
Response: CMS thanks the commenters for their appreciation and for
sharing concerns regarding the costs and burden of incorporating
phosphate binders into the ESRD PPS bundled payment. CMS has addressed
these specific concerns in the responses to comments that follow in
this rule. CMS recognizes that the introduction of oral-only
medications into the ESRD PPS bundle can present some new logistic
challenges. CMS is recognizing these costs through the modification to
the TDAPA amount for phosphate binders in this final rule. In
accordance with section 1881(b)(14)(B) of the Act, Sec. 413.171
defines renal dialysis services to include oral-only renal dialysis
services drug and biologicals. Oral-only renal dialysis service drugs
and biological products were included in the definition of renal
dialysis services in the CY 2011 ESRD PPS final rule (75 FR 49044). At
that time CMS finalized a policy to delay payment for these drugs under
the ESRD PPS until January 1, 2014, to allow ESRD facilities to plan
for the logistic challenges like those interested parties note in their
comments. Legislation further delayed this date to January 1, 2025, and
CMS ultimately updated the regulations at 42 CFR 413.174(f)(6) to
finalize the date of the incorporation of oral-only drugs into the ESRD
PPS bundled payment as January 1, 2025. CMS believes that the passage
of over a decade since implementation of the ESRD PPS has provided
sufficient time for interested parties to make the operational changes
and logistical arrangements needed to furnish oral-only renal dialysis
service drugs and biological products to their patients.
Comment: Numerous commenters stated that CMS should finalize the
payment of a dispensing fee to account for such incremental operational
costs when phosphate binders are added to the ESRD PPS bundled payment.
They stated that the dispensing of oral medications to be taken daily
will result in incremental operational costs and that these costs and
dispensing fees are not included in the ESRD PPS base rate. An LDO and
a coalition of dialysis organizations noted that every dialysis
provider likely will implement a process that is most cost effective
and efficient based on their footprint, organizational structure,
patient population and other specific circumstances. Commenters stated
that while the processes and procedures may vary by ESRD facility,
every ESRD facility will incur distribution, storage, and staff
expenses that are not accounted for in the ASP data, and this is an
important distinction from the current processes related to
calcimimetics. These other costs are discussed in the comments and
responses that follow.
Response: In the CY 2025 ESRD PPS proposed rule, CMS recognized the
high percentage of ESRD beneficiaries that have at least one phosphate
binder prescription and the large volume of phosphate binder
prescriptions and noted that we were considering whether it may be
appropriate to make additional payment to account for incremental
operational costs in excess of 100 percent of ASP, such as dispensing
fees, when paying the TDAPA for phosphate binders. We stated that
unlike drugs and biological products for which payment is already
included in the ESRD PPS base rate, including all other drugs and
biological products in existing ESRD PPS functional categories,
dispensing fees and other costs are not currently included in the ESRD
PPS base rate for phosphate binders (89 FR 55797). CMS believes that
payment for the incremental operational costs, such as distribution
fees, mailing fees, storage fees, and increases in labor costs incurred
by the ESRD facilities for the provision of phosphate binders should
align with resource use; that is, ESRD facilities' outlay to provide
the phosphate binders to the Medicare beneficiaries. In lieu of a
dispensing fee, as discussed later in this section, we are finalizing a
flat rate increase to the proposed 100 percent of ASP TDAPA amount for
phosphate binders.
Comment: Coalitions of dialysis organizations commented that
distribution costs, both dispensing fees and mailing fees, are not
included in 100 percent of ASP. An LDO stated that CMS suggested that
ESRD facilities can implement efficiencies by having phosphate binder
prescriptions mailed to the patient's home to the extent possible under
state pharmacy laws. They noted, however, that this still represents a
new cost to ESRD facilities that is not accounted for in a drug's ASP.
One commenter who is a pharmacy solutions company stated that the range
of dispensing fees tends to be $5 to $30 for any given dispense, and
incremental operational costs might include costs associated with call
centers and pharmacists to receive prescriptions from ESRD facilities,
as well as the internal processing costs associated with converting
that into fillable medications. The commenter also stated that there is
labor associated with the actual fulfillment of oral medications, which
includes both quality control such as operational checks, and despite
automation there is additional regulatory burden and oversight that is
applied to mail order pharmacies. They stated that all these activities
will result in incremental operational costs. The commenter stated that
it is reasonable to expect that ESRD facilities, depending on their
size and scale, might pay more than what would be incurred in mailing
fees to dispense oral medications through a pharmacy. Commenters noted
that these types of distribution costs exist regardless of whether the
oral-only drugs are dispensed from a retail or mail or central
pharmacy.
Multiple commenters stated that the ESRD facilities will be paying
pharmacy charges to obtain the drugs through them. Commenters expressed
concern that ESRD facilities will incur additional costs that should
not be theirs to shoulder. A non-profit dialysis association noted that
increased payment for these incremental operational costs is important,
particularly now when according to the commenter ESRD facilities are at
a financial breaking point. The commenter noted that the logistics
involved with getting the phosphate binders to a patient can be more
expensive than the drugs themselves. They stated that these costs are
even greater when beneficiaries are based in rural communities, putting
their ESRD facilities at an even greater disadvantage.
An organization of pediatric nephrologists supported the TDAPA
amount based on 100 percent of ASP for oral phosphate binders. While
the organization appreciated that adding
[[Page 89140]]
oral-only drugs to the bundled payment will improve patient access,
they are concerned that these drugs are expensive, and pediatric
centers will not be able to afford them. The organization stated that
pediatric patients with kidney disease are mainly dialyzed in pediatric
hospitals, which are not able to get bulk pricing deals for these
drugs. By adding oral-only drugs to the ESRD PPS bundled payment
without an appropriate increase in payment, the organization stated
that there will be a huge cost to the pediatric hospitals that they
cannot absorb. The commenter identified additional concerns about
access, as these are not first-line drugs for pediatrics and there is
often significant prior authorization involved in procuring these drugs
for pediatric patients. They stated that the provision of phosphate
binders for the pediatric ESRD population would include compounding
charges and dispensary costs.
Several commenters noted that there will be mailing fees either in
terms of obtaining drugs from pharmacies or sending the drugs directly
to the patient's home, which is where they are taken. The pharmacy
solutions company stated that the home delivery of medications is
preferred by beneficiaries. The commenter predicted that most dialysis
providers will rely on mail order or shipping from a central pharmacy
to their clinics for distribution; others may rely on local retail
pharmacies. The commenter stated that for home delivery, each
prescription must be shipped to a patient's home through a carrier like
the United States Postal Service, FedEx, UPS, etc. Thus, each dispense
incurs an additional expense of $3 to $25 depending on weight and
shipping method. The commenter also noted that given the number of
types of phosphate binders used per patient, and the sheer volume of
pills needed, there will be increased shipping costs previously
unaccounted for in the ESRD PPS base rate for oral phosphate binders. A
coalition of dialysis providers stated that shipping costs alone are
expected to be significant, as pills must be packaged to ensure the
medication is not damaged during transit, and shipping costs are likely
to escalate year over year, as will the contract costs with mail-order
pharmacies.
Drug manufacturers encouraged CMS to finalize a change in the TDAPA
amount to 106 percent of ASP for phosphate binders. They stated that
100 percent of ASP does not consider the substantial cost for
dispensing oral-only drugs particularly for the high volume of pills
associated with phosphate binders, which a large majority of Medicare
ESRD beneficiaries utilize. An LDO and a coalition of dialysis
organizations commented on the distribution of phosphate binders to a
subpopulation of patients with housing instability, for whom mailing
medications to a home is not an option. Based on an assessment of the
LDO's patient population, as well as internal and external assets and
capabilities in efficiently ordering and distributing a large volume of
oral drugs, they assessed that mailing medications to patient homes,
arguably the least burdensome process for facility staff, is viable for
only a subset of their population. Because many patients have unstable
housing situations, the LDO stated that they cannot rely on mail order
for every patient.
Multiple commenters noted that all these distribution options will
incur new costs previously unaccounted for in the original underlying
bundled payment and that are not covered by 100 percent of ASP,
including additional staff time and facility infrastructure costs.
Unlike the current process used for calcimimetics, staff will be
required to accept and store individual prescriptions for each patient.
An LDO stated phosphate binders currently flow through retail and mail
order pharmacies, and that they will continue to flow through those
channels when the payment changes from Part D to Part B. The LDO
suggested that it would be appropriate for CMS to adjust the TDAPA
payment amount to recognize Part B pharmacy supply fees paid for oral
drugs paid as part of a physician's service, or in this case as part of
the renal dialysis service.
Response: CMS thanks the commenters for sharing the challenges
accompanying the complexity of dispensing phosphate binders because of
the broad array of phosphate binders and the high volume of pills. We
acknowledge there are six common types of phosphate binders as compared
to only one calcimimetic. CMS also acknowledges the range of dispensing
fees for the high volume of phosphate binders required to manage ESRD
patients, along with the impact of potentially higher pharmacy supply
fees on the rural community. We understand the concerns expressed by
the commenters about ASP, and that small ESRD facilities may be unable
to negotiate the lower drug prices attributed to volume, and
inaccessibility to supply chain discounts. These unique challenges of
the high volume of phosphate binders that ESRD facilities must provide
to beneficiaries would be magnified by a higher cost-to-payment ratio
for the smaller ESRD facilities. We recognize that unstable housing
situations with some ESRD beneficiaries would affect the distribution
of phosphate binders through mail order, which may be a preferred way
for ESRD facilities to manage this process. In consideration of the
incremental operational costs that will be incurred by the ESRD
facilities, as noted later in this section, CMS has decided to finalize
an increase to the current 100 percent of ASP calculation of the TDAPA
amount paid to ESRD facilities for the inclusion of phosphate binders.
Comment: A coalition of dialysis organizations noted that ESRD
facilities will need to update information technology systems to
facilitate these changes. Changes are required to update electronic
medical records, billing systems, and inventory management. The
commenter also stated that e-prescribing is also a complex process that
involves interactions with state regulatory authorities and that ESRD
facilities will need to stand-up or expand their internal ability to
engage with e-prescribing systems and contract with e-prescribing
platforms to facilitate this policy change for phosphate binders. The
coalition stated that all these changes represent both significant up-
front costs and investments as well as ongoing administrative
requirements to ensure operational connectivity and seamless delivery
to the beneficiary. The commenter stated that ASP does not cover any of
information technology costs for ESRD facilities to distribute
phosphate binders to beneficiaries.
Response: CMS acknowledges that there will be changes needed in the
IT systems for ESRD facilities to accommodate the updates and
methodological changes accompanying the inclusion of the phosphate
binders in the ESRD PPS. These changes and updates affect electronic
medical records, billing systems, and inventory management systems.
However, since publication of the CY 2016 ESRD PPS final rule, our
existing regulations at Sec. 413.174(f)(6) have stated that effective
January 1, 2025, oral-only drugs, which includes phosphate binders,
will be paid for under the ESRD PPS. As previously discussed, we
initially delayed the incorporation of oral-only drugs into the ESRD
PPS in 2011, in part to allow ESRD facilities to make such operational
changes and logistical arrangements. In addition, we have provided
detailed operational guidance on the implementation of the TDAPA policy
as it pertains to phosphate binders to ensure that facilities have
clear instructions on compliance and payment processes to facilitate a
smooth
[[Page 89141]]
transition,\46\ which addresses HCPCS coding, billing, and price
information for phosphate binders. We expect that ESRD facilities will
be able to make these system changes in advance of January 1, 2025. CMS
will continue to issue operational guidance as necessary for the smooth
implementation of the incorporation of phosphate binders into the ESRD
PPS bundled payment. As discussed later in this section, CMS is
finalizing an increase in the TDAPA amount for phosphate binders, which
may help to offset the costs associated with the logistic steps that
the commenter described.
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\46\ https://www.cms.gov/files/document/including-oral-only-drugs-esrd-pps-bundled-payment.pdf.
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Comment: Coalitions of dialysis organizations, a professional
organization of nephrologists, a drug manufacturer and a health care
system noted that supporting the provision of a significant volume of
pills to patients along with the storage costs associated with
maintaining the drugs at the ESRD facility if the decision is to
distribute the drugs to patients during their dialysis treatment
sessions is an additional cost to the ESRD facility. An LDO stated that
the storage and distribution of oral calcimimetic medications are
different from what they would be with phosphate binders. Commenters
noted that because there is one oral calcimimetic medication, and half
of their patient population on calcimimetic treatment (approximately 25
percent) receives this drug three times per week chairside, the storage
and distribution processes are much simpler. They stated that ESRD
facilities can maintain a supply of calcimimetics with relatively low
burden compared to phosphate binders. The commenters stated that with
more than 80 percent of ESRD patients being prescribed phosphate
binders, and with more than six different types of oral phosphate
binders and various dosages of each, phosphate binders represent a 225
percent relative increase over, and addition to, the percent of
patients to whom the ESRD facilities are currently delivering
calcimimetics. The coalition stated that the scale of operational
requirements needed to deliver calcimimetics simply pales in comparison
to what will be required to deliver phosphate binders to beneficiaries
through the ESRD PPS.
The commenters also noted that because of the size of the pills and
the quantity required for each prescription, most ESRD facilities are
not equipped to store and dispense this volume of oral medication. They
stated that phosphate binders represent an exponential increase in the
volume of pills dialysis providers will need to acquire, distribute,
store, and manage for their patients each month and year. The relative
difference between managing 360 pills per year per patient for
cinacalcet as compared with 3,240 pills per year per patient for
calcium carbonate is 800 percent.
An LDO stated that the ESRD PPS bundled payment might have included
storage administration fees for drugs that were previously separately
billable (largely intravenous agents) when CMS established the bundled
payment. However, they noted that the claims data CMS analyzed at that
time omitted these oral medications. The LDO commented that it is
incorrect to assume that the storage costs and dispensing fees for
intravenous agents, which represent the vast majority of dialysis-
provided drugs accounted for when the bundled payment was created, are
equivalent to the administration and mailing costs associated with
oral-only medications. A coalition of dialysis organizations stated
that while their member ESRD facilities have increased their
familiarity with dispensing oral drugs since the inception of the ESRD
PPS, the difference between distributing several hundred pills to 25
percent of their patients each year and distributing thousands of large
pills to 80 percent of the ESRD facilities' patients each year requires
a significant expansion of their pharmaceutical distribution operations
on a massive scale. The commenter stated that the ESRD facilities
cannot simply repurpose existing systems to meet this goal--they must
build, rebuild, and significantly expand the scale of their operations
to accommodate a vastly larger number of patients taking exponentially
more pills than they have ever provided before. The development,
maintenance, and ongoing clinical management of these processes
represent significant costs to ESRD facilities, which are not covered
by setting the TDAPA for phosphate binders at 100 percent of ASP.
The LDO commented that intravenous agents and oral-only drugs
differ in several respects. Most notably, intravenous agents are
usually administered to patients while on dialysis. Thus, there is
centralized shipping and administration of those products. In contrast,
the commenter stated, under state and other pharmacy laws, a
significant number of the oral-only drugs will be shipped and dispensed
directly to the patient's home. This delivery model incurs fixed costs,
such as shipping and administration fees, which differ from those
associated with the previously separately billable intravenous drugs.
A coalition of dialysis organizations stated that ESRD facilities
would also have to construct or install on-site storage with
appropriate temperature controls and security measures compliant with
state pharmacy laws and requirements. If the patient misses or changes
their appointment, or if the delivery of their prescription is delayed
by the shipping carrier, this process breaks down. The coalition stated
that CMS's suggestion regarding labor allocation for in-center
distribution of phosphate binders does not address the needs of
patients using home dialysis, is not simple, and is not without costs.
The commenter stated that having an ESRD facility staff member hand a
patient their pre-packaged medication is the final step in a long,
complex, and costly process. They stated that none of those costs will
be supported if CMS sets the TDAPA amount for phosphate binders at 100
percent of ASP.
A non-profit treatment and research center stated that given the
difficulties associated with dispensing these medications in the ESRD
facility, these facilities may have to restrict the formulary of
available medications, which may mean that some patients have
difficulty accessing the optimal medication for them. A health care
system stated that because of significant cost considerations, they are
concerned that ESRD facilities may limit patient choice by offering
fewer phosphate binders based on the cost to facilities.
In their comment, MedPAC refers to their comment in the CY 2019
proposed rule that stated that the ASP + 6 percent policy that is
applied to many Part B drugs was developed to reimburse physicians for
the cost of drugs that they purchase directly and commonly administer
in their offices. MedPAC also stated that while the ASP payment policy
never stated what cost the ``+6 percent'' was intended to cover, they
noted that reimbursing dialysis facilities is considerably different
from reimbursing physicians. First, the variation in physicians'
purchasing power, whether they practice solo, as part of a group, or in
a health system, is likely to result in considerably more variation in
the acquisition price for a drug compared to the acquisition prices for
dialysis facilities. If the intent of the ``+6 percent'' was to address
acquisition price variation, MedPAC stated that they believe that
rationale is diminished for dialysis facilities. MedPAC also stated
that the TDAPA amount is in addition to the ESRD PPS base rate, which
already includes payment for the cost of storage and administration of
[[Page 89142]]
ESRD-related drugs. Therefore, if the intent of the ``+6 percent'' was
to address storage and administration costs, MedPAC believes these
costs are already addressed through the ESRD PPS bundled payment and do
not contribute to the rationale for paying 106 percent of ASP for the
TDAPA.
Response: We agree with MedPAC that the 106 percent of ASP percent
policy was developed to pay physicians for the cost of drugs and that
the TDAPA is an add-on payment adjustment to the ESRD PPS base rate,
which already accounts for the cost of storage and administration of
renal dialysis drugs. However, CMS recognizes the unique costs
associated with the provision of phosphate binder drugs and believes it
is appropriate to consider a potential change in the TDAPA payment
policy for these drugs. CMS believes it is appropriate to make an
incremental addition to the TDAPA amount to specifically account for
incremental operational costs in excess of 100 percent of ASP for
furnishing phosphate binders, such as distribution fees, mailing fees,
excess storage fees, and increases in labor costs. Unlike other drugs
and biological products for which payment is already included in the
ESRD PPS base rate, including all other drugs and biological products
in existing ESRD PPS functional categories, these incremental
operational costs, such as security of medications in storage, are not
currently included in the ESRD PPS base rate for phosphate binders. We
noted this in the analysis conducted to establish the base rate in the
CY 2011 ESRD PPS final rule, and we did not include phosphate binders
in that analysis due to a lack of data (75 FR 49043). CMS is making a
provision for a fixed additional amount for each monthly claim that
includes phosphate binders, which will increase the TDAPA amount to
account for these unaddressed incremental operational costs in CY 2025
and CY 2026.
Regarding the concern about the difficulties associated with
dispensing phosphate binders in the ESRD facility, and the risk that
these facilities may have to restrict the formulary of available
medications, which may mean that some patients have difficulty
accessing the optimal medication for them, we believe that physicians
and their patients should make the decision together on the appropriate
form of the drug for treatment. It is not our intent to interfere with
that decision making process. As the number of drugs within each ESRD
PPS functional category increases and market share competition from the
manufacturers is a factor, we anticipate easier access, more choices in
care, and lower prices. We acknowledge that payment policies may have
unintended consequences as identified by the commenters. However, it is
our expectation that ESRD facilities will follow the physician's plan
of care for the patient. Under the ESRD facility CfCs (for example,
Sec. Sec. 494.70(a)(12) and 494.90(a)(3)), if a physician determines
that a particular phosphate binder is clinically best for a particular
patient, the ESRD facility is obligated to make that drug available to
the patient. In the CY 2011 ESRD PPS final rule, we specifically stated
that we expect ESRD facilities to provide the appropriate medications,
at the appropriate dosage, based upon individual patient needs. We
expect the patient's nephrologist and the interdisciplinary team to
identify medication needs in accordance with the individual patient's
plan of care (75 FR 49038). CMS will be closely monitoring drug
utilization at the beneficiary and facility level for these types of
issues.
Comment: Coalitions of dialysis organizations, a professional
organization of nephrologists and drug manufacturers commented that
complying with state pharmacy laws for the distribution of phosphate
binders is an additional cost. For example, these commenters noted that
some states, like Alabama and Arkansas, do not allow ESRD facilities to
distribute oral drugs directly to the patients, so there are additional
contracting costs incurred. An LDO commented that ESRD facilities are
limited by state rules in their ability to maintain a stock of
medications that are dispensed to patients for consumption at home.
They stated that CMS's recommendation that ESRD facilities could
provide the patient with prepackaged medication when they are at the
facility is not aligned with the reality of how ESRD facilities
operate. They also stated that since they are not licensed to package
medications, they will need to pay pharmacies to provide the medication
so it can be distributed by registered nurses in their ESRD facilities
to their patients. This fee is not included in the ASP, and the
commenter stated that they will incur additional costs.
Another coalition of dialysis organizations commented that ESRD
facilities are working diligently to stand up contracting and
procurement agreements with manufacturers, distributors, mail-order
pharmacies, and other entities to facilitate these changes to the
payment system. The coalition notes that each provider must ensure
compliance with federal rules as well as state pharmacy laws, which can
vary significantly and prevent providers from having uniform policies
and protocols across the country, creating inefficiencies that cannot
be mitigated. Whether standing-up or significantly expanding these
operations from their current, limited state to manage the phosphate
binders, the coalition noted that ESRD facilities will need to invest
in significant legal, administrative, and compliance staff resources to
initiate and continuously maintain these operations going forward. The
coalition also stated that some of their members noted that they will
also need to help beneficiaries understand the limitations based on
state pharmacy laws of what they can and cannot address with them about
their prescription in the facility, as many state pharmacy laws require
questions about prescriptions to be answered only by the pharmacist or
prescribing clinician.
An organization of pediatric nephrologists stated that pediatric
hospitals providing pediatric dialysis often do not have a license to
dispense for Medicare.
A trade association stated that the dispensing flexibilities of
pre-packaged mailed medications that extend to community-dwelling
beneficiaries or contracting with external pharmacies to furnish the
medications not dispensed during an in-center dialysis session, may not
apply to those beneficiaries in long-term care facilities (LTCs), due
to Federal or State nursing home regulations. In addition, this trade
association stated that furnishing the oral-only phosphate binder
medications to beneficiaries receiving home dialysis in a nursing
facility will create excessive burdens on facility staff to establish
``work-around'' processes to intake, store, and dispense these oral-
only dialysis medications in a manner different than their standard
operating procedures for all other residents. The trade association
wrote that such ``work-arounds'' increase the risk for missed
medication administration and increase LTC provider operating costs,
which may disincentivize providers from offering in-center dialysis
room, akin to a ``den'' in a private home, or home dialysis services
within the LTC facility, thereby limiting beneficiary care options.
A coalition of dialysis organizations stated that CMS should ensure
that other providers, such as SNFs, are notified of forthcoming changes
to the ESRD PPS regarding the provision of phosphate binders and work
with those providers to ensure a smooth transition. Coalitions of
dialysis organizations and a nephrology nurses association requested
additional guidance from CMS regarding the complexity of
[[Page 89143]]
phosphate binder management for ESRD patients in the SNF setting. A
trade association also requested that CMS address how ESRD and LTC
facilities should address the unique operational considerations related
to the incorporation of oral-only drugs into the ESRD PPS when the
beneficiary's current home is a LTC facility. The association requested
CMS to explain how the oral-only phosphate binder medications for
Medicare dialysis patients should be made available to the LTC provider
in a manner that complies with the Federal and State LTC provider
regulations, whether it be from the ESRD facility, mail delivery or
through an LTC pharmacy. The same commenters wanted to know if
assurances will be provided that the costs of these medications
directly related to the ESRD benefit and services will not be passed on
to the SNF. Finally, the commenter questioned what, if any, are the
documentation needs and requirements to be exchanged between the SNF
and the ESRD facility.
Response: CMS expects that facilities should be prepared
logistically for the inclusion of phosphate binders in the ESRD PPS
bundled payment, given that the regulation establishing the current
effective date was codified in 2016. This would include the logistics
and contractual agreements for distributing the phosphate binders,
whether in-center or for those patients receiving home dialysis, any
need for increased storage due to the number of pills, and efficient
use of ESRD facility labor. CMS is planning to hold at least two open
door forums to inform interested parties about ESRD PPS policy and
answer questions related to implementation of the incorporation of
phosphate binders into the ESRD PPS bundled payment. In addition, CMS
has a payment mailbox for incoming questions regarding the ESRD PPS
payment policies. That mailbox address is: [email protected].
Regarding the commenter's concerns about pediatric hospitals'
licensure to dispense phosphate binders, we believe the commenter is
referring to regulations that prevent certain hospital pharmacies from
providing drugs to patients to take home. We note that we expect ESRD
facilities would contract with a pharmacy as necessary, and this would
be the case for hospital-based ESRD facilities as well. Some hospitals
may not have outpatient pharmacies, as would most freestanding ESRD
facilities, but would be able to contract with a pharmacy to make
phosphate binders available to patients. We note that the additional
$36.41 increase to the TDAPA amount for phosphate binders would be
intended cover incremental operational costs associated with such a
contract.
CMS expects that LTC facilities will ensure that the current
procedures they are using to supply oral drugs, such as calcimimetics,
comply with the Federal and State LTC facility regulations.
Accordingly, the same process should be followed for phosphate binders.
In accordance with the statutory definition of renal dialysis services
at section 1881(b)(14)(B)(iii) of the Act, Sec. 413.171 defines
phosphate binders as a renal dialysis service. Renal dialysis services
have always been included within the scope of the Part A extended care
benefit under section 1861(h)(7) of the Act that provides for coverage
of those services (not specified elsewhere in section 1861(h)) that are
generally furnished by, or under arrangements made by, SNFs. However,
dialysis services described under section 1861(s)(2)(F) of the Act may
be unbundled when furnished by an outside dialysis supplier. Given
this, the SNF rarely bills separately for renal dialysis services.
Rather, such services are billed for separately under the Medicare Part
B dialysis benefit by the outside supplier. The incorporation of oral
only drugs did not change the existing ESRD facility CfCs or associated
guidance for providing home dialysis services in a LTC facility.
Currently, CMS does not plan to update the QSO 18-24 guidance. As
explained in QSO 18-24, collaborative care planning and delineated
division of responsibilities is critical to the successful
implementation of a patient's dialysis plan of care.\47\ Listed below
are the clinical areas that should be addressed in an agreement between
an ESRD facility and LTC facility when home dialysis services are
provided to residents of a LTC facility. This is not an exhaustive
list, nor does it represent mandatory elements of a written agreement.
This guidance is a resource for dialysis facilities to refer to prior
to furnishing home dialysis care to nursing home residents. Guidance on
clinical areas that should be addressed in an agreement include:
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\47\ https://www.cms.gov/files/document/qso-18-24-esrd-revised.pdf.
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Methods for enabling timely communication and
collaboration between the ESRD facility and nursing home care team;
Ensuring a safe and sanitary environment where the
dialysis treatments occur;
Ensuring active participation of the nursing home care
team in the development and implementation of an individualized care
plan;
Delineation of patient monitoring responsibilities before,
during, and after each treatment, ensuring any state scope-of-practice
laws and limitations are adhered to when delineating responsibilities;
Processes that ensure a review of the qualifications,
training, competency verification, and monitoring of all personnel,
patients, and caregivers (family members or friends) who administer
dialysis treatments in the nursing home;
Procedures for preparing nursing home staff to
appropriately address and respond to dialysis-related complications and
provide emergency interventions, as needed; and
Procedures to make sure that all equipment necessary for
the resident's dialysis treatment is available and maintained in
working condition.
Comment: A trade association questioned if CMS intends to update
the QSO-18-24-ESRD guidance prior to implementation to assure that both
the ESRD facility and the LTC provider clearly understand what may need
to be updated in their agreements, policies and procedures, and
training needs resulting from the revised payment methodologies and the
potential shift in how these oral-only phosphate binder medications are
made available to the LTC provider.
Response: The incorporation of oral-only drugs under the ESRD PPS
will not change the existing ESRD facility CfCs or associated guidance
for providing home dialysis services in a LTC facility. Currently, CMS
does not plan to update the QSO 18-24 guidance. As explained in QSO 18-
24, collaborative care planning and delineated division of
responsibilities is critical to the successful implementation of a
patient's dialysis plan of care.
Comment: A non-profit treatment and research center stated that
there will be difficulty managing these medications for patients
residing in nursing homes whether for short-term rehabilitation or as
long-term residents. They stated that nursing homes have existing
processes for obtaining medication for their patients which does not
include obtaining it from ESRD facilities. The ESRD facilities will
need to collaborate with any nursing facility in which their patients
reside to arrange for the delivery of the medication. Further, the
commenter stated that the nursing homes will ask for payment for the
time their staff spend in providing the medication to the patient. They
will need to have a pharmacist deliver the medication to the nurse
caring for a
[[Page 89144]]
patient and then the nurse will have to provide the medication to the
patient as prescribed.
Response: As noted previously, renal dialysis services have always
been included within the scope of the Part A extended care benefit
under section 1861(h)(7) of the Act that provides for coverage of those
services (not specified elsewhere in section 1861(h)) that are
generally furnished by, or under arrangements made by, SNFs. However,
dialysis services described under section 1861(s)(2)(F) of the Act may
be unbundled when furnished by an outside dialysis supplier. Therefore,
LTCs can provide renal dialysis services, including provision of
phosphate binders, to their residents in an ``under arrangement''
agreement with an ESRD facility.\48\ Any payment arrangements, such as
payment for the LTC staff time, with the ESRD facilities would involve
contractual arrangements with the ESRD facility and the LTC facility.
Alternatively, if the LTC is a Medicare-certified dialysis facility, it
can provide renal dialysis services.
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\48\ https://www.cms.gov/Medicare/Medicare-Contracting/ContractorLearningResources/Downloads/ja0435.pdf.
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Comment: A coalition of dialysis organizations, a professional
organization of nephrologists, a drug manufacturer, and a health care
system all stated that adjusting drug supplies when a physician changes
a patient's prescription to another product (which often occurs) is a
cost not covered by 100 percent of ASP. In a comment from an LDO, they
stated that their data suggests that relative to calcimimetics,
phosphate binder prescriptions change frequently. They noted that
approximately 23 percent of patients on a phosphate binder have a
change in their prescription each month. The commenters stated that
assuming mail delivery is used for appropriate patients, ESRD
facilities will incur the cost of delivery, which in some cases may be
more than once per month depending on the rate of prescription changes.
Response: CMS recognizes that there may be changes in the patient's
prescription for phosphate binders to address the patient's side-
effects from a current phosphate binder or to adjust following the
results of laboratory testing. As a cost control measure, ESRD
facilities could adjust the prescribed amounts to avoid additional
mailing fees or could negotiate deeper discounted pricing from mail
service pharmacies for long term, chronic therapies such as phosphate
binder prescriptions. 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. CMS notes that Medicare does not pay
for drugs that are not in single-use packaging that have been dispensed
and discarded. As noted in an October 2022 review article about mineral
bone disorders in kidney disease patients, decisions about the use and
dose of specific phosphate binders should be based on progressive or
persistent hyperphosphatemia.\49\ Additionally, changes in phosphate
binder prescriptions most often occur in patients with ESRD who are new
to dialysis \50\ and may have higher costs. CMS provides an onset
adjustment of 32.7 percent, which is a Medicare payment adjustment for
patients with ESRD who are eligible for Medicare during their first 120
days of chronic renal dialysis. As noted in the CY 2011 ESRD PPS
proposed rule (74 FR 49952) the higher costs of the new patients may be
due to stabilization of the patient's condition, along with
administrative and labor costs associated with the patients being new
to dialysis.
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\49\ Int. J. Mol. Sci. 2022, 23(20), 12223; https://doi.org/10.3390/ijms232012223, Mineral Bone Disorders in Kidney Disease
Patients: The Ever Current Topic.
\50\ Expert Opinion on Drug Safety, 2022, 21(7); https://doi.org/10.1080/14740338.2022.2044472. An update on phosphate
binders for the treatment of hyperphosphatemia in chronic kidney
disease patients on dialysis: a review of safety profiles.
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Comment: A coalition of dialysis organizations and a health care
system disagreed with the language in the proposed rule that suggested
there would be no additional labor cost incurred when phosphate binders
are added to the ESRD PPS bundled payment. The commenters stated that
they anticipate that adding new duties associated with the distribution
of phosphate binders will take significant time away from existing
patient care activities. As a result, many ESRD facilities may find
themselves having to hire additional health care professionals and
other staff to maintain the same level of care provided today. The
coalition and health care facility also stated that ESRD facilities
continue to face significant labor costs and, while the tight labor
market has abated somewhat, hiring additional staff remains a
significant expense. An LDO noted that CMS suggested that ESRD
facilities can efficiently use staff time by providing patients with
pre-packaged medication that would include medications for multiple
days. However, the LDO, along with a coalition of ESRD facilities
commented that this represents a new cost to ESRD facilities that is
not accounted for in a drug's ASP. They commented that what CMS
presents as a simple solution is the end-result of a complex system
that will require a significant up-front and ongoing investments of
resources and staff time. To execute CMS's suggestion, the commenters
noted that ESRD facilities need to contract with a pharmacy to
dispense, fill, and ``pre-package'' the medication and arrange for
delivery to the facility in advance of each patient's scheduled
appointment. Facility staff would need to receive, inventory, store,
and manage medication for all their patients on-site and then ensure
that all pharmacy processes are coordinated with scheduled patient
appointments. The LDO stated that under Part B, phosphate binders will
continue to be distributed through pharmacies whether those
prescriptions are mailed to the patient or to the facility. Regardless
of where the patient receives the prescription (facility or home), the
burden of managing oral phosphate binders through the facility affects
every member of the staff. The LDO stated that the ESRD facility staff
will need to manage medication orders, call in new prescriptions,
conduct medication management, maintain delivery logs when
prescriptions are delivered to the facility, review and maintain refill
requests, educate patients on usage, and manage disposal of unused oral
medications. Because many patients will lose the low-income subsidy and
other beneficiary protections in Part D, the LDO noted, some facility
staff time will now be dedicated to assisting patients who have trouble
affording their medications.
A non-profit treatment and research center stated that not only are
there costs incurred when their registered nurses dispense the
medications to the patients, provide counseling about the medications
and answer any questions patients may have, but the nurses will be
taken away from their current patient care responsibilities to perform
these functions, which the commenters noted will negatively impact the
patients under their care. A health care system
[[Page 89145]]
also stated that increasing the number of pharmacies will increase the
administrative cost of providing services and the complexity of
tracking the drugs for the ESRD facility.
The LDO stated that while approximately 25 percent of their patient
population is on calcimimetic therapy, whereas approximately 70 to 80
percent of their population is on phosphate binder therapy, CMS cannot
assume that because ESRD facilities are managing calcimimetics, the
infrastructure is in place to manage phosphate binders. They stated
that there will be a significant amount of staff time devoted to
managing phosphate binders through the ESRD facility, which will almost
certainly be required to hire additional staff to reduce the burden on
clinical staff. The LDO stated that these areas represent the ongoing
costs to providers and do not include startup costs of building storage
capacity and upgrading IT systems to accommodate changed workflow and
new business functions.
A coalition of dialysis organizations expressed the importance of
medication management with ESRD patients, as they may have multiple co-
morbidities and polypharmacy, and there is a potential for medication-
related errors. This makes continuity of care and medication management
systems important. They stated that CMS does not cover ESRD facilities'
ongoing expenses to provide medication management for the phosphate
binders.
Response: CMS has carefully considered the operational
considerations and costs raised in the comments. With respect to
considerations for ESRD facility staffing, CMS notes that the ESRD PPS
includes payment for staffing related to the provision of most renal
dialysis services. However, we acknowledge that there are some areas
such as IT synchronization and the advancements in the delivery systems
that had not been considered, when establishing both the ESRD PPS base
rate and the current policy for TDAPA payments at 100 percent of ASP.
These costs were considered in formulating the increased TDAPA payment
which is intended to account for incremental operational costs
associated with furnishing phosphate binders. CMS does believe there
are several strategies that ESRD facilities could employ to efficiently
use available staff time to provide phosphate binders. There are
parallels between the administration of phosphate binders and the
administration of oral calcimimetics, which are also typically taken
every day. First, we expect that patients with ESRD generally receive
treatment for at least 3 hours per session, typically three times per
week. We believe that during this treatment window there is generally
staff availability to provide the patient with pre-packaged multiple-
day doses of their medication (should state law allow). Second, ESRD
facilities could maximize the efficiency of staff time by mailing the
prescriptions, to the extent that doing so is consistent with state
pharmacy laws. For example, the GAO report identified that one large
dialysis organization only mails oral prescriptions to patients' homes,
while others mail the medication to either the ESRD facility or the
patient's home. Third, the GAO report identified that some ESRD
facilities outsource labor by contracting with outside pharmacies
rather than operating their own pharmacy. By contracting with outside
pharmacies, ESRD facilities could reduce or avoid the need to hire
additional pharmacists and pharmacy staff to manage the volume of
prescriptions. CMS acknowledges that these suggestions may not be fully
applicable for LTC or SNF facilities. CMS will continue to engage and
communicate with these facilities to ensure continuity of care and will
continue to monitor patient outcomes under this policy change.
Comment: A coalition of dialysis organizations stated that while
ESRD facilities and clinical teams, such as dietitians, are involved in
the current management of bone and mineral metabolism and
hyperphosphatemia, the process is currently managed under the auspices
of the prescribing physician working within the formulary confines of
the beneficiary's Part D plan or other source of drug coverage, which
is managed largely outside of the ESRD facility. Migration of phosphate
binders from Part D to Part B imposes new clinical administrative
responsibility on ESRD facilities to develop clinical protocols and
formularies, educate their clinician partners and clinical staff, and
manage ongoing clinical evaluation and monitoring to ensure they are
meeting the needs of our patients on an ongoing basis to manage a class
of drugs for which they were previously not responsible. The coalition
stated that the development, maintenance, and ongoing clinical
management of these processes represent significant costs to ESRD
facilities to hire and continuously employ clinical leaders across ESRD
facilities and educate and train clinical staff on evolving educational
protocols and educate beneficiaries on complex clinical issues. They
noted that although ESRD facilities certainly already employ many
clinicians, the expansion of the bundled payment to include phosphate
binders represents an expansion of the duties their clinical teams need
to undertake, which will result in an expansion of their clinical
teams. They stated that ASP would not cover any of these clinical
operations expenses required for ESRD facilities to take on the
responsibility of managing the phosphate binders for ESRD patients.
Response: As discussed in the CY 2016 ESRD PPS final rule (80 FR
69010), we issued sub-regulatory guidance that instructs ESRD
facilities to include all composite rate drugs and biological products
furnished to the beneficiary on the monthly claim form (Change Request
8978, issued December 2, 2014). In CY 2015 ESRD PPS final rule (79 FR
66149 through 66150), we discussed the drug categories that we consider
to be used for the treatment of ESRD with the expectation that all of
those drugs and biological products would be reported on the claim.
Along with capturing cost to align payment with resource use, we
expected that ESRD facilities would be aware of all renal dialysis
service drugs and biological products being taken by their dialysis
patients in the event of a medical adverse event during dialysis. In
addition, the ESRD QIP includes measures for coordination of care in
the Care Coordination domain, which accounts for 30 percent of an ESRD
facility's Total Performance Score. The QIP also includes a reporting
measure for dialysis events. We have heard from interested parties that
they are aware of and manage, with the patient's physician, the drugs
and biological products taken by their ESRD patients. Therefore, CMS
does not believe that the management of phosphate binders done in
conjunction with the ESRD patient's physician, represents a new
clinical administrative responsibility.
CMS will continue monitoring beneficiary utilization of phosphate
binders, as well as beneficiary health outcomes that might be related
to phosphate binder treatment, as it includes these drugs in the
bundled payment. In addition, CMS is monitoring these metrics across
beneficiary characteristics, including race or ethnicity and dual
eligibility status, to ensure that vulnerable populations are not
harmed by this change.
Comment: A coalition of dialysis organizations commented on the
ESRD facilities' responsibility to educate ESRD beneficiaries on an
ongoing basis. They stated that the migration of Medicare payment for
phosphate binders from Part D to Part B would be a significant change
for beneficiaries.
[[Page 89146]]
For some, this change would start with ensuring they understand that
their phosphate binders will now be managed by their ESRD facility
rather than through their local pharmacy. However, the commenter noted
that some beneficiaries may experience a change in their recommended
prescription related to the change from their prior drug coverage and
will need clinical, dietary, and social work education in support of
that change.
Response: Under the CfCs for ESRD facilities (73 FR 20480), the
standard for patient education located at Sec. 494.90(d) mandates that
the plan of care include education and training for patients and family
members or caregivers or both, in aspects of the dialysis experience
and dialysis management, which includes medications they are taking.
The plan of care would include a change in a patient's recommended
prescription and would include the need for clinical, dietary, and
social work education in support of that change. ESRD beneficiary
education is a longstanding CfC requirement.
Comment: An LDO expressed appreciation of CMS's interest in
exploring options for paying providers for costs in addition to the
drug acquisition costs and acknowledgement that drug dispensing fees
were included in the original bundling of oral drugs in 2011. An
interested party requested that CMS consider the incremental
operational costs involved when adding phosphate binders to the ESRD
bundled payment, noting that the current proposal does not account for
these costs, which could lead to increased financial strain on ESRD
facilities. The commenter stated that a fair dispensing fee or a
similar mechanism should be implemented to cover these additional
expenses.
An LDO and a health care system requested CMS to consider that
payment at 100 percent of ASP is inconsistent with Part B drug payment
generally, where providers are typically paid at 106 percent of ASP
percent or receive additional dispensing fees for certain drugs.
Numerous commenters agreed that CMS should finalize the TDAPA payment
for phosphate binders at 106 percent of ASP, rather than 100 percent of
ASP, to account for additional facility incremental operational costs.
One LDO stated that they strongly believe the savings CMS will obtain
from including these drugs in the ESRD PPS bundled payment will cover
the additional costs associated with appropriately recognizing
dispensing and other incremental operational costs. The non-profit
dialysis organization also recommended that beginning January 1, 2025,
CMS should begin collecting and analyzing data to inform a mid-year
correction to the TDAPA amount if data suggest that 106 percent of ASP
is insufficient.
MedPAC commented that CMS should maintain its existing TDAPA policy
to incorporate oral-only phosphate binders into the ESRD PPS. The
commission wrote that in their comment in the CY 2019 ESRD PPS proposed
rule, they stated that the 106 percent of ASP policy that is applied to
many Part B drugs was developed to reimburse physicians for the cost of
drugs that they purchase directly and commonly administer in their
offices.\51\ MedPAC stated that while the ASP payment policy never
stated what cost the ``+6 percent'' was intended to cover, they noted
that payment to ESRD facilities is considerably different from payment
to physicians. MedPAC stated that the variation in physicians'
purchasing power, whether they practice solo, as part of a group, or in
a health system, is likely to result in considerably more variation in
the acquisition price for a drug compared to the acquisition prices for
ESRD facilities. If the intent of the ``+6 percent'' was to address
acquisition price variation, MedPAC believed that rationale was
diminished for ESRD facilities. In their comment letter, MedPAC
referenced their comment on the CY 2019 ESRD PPS proposed rule, that
setting the TDAPA at 100 percent of ASP appears to be a well-founded
policy. Further, they stated that as CMS explained when the agency
reduced the TDAPA amount for calcimimetics in CY 2020 from 106 percent
of ASP to 100 percent of ASP, setting the payment level with the
average sales price of the drug limits the financial burden on
beneficiaries and taxpayers.
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\51\ Medicare Payment Advisory Commission.2018. MedPAC comment
on CMS's proposed rule on the end-stage renal disease payment system
for CY 2019. https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-letters/08312018_esrd_cy2019_dme_medpac_comment_v2_sec.pdf.
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Response: As discussed previously, CMS agrees with MedPAC that the
106 percent of ASP policy was developed to reimburse physicians for the
cost of drugs and that the TDAPA is an add-on payment adjustment to the
ESRD PPS base rate, which already accounts for the cost of storage and
administration of renal dialysis drugs and biological products.
However, we also recognize that there are incremental operational costs
with inclusion of phosphate binders into the ESRD PPS, that were not
factored into the original payment policy. As described later in this
section, CMS is making a provision for an increase in the calculation
of the amount for the TDAPA for phosphate binders through a flat rate
addition for two years to account for these unforeseen incremental
operational costs.
Comment: A hospital association requested that CMS pay ESRD
facilities for the costs associated not only with drug acquisition, but
also with storing, managing and distributing oral drugs that are not
consumed with the treatment. An LDO noted that in the proposed rule,
CMS suggests that payment for phosphate binders at 106 percent of ASP
may be appropriate for the 2-year TDAPA period. The LDO and a drug
manufacturer agreed that this approach would be consistent with CMS
policy for calcimimetics and would also be consistent with Part B drug
payment policies generally. However, a non-profit treatment and
research center stated that for some phosphate binder medications like
sevelamer and calcium acetate, the 6 percent above ASP likely will not
cover the costs they will have to pay to the pharmacy, much less the
costs incurred when their registered nurses dispense the medications to
the patients, provide counseling about the medications and answer any
questions patients may have.
To maintain consistency with the treatment of calcimimetics during
their first 2 years of TDAPA, to align with the way Medicare pays for
drugs and biological products under the Hospital Outpatient PPS's pass-
through payment policy, and to minimize administrative burden on CMS
and ESRD facilities, multiple commenters recommend that CMS adopt the
methodology outlined in section 1847A of the Act, which sets payment at
the 106 percent of ASP; if ASP is not available, the payment is based
on the Wholesale Acquisition Cost (WAC). Alternatively, an LDO urged
CMS to use the flat rate part B supply fee for oral drugs under the
Physician Fee Schedule as a precedent to provide the same payment
adjustment for oral Part B renal dialysis drugs.
MedPAC opposed the TDAPA amount based on 106 percent of ASP for
phosphate binders in their comment and noted that when CMS reduced the
TDAPA amount for calcimimetics in CY 2020 from 106 percent of ASP to
100 percent of ASP, MedPAC stated that CMS explained that setting the
payment amount at 100 percent of ASP of the drug limits the financial
burden on beneficiaries and taxpayers.
Response: Consistent with our discussion in the CY 2020 ESRD PPS
final rule (84 FR 60675), we continue to
[[Page 89147]]
believe that 100 percent of ASP is a reasonable basis for payment for
the TDAPA for new renal dialysis drugs and biological products that
fall within an existing functional category, because there are already
dollars in the per treatment base rate for the new drug's respective
functional category. We further believe 100 percent of ASP is a
reasonable basis for the TDAPA amount for new renal dialysis drugs and
biological products that do not fall within an existing functional
category because the ESRD PPS base rate has dollars built in for
administrative complexities and overhead costs for drugs and biological
products. However, we note that the original analysis in the CY 2011
ESRD PPS final rule excluded phosphate binders, which are a
longstanding renal dialysis service, and their associated costs, so a
higher payment amount to capture these additional costs would be
warranted. In addition, we believe the 106 percent of ASP payment could
induce ESRD facilities to choose the higher priced phosphate binders
for the higher payment rate. As detailed below, CMS is increasing the
TDAPA amount for phosphate binders for two years in an amount similar
to 106 percent of ASP to pay for the additional incremental operational
costs of phosphate binder inclusion in the ESRD PPS while striking a
balance between accessibility and efficiency and economy for the
Medicare program.
Comment: Numerous commenters stated that CMS should adopt a
dispensing fee using a rate of 106 percent of ASP for phosphate binders
to align the ESRD PPS policies with those applied to other Medicare
providers. They stated that both the Medicare Part D and Medicaid
programs provide for dispensing fees. Under Part D, they noted that the
dispensing fees are set through negotiations between the plan and
pharmacy. Medicaid amounts are significantly higher and in the range of
$9 to $12 per prescription, which the commenter noted would translate
into a $0.69 to $0.92 per treatment amount in the context of the ESRD
PPS, according to an analysis cited by the commenter. The commenters
also noted that in accordance with section 1861(s) of the Act, Medicare
Part B includes a $24 dispensing fee, which would be approximately
$1.85 per treatment in the ESRD PPS context. Additionally, the
commenters stated that according to the Medicare Claims Processing
Manual, Chapter 17, Sec. 90.4, CMS also provides a dispensing fee to
hospital outpatient departments (HOPD) and ambulatory surgical centers
(ASC), but relies upon 106 percent of ASP rather than a flat rate. The
commenters stated that CMS decided to maintain the 106 percent of ASP
policy in the HOPD and ASC settings after conducting a multi-year
analysis of hospital cost reports. This analysis sought to determine
the average overhead costs associated with providing drugs to patients,
and CMS decided to adopt 106 percent of ASP as the payment amount. The
commenters indicated that even though in the context of some HOPD/ASC
products the add-on may result is higher payment amounts, CMS adopted
this approach because of its administrative simplicity. Similarly, in
these settings, the commenters stated that CMS also has adopted 106
percent of ASP as the basis for paying for separately payable non-pass-
through drugs. One criterion a drug must meet to receive this separate
payment is that the cost exceeds $135 per day.
The commenters stated that adopting a 106 percent of ASP policy as
the basis of a dispensing fee rate would also align with the treatment
of drugs in these other payment systems. They indicated that one
analysis of phosphate binders demonstrates that the increase in per
treatment payment for a 30-day supply of a phosphate binder could range
from $1.46 to $8.03. The commenters stated that these amounts are not
significantly different than those CMS finds acceptable in the HOPD/ASC
setting or the other dispensing fee programs.\52\
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\52\ MedPAC. Report to the Congress: Outpatient Dialysis
Services (Mar. 2024).
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The commenters requested that CMS adopt the 106 percent of ASP
policy that it relies upon in other parts of the Medicare program,
which the commenters described as straightforward and transparent.
Response: As CMS stated in the CY 2020 ESRD PPS final rule (84 FR
60676), we believe moving from pricing methodologies available under
section 1847A of the Act, (106 percent of ASP) to 100 percent of ASP
for all new renal dialysis drugs and biological products regardless of
whether they fall within an ESRD PPS functional category strikes a
balance between the increase to Medicare expenditures (subsequently
increasing beneficiary co-insurance) and addressing stakeholder
concerns discussed in section II.B.1.e of the CY 2019 ESRD PPS final
rule (83 FR 56932). As an example of how the flat addition to the TDAPA
amount would impact beneficiary copayment when compared to 106 percent
of ASP, if a beneficiary's monthly utilization for a given phosphate
binder totaled $1,000 (100 percent of ASP) + $36.41= $1,036.41, the
beneficiary co-pay would be $207.28. However, if the same phosphate
binder were to be paid a TDAPA amount derived from 106 percent of ASP
($1,000 * 1.06 = $1,060), then the beneficiary's copay would be $212
($1,060 * 0.20 = $212). During the CY 2024 ESRD PPS rulemaking cycle,
CMS indicated that it preferred to adopt policies that are less complex
and more transparent. As noted later in this section of the preamble,
we are finalizing the incorporation of a flat-rate add-on amount to the
TDAPA, as allowed by section 1881(b)(14)(D)(iv) of the Act, for
phosphate binders, which we believe reflects a similarly transparent
and straightforward approach. We believe this fixed addition to the
TDAPA amount for phosphate binders is relatively simple while being
more predictable and more transparent than the requested 106 percent of
ASP methodology, because ESRD facilities would not have their
additional payment based on the ASP of the drug prescribed.
Additionally, this fixed increase methodology would achieve many of the
benefits described by commenters without incentivizing use of higher-
cost phosphate binders.
Comment: Commenters generally agreed that payment of 100 percent of
ASP would be insufficient to cover the incremental operational costs of
including phosphate binders in the ESRD PPS bundled payment. In their
comments letters, both MedPAC (citing their 2023 Report to Congress)
\53\ and LDOs have recognized the inherent incentives that a
percentage-based payment policy creates in encouraging use of higher
cost drugs when less expensive therapeutic alternatives are available.
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\53\ Medicare Payment Advisory Commission.2023. Report to the
Congress: Medicare and the health care delivery system. Washington,
DC:MedPAC.
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A coalition for dialysis organizations recognized that utilizing
106 percent of ASP ties the value of the dispensing fee to ASP, which
may present issues where ESRD facility incremental operational costs
exceed 6 percent of ASP. They stated that they understand why some
other payment systems have instead provided fixed dispensing fees that
are intended to reimburse for incremental operational costs independent
of ASP and arrive at the fixed dispensing fee through different
mechanisms, including some that are set in statute.
Although MedPAC did not support setting the TDAPA amount at 106
percent of ASP to account for dispensing fees, which are intended to
cover reasonable costs that are directly
[[Page 89148]]
related to providing the drug,\54\ MedPAC did state in the comment that
there is no consensus on the original intent of the percentage add-on
to ASP. MedPAC stated that if CMS elects to include a dispensing fee in
the TDAPA for phosphate binders, the agency should examine the
dispensing fees for phosphate binders paid under Part D to assess if
such data are appropriate to use under the ESRD PPS, noting that, in
2021, the median Part D dispensing fee was $0.50 per claim for the six
common types of phosphate binders furnished to beneficiaries on
dialysis. In their comment letter, the Commission indicated that it has
also found that under Part D, dispensing fees for generic drugs are
typically a fixed dollar amount (that is, not always related to the
price of the product), and that similar to dispensing fees paid in the
commercial sector, Part D plans typically pay dispensing fees of $1 per
claim or less.\55\ As an alternative to 106 percent of ASP, the LDOs,
coalitions of dialysis organizations and the professional association
of nephrologists would also support, and there is precedent for, a flat
rate addition to the ASP. One LDO recommended a flat fee instead of a
percentage of the cost of the medication. The LDO stated that
dispensing expenses do not fluctuate based on the cost of the
medication. The commenter estimated that dispensing fees would be
roughly $11 and shipping fees would be approximately $15 per
prescription. Other commenters stated that for certain conditions,
Medicare Part B covers outpatient prescription drugs and biological
products when they are part of a physician's service or used with
covered durable medical equipment. For those drugs, Medicare Part B
pays pharmacies a supply fee for each prescription. The commenters
referred to 42 CFR 414.1001 and stated that pharmacies are paid $24 for
the first 30-day period, and $16 for each subsequent 30-day period. On
a per treatment basis, this would equate to approximately $1.23 to
$1.85 when a patient receives 13 treatments in a month. Commenters
suggested that CMS should recognize that under Part B, ESRD facilities
will be required to pay for these pharmacy services.
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\54\ Under 42 CFR 423.100, dispensing fees are costs incurred at
the point of sale in excess of the ingredient cost of a covered Part
D drug. Dispensing fees include pharmacy costs such as checking
insurance status, performing quality assurance, physical delivery,
special packaging, and salaries of pharmacists and other pharmacy
workers as well as the costs associated with maintaining the
pharmacy facility and acquiring and maintaining technology and
equipment.
\55\ The Commission's calculation is based on Part D
prescription drug event data from CMS. According to our stakeholder
interviews, this amount is in line with most commercial insurance.
https://www.medpac.gov/wpcontent/uploads/2023/10/Generic-prices-Part-D-April-2024-SEC.pdf.
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Response: CMS has reviewed all of the comments regarding
implementation of the inclusion of phosphate binders in the ESRD PPS
bundled payment. In the CY 2016 ESRD PPS final rule, we stated that for
at least 2 years we will pay for the existing oral-only drugs--
phosphate binders and calcimimetics--using the TDAPA, which will be
calculated based on the payment methodologies under section 1847A of
the Act (80 FR 69027), which can include 106 percent of ASP. Following
finalization of the CY 2016 ESRD PPS final rule, the regulation at
Sec. 413.234(c)(2) stated the TDAPA is paid until sufficient claims
data for rate setting analysis for the new injectable or intravenous
product is available, but not for less than two years. In the CY 2019
ESRD PPS final rule CMS stated that to balance the price controls
inherent in any PPS we believe that we needed to take numerous issues
into consideration to revise the basis for TDAPA payment. These issues
included the use of the best available data, the avoidance of use of
the highest price drugs for higher payment, and cost-sharing for
beneficiaries. We noted that we are, and will continue to be, conscious
of ESRD facility resource use and recognize the financial barriers that
may be preventing uptake of innovative new drugs and biological
products.
Therefore, we proposed to revise Sec. 413.234(c) under the
authority of section 1881(b)(14)(D)(iv) of the Act, to reflect that we
would base the TDAPA payments on 100 percent of ASP instead of the
pricing methodologies available under section 1847A of the Act (which
includes 106 percent of ASP)(83 FR 56943-56944).
As we discussed previously, we believe that a flat increase to the
TDAPA amount for phosphate binders would be most appropriate. We
believe an increase in the payment adjustment amount that approximates
6 percent of ASP would provide the appropriate payment for incremental
operational costs associated with ESRD facilities furnishing phosphate
binders. We considered the differences in the availability of data for
calculating the appropriate TDAPA amount for calcimimetics and
phosphate binders. Prior to the TDAPA payment for calcimimetics in CY
2018, only those ESRD beneficiaries with Part D had access to the oral
calcimimetic, Sensipar, but there was no utilization data for the
injectable calcimimetic, Parsabiv, which would serve as a substitute
for the oral calcimimetic. However, CMS was able to obtain data on
phosphate binder utilization among ESRD PPS beneficiaries who had Part
D coverage for phosphate binders to estimate expenditures, and there is
no injectable phosphate binder for which we do not have utilization
data. Therefore, with the knowledge of utilization of phosphate binders
in Part D, coupled with the percentage of ESRD PPS beneficiaries who do
not have Part D coverage, we believe we have adequate data to be able
to calculate an appropriate amount to pay the TDAPA for phosphate
binders for at least two years. Taking into account the estimates that
were put forth by the commenters for the incremental operational costs
to the ESRD facilities for supplying the phosphate binders to the ESRD
facilities, along with our use of the Part D data, we have determined
that a fixed amount derived from 6 percent of ASP of a monthly weighted
average of the six most common phosphate binders based on past Part D
utilization data best aligns payment with resource use and mitigates
the incentive to use of the most expensive phosphate binders to obtain
higher TDAPA payment and ultimately a higher dollar addition to the
ESRD PPS base rate at the end of the TDAPA period. This aligns with the
commenters' suggestions of using a flat rate adjustment instead of 106
percent of ASP. We are finalizing a flat rate increase to the TDAPA
amount for phosphate binders, derived from 6 percent of the weighted
average of Medicare expenditures for phosphate binders per month under
Part D, for the first two years of TDAPA payment to ESRD facilities.
The CY 2025 flat rate increase to the TDAPA amount will be $36.41. This
payment adjustment is included for every monthly ESRD PPS claim that
includes phosphate binders. We will consider changes to this amount
through future rulemaking if appropriate; for example, this amount
could be recalculated derived from the best available updated data for
the second year of TDAPA payment for phosphate binders, potentially
utilizing data from Part B.
Additionally, we are finalizing regulatory language at
413.234(c)(4), which states that we would pay an increased amount
through the TDAPA for phosphate binders for two years. The increase to
the TDAPA amount would be the equivalent of the monthly weighted
average of 6 percent of ASP, calculated for each of the first two years
of TDAPA payment for the phosphate binders.
Comment: Coalitions of dialysis organizations, a professional
organization of nephrologists and a non-profit treatment and research
center
[[Page 89149]]
stated that, due to the 2 percent reduction in Medicare FFS payments
under sequestration, 100 percent of ASP equates to roughly ASP minus
1.6 percent, which the commenters stated does not cover the cost of
acquiring phosphate binders. They commented that many medium and small
ESRD facilities do not have the economies of scale and must purchase
drugs at a significant percentage above the ASP. As a result, 100
percent of ASP is actually less than the acquisition cost of these
drugs and will have a negative financial impact on these ESRD
facilities. A non-profit treatment and research center noted that since
the ASP is reduced by 1.6 percent because of the sequestration cuts,
the gap between resource use and payment is even greater. A
professional organization of dialysis providers and an LDO stated that
Medicare only pays 80 percent of costs. For patients who are dual
eligible receiving Medicaid, this remaining 20 percent goes
unreimbursed, which, following sequestration, equates to 78.4 percent.
Similar results would occur for patients without a secondary insurance
if they are unable to pay the remaining 20 percent cost-sharing amount.
An LDO asserted that for patients without secondary insurance, only 60
percent of the nonpayment is covered by bad debt.
Response: We appreciate the commenters' concerns about payment
adequacy; however, we noted that these concerns generally fall outside
the scope of ESRD PPS policy. Sequestration is a mandatory spending
reduction that affects Medicare Part B payments broadly, including
payments under the ESRD PPS.\56\ Reductions in Medicare payments due to
sequestration fall outside the scope of the ESRD PPS policy and are
required under the Budget Control Act of 2011 (BCA; P.L. 112-25). In
addition, the 20 percent beneficiary copayment amount is required by
statute, and we did not propose any changes to this amount. Section
1833 of the Act governs payments of benefits for Part B services and
the cost sharing amounts for services that are considered medical and
other health services. In general, many Part B services are subject to
a payment structure that requires beneficiaries to be responsible for a
20 percent coinsurance after the deductible (and Medicare pays 80
percent). With respect to renal dialysis services furnished by ESRD
facilities to individuals with ESRD, under section 1881(b)(2)(A) of the
Act, Medicare pays 80 percent of the total amount per treatment and the
individual pays 20 percent (74 FR 50005). Some dual eligible
beneficiaries could have their coinsurance reimbursed via Medicaid in
some circumstances.\57\
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\56\ A general description of Medicare sequestration from the
Congressional Research Service is available at https://sgp.fas.org/crs/misc/R45106.pdf.
\57\ https://www.cms.gov/outreach-and-education/medicare-learning-network-mln/mlnproducts/downloads/medicare_beneficiaries_dual_eligibles_at_a_glance.pdf.
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Similarly, we did not propose any changes to the ESRD PPS bad debt
policy, which is also dictated by statute. For instance, we have long
interpreted Title I, section 153(b)(4) of MIPPA as providing that bad
debt payments are available only for covered services under the
composite rate.\58\ In addition, section 1861(v)(1) of the Act,
implemented at Sec. Sec. 413.89 & 413.215(b), imposes certain
reductions in the amount of bad debts otherwise treated as allowable
costs which are attributable to deductibles and coinsurance amounts.
Currently, general requirements and policies for payment of bad debts
attributable to unpaid Medicare deductibles and co-insurance are found
in chapter 3 of the Provider Reimbursement Manual, Part 1 (PRM) (CMS
Pub. 15-1) and cost reporting worksheets and instructions in the PRM
Part 2 (CMS Pub. 15-2).
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\58\ See the November 17, 2004 Decision of the Administrator
(https://www.cms.gov/Regulations-and-Guidance/Review-Boards/OfficeAttorneyAdvisor/Downloads-3/2004-D43.pdf) and Medicare Benefit
Policy Manual, Chapter 11, Sec. 80 (https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/bp102c11.pdf).
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We acknowledge that some ESRD facilities may pay more or less than
ASP for renal dialysis drugs and biological products that they
purchase, since ASP represents an average, but we note that payment of
the TDAPA based on ASP is consistent with the principles of prospective
payment underlying the ESRD PPS more broadly. As stated earlier in this
final rule, we are finalizing an increase to the TDAPA amount for
phosphate binders to account for certain administrative costs not
included in the ESRD PPS base rate, but this increase is not intended
to account for sequestration costs, beneficiary copayment amounts, or
bad debts.
Comment: Coalitions of dialysis organizations requested that CMS
address what they consider to be a gap in the current Medicare guidance
to support including phosphate binders into the ESRD PPS bundled
payment. Specifically, regarding the reporting of oral drugs, the
coalition notes that the current Medicare Benefit Policy Manual states
that for oral or other forms of renal dialysis drugs that are filled at
the pharmacy for home use, ESRD facilities should report one line item
per prescription, but only for the quantity of the drug expected to be
taken during the claim billing period.\59\ A non-profit treatment and
research center stated that patients will be given all of their
medications at one time, presumably a few days before the start of a
new month. They noted that if a patient misplaces the medication, they
will need to obtain a new supply from the ESRD facility. Since the ESRD
facility is not paid for the lost medication, the lost medication will
cost the ESRD facility significant money. The commenter also stated
that the doses prescribed for these medications depend on blood tests
which are performed monthly, typically during the mid-week dialysis
treatment of the first week of the month. The results become available
a few days later and are then reviewed by nephrologists who may
prescribe dose changes in phosphate lowering medication or may
prescribe a different phosphate lowering medication. In that case, the
ESRD facility would have to provide the patient an additional supply of
medication and would have to pay additional fees to the pharmacy. In
the event the medication is changed, the facility would again not be
paid for the unused medication. A professional organization of
nephrologists stated that ESRD facilities absorb the costs of unused
medications when patients are hospitalized, transfer to other
facilities, die, or receive a kidney transplant. A coalition of
dialysis providers provided additional illustrative examples of when
the current payment policy does not work financially for ESRD
facilities, including patient hospitalization or when the patient is on
vacation over 30 days, patient death and changes in ESRD facility. To
align the reporting and payment with similar provisions for hospitals
and skilled nursing facilities (SNFs), coalitions of dialysis
organizations referred to the Medicare Claims Processing Manual,
Chapter 17, Sec. 90.4 and requested that CMS require reporting on
claims of one of the following:
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\59\ Medicare Benefit Policy Manual Chapter 11--End Stage Renal
Disease Sec. 20.3.C.
---------------------------------------------------------------------------
Both the quantity of the drug expected to be taken during
the claim billing period and any unused quantity of drug that was
prescribed under a prescription that was later revised.
The total amount of the drug provided during the claim
billing period.
The coalition of dialysis providers claimed that these changes
would alleviate the financial losses to ESRD
[[Page 89150]]
facilities. The commenter stated that these changes do not need to be
included in the CY 2025 final rule but can be done through guidance
prior to the end of CY 2024 to apply to the forthcoming inclusion of
phosphate binders in the ESRD PPS bundled payment to limit unnecessary
losses for an already strained payment system. The commenter also
stated that making these changes to the billing rules is also necessary
for CMS to have accurate utilization data of the phosphate binders
during the TDAPA period for the purpose of future rate setting
exercises. The commenter believes that without these changes, not only
will ESRD facilities experience real-time losses due to circumstances
outside their control, but those losses will be baked into depressed
utilization data used to update the base rate after the end of the
TDAPA period for the phosphate binders, locking those losses into the
ESRD PPS in perpetuity. In addition, the commenter noted that other
providers, including hospitals, pharmacies and skilled nursing
facilities, are all permitted by Medicare to submit claims for the full
prescription dispensed in good faith to the beneficiary. They requested
that CMS align the ESRD PPS billing policies with that of other health
care providers rather than imposing what they characterized as unique
and unnecessary burdens on a fragile payment system serving the most
vulnerable patients.
Response: CMS thanks the commenters for their recommendations. Per
the regulation at Sec. 413.198(b)(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. At Sec. 413.198(b)(5)(ii), this includes information
reported on ESRD PPS claims about the total number of billing units (or
the expected number of billing units), for renal dialysis drugs and
biological products provided to beneficiaries for use while receiving
home dialysis services as defined in Sec. 413.217(b), which includes
home dialysis services, support, and equipment as identified in Sec.
410.52, to be included in the ESRD PPS effective January 1, 2011.
As we noted previously in this section, 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 did not propose a
change to the reporting requirements regarding the drugs expected to be
taken during the claim billing period and any unused quantity of that
drug that was prescribed under a prescription that was later revised,
along with the total amount prescribed during the billing period.
However, we thank the commenter for their suggestions and will take the
commenter's suggestions into consideration in future rulemaking.
Discarded drugs or biological products that are not in single use
containers or single dose packaging are not billable under the ESRD
PPS.\60\ Similarly, we believe it would be most appropriate to make a
future modification to the ESRD PPS base rate, if warranted, based on
actual phosphate binder utilization and not discarded amounts. We
expect that ESRD facilities will employ strategies to reduce discarded
amounts of phosphate binders, which best serves the interest of
efficient resource use and is consistent with the goals of the ESRD
PPS.
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\60\ In the CY 24 ESRD PPS final rule, we finalized a new policy
to require the use of the JW or JZ modifier on claims to track
discarded amounts of single-dose container and single-use package
renal dialysis drugs and biological products paid for under the ESRD
PPS, effective January 1, 2025 (88 FR 76346, 76383-76386).
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Comment: A coalition of dialysis organizations recommended that CMS
should amend the cost reports and update billing and payment policies
in advance of the TDAPA period for phosphate binders. The current ESRD
Facility Cost Report revision includes one line item for the TDAPA and
one line item for the TPNIES. At the time this was implemented, there
was only one drug receiving the TDAPA and one supply item receiving the
TPNIES. At present and in the coming years, the commenter expects there
will be multiple drugs and devices receiving the TDAPA and the TPNIES
in the same year. The commenter stated that CMS and other policymakers
would find it important and useful to be able to track costs associated
with individual products receiving the TDAPA and TPNIES rather than
have them reported in the aggregate. The commenter recommended that CMS
add several line items for each of the TDAPA and TPNIES reporting
sections and provide instructions that each product receiving the TDAPA
or the TPNIES are to be reported separately on their distinct line-
items. The commenter stated that CMS should also ensure that ESRD
facilities have clear instructions for reporting the TDAPA for
phosphate binders during the TDAPA period and that facilities have
clear instructions for reporting the phosphate binders after they are
bundled into the base rate after the end of the TDAPA period. The
commenter stated that it is imperative that CMS amend the cost report
and instructions in advance of the launch of the TDAPA period and end
of the TDAPA period to ensure the integrity of dialysis facility cost
reporting.
Further, the coalition requested CMS to make changes to billing
procedures to make it easier for ESRD facilities to identify the
correct TDAPA and TPNIES payments to report on the cost report. At
present, they state that when CMS pays a claim that includes the TDAPA
or TPINIES, ESRD facilities simply receive one payment for the adjusted
base rate plus the TDAPA or TPNIES amount. The TDAPA or TPNIES is not
indicated on a separate line item by CMS. The coalition stated that
while the ESRD PPS is a bundled payment system with a standardized base
rate, most claims are adjusted based on a dozen patient and facility
characteristics. As a result, the commenter stated that to accurately
report TDAPA and TPNIES payments on the Cost Report, ESRD facilities
need to crosswalk each reimbursement to relevant patient claims or
medical records to identify those for whom TDAPA or TPNIES payment was
requested, then determine if and at what amount the TDAPA or TPNIES was
paid, noting that the TDAPA and TPNIES payment amount fluctuates over
the course of the year, and then report those figures on the cost
report on an ESRD facility basis. For some ESRD facilities this is a
manual, and not an automated exercise. The commenter requested that CMS
amend billing and payment procedures to flag TDAPA and TPNIES payments
separately on an itemized report so that ESRD facilities can more
effectively and efficiently identify and flag these items for accurate
reporting onto the Cost Report.
Response: CMS thanks the commenters for their suggestions regarding
the cost reports. We are currently evaluating changes to the ESRD PPS
cost reports and will take these suggestions into consideration for
future cost report modifications.
Comment: A drug manufacturer questioned why the phosphate-lowering
agent XPHOZAH[supreg] is receiving disparate treatment from phosphate
binders with respect to the TDAPA. The drug manufacturer stated that
they view CMS as treating XPHOZAH[supreg] similar to a phosphate binder
for the purposes of inclusion in the ESRD PPS bundled payment, but
different from a phosphate
[[Page 89151]]
binder for the purposes of a potential increase to the ESRD PPS base
rate after the end of the TDAPA period.
Response: Existing Medicare regulations state that effective
January 1, 2025, oral-only drugs will be paid for under the ESRD
Prospective Payment System (PPS). Although oral-only drugs are not
included in the ESRD PPS bundled payment until January 1, 2025, they
are currently recognized as renal dialysis services as defined in
regulation. Accordingly, CMS is planning to incorporate oral-only drugs
into the ESRD PPS bundled payment beginning January 1, 2025, using the
TDAPA, as described in the calendar year (CY) 2016 ESRD PPS final rule
(80 FR 69027) and subsequent rules. In the CY 2022 ESRD PPS final rule
(87 FR 67179) we stated that we finalized and issued the payment
policies for oral-only renal dialysis service drugs or biological
products in the CY 2011 ESRD PPS final rule (75 FR 49038 through
49053). In that rule we defined renal dialysis services at Sec.
413.171 as including other drugs and biologicals that are furnished to
individuals for the treatment of ESRD and for which payment was made
separately prior to January 1, 2011, under Title XVIII of the Act,
including drugs and biologicals with only an oral form. Although we
included oral-only renal dialysis service drugs and biologicals in the
definition of renal dialysis services in the CY 2011 ESRD PPS final
rule (75 FR 49044), we also finalized a policy to delay payment for
these drugs under the ESRD PPS until January 1, 2014. In the CY 2011
ESRD PPS proposed rule (74 FR 49929), we noted that the only oral-only
drugs that we identified were phosphate binders and calcimimetics,
specifically, cinacalcet hydrochloride, lanthanum carbonate, calcium
acetate, sevelamer hydrochloride, and sevelamer carbonate. All of these
drugs fall into the ESRD PPS functional category for bone and mineral
metabolism. In the manufacturer's press release on October 17, 2023,
they noted that XPHOZAH[supreg] is a phosphate-lowering therapy, and it
is not a phosphate binder.\61\
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\61\ https://ir.ardelyx.com/news-releases/news-release-details/fda-approves-xphozahr-tenapanor-first-class-phosphate-absorption.
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As for the commenter's concern regarding CMS's treatment of
XPHOZAH[supreg] with respect to a potential increase in the ESRD PPS
base rate after the end of the TDAPA period, we note that we have been
consistent in treating XPHOZAH[supreg] as an oral-only drug that is
considered included in the ESRD PPS base rate because it falls within
the bone and mineral metabolism ESRD PPS functional category.
XPHOZAH[supreg] is a renal dialysis service under the definition at
Sec. 413.171 and is to be included in the ESRD PPS bundled payment
effective January 1, 2025, according to Sec. 413.174(f)(6). Any other
oral renal dialysis drug or biological product without an injectable
equivalent or other form of administration would also be included in
the ESRD PPS bundled payment effective January 1, 2025. We note that
XPHOZAH[supreg], should it apply for the TDAPA, would receive the same
consideration and treatment as other renal dialysis drugs and
biological products in existing ESRD PPS functional categories which
are considered included in the ESRD PPS base rate. In the CY 2016 ESRD
PPS final rule we explained that we would modify the ESRD PPS base rate
after the end of the TDAPA period only for calcimimetics and phosphate
binders, but that we would not follow this process for any other
potential future oral-only drugs in the bone and mineral functional
category or any other functional category, as calcimimetics and
phosphate binders were the only two drugs for which 2007 utilization
data was available at the time the ESRD PPS base rate was first
developed for which payment was delayed (80 FR 69025). In particular,
the intention behind CMS's policy is that funds would be added to the
base rate to account for phosphate binders because the costs associated
with phosphate binders would have been included in the initial
calculation of the base rate in CY 2011 if not for CMS's (and
subsequently congress') decision to temporarily delay their inclusion.
However, the delay was always with the intention that the costs would
eventually be included in the ESRD PPS base rate. This is not true of
other drugs or biological products that were not in use in the
timeframe analyzed for the initial development of the ESRD PPS base
rate, but that are considered included in the base rate because they
fall within an existing functional category.
From a policy perspective, the ESRD PPS bundled rate is intended to
encourage efficient resource use, and CMS therefore only would add
funds, if appropriate, to the base rate for drugs that have a new
function not accounted for when the initial base rate was developed or,
in the case of calcimimetics and phosphate binders, that were intended
to be included at the time the base rate was first developed but were
temporarily excluded. As discussed previously, XPHOZAH[supreg] is not a
phosphate binder (nor is it a calcimimetic), so under our established
methodology it would be treated in the same way as all other new drugs
(80 FR 69027). We note that any specific considerations regarding
modification of the ESRD PPS base rate to account for phosphate
binders, such as whether to incorporate data from drugs or biological
products with a similar end-action effect that may be a substitute for
phosphate binders, will be made through notice and comment rulemaking
in the future. We will consider the commenter's suggestions related to
how the ESRD PPS treats new renal dialysis drugs and biological
products in existing functional categories which are considered
included in the base rate for potential future rulemaking related to
TDAPA and other payment policies under the ESRD PPS.
Comment: Some commenters expressed support for a delay for the
inclusion of either oral-only drugs and biological products or
phosphate binders, in the ESRD PPS bundled payment. We received 110
form letters from unique submitters that did not relate to policies
proposed in the CY 2025 ESRD PPS proposed rule, but rather expressed
support for -draft legislation that would delay the inclusion of
certain oral-only drugs and biological products into the ESRD PPS
bundled payment. One drug manufacturer requested CMS refrain from
incorporating phosphate-lowering therapies into the ESRD PPS in January
2025. The drug manufacturer suggested that CMS should respond to
stakeholder concerns regarding access issues and public health data on
harms to patients.
Response: We did not propose any changes to Sec. 413.174(f)(6) to
modify the date of the incorporation of the oral-only drugs into the
ESRD PPS. We note that in the CY 2011 ESRD PPS final rule we stated
that the delay in incorporating oral-only drugs into the ESRD PPS
bundled payment would allow additional time to address several issues
including the following: the determination of oral-only drug pricing
and utilization; adequate beneficiary education; assessment of
potential problems which may arise in connection with the provision of
oral drugs prior to the system's expansion to include oral-only drugs;
analysis regarding the ability of ESRD facilities to provide oral-only
ESRD drugs; and, evaluation of indicators applicable to the monitoring
of certain patient conditions treated with oral-only drugs, such as
bone loss and mineral metabolism associated with the provision of
calcimimetics and
[[Page 89152]]
phosphate binders, which could assist in determining the impact of the
fully bundled ESRD PPS, and any unintentional consequences that might
ensue, on quality of care (75 FR 49043 through 49044). CMS has actively
been engaged in addressing the aforementioned issues since that rule
was finalized 13 years ago in preparation for inclusion of the oral-
only drugs into the ESRD PPS. Our data analysis has shown that because
not all ESRD PPS beneficiaries have had Part D coverage some have
lacked equal access to either calcimimetics or phosphate binders.
Inclusion in the ESRD PPS bundled payment provides patients access to
all the drugs and biological products in all the ESRD PPS functional
categories, including those included in the bone and mineral metabolism
functional category, averting potential harm to those Medicare
beneficiaries currently lacking access to some of those drugs and
biological products.
Comment: A coalition for dialysis organizations recommended that
CMS should align MA and ESRD PPS policies in advance of the TDAPA
period for phosphate binders and future inclusion of phosphate binders
in the ESRD PPS base rate to ensure MA beneficiaries will receive
necessary medication.
Response: With respect to MA, per section 1852(a)(1) of the Act and
its implementation regulations (42 CFR 422.100 and 422.101(a)),
Medicare Advantage organizations (MAOs) must cover items and services,
including drugs, for which benefits are available under Parts A and B
in the Traditional Medicare program, subject to limited exclusions. We
note that phosphate binders are not subject to the limited exclusions
at section 1852(a)(1) of the Act and, therefore, must be covered by
MAOs. Specifically, in accordance with section 1852(a)(1) if the Act
and 42 CFR 422.100 and 422.101(a), and as noted in \62\ section 10.4 of
chapter 4 of the Medicare Managed Care Manual,\63\ MAOs must provide
coverage of, by furnishing, arranging for, or making payment for,
generally all services that are covered by Part A and Part B of
Medicare and that are available to beneficiaries residing in the plan's
service area. Services may be provided outside of the service area of
the plan if the services are accessible and available to enrollees. In
addition, with respect to coverage of Traditional Medicare benefits
such as Part B drugs, MAOs must comply with applicable Medicare
statutes, regulations, national coverage determinations (NCDs) and
local coverage determinations (LCDs) of Medicare contractors with
jurisdiction for claims in the geographic area in which services are
covered under the MA plan (42 CFR 422.101(b)). In general, an MA plan
that offers Part D benefits (MA-PD) must determine whether payment for
the drug is allocated under Parts B or D, consistent with Traditional
Medicare and Part D program drug coverage policies (see Appendix C,
Attachment II, Question 5 of Chapter 6 \64\ Medicare Prescription Drug
Benefit Manual for additional detail). Concerning how Part D sponsors
will determine whether a drug is covered under Part B, it is important
to keep in mind that in most cases Part B drug coverage should not
impact payment decisions by Part D sponsors since Part B coverage is
generally in a provider setting or physician's office rather than for
drugs dispensed at a pharmacy. A Part D sponsor cannot deny payment for
a particular drug on the basis that it is covered under Part B in some
instances and Part D in others unless there is Part B coverage as the
drug is prescribed and dispensed or administered in that particular
instance. The fact that a claim is received for a drug that is
sometimes covered by Part B is not a basis for denial since the Part D
sponsor would have to determine whether the drug is being prescribed
and dispensed or administered on the basis under which Part B coverage
is available. This will generally involve interaction between the Part
D sponsor and the Medicare Part B contractor with jurisdiction in that
geographic area for that drug. Regarding new drugs, as decisions are
made nationally or by individual A/B MAC contractors, this information
will be available on the CMS and contractor websites. MA-PD coordinated
care plans must coordinate all benefits administered by the plan with
respect to drugs for which payment as so prescribed and dispensed or
administered to an individual may be available under Part A or Part B,
or under Part D (42 CFR 422.112(b)(7)). As a result of the rules and
regulations described here, MAOs must cover oral-only ESRD drugs under
their plans, as these are drugs under Part B and are not subject to the
limited exclusions under section 1852(a)(1) of the Act.
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\63\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/chapter4-final-may2012_0.pdf
\64\ https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf.
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Final Rule Action: After consideration of all the comments
received, we agree with commenters that there are additional costs
associated with ESRD facilities furnishing phosphate binders that are
not currently included in the ESRD PPS base rate and that were not
addressed when the ESRD PPS base rate was developed in CY 2011. This
differentiates phosphate binders from other drugs and biological
products in existing ESRD PPS functional categories, which justifies a
change to the TDAPA policy, as phosphate binders were excluded from the
analysis performed for the CY 2011 ESRD PPS final rule due to a lack of
data available at the time of rulemaking. Consistent with past
policies, we consider drugs and biological products in existing ESRD
PPS functional categories to be included in the ESRD PPS base rate. The
ESRD PPS base rate includes money for the costs, such as dispensing
fees, associated with furnishing other drugs (in existing functional
categories) paid for using the TDAPA. We are finalizing to pay the
TDAPA for phosphate binders at 100 percent of ASP, increased by a fixed
amount calculated at an amount that we believe most appropriately
approximates 6 percent of ASP. For CY 2025, as utilization data and ASP
reporting are currently unavailable, we are finalizing to use the
weighted average of Medicare expenditures for phosphate binders per
month under Part D for all phosphate binders used in a month, based on
estimates for CY 2025 phosphate binder utilization using utilization
patterns in CY 2023 among Part D eligible beneficiaries. For CY 2025,
this amount is $36.41, which will be added to any monthly claim for
which there is a TDAPA payment for phosphate binders. For CY 2025 and
2026, the TDAPA amount for a phosphate binder is based on 100 percent
of ASP plus an additional amount based on 6 percent of per-patient
phosphate binder spending derived from utilization and cost data.
We are finalizing two changes to Sec. 413.234(c) to codify this
change in TDAPA policy for phosphate binders. First, we are amending
paragraph (c) to note that we would not pay the TDAPA at 100 percent of
ASP in this circumstance by adding in language which reads ``except as
provided in paragraph (c)(4) of this section.'' Second, we are adding
paragraph (c)(4) which reads: ``For calendar years 2025 and 2026, the
transitional drug add-on payment adjustment amount for a phosphate
binder is based on 100 percent of ASP plus an additional amount based
on 6 percent of per-patient phosphate binder spending derived from
utilization and cost data.'' As discussed previously, for calendar year
2025, the additional amount is estimated based on the weighted
[[Page 89153]]
average of Medicare expenditures for phosphate binders per month under
Part D for all phosphate binders used in a month, derived from
estimates for CY 2025 phosphate binder utilization using utilization
patterns in CY 2023 among Part D eligible beneficiaries. . We intend to
reevaluate this amount in rulemaking next year; for example, for
calendar year 2026, we may consider updating the additional amount
quarterly derived from the actual phosphate binder utilization and ASP
reported under Medicare Part B in the most recently available quarter,
if appropriate.
d. Expected Impact of Incorporation of Oral-Only Drugs
We anticipate that the incorporation of oral-only drugs into the
ESRD PPS will increase access to these drugs for beneficiaries. We
estimate that there will be an increase in Medicare spending as a
result of this increase in access. Specifically, CMS has been
monitoring and analyzing data regarding beneficiary access to Medicare
Part D drugs; increases in expenditures for renal dialysis drugs paid
under Medicare Part D; health equity implications of varying access to
Medicare Part D drugs among patients with ESRD; and ESRD facility
behavior regarding drug utilization. We have seen that incorporating
Medicare Part D drugs into the ESRD PPS has had a significant positive
effect of expanding access to such drugs for beneficiaries who do not
have Medicare Part D coverage, with significant positive health equity
impacts. For example, based on the results of our ESRD PPS monitoring
analyses, in December 2017, prior to incorporation of calcimimetics
into the ESRD PPS bundled payment, utilization was at 28.97 percent for
African American/Black beneficiaries but went up to 35.31 percent in
January 2018 and eventually to 39.04 percent in at the end of the TDAPA
period for calcimimetics in December 2021. This 10.07 percentage point
increase in utilization reflects the significant access improvement for
African American/Black beneficiaries of incorporating formerly oral-
only drugs into the ESRD PPS.
Lastly, as part of the preparation for the inclusion of phosphate
binders into the ESRD PPS, CMS has monitored Part D utilization of, and
spending for, phosphate binders. We have developed budgetary estimates
of the changes in Medicare Part B and Part D spending, which are
discussed in section VII.C.1 of this final rule.
8. Changes to the Low-Volume Payment Adjustment (LVPA)
a. Background on the LVPA
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.
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 paragraphs (g)(4) and (5))
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 or as
specified in paragraph (g)(6)) 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.
In addition, under Sec. 413.232(c), for purposes of determining
eligibility for the LVPA, 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. To receive
the LVPA, an ESRD facility must submit a written attestation statement
to its Medicare Administrative Contractor (MAC) confirming that it
meets the requirements as 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 1
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 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 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 facilities based on a treatment
threshold. After consideration of public comments, we originally
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 these ESRD facilities still had higher costs compared to other
ESRD facilities. A regression analysis of low-volume facility claims
from CYs 2012 and 2013 and cost report data indicated a multiplier of
1.239; 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).
This update was implemented budget neutrally alongside numerous other
changes to the case-mix and facility-level adjusters. In CY 2022, 352
ESRD facilities received the LVPA. Using the most recent available data
for CY 2023, the number of ESRD facilities receiving the LVPA was 330.
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 only considered total dialysis
treatments for any 6 months of their cost-reporting period ending in
2020. In the CY 2024 ESRD PPS final rule (88 FR 76344), we finalized
changes to the LVPA regulation at Sec. 413.232 that allow ESRD
facilities affected by disasters and other emergencies to qualify for
[[Page 89154]]
exceptions to certain eligibility requirements for the LVPA. Facilities
may close and reopen if they experience an emergency, or they may
temporarily exceed the 4,000-treatment threshold if they take on
additional patients displaced by an emergency and still qualify for the
LVPA.
(1) Current Issues and Concerns
As discussed in the CY 2025 ESRD PPS proposed rule, interested
parties, including MedPAC and the GAO,\65\ 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.\66\ These groups and other interested parties have also
expressed concern that the strict treatment count used to determine
eligibility 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.\67\
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\65\ https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun20_ch7_reporttocongress_sec.pdf.
\66\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
\67\ 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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We considered several changes to the LVPA eligibility criteria to
address the concerns that interested parties, including the 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 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 found that isolated low-
volume facilities do not face higher costs than other low-volume
facilities. Therefore, we stated in the CY 2025 ESRD PPS proposed rule
that we do not believe that this requested change reconciles with the
central statutory requirements and limitations for the LVPA, and we
stated that 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.
We noted in the proposed rule that 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 Sec. 413.233.
To avoid overlap with these existing facility-level adjustments, we
stated that 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 requested
information in the CY 2024 ESRD PPS proposed rule (88 FR 42441 through
42445).
In addition, interested parties expressed that the eligibility
criteria for the LVPA are very explicit and leave little room for
flexibility in certain circumstances (85 FR 71442). Some also viewed
the attestation process as burdensome to ESRD facilities and believed
it may discourage participation by small ESRD facilities with limited
resources that would otherwise qualify for the LVPA.\68\ Given these
concerns, we 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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\68\ 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.\69\ 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 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 facility adjustment.\70\ One small dialysis organization within a
large non-profit health system responded that it is reliant upon the
LVPA and the rural facility adjustment and supports both adjustments,
albeit with modifications. MedPAC renewed its support for a new Low-
Volume and Isolated (LVI) adjustment with a recommendation for 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 facility adjustment should be eliminated and a 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
reliance of the census tract methodology used by the rural facility
adjustment upon `driving time' as a data measure, noting this presents
legitimate equity issues. ESRD facilities that have relied upon both
the LVPA and rural payment adjustments to remain operational expressed
opposition to elimination of either adjustment.\71\
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\69\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/esrdpayment/educational_resources.
\70\ https://www.cms.gov/files/document/cy-2022-esrd-pps-rfi-summary-comments.pdf.
\71\ 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.
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In the CY 2022 ESRD PPS proposed rule LVPA RFI, we sought input on
alternative approaches to the LVPA methodology (86 FR 36398 through
36399).\72\ Specifically, we requested input on--(1) whether a
distinction other than census tract information should be considered;
and (2) what criteria should be used to determine the threshold(s) of
adjusted latent demand (in treatment counts) which determine LVPA
eligibility. Additionally, we explored the LVI adjustment that MedPAC
recommended in its June 2020 Report to Congress. Under the LVI
methodology, a determination that a facility is low volume and isolated
would be based on that facility's distance from the nearest facility
and its total treatment volume. Regarding the LVI methodology, we
requested input on the concerns for facilities that would lose the LVPA
under the LVI methodology and the potential for gaming within the LVI
methodology. In
[[Page 89155]]
addition, we requested input regarding the extent that the LVI
methodology captures more isolated (and most often rural) facilities,
and whether a separate rural facility adjustment should be maintained.
As previously discussed, our most recent analysis of cost report data
does not support the claim that isolated low-volume ESRD facilities
face higher costs than non-isolated ESRD facilities; therefore, the LVI
methodology would not adhere to the statutory requirement for the LVPA
set forth at section 1881(b)(14)(D)(iii) of the Act.
(2) CY 2024 RFI on Potential Changes to the LVPA
In the CY 2024 ESRD PPS proposed rule (88 FR 42430 through 42544),
we issued a RFI regarding several possible modifications to the current
LVPA methodology.\73\ We provided commenters the option of maintaining
a single LVPA threshold, establishing LVPA tiers, or utilizing a
continuous function. We received 23 comments in response to the RFI,
all of which had differing opinions. A coalition of dialysis
organizations recommended a two-tiered approach, while MedPAC
reiterated their support for a LVI adjustment. A common theme among a
handful of comments was concern about administrative burden and
transparency regarding the methodology that is chosen. Most commenters
believed that the issue of payment cliffs is substantial, but many did
not believe any of the options presented in the RFI could successfully
eliminate gaming completely. CMS will continue to consider these
comments to potentially inform future rulemaking.
(3) CY 2024 RFI on the Rural Facility Adjustment
We have considered several changes to the LVPA eligibility criteria
to address the concerns that the 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. As previously
discussed, we do not believe the suggestion to consider facilities'
geographic isolation 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.
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.
Interested parties, including MedPAC and the GAO, have recommended that
CMS make refinements to the LVPA and rural adjusters to better target
ESRD facilities that are critical to beneficiary access to dialysis
care in remote or isolated areas. The GAO and MedPAC, among others,
have also raised concerns about targeting LVPA payments to ESRD
facilities that are not located near other ESRD facilities to protect
access to care.
In the CY 2024 ESRD PPS proposed rule's LVPA RFI (88 FR 42441
through 42445), we solicited comments on a potential new payment
adjustment that accounts for isolation, rurality, and other
geographical factors, including local dialysis need (LDN). The LDN
methodology, as described in the CY 2024 ESRD PPS proposed rule (88 FR
42430 through 42544), would consider LDN instead of basing payment
strictly upon a rural designation, as provided for by Sec. Sec.
413.233 and 413.231(b)(2). In the CY 2024 ESRD PPS proposed rule's LVPA
RFI, we suggested the utilization of census tracts to identify
geographic areas with low demand, then calculating latent demand by
multiplying the number of beneficiaries near (``near'' was defined by
driving time to ESRD facilities) an ESRD facility by the average number
of treatments for ESRD beneficiaries. The threshold to qualify for the
LVPA could then be applied by determining the amount of adjusted latent
demand. The ESRD facilities that fall below the threshold would be
eligible. The statutory requirements for the LVPA under section
1881(b)(14)(D)(iii) of the Act generally would not allow for CMS to
account for geographic isolation outside of the extent to which low-
volume facilities face higher costs in furnishing renal dialysis
services than other facilities, and 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. Because of this, the LDN methodology would be
implemented under the authority in 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.
We received 23 comments in response to the LVPA RFI, all of which
had differing opinions.\74\ Some commenters supported eliminating the
rural adjuster and reallocating its funds to either the LVPA or to a
new adjustment that considers LDN. Others stated the rural facility
adjustment should be removed, and those dollars be incorporated into
one of the tiered LVPA methodologies. Many commenters noted that a
LVPA, a rural facility adjustment, and a possible LDN-based adjustment
would be redundant. A coalition of dialysis organizations stated that
CMS's reliance on zip codes to identify rural facilities is no longer
an adequate proxy for facilities in need, and cited data that many
rural facilities enjoy a large patient count and positive profit
margins. Other commenters supported the rural facility adjustment,
explaining that it was especially appropriate in conjunction with a
modified LVPA methodology, since under the options presented by CMS in
the RFI, many facilities would experience significant decreases in
payment. They claimed that the additional funds provided by the rural
facility adjustment would protect against the closure of rural
facilities. Several commenters expressed concern about administrative
burden and transparency in a general sense, no matter the methodology
chosen.
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\74\ https://www.cms.gov/files/document/cy-2024-esrd-pps-lvpa-rfi-summary-comments.pdf.
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Generally, commenters were opposed to a payment adjustment based on
the LDN methodology, reiterating many of the concerns raised during the
2020 TEP. A coalition of dialysis organizations voiced the concern that
the LDN methodology would take away providers' ability to make
financial decisions about their operations, since they would not be
able to predict their eligibility for the LDN payment adjustment nor
the amount they would receive. They maintained that the LDN may not
target the appropriate facilities and could provide opportunities for
gaming. The coalition also claimed that the central issue faced by
these facilities is low patient count, which they stated that the LDN
methodology would not recognize, and thus the adjustment could be
provided to facilities that are isolated, but have high patient counts,
and are not in need of an additional payment adjustment. A coalition of
dialysis organizations and a non-profit dialysis association both
stated that the current LVPA provision to aggregate the treatments of
facilities under common ownership that are not at least 5 miles apart
is an important feature that discourages gaming, one that is not
included in the LDN methodology. Furthermore, the coalition noted that
the LDN methodology would lack stability, given that patient location
varies over time. MedPAC suggested that if the LDN were adopted, CMS
should ensure that the methodology is transparent; for example, making
the
[[Page 89156]]
specifications and results for the regression equation available on
CMS's website and in the Federal Register. In addition, MedPAC stated
that CMS should note how often the model would be updated, discuss how
census tract populations changing over time would affect the stability
of the adjustment, and how the approach would address MedPAC's
anticipated increase in home dialysis use.
In addition to the questions outlined in the CY 2024 ESRD PPS
proposed rule LVPA RFI, as discussed in the CY 2025 ESRD PPS proposed
rule, CMS has also considered incorporating isolation criteria into the
rural facility adjustment, where payment of the adjustment could be
limited to ESRD facilities that are isolated from other ESRD
facilities, or a higher adjustment could be applied for isolated rural
facilities than for non-isolated rural facilities. Alternatively, the
current rural facility adjustment could be replaced by an adjustment
based solely on isolation. We noted that recent analysis has confirmed
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. This analysis aligns with suggestions from
various commenters, including MedPAC, to refine or remove the rural
facility adjustment to better target ESRD facilities that are critical
to beneficiary access and are likely not being adequately targeted
under the current methodology. However, we noted that many ESRD
facilities which receive the rural facility adjustment are critical to
patient access and that these ESRD facilities may be relying on the
additional payment from the rural facility adjustment for the coming
years. As discussed in section II.B.2.f.(2) of this final rule, we
proposed to implement a phase-out policy for ESRD facilities that lose
the rural facility adjustment as a result of being redesignated from a
rural area to an urban area in the most recent CBSA delineations. We
are not finalizing any other changes to the rural facility adjustment
in this final rule.
b. Tiered LVPA Methodology
The goals of the ESRD PPS (including the LVPA) are to align
resource use with payment, advance health equity, and protect access to
renal dialysis services for vulnerable beneficiaries in underserved
communities, including rural and isolated communities, by increasing
payments to certain ESRD facilities in these areas to align with their
higher costs. As noted in the CY 2016 ESRD PPS final rule (80 FR 68967
through 69077), we aim to target the benefit of the LVPA to facilities
that serve the access needs of patients in remote locations. In the CY
2022 ESRD PPS final rule (86 FR 61874 through 62026), we detailed our
commitment to achieving equity in health care outcomes for our
beneficiaries using the definition of equity set forth in Executive
Order 13985,\75\ which places emphasis on individuals who belong to
underserved communities. In the CY 2023 ESRD PPS proposed rule RFI (87
FR 38464 through 38586), we reiterated our commitment to achieving
equity in health care and noted that we aim to align ESRD facility
resource use with payment. Recent feedback from interested parties
indicates that the current LVPA payment structure may lead some ESRD
facilities to treat fewer patients to avoid a payment cliff. Proposing
a revised methodology that would reduce the incentive for gaming, as
the GAO described, would help advance health equity by removing the
incentive for some ESRD facilities to limit access to renal dialysis
services. We would expand access through payments that incrementally
align resource use with payment to ESRD facilities that furnish
different volumes of treatment.
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\75\ 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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In the CY 2025 ESRD PPS proposed rule, we proposed to refine the
LVPA methodology to include two tiers based on treatment volume with
different payment adjustments for each tier. This methodology would be
similar to the methodology described in the CY 2024 ESRD PPS proposed
rule RFI (88 FR 42430 through 42544), but with methodological changes
to improve consistency in an ESRD facility's tier assignment from year
to year.
We analyzed cost report data from ESRD facilities to develop the
tiered thresholds and adjustment amounts for the proposed LVPA. This
analysis used a logarithmic regression model that controls for various
geographical and facility level characteristics, including facility
type and region, to estimate cost differences based on treatment
volume. We also simulated attestation patterns by excluding a
stratified random sample of ESRD facilities who are eligible for LVPA
payment but do not submit LVPA attestations. This step allowed us to
account for the fact that a portion of ESRD facilities that were within
the treatment volume threshold routinely did not attest to meeting the
LVPA requirements for other reasons. We analyzed numerous different
potential tiered payment structures based on this analysis, where the
estimated cost for the tier uses the upper bound of the treatment count
for that tier. Based on the results of this analysis, we proposed a
two-tiered approach; we believe the two-tiered approach is appropriate
because it strikes a balance between simplicity for ESRD facilities,
sufficiently large tiers to allow for treatment volume variation from
one year to the next, and payment adequacy for current low-volume
facilities, particularly those with the lowest volume.
Table 9 presents our proposed two-tiered LVPA methodology, which is
based on data from ESRD facility cost reports such that the reporting
periods include some part of the period between January 1, 2020, to
December 31, 2022 (that is, beginning or ending during these 3 CYs). We
noted that we have required budget neutrality for any change to the
LVPA methodology, so any proposed changes to the LVPA cannot increase
or decrease total estimated ESRD PPS payments; therefore, the two sets
of potential adjustment factors in Table 9 would be implemented budget-
neutrally. The second column presents the unscaled adjusters, which if
implemented, would cause the ESRD PPS base rate to be reduced by a
factor of 0.999262, or approximately $0.20, to achieve budget
neutrality. The third column presents the adjusters scaled down by a
factor of 0.815 to maintain the LVPA payment amount under the existing
methodology of $26.7 million based on the expected CY 2025 LVPA
payments. Using the scaled adjusters would maintain budget neutrality
without lowering the ESRD PPS base rate.
[[Page 89157]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.008
The adjustment factors in the second column are derived from the
regression explained previously. These results indicate that facilities
which furnish less than 3,000 treatments have costs that are 34.9
percent higher than non-low-volume facilities, and facilities that
furnish between 3,000 and 3,999 treatments have costs that are 22.2
percent higher. The adjustment factors in the third column, which are
scaled down, reflect the same relationship between the two tiers of
low-volume facilities and non-low-volume facilities.
We explained that we believe a two-tier scaled approach is
appropriate because it would increase payments to facilities with the
lowest volume while keeping payment changes contained within the LVPA.
In CY 2016 ESRD PPS final rule (80 FR 68972 through 69004) when we last
updated the LVPA adjustment factor, we also updated most of the
facility-level and case-mix adjusters. At that time, it was appropriate
to apply a budget-neutrality factor that represented all of the changes
to the facility-level and case-mix adjusters. However, we only proposed
changes to the LVPA in the CY 2025 ESRD PPS proposed rule (89 FR 55760
through 55843) and believed it would be most appropriate to contain the
changes within the current LVPA by applying a scaling factor to the
LVPA adjusters.
We also analyzed a three-tiered option that would include a tier
for ESRD facilities furnishing between 4,000 and 5,000 treatments,
which is presented in Table 10. As noted previously, we considered both
scaled and unscaled adjustment factors, with both maintaining budget
neutrality. Our analysis showed that the scaled, three-tiered option
would reduce payments for facilities furnishing less than 3,000
treatments as compared to both the current LVPA methodology and the
proposed two-tiered scaled methodology. Because payments for facilities
furnishing between 4,000 and 5,000 treatments would increase, payments
for the lowest-volume facilities would need to decrease to maintain
budget neutrality, which we did not believe would align with the goals
of the LVPA outlined previously. We explained that if we were to
propose a three-tiered option, we believe budget neutralizing the base
rate rather than scaling the adjustment factors would better align with
these goals. Our analysis shows that an unscaled three-tiered
adjustment would result in a $0.99 reduction to the base rate. We
sought comment on our proposed scaled, two-tier proposal and on the
alternative three-tier LVPA structure. We noted that, should this
alternative be finalized, we would make changes to Sec. 413.232(b)(1)
to reflect the increased LVPA threshold of 5,000. As discussed further
in the next subsection, we also proposed to determine an ESRD
facility's LVPA tier based on the median treatment count volume of the
last three cost-reporting years, rather than using a single year
treatment count. Therefore, expanding LVPA eligibility to ESRD
facilities that furnished fewer than 5,000 treatments in each of the
past three cost-reporting years would also increase the number of ESRD
facilities that would qualify for tier 1 and tier 2, since ESRD
facilities which furnished between 4,000 and 4,999 treatments in one of
the past 3 years and fewer than 4,000 (or 3,000 for tier 1) in the
other 2 years could qualify in these tiers.
[GRAPHIC] [TIFF OMITTED] TR12NO24.009
[[Page 89158]]
c. Final Changes to the LVPA for CY 2025
We proposed a two-tiered LVPA using the scaled adjusters presented
in the second column of Table 9. ESRD facilities that fall into the
first tier (those that furnish fewer than 3,000 treatments) would
receive a payment adjustment of 28.4 percent. Those that fall in the
second tier (those that furnish 3,000 or more treatments but fewer than
4,000 treatments) would receive a payment adjustment of 18.1 percent.
Outside of the change to the LVPA amount, this change would not impact
how the LVPA is applied to ESRD PPS payments.
We stated that one potential complication with a tiered approach to
the LVPA is that there would still be payment cliffs present between
the tiers. This may discourage ESRD facilities from increasing their
treatment volume in a given year, especially if it is uncertain whether
the ESRD facility's treatment volume in future years will stay at the
increased level. To address this, we proposed to determine an ESRD
facility's LVPA tier based on the median treatment count volume of the
last three cost-reporting years, rather than using a single year
treatment count. This methodology would smooth payments over years,
increasing stability and predictability in payments to low-volume
facilities. We also proposed that, should a facility receive an
exception under Sec. 413.232(g)(5) in one or more of the past three
cost-reporting years, the median treatment count of the unaffected
cost-reporting years would be used to make the facility's tier
determination. We note that the median of two numbers is the average of
those numbers, and the median of one number is that number. In the case
that a facility does not have cost-reporting data from the last 3 years
that are unaffected by a disaster or other emergency, we would assign
the facility to a tier based on their last full year of unaffected
treatment volume, assuming all LVPA eligibility criteria are met.
We stated that we believe that the proposed median treatment
approach would promote stability, especially for facilities whose
treatment counts are on the margins of a tier. We also believe that the
proposed smoothing methodology for determining the treatment volume
tier for which an ESRD facility qualifies is better than the
alternative of using the highest tier (in terms of treatment volume)
for which an ESRD facility has qualified in each of the past years. For
example, if we used the highest tier of the last 3 years and a facility
furnishes 3,500 treatments in one of the past 3 years, it would be
categorized as tier 2 even if it furnished fewer than 3,000 treatments
in the other 2 years. We believe that the proposed smoothing would
mitigate the introduction of a cliff-effect within the tiers.
By contrast, under the proposed smoothing methodology, if the cost-
reporting data indicated that the facility furnished 2,500, 2,999, and
3,500 treatments in the 3 years preceding the payment year, the median
tier would be identified (tier 1 in this case), and the facility would
(in the proposed two-tier system with scaling) receive a 28.4 percent
payment adjustment for all of the treatments furnished during the
payment year. We expect that any higher or lower payments from year to
year under this policy would balance out over time without putting
additional burden on the MACs. The structure of the proposed scaled,
two-tier LVPA methodology is presented in Table 9, and the structure of
the alternative three-tier unscaled LVPA methodology is presented in
Table 10. For the purposes of comparison, we have included the scaled
and unscaled version of both of the potential LVPA structures.
We noted that we did not propose any changes to the methodology for
determining eligibility for the LVPA under Sec. 413.232(b)(1), as the
purpose of this change is to better allocate payments within the LVPA,
not to expand the LVPA to facilities that have furnished more than
4,000 treatments in one of the past three cost-reporting years. We
would continue to determine eligibility for the LVPA based on a
facility's treatment count in each of the three cost-reporting years
preceding the payment year as set forth in Sec. 413.232(b)(1) and
would not consider the median treatment count over that period for
purposes of determining eligibility. Likewise, we did not propose any
changes to Sec. 413.232(g)(5), which allows for an exception to the
requirement at Sec. 413.232(b)(1) in the case of a disaster or other
emergency. In the CY 2011 ESRD PPS final rule (75 FR 49030 through
49214), we stated that we believe a 3-year waiting period serves as a
safeguard against facilities that have the opportunity to take a
financial loss in establishing facilities that are purposefully small.
In response to the CY 2024 ESRD PPS proposed rule RFI (88 FR 42430
through 42544), several interested parties commented that they believe
CMS should maintain the 3-year attestation to determine eligibility for
the LVPA, as it is an important safeguard against gaming. In addition,
if we were to use the median tier methodology to determine LVPA
eligibility, we estimate that the adjustment factors would decrease,
because the scaling factor used to maintain budget neutrality within
the LVPA would be smaller to account for a larger amount of ESRD
facilities qualifying for the LVPA.
We stated that, if finalized, the proposed median treatment count
methodology for determining an eligible ESRD facility's LVPA tier would
improve the stability and predictability of the LVPA by basing tier
determination on the median treatment count of the last 3 years as
opposed to the treatment count for each of the last 3 years, where
facilities could be disqualified from a higher adjustment based on
marginal changes. The proposed tiered smoothing methodology would also
better align payment with resource use by minimizing the impact of the
payment cliff between the LVPA tiers in a transparent and reproducible
fashion. We solicited comments on each aspect of our proposal: (1) the
tiered structure of the LVPA; (2) using the median treatment count
volume to determine the LVPA payment tier for ESRD facilities that are
eligible for the adjustment; and (3) the scaling of the adjusters to
maintain LVPA payments at the same level. As previously discussed, we
also considered an alternative three-tiered structure, which would have
the effect of reducing the base rate by $0.99. We solicited comments on
whether this alternative methodology could be more appropriate than the
proposed methodology.
We invited public comment on our proposal to change the LVPA
methodology to include two tiers, use the median treatment count volume
to determine the LVPA payment tier for eligible facilities, and to
scale the adjusters to maintain budget neutrality without lowering the
ESRD PPS base rate. Approximately 12 commenters including a non-profit
dialysis organization, a non-profit kidney organization, multiple large
dialysis organizations, a provider advocacy organization, a non-profit
organization of ESRD networks, a non-profit kidney care alliance, a
coalition of dialysis organizations, a small dialysis organization
within a large non-profit health system, and MedPAC commented on the
proposed changes to the LVPA methodology. The following is a summary of
the public comments received on these proposals and our responses.
Comment: Several commenters supported CMS's proposed changes to the
LVPA methodology, agreeing that introducing two tiers would help reduce
[[Page 89159]]
the burden of payment cliffs. Some of these commenters encouraged CMS
to continue refining the LVPA as more data becomes available, and to
continue evaluating the impact of creating additional tiers. Nearly all
commenters expressed support for our proposal to use the median
treatment count volume to determine the LVPA payment tier for eligible
facilities.
Response: We thank commenters for their support and dedication to
advancing health equity and protecting access to renal dialysis
services for vulnerable beneficiaries. CMS will continue to monitor the
ESRD PPS LVPA methodology to ensure that payments are appropriately
aligned with resource use and adequately target low-volume facilities
and make refinements, if appropriate, through rulemaking.
Comment: Some commenters cited analysis suggesting that CMS may
have underestimated the number of facilities projected to furnish more
than 3,000 treatments during CY 2025 in the CY 2025 impact file \76\
and expressed concern that the adjuster amounts CMS calculated for both
tier structures described in the CY 2025 ESRD PPS proposed rule may be
inaccurate. Many of these commenters were also concerned that the two-
and three-tiered structures presented in the proposed rule had the same
adjusters despite a greater number of ESRD facilities qualifying for
the LVPA under the three-tiered structure.
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\76\ The CY 2025 impact file can be found in Addendum B of the
proposed rule.
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Response: The dialysis treatment counts reported in the impact
tables in Addendum B represent Fee-For-Service (FFS) treatments
furnished by each facility during 2023. LVPA tier assignment is based
on facility size, which encompasses all treatments (Medicare FFS, MA,
or non-Medicare) furnished during CYs 2020, 2021, and 2022, including
treatments by ESRD facilities under common ownership and located within
a 5-driving mile radius. The CY 2023 facility size information was
considered separately from the FFS treatment during our analysis.
The two- and three-tier LVPA structures in the CY 2025 ESRD PPS
proposed rule appear identical as both represent estimates of expected
cost differentials derived from a common model that measures
association between facility size and cost. The adjusters from the
common model are stable because they are based on the overall
relationship between cost and volume, not on the number of tiers into
which facilities are divided. These estimates appear in the second
columns of Tables 9 and 10 in this final rule. However, once facilities
are assigned to a category and payment budget neutrality is applied,
the adjusters for the two- and three-tier proposals diverge, as shown
by the third columns in each respective table where the adjustment
factors are scaled to maintain total LVPA payments at the same level.
Comment: Several interested parties expressed concern that the
facilities in the second tier under the proposed two-tier LVPA
methodology (furnishing between 3,000 and 3,999 treatments per year)
would receive a lower adjustment compared to the current LVPA policy.
Response: We maintain our belief that a two-tier scaled approach is
appropriate, as it replaces a one-size-fits all approach with one where
payments more closely align with cost while keeping payment changes
contained within the population of LVPA facilities. Maintaining budget
neutrality in this manner when transitioning to a tiered structure
necessitates payment adjustments that differ from the current adjuster
at each tier. Therefore, it is unavoidable that the tier 2 LVPA
facilities receive a lower LVPA adjustment factor under the tiered
system while holding total LVPA payments at the same level.
We also maintain our belief that it is appropriate to implement a
scaled approach as opposed to a budget neutrality factor applied to all
ESRD PPS payments. We reiterate that when we last updated the LVPA
adjustment factor in the CY 2016 ESRD PPS final rule (80 FR 68972
through 69004), we also updated most of the facility-level and case-mix
adjusters and applied a budget neutrality factor that represented all
of those changes. Since we only proposed changes to the LVPA in the CY
2025 ESRD PPS proposed rule (89 FR 55760 through 55843), we noted that
it would be most appropriate to contain the changes within the current
LVPA by applying a scaling factor to the LVPA adjusters.
Comment: MedPAC supported the proposal for a two-tier LVPA for
existing ESRD facilities as well as maintaining budget neutrality with
respect to the current LVPA policy but expressed multiple concerns
about extending the LVPA to new ESRD facilities. MedPAC suggested that
the two-tier proposal is an improvement over the current policy, but
that they ultimately support a statutory change that would replace both
the LVPA and the rural facility adjustment with a single payment
adjustment that considers distance to the next nearest facility and
treatment volume. MedPAC stated that such an adjustment would eliminate
extra payments to low-volume facilities in close proximity to another
facility and high-volume rural facilities.
Response: CMS appreciates the support expressed by MedPAC for the
proposed changes to the LVPA methodology and its input on future
refinements that could preserve access to renal dialysis services. CMS
also shares MedPAC's concerns about extending the LVPA to new ESRD
facilities, as this could result in decreased payment to the lowest-
volume ESRD facilities. As we discussed in the CY 2025 ESRD PPS
proposed rule (89 FR 55760 through 55843), CMS aims to align resource
use with payment, advance health equity and protect access to renal
dialysis services for vulnerable beneficiaries in underserved
communities, including rural and isolated communities, by increasing
payments to certain ESRD facilities in these areas to align with their
higher costs. We acknowledge MedPAC's continued support for an LVPA
that incorporates geographic isolation but reiterate that such an
adjustment would not be consistent with the statutory requirements for
the LVPA unless geographic isolation is found to influence the extent
to which low-volume ESRD facilities face higher costs, and we agree
that such an adjustment would require a statutory change.
Comment: Multiple commenters once again called for the elimination
of the rural facility adjustment and for its funds to be allocated to
support a more robust LVPA, either within the current bounds of
eligibility or to include ESRD facilities that furnish up to 6,000
treatments per year. Many of these commenters reiterated their support
for MedPAC's LVI methodology and noted several concerns regarding the
three-tier model presented by CMS in the CY 2025 ESRD PPS proposed
rule. Some commenters stated that the three-tier model presented by CMS
would cause substantial overlap between facilities receiving the LVPA
and the rural facility adjustment, and that a large number of rural
facilities are high-volume to an extent that may not warrant additional
payment.
Response: In the CY 2025 ESRD PPS proposed rule (89 FR 55760
through 55843), CMS noted that recent analysis has confirmed, in
general, that low-volume facilities that are rural, isolated, or
located in low-demand areas did not have higher costs than low-volume
ESRD facilities overall. This analysis broadly aligns with suggestions
from various commenters, including MedPAC, to refine or remove the
rural
[[Page 89160]]
facility adjustment to better target ESRD facilities that are critical
to beneficiary access and are likely not being adequately targeted
under the current methodology. However, CMS found that, on treatment
weighted basis, over 65 percent of rural providers have no other
providers in a 5-driving mile distance, and that this fraction
increases to 83 percent for providers eligible for both the rural
facility adjustment and the LVPA. These findings indicate that the
overlapping payments for both the LVPA and rural facility adjustments
are primarily going to small and isolated providers and align with our
belief that many ESRD facilities which receive the rural facility
adjustment are critical to patient access and may be relying on the
additional payment from the rural facility adjustment for the coming
years. We are not finalizing any changes to the rural facility
adjustment at this time, but we are open to considering potential
refinements to the definition of a rural ESRD facility in the future by
considering alternate rural designations. Any future changes would
consider the impact on rural ESRD facilities. Additionally, we note
that the rural facility adjustment for the ESRD PPS is relatively small
compared to other payment systems, at 0.8 percent, and that the
suggested elimination of this adjustment would only account for about
one third of the budget neutrality adjustment required for our
alternative 3-tiered adjustment, which would expand the LVPA to ESRD
facilities that furnish up to 5,000 treatments per year. Therefore, the
funds currently associated with the rural facility adjustment would not
be able to ``pay for'' expanding the LVPA to the commenter's suggested
6,000 treatment volume threshold without a significant budget
neutrality reduction to the ESRD PPS base rate.
CMS also reiterates that because payments for facilities furnishing
between 4,000 and 5,000 treatments would increase under the three-tier
methodology presented in the proposed rule, payments for the lowest-
volume facilities would need to decrease to maintain budget neutrality,
and we do not believe this would align with the goals of the LVPA. We
thank the commenters who presented analysis demonstrating why the
three-tier methodology we presented may yield decreased payment to the
lowest-volume facilities and how alternative methodologies, including
MedPAC's LVI methodology, could potentially yield more equitable
payment distribution to LVPA-eligible facilities. CMS intends to
consider the provided analyses to inform future notice and comment
rulemaking pertaining to the LVPA methodology.
Comment: A small dialysis organization within a large non-profit
health system commented asking for additional clarification regarding
the median tier calculation in the instance where a facility receives
an exception for taking on additional patients due to a disaster or
emergency.
Response: In the CY 2025 ESRD PPS proposed rule (89 FR 55760
through 55843), we proposed that, should a facility receive an
exception under Sec. 413.232(g)(5) in one or more of the past three
cost-reporting years, the median treatment count of the unaffected
cost-reporting years would be used to make the facility's tier
determination. We noted that the median of two numbers is the average
of those numbers, and the median of one number is that number. In the
case that a facility does not have cost-reporting data from the last 3
years that are unaffected by a disaster or other emergency, we would
assign the facility to a tier based on their last full year of
unaffected treatment volume, assuming all LVPA eligibility criteria are
met. For example, if cost-reporting data indicated that an ESRD
facility furnished 2,500, 2,999, and 4,500 treatments in the 3 years
preceding the payment year, but received an exception under Sec.
413.232(g)(5) during the year it furnished 4,500 treatments, the median
treatment count from the two prior years (2,500 and 2,999) would be
used determine the facility's LVPA tier, which would place the facility
in tier 1 under the proposed two-tier methodology. The facility would
then receive a 28.4 percent payment adjustment for all of the
treatments furnished during the payment year.
Comment: Some interested parties commented that it is necessary to
conduct analysis of the Pacific territories separately from the general
Pacific census region to consider the unique costs that are exclusive
to small island economies. The commenters cited air freight shipping
costs, operational costs for utilities, limited availability of local
healthcare professionals, and a lack of economies of scale as factors
that may be raising the per-treatment costs across the Pacific
territories. The interested parties acknowledged that CMS is barred
from accounting for geographic isolation outside of the extent to which
low-volume facilities face higher costs in furnishing renal dialysis
services than other facilities, but claimed that CMS may have concluded
that low-volume facilities that are rural, isolated, or located in low-
demand areas generally did not have higher costs than low-volume ESRD
facilities overall without adequately considering the unique situation
of the Pacific territories. The commenters urged CMS to refine the LVPA
to better target isolated ESRD facilities such as those in the Pacific
islands and requested the Secretary to consider exercising the
authority provided under section 1881(b)(14)(D)(iv) to establish other
payment adjustments for the Pacific territories in the case that CMS is
unable to better target these facilities due to statutory constraints.
Response: In the CY 2024 ESRD PPS proposed rule's LVPA RFI (88 FR
42441 through 42445), we solicited comments on a potential new payment
adjustment that accounts for isolation, rurality, and other
geographical factors, including local dialysis need (LDN). CMS stated
that the statutory requirements for the LVPA under section
1881(b)(14)(D)(iii) of the Act generally would not allow for CMS to
account for geographic isolation outside of the extent to which low-
volume facilities face higher costs in furnishing renal dialysis
services than other facilities, and 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. Because of this, we clarified that the LDN
methodology could only be implemented under the authority in 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. Commenters were generally opposed to the LDN methodology
for a variety of factors, and many supported MedPAC's LVI methodology
in place of the existing LVPA and rural facility adjustments. The
statute generally would not permit MedPAC's approach recommending
payment directed at isolated facilities under the LVPA, and our
preliminary analysis shows that the funds from the rural adjuster alone
cannot support a third LVPA tier while maintaining budget neutrality
and without decreasing payment to the lowest volume facilities. CMS is
committed to achieving equity in healthcare outcomes for our
beneficiaries, and we reiterate that the statutory requirement for the
LVPA requires it reflect the extent to which low-volume ESRD facilities
face higher costs. We intend to continue to evaluate whether geographic
isolation is associated with higher costs for low-volume ESRD
facilities and, should we find such evidence, we would be able to
[[Page 89161]]
consider alternative methodologies to the LVPA similar to MedPAC's LVI
in potential future rulemaking. Should our future analysis show that
isolated, low-volume ESRD facilities incur greater costs than other
low-volume ESRD facilities, we would consider, if appropriate, making
further refinements to the LVPA methodology through rulemaking. We
recognize that the U.S. Pacific Territories are uniquely isolated
compared to mainland ESRD facilities, so a different set of isolation
criteria may apply distinctly to these ESRD facilities and, should they
have higher costs than other LVPA facilities, support incorporating
such isolation criteria into the LVPA under the current statute.
However, we do not believe it would be appropriate to define isolation
criteria based on predetermined ESRD facilities that we believe should
be considered isolated. Additionally, as there are relatively few ESRD
facilities in the U.S. Pacific Territories, any isolation criteria
which would only identify these ESRD facilities would likely be very
restrictive and not appropriate to be applied to the ESRD PPS overall.
Therefore, we do not believe it would be most appropriate to address
the higher costs that the commenter described through the LVPA. We
intend to further consider the unique challenges and costs which are
faced by ESRD facilities in the U.S Pacific Territories, and other
similarly isolated places, and address these challenges and costs, if
warranted, through an appropriate payment mechanism, such as an
adjustment under section 1881(b)(14)(D)(iv), in potential future
rulemaking.
CMS appreciates the unique challenges that ESRD facilities in the
U.S. Pacific Territories face and the higher costs that might accompany
them. However, we note that the LVPA is generally not constructed to
account for factors outside of the costs that ESRD facilities incur as
a result of furnishing a small number of treatments. CMS has also noted
that there are ESRD facilities that may be eligible for the LVPA but
have not submitted attestations to their MACs. CMS encourages these
facilities to attest for purposes of the LVPA as we continue to
consider appropriate ways to support Pacific Territory facilities that
are critical to beneficiary access to renal dialysis services.
Final Rule Action: After considering the comments, we are
finalizing as proposed the scaled two-tier LVPA methodology, where ESRD
facilities that fall into the first tier will receive a payment
adjustment of 28.9 percent and those that fall in the second tier will
receive a payment adjustment of 18.3 percent. The structure of this
methodology can be found in Table 11. We are also finalizing as
proposed the tiered smoothing methodology, where an ESRD facility's
LVPA tier will be determined based on the median treatment count volume
of the last three cost-reporting years, rather than using a single year
treatment count.
[GRAPHIC] [TIFF OMITTED] TR12NO24.010
We note that the final LVPA adjusters under the two-tier
methodology are marginally different from those presented in the CY
2025 ESRD PPS proposed rule. The final LVPA adjusters presented in
Table 11 reflect the use of more recent claims data in our analysis for
this final rule, which results in changes to the scaling factor used to
maintain total estimated LVPA payments at the same amount.
CMS reiterates that we did not propose and are not finalizing any
changes to the methodology for determining eligibility for the LVPA
under Sec. 413.232(b)(1), as the purpose of the finalized changes is
to better allocate payments within the LVPA, not to expand the LVPA to
facilities that have furnished more than 4,000 treatments in one of the
past three cost-reporting years. We will continue to determine
eligibility for the LVPA based on a facility's treatment count in each
of the three cost-reporting years preceding the payment year as set
forth in Sec. 413.232(b)(1) and would not consider the median
treatment count over that period for purposes of determining
eligibility. Likewise, we did not propose and are not finalizing any
changes to Sec. 413.232(g)(5), which allows for an exception to the
requirement at Sec. 413.232(b)(1) in the case of a disaster or other
emergency.
d. Summary of RFI on Improving the LVPA for New ESRD Facilities
In the CY 2025 ESRD PPS proposed rule (89 FR 55760 through 55843),
we sought comment on several approaches to modifying the LVPA
methodology to ensure that payments are accurately aligned with
resource use, adequately target low-volume facilities, and strive for
healthcare equity for ESRD beneficiaries. We issued an RFI to seek
feedback from the public on potential changes to the LVPA eligibility
criteria, including the potential modification of the 3-year cost-
reporting data requirement, and what commenters believe would be the
best way for a new low-volume ESRD facility to demonstrate or attest
that it expects to be low-volume. We also sought information regarding
the potential implementation of a reconciliation process for ESRD
facilities that fail to furnish a low enough treatment volume to
qualify for the LVPA or their predicted tier. We also questioned
commenters about the cost differences for providers of low-volume home
dialysis and providers of low-volume in-center dialysis, and whether
the
[[Page 89162]]
LVPA be an appropriate pathway to support the provision of home
dialysis through increased payment. In particular, we sought input and
responses to the following considerations, requests, and questions:
Whether the LVPA or another adjustment, such as the LDN
methodology discussed earlier, would be the most appropriate payment
pathway to support access to renal dialysis services in areas that do
not currently have sufficient capacity to furnish these services to all
Medicare beneficiaries.
What would be the most appropriate way or ways for a new
ESRD facility to demonstrate or attest that it expects to be low-
volume?
The potential for future reconciliation process as an
appropriate accommodation for new ESRD facilities.
Whether a reconciliation process would be an effective
tool for making appropriate payments to existing ESRD facilities that
have three or more years of cost reporting data.
Would a reconciliation process be operationally
straightforward and understandable for an ESRD facility that has opened
in the past 3 years?
Would a reconciliation process make it more difficult for
ESRD facilities to plan and budget for future payment years? Is this
outweighed by the potential benefit of earlier access to the LVPA for
these new facilities?
Would it be useful or feasible to implement a
reconciliation process for ESRD facilities that have not opened in the
past 3 years but, for whatever reason, may have furnished a low enough
treatment volume to qualify for the LVPA?
Could the LVPA be changed in any way to better support
ESRD facilities opening in underserved areas? Are there any costs
specific to low-volume facilities for which the current LVPA does not
account?
How are the costs for providers of low-volume home
dialysis different from the costs for providers of low-volume in-center
dialysis? Could the LVPA be an appropriate pathway to support the
provision of home dialysis through increased payment?
We did not receive any new feedback in response to our RFI
regarding LVPA eligibility or the attestation process for new ESRD
facilities. A handful of commenters reiterated their stance from the CY
2024 ESRD PPS RFI on the LVPA. Some commenters thanked CMS for our
consideration of public comments as we continue to refine the LVPA
methodology. We received one comment from an LDO in response to our RFI
regarding the cost differences for low-volume home dialysis versus in-
center dialysis providers. The comment explained that staffing dynamics
make the 4,000-treatment LVPA threshold inapplicable for home dialysis
programs but cautioned that a home dialysis-specific LVPA threshold may
not address the challenges faced by low-volume home programs as the
treatment aggregation mechanism within the LVPA disqualifies many of
these programs due to their proximity to commonly owned in-center
programs.
We thank the commenters for their detailed and thoughtful comments,
including those who responded to the RFI. While we are not responding
to these comments in this CY 2025 ESRD PPS final rule, we intend to
take them into consideration for future rulemaking and future policy
development.
C. Transitional Add-On Payment Adjustment for New and Innovative
Equipment and Supplies (TPNIES) Applications and Technical Changes for
CY 2025
1. Background
In the CY 2020 ESRD PPS final rule (84 FR 60681 through 60698), we
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. For
additional background on the TPNIES we refer readers to the CY 2024
ESRD PPS final rule (88 FR 76410 through 76412).
As indicated in Sec. 413.236(c) CMS includes the summary of each
TPNIES application and our analysis of the eligibility criteria for
each application in the annual ESRD PPS proposed rule and announces the
results in the annual ESRD PPS final rule. Because we did not receive
any applications for the TPNIES for CY 2025, no TPNIES application
summaries, CMS analyses, or results have been included in this final
rule.
2. Technical Changes to Sec. 413.236(b)(4) and Sec. 413.236(c)
As part of the TPNIES eligibility requirements in Sec.
413.236(b)(4), a covered equipment or supply must have 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 durable medical
equipment, orthotics, prosthetics and supplies (DMEPOS) items and
services as specified in the HCPCS Level II coding guidance on the CMS
website prior to the particular CY. We have identified a minor error in
Sec. 413.236(b)(4). Specifically, we inadvertently transposed the
words orthotics and prosthetics within the DMEPOS acronym. The acronym
was intended to read durable medical equipment, prosthetics, orthotics,
and supplies (DMEPOS) instead of durable medical equipment, orthotics,
prosthetics and supplies (DMEPOS).
As described in the HCPCS Level II Coding Procedures, HCPCS Level
II is a standardized coding system that is used primarily to identify
drugs, biologicals and non-drug and non-biological items, supplies, and
services not included in the CPT[supreg] code set jurisdiction, such as
ambulance services and durable medical equipment, prosthetics,
orthotics, and supplies (DMEPOS) when used outside a physician's
office.
While the HCPCS level II Coding Procedures include DMEPOS as an
example of items for which HCPCS Level II codes are established, we
believe that the phrase non-drug and non-biological items more broadly
reflects all items, supplies, and services for which HCPCS Level II
codes are established and aligns with the HCPCS Level II coding
procedures on the CMS website. Therefore, we proposed a technical
change at Sec. 413.236(b)(4) to remove the reference to the phrase
durable medical equipment, orthotics, prosthetics and supplies (DMEPOS)
and replace it with the phrase non-drug and non-biological items. We
are also adding the word supplies. These technical changes would better
reflect the broader category of non-drug and non-biological item coding
in the HCPCS Level II Coding Procedures available on the CMS
website.\77\
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\77\ Healthcare Common Procedure Coding System (HCPCS) Level II
Coding Procedures. Available at: https://www.cms.gov/medicare/coding/medhcpcsgeninfo/downloads/2018-11-30-hcpcs-level2-coding-procedure.pdf. Accessed on January 16, 2024.
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We did not receive any comments on our proposed technical changes
to Sec. 413.236(b)(4). We are finalizing the technical changes as
proposed at Sec. 413.236(b)(4) and also finalizing the corresponding
edit at Sec. 413.236(c) for the same reasons that we identified for
the proposed edit.
D. Continuation of Approved Transitional Add-On Payment Adjustments for
New and Innovative Equipment and Supplies for CY 2025
In this section of the final rule, we identify any items previously
approved for the TPNIES and for which payment
[[Page 89163]]
is continuing for CY 2025. As described in the CY 2024 ESRD PPS final
rule, no new items were approved for the TPNIES for CY 2024 (88 FR
76431). As such there are no items previously approved for the TPNIES
for which payment is continuing in CY 2025.
E. Continuation of Approved Transitional Drug Add-On Payment
Adjustments for CY 2025
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 July 2023, CMS approved Jesduvroq
(daprodustat) for the TDAPA under the ESRD PPS, effective October 1,
2023. Implementation instructions are specified in CMS Transmittal
12157, dated July 27, 2023, and available at: https://www.cms.gov/files/document/r12157cp.pdf.
In April 2024, CMS approved DefenCath[supreg] (taurolidine and
heparin sodium) for the TDAPA under the ESRD PPS, effective July 1,
2024. Implementation instructions are specified in CMS Transmittal
12628, dated May 9, 2024, and available at: https://www.cms.gov/files/document/r12628CP.pdf.
Table 12 identifies the two new renal dialysis drugs for which the
TDAPA payment period as specified in Sec. 413.234(c)(1) will continue
in CY 2025: Jesduvroq (daprodustat) that was approved for the TDAPA
effective in CY 2023 and DefenCath[supreg] (taurolidine and heparin
sodium) that was approved for the TDAPA effective in CY 2024. Table 12
also identifies the products' HCPCS coding information as well as the
payment adjustment effective dates and end dates.
[GRAPHIC] [TIFF OMITTED] TR12NO24.011
Comment: One commenter recommended that CMS monitor anemia outcomes
with hypoxia-inducible factor prolyl hydroxylase inhibitor (HIF-PHI)
versus erythropoiesis stimulating agent (ESA) therapy.
Response: We thank the commenter for the recommendation and note
that Jesduvroq (daprodustat) is a HIF-PHI.\78\ CMS engages in ongoing
monitoring and analysis of the ESRD PPS to identify trends in
beneficiary health outcomes. An overview of the ESRD PPS claims-based
monitoring program is provided on the CMS website.\79\ CMS will
continue the claims-based monitoring in CY 2025, inclusive of all drugs
approved for the TDAPA. CMS intends to monitor anemia and
cardiovascular outcomes among beneficiaries using Jesduvroq
(daprodustat) and ESAs.
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\78\ Jesduvroq Prescribing Information. Accessed October 10,
2024. Available at: https://gskpro.com/content/dam/global/hcpportal/en_US/Prescribing_Information/Jesdvroq/pdf/JESDUVROQ-PI-MG.PDF.
\79\ ESRD Prospective Payment System (ESRD PPS) Claims-Based
Monitoring Program-Overview of 2010-2022 Claims-Based Monitoring
Program. Accessed September 13, 2024. Available at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/esrdpayment/esrd-claims-based-monitoring.
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III. Final CY 2025 Payment for Renal Dialysis Services Furnished to
Individuals With 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. Public Comments and Responses on the Proposal To Allow Medicare
Payment for Home Dialysis for Beneficiaries With AKI
1. Background
In the CY 2017 ESRD PPS final rule, we indicated that we did not
expect beneficiaries with AKI to dialyze at
[[Page 89164]]
home; therefore, the home dialysis benefit was not extended to
beneficiaries with AKI (81 FR 77870). There were commenters who
advocated for beneficiaries to have the option to dialyze in a home
setting, particularly those beneficiaries who started peritoneal
dialysis (PD) in the hospital and desired to continue PD after
discharge. However, other commenters indicated that beneficiaries with
AKI needed close supervision during dialysis. Additionally, some
commenters indicated that dialysis for AKI is a short-term treatment,
and beneficiaries would not have time to learn to administer a home
therapy. Therefore, we finalized the AKI payment policy in the CY 2017
ESRD PPS final rule as proposed without extending the AKI benefit to
home dialysis beneficiaries. We indicated that we would gather data on
the AKI beneficiary population and the extent of home training
necessary to safely self-administer dialysis in the home, and that we
would consider the use of home dialysis for beneficiaries with AKI in
the future as we find that it may be beneficial for subsets of
beneficiaries.
In past years we have received comments regarding the site of renal
dialysis services for Medicare beneficiaries with AKI, with the most
recent comments received in response to the CY 2024 ESRD PPS proposed
rule to update to the AKI dialysis payment rate (88 FR 76433). We have
monitored data for beneficiaries with AKI and researched data in
journal articles discussing the potential to expand dialysis for
beneficiaries with AKI to a home setting, as noted in the CY 2017 ESRD
PPS final rule (81 FR 77871).
In the CY 2017 ESRD PPS final rule, we clarified that the ESRD
Facility CfCs apply to ESRD facilities, not to ESRD beneficiaries, and
noted that the ESRD facility CfCs would be the appropriate regulatory
location for standards addressing care provided to beneficiaries with
AKI in ESRD facilities. We finalized a policy that our CfCs would not
need to be revised to address the provision of dialysis treatment to
beneficiaries with AKI (81 FR 77871 through 77872).
In December 2020, CMS's data contractor held a TEP that considered
data related to utilization review and cost of AKI treatments since
2017. The TEP solicited input regarding how reported costs align with
realized costs of treatment for beneficiaries with AKI. During the TEP,
participants suggested that we extend Medicare payment for
beneficiaries with AKI to allow them to dialyze in a home setting.
Additionally, the TEP indicated that beneficiaries with AKI could
benefit from different treatment regimens. The TEP noted that more
frequent, gentler dialysis with a lower ultrafiltration rate would be a
viable option for some beneficiaries. Members of the panel commented on
the similar treatment frequencies observed for beneficiaries with AKI
and ESRD, stating that the payment system is currently constructed to
facilitate the standard treatment plan for beneficiaries with AKI.
Panelists recommended that the ESRD PPS should be flexible in terms of
number of treatments for beneficiaries with AKI, so that those who need
more frequent treatments are not impeded from receiving them. Panelists
related instances of hospitals starting a patient on PD, which can be
done frequently in the home setting, only to convert the patient to a
more standard treatment regimen such as three in-center hemodialysis
treatments per week before discharging the patient to a dialysis
facility. Panelists also advocated that we provide Medicare payment for
beneficiaries with AKI to be treated at home.
We solicited comments regarding potentially modifying the site of
renal dialysis services for beneficiaries with AKI and payment for AKI
in the home setting as a RFI in the CY 2022 ESRD PPS proposed rule (86
FR 36322, 36408). We received 16 comments from LDOs, patient advocacy
groups, professional organizations, small dialysis organization within
a large non-profit health system, and non-profit organizations. Most of
the comments favored providing a payment option for beneficiaries with
AKI to dialyze in a home setting; however, some commenters expressed
concerns about doing so. A small dialysis organization within a large
non-profit health system indicated that beneficiaries with AKI may have
chronic kidney disease at a lesser stage, such as, Stage 3 or Stage 4
chronic kidney disease (CKD) rather than ESRD; however, the AKI makes
dialysis necessary. This commenter noted that if the AKI were to cause
the beneficiary's underlying Stage 3 or Stage 4 CKD to progress to ESRD
in the future, training them to use a home modality during the AKI
episode could prepare the patient for a home modality if they are
diagnosed as having ESRD. One LDO indicated there is evidence that PD,
which is typically used in the home setting, is associated with better
preservation of residual kidney function compared to hemodialysis. A
national organization of beneficiaries and kidney health care
professionals advocated that PD may be learned quickly, reduces rapid
hemodynamic changes that may potentiate kidney injury and impede
recovery, and does not require a high-risk central venous catheter to
provide treatment. We note that these comments are specific to PD as a
treatment modality; however, when considering such a policy we would
include payment for both PD and hemodialysis (HD) in the home setting
for beneficiaries with AKI, consistent with our payment policy for home
dialysis for patients with ESRD.
Most recently, as noted in the CY 2024 ESRD PPS final rule (88 FR
76433), we received 10 public comments on our proposal to update the
payment rate for renal dialysis services furnished to individuals with
AKI. Commenters included a coalition of dialysis organizations, a non-
profit dialysis organization, a trade association, a renal product
development company, and multiple large dialysis organizations. Most of
the commenters requested that we allow payment for beneficiaries with
AKI to select home dialysis modalities by changing the current policy,
even though it was not proposed in the CY 2024 ESRD PPS proposed rule.
In the CY 2025 ESRD PPS proposed rule, we acknowledged there have
been concerns in the past regarding the safety of beneficiaries with
AKI dialyzing at home (89 FR 55806). However, we explained that we
carefully reviewed the totality of the information and evidence
presented to the agency and now recognize that current information
regarding beneficiaries with AKI dialyzing in a home setting supports
more frequent dialysis at a lower ultrafiltration rate. We stated that
the ability to dialyze at a lower ultrafiltration rate supports a
decrease in hemodynamic fluctuation and the complications associated
with it, which in turn support recovery of kidney function.
2. Technical Analysis
In the CY 2025 ESRD PPS proposed rule, we noted that although there
is only limited research regarding the use of home dialysis for the
treatment of AKI, several studies support the use of home dialysis to
generally improve access to dialysis and provide care that better meets
patient needs (89 FR 55806 through 55807). We noted that many of the
studies related to home dialysis in the AKI patient population use PD
as the treatment modality, which we explained is consistent with
comments received during the December 2020 TEP and comments received
during rulemaking as noted previously. Additionally, we stated that
data from the United States Renal Data System (USRDS) Annual Data
Report (ADR),
[[Page 89165]]
indicated the percentage of incident dialysis patients performing home
HD was only 0.4 percent in 2021, and a significant majority of dialysis
patients performing home dialysis chose PD.\80\ We stated that we
believe the choice of a home modality would be comparable in the
beneficiary population for those with AKI as those initiating chronic
maintenance dialysis for ESRD. However, we affirmed that payment would
be provided for either modality of home dialysis. For example, PD was
used frequently for patients during the COVID-19 PHE due to challenging
situations such as supply shortages, staffing shortages, and limited
surgical availability for the placement of a venous access. In the
proposed rule, we noted that a multicenter, retrospective,
observational study of 94 patients who received acute PD in New York
City in the spring of 2020 indicated that rapid deployment of acute PD
was feasible. We stated that the rates of death and renal recovery were
like those of patients with AKI requiring kidney replacement therapy
(KRT) in other cohorts. Of those who were discharged on dialysis, four
were discharged on PD, and one was discharged on HD.\81\
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\80\ Annual Data Report [verbar] USRDS (nih.gov), https://usrds-adr.niddk.nih.gov/2023/end-stage-renal-disease/2-home-dialysis.
\81\ https://www.sciencedirect.com/science/article/pii/S0085253821004567.
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We further noted that the International Society for Peritoneal
Dialysis (ISPD) reiterated in the 2020 guidelines, updated from the
2014 guidelines for PD in AKI, that PD should be considered a suitable
modality for treatment of AKI in all settings. This was a strong
recommendation from the ISPD based on evidence rated at the second
highest level used by ISPD.\82\ Researchers found little to no
difference between PD and hemodialysis in all-cause mortality, recovery
of kidney function, or infection as a complication.\83\ We noted that
this finding was augmented by an article that reviewed the resurgence
of PD for the treatment of AKI since the COVID-19 PHE. The article
listed cost effectiveness, low infrastructure requirements, ease of
staff training, and more rapid recovery of renal function as benefits
to the use of PD to treat AKI. We identified a survey of nephrologists
from three international conferences which reported that 50.8 percent
and 36.4 percent of respondents stated that PD was suitable for
treating AKI in the wards and ICU, respectively. We found that PD is
the predominant therapy used to treat pediatric patients with AKI, and
until the mid to late 1990s was the predominant therapy to treat adults
with AKI, but the use of this therapy has waned since the advent of
pump driven continuous kidney replacement therapy.\84\
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\82\ https://journals.sagepub.com/doi/10.1177/0896860820970834.
\83\ https://pubmed.ncbi.nlm.nih.gov/29199769/.
\84\ https://academic.oup.com/ckj/article/16/2/210/6696026.
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We noted that most studies regarding recovery of kidney function in
patients with AKI were based around hospitalized patients. We further
noted that there were very limited studies suggesting that self-care
dialysis can yield faster recovery of kidney function; however, the
results were not conclusive.\85\ We identified that one study of
hospitalized patients with AKI indicated that a median of 10 patients
recovered kidney function more quickly utilizing PD.\86\ We noticed
another study of hospitalized patients with AKI that indicated that
while the recovery of kidney function was similar in PD and HD (28 and
26 percent) there was a significantly shorter time to the recovery of
kidney function for patients with AKI that utilized PD.\87\
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\85\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4594060/.
\86\ https://onlinelibrary.wiley.com/doi/pdfdirect/10.1111/1744-9987.12660.
\87\ https://www.sciencedirect.com/science/article/pii/S0085253815528664.
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We identified additional information from CMS AKI monitoring data,
in which we found that current provision of AKI dialysis is very
similar to the provision of ESRD dialysis. Data noted in the 2021
Quarter 4 public use file (PUF) \88\ for AKI showed that hemoglobin for
beneficiaries with ESRD averaged 10.6 gm/dL while the average
hemoglobin for beneficiaries with AKI averaged 9 gm/dL. Although the
data further suggested that beneficiaries with AKI were less likely to
be prescribed an ESA than patients with ESRD, we identified research
that indicated that patients using PD have a lower rate of anemia that
those using HD. Additionally, patients receiving PD require lower doses
of ESAs and iron than patients receiving HD.\89\ We observed that this
might indicate that dialyzing in a home environment could be effective
to manage anemia in beneficiaries with AKI more appropriately, as the
USRDS ADR indicated incident patients with ESRD typically choose PD as
a home modality over home HD.\90\ We stated that we believed that
beneficiaries with AKI would make similar choices. Furthermore, the AKI
PUF data showed that approximately 8 percent of beneficiaries with ESRD
experienced incidences of fluid overload, while beneficiaries with AKI
experienced episodes for which congestive heart failure was reported
within 30, 60, and 90 days (which can be related to fluid overload) at
rates of around 42 percent, 50 percent, and 53 percent,
respectively.\91\ This data was concerning because fluid overload in
beneficiaries with AKI can be detrimental to recovering kidney
function. Additionally, this data supported conclusions drawn from an
article involving the review of 1754 patients with AKI requiring
dialysis. The article indicated that treatment protocols for patients
with AKI were like those of incident ESRD patients despite the
underlying differences in treatment goals. The article further
indicated that most patients with AKI who recovered had discontinued
dialysis without ever having been weaned from their initial dialysis
prescription, suggesting there may be substantial opportunity to wean
dialysis sooner.\92\ We continue to support the significant need to
individualize the treatment of every kidney patient, but particularly
beneficiaries with AKI, as this omission could result in a missed
opportunity to recover kidney function.
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\88\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-prospective-payment-system-esrd-pps-overview-claims-based-monitoring-program.
\89\ https://academic.oup.com/ckj/article/16/12/2493/7210548.
\90\ Annual Data Report [verbar] USRDS (nih.gov), https://usrds-adr.niddk.nih.gov/2023/end-stage-renal-disease/2-home-dialysis.
\91\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-prospective-payment-system-esrd-pps-overview-claims-based-monitoring-program.
\92\ https://journals.lww.com/jasn/abstract/2023/12000/initial_management_and_potential_opportunities_to.9.aspx.
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We stated that we believed the proposal to provide payment for
beneficiaries with AKI to dialyze in a home setting aligns closely with
the CMS Strategic Pillars \93\ of expanding access, engaging the ESRD
community by being responsive to TEPs and RFIs, and driving innovation
to promote patient centered care. We did not have utilization data for
beneficiaries with AKI using a home modality available, but we used the
USRDS ADR, which indicated that disparities currently exist for self-
care dialysis in the home setting for the ESRD beneficiary population,
with fewer African American/Black and Hispanic beneficiaries choosing a
home dialysis modality. Additionally, fewer Medicare and Medicaid dual
eligible
[[Page 89166]]
beneficiaries choose a home dialysis modality.\94\ We noted that the
ability for beneficiaries with AKI to choose self-care dialysis in a
home setting would offer a pathway to reduce these current disparities
(insofar as the AKI population mirrors the ESRD beneficiary population)
by promoting access to treatment, as well as removing a disparity in
care between AKI beneficiaries and ESRD beneficiaries. We continue to
believe it is crucial that the policy revisions to payment for AKI
renal dialysis consider health equity and the effects on underserved
populations. We identified that the rate of AKI was about 81 percent
higher among African American/Black beneficiaries than among White
beneficiaries.\95\ We noted that we had reviewed comments and concerns
from interested parties and agreed that home dialysis could benefit
beneficiaries with AKI. We noted that issues with fluid management
could be managed with more frequent, gentler modalities, such as PD. We
stated that we trusted that providing an avenue to expand treatment
modalities would encourage individualized and patient-centered
treatment plans for beneficiaries with AKI, for example, addressing
anemia and ESA management. We will continue to monitor outcomes for
beneficiaries with AKI with the expectation that AKI PUF are being
reviewed in quality improvement efforts by ESRD facilities that provide
services to beneficiaries with AKI.
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\93\ https://www.cms.gov/about-cms/what-we-do/cms-strategic-plan.
\94\ https://usrds-adr.niddk.nih.gov/2023/end-stage-renal-disease/2-home-dialysis.
\95\ Annual Data Report [verbar] USRDS (nih.gov), https://usrds-adr.niddk.nih.gov/2023/chronic-kidney-disease/4-acute-kidney-injury.
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3. Home Dialysis Benefit for Beneficiaries With AKI
As we explained in the CY 2025 ESRD PPS proposed rule (89 FR
55806), we did not extend the home dialysis benefit to beneficiaries
with AKI when we initially implemented the benefit (81 FR 77870).
However, as discussed in the proposed rule (89 FR 55806 and 55807), we
reviewed AKI monitoring data that showed the outcomes for anemia, ESA
use, and fluid management are not necessarily reflective of the
specific, individualized care, and close supervision by qualified staff
currently required during the in-center dialysis process. We further
noted that research demonstrated the use of PD correlated with positive
outcomes for fluid management and a lower rate of anemia with less
utilization of ESAs and iron. In the proposed rule we indicated that
research related to home dialysis in the AKI patient population has
primarily discussed results using PD as the modality; however, we would
provide payment for either PD or HD as a home modality. We noted our
goal was for beneficiaries with AKI to receive the necessary care to
improve their condition, recover kidney function, and be weaned from
dialysis treatment. We also noted that the literature exhibits a high
correlation between the use of PD treatment for beneficiaries with AKI
and positive outcomes for fluid management, infection rates, mortality,
and recovery of kidney function.\96\ Additionally, we reviewed research
that demonstrated that the use of PD to manage the care of
beneficiaries with AKI as a result of COVID-19 was successful and that
beneficiaries who had successfully begun a treatment regime that could
transition from the hospital to a home modality should not have to
change treatment to an in-center treatment modality.
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\96\ https://pubmed.ncbi.nlm.nih.gov/29199769/.
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We proposed, based on the current research we cited (89 FR 55806
through 55807), to extend the home dialysis benefit as defined at 42
CFR 410.52 to beneficiaries with AKI for either PD or HD. As discussed
in section III.C.1 of this final rule, we proposed that the payment
amount for home dialysis for AKI beneficiaries would be the same as the
payment amount for in-center dialysis for AKI beneficiaries, consistent
with payment parity within the ESRD PPS. This payment amount would be
the ESRD PPS base rate, adjusted for geographic area, as described in
section III.C.2 of this final rule. Additionally, as discussed in
section III.C.3 of this final rule, we proposed to extend the training
add-on payment adjustment for home and self-dialysis training in the
same amount as for patients with ESRD, on a budget neutral basis. We
proposed to revise Sec. 413.373, which currently states ``The payment
rate for AKI dialysis may be adjusted by the Secretary (on a budget
neutral basis for payments under section 1834(r)) by any other
adjustment factor under subparagraph (D) of section 1881(b)(14) of the
Act,'' by adding paragraph (a) before ``The payment rate'' that reads
``CMS applies the wage-adjusted add-on per treatment adjustment for
home and self-dialysis training as set forth at Sec. 413.235(c) to
payments for AKI dialysis claims that include such training.'' We
proposed to move the current language to paragraph (b) with a technical
revision to add ``of the Act'' after ``section 1834(r)''. Furthermore,
as discussed in section III.D of this final rule, we proposed changes
to the ESRD facility CfCs that would accommodate the provision of home
dialysis for beneficiaries with AKI and help ensure safe and high-
quality care for Medicare beneficiaries in this setting.
We proposed to amend Sec. 410.52 to provide Medicare payment for
the treatment of patients with AKI in the home setting. We proposed to
revise Sec. 410.52 to read ``Medicare Part B pays for the following
services, supplies, and equipment furnished to a patient with ESRD or
an individual with Acute Kidney Injury (AKI) as defined in Sec.
413.371 of this chapter in his or her home:'' by striking the words
``an ESRD patient'' after ``to'' and adding the words ``a patient with
ESRD or an individual with Acute Kidney Injury (AKI) as defined in
Sec. 413.371 of this chapter'' after ``to''. We also proposed to
revise Sec. 413.374(a) to read: ``The AKI dialysis payment rate
applies to renal dialysis services (as defined in subparagraph (B) of
section 1881(b)(14) of the Act) furnished under Part B by a renal
dialysis facility or provider of services paid under section
1881(b)(14) of the Act, including home services, supplies, and
equipment, and self-dialysis.''
We invited public comment on our proposal for extending the home
dialysis benefit to beneficiaries with AKI. Approximately 27 commenters
including LDOs; regional health systems; a home dialysis services
provider; a coalition of dialysis organizations; a provider advocacy
organization; a non-profit dialysis association; an advocacy group for
people living with a serious illness; a non-profit organization of ESRD
networks; a non-profit organization for environmental health and
justice; a professional organization of pediatric nephrologists; a
professional organization of nephrologists; a home dialysis stakeholder
alliance; a national organization of patients and kidney health care
professionals; a hospital association; a non-profit kidney care
alliance; a non-profit kidney organization; device manufacturers; a
patient-led dialysis organization; and ESRD patients commented on the
proposed regulation. The following is a summary of the public comments
received on these proposals and our responses.
Comment: Many commenters were overwhelmingly in favor of the
proposal to extend the home dialysis benefit to beneficiaries with AKI.
The commenters agreed that while evidence is limited, experience from
the COVID-19 PHE supports modifying payment policy to ensure home
modalities would be available for appropriate patients with AKI. A
patient with ESRD spoke to the
[[Page 89167]]
importance the proposal would have in empowering beneficiaries, in
reducing their travel burden, and in enhancing their general quality-
of-life. A LDO expressed they were ``excited,'' and a home dialysis
services provider expressed their ``enthusiastic support'' for the
proposed policy change. Some commenters indicated that the proposal is
an important step forward in mitigating health disparities.
Additionally, some commenters expressed that providing patients with
AKI access to home modalities, particularly PD, could support recovery
of kidney function because of positive clinical outcomes. A few
commenters spoke about the quality-of-life benefits and the positive
move toward patient-centered care the proposal could generate. One
commenter agreed that there are safety concerns surrounding home
dialysis for beneficiaries with AKI, but that these can be mitigated
with appropriate training. Finally, some commenters indicated that
training beneficiaries with AKI for a home dialysis modality could be
beneficial if the beneficiary did not recover kidney function and
progressed to having ESRD.
Response: CMS appreciates the support from commenters for the
proposal to extend the home dialysis benefit with appropriate training
to beneficiaries with AKI. We agree with commenters that extending the
home dialysis benefit with appropriate training to beneficiaries with
AKI could advance positive outcomes for beneficiaries who choose a home
dialysis modality.
Comment: A hospital association expressed confusion about the
frequency of care received by chronic maintenance home dialysis
patients and by extension the frequency of care a patient with AKI
could receive in the home setting. Additionally, the same commenter
indicated concern that the proposed rule does not include treatment of
transplant patients with late graft recovery in the AKI definition.
Response: A beneficiary with AKI and their health care provider
would still determine the best frequency of care. CMS would provide
payment for home dialysis treatments furnished to AKI beneficiaries at
the ESRD PPS base rate determined for the year under section
1881(b)(14) of the Act, as statutorily required at section 1834(r)(1)
of the Act. In the CY 2011 ESRD PPS final rule CMS explained that home
dialysis treatments are paid the same rate as in-center treatments (75
FR 49058). Additionally, CY 2011 ESRD final rule provided an
explanation that a week of home dialysis is converted into three
equivalent in-center HD treatments. In the CY 2017 ESRD PPS final rule
we stated that there is no weekly limit on the number of dialysis
treatments that will be paid for beneficiaries with AKI (81 FR 77867).
AKI is defined statutorily at section 1834(r)(2) of the Act. CMS cannot
change the definition of AKI to include beneficiaries who have had a
kidney transplant that experience late graft recovery. Beneficiaries
that have had a transplant are still covered under the ESRD benefit for
three years post-transplant. Therefore, the beneficiary that had a
transplant could dialyze in an outpatient ESRD facility under the ESRD
benefit.
Comment: One commenter questioned how to use CPT codes such as
90945 (Dialysis procedure other than hemodialysis) and 90947 (Dialysis
procedure other than hemodialysis requiring repeated evaluations by a
physician or other qualified health care professional, with or without
substantial revisions of dialysis prescription) when billing for home
dialysis rather than in-center.
Response: We refer the commenter to the Medicare Claims Processing
Manual Chapter 8 Sec. 170, which indicates that codes 90935, 90937,
90945, or 90947 are only used if the place of service on the claim is
an inpatient hospital. This is because all physicians' outpatient
renal-related services are included in payment made under the monthly
capitation payment.\97\
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\97\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c08.pdf.
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Final Rule Action: After consideration of the comments received, we
are finalizing our proposal to extend the home dialysis benefit to
beneficiaries with AKI, as proposed. Accordingly, we are finalizing our
proposal to revise Sec. 410.52 to read: ``Medicare Part B pays for the
following services, supplies, and equipment furnished to a patient with
ESRD or an individual with Acute Kidney Injury (AKI) as defined in
Sec. 413.371 of this chapter in his or her home.'' We are also
finalizing our proposal to revise Sec. 413.374(a) to read: ``The AKI
dialysis payment rate applies to renal dialysis services (as defined in
subparagraph (B) of section 1881(b)(14) of the Act) furnished under
Part B by a renal dialysis facility or provider of services paid under
section 1881(b)(14) of the Act, including home services, supplies, and
equipment, and self-dialysis.''
C. Annual Payment Rate Update for CY 2025
1. CY 2025 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
could bill Medicare for non-renal dialysis items and services and
receive separate payment in addition to the payment rate for AKI
dialysis. As discussed in section II.B.4 of this final rule, the final
ESRD PPS base rate is $273.82, which reflects the application of the CY
2025 wage index budget-neutrality adjustment factor of 0.988600 and the
CY 2025 ESRDB market basket percentage increase of 2.7 percent reduced
by the productivity adjustment of 0.5 percentage point, that is, 2.2
percent. Accordingly, we are finalizing a CY 2025 per treatment payment
rate of $273.82 (($271.02 x 0. 988600) x 1.022 = $273.82) for renal
dialysis services furnished by ESRD facilities to individuals with AKI.
Additionally, we have applied a $0.00 budget neutrality adjustment to
the AKI per treatment base rate as discussed in section III.C.3 of this
final rule to address the training add-on payment adjustment for home
dialysis modalities in the AKI beneficiary population. We did not
receive specific comments related to the CY 2025 AKI dialysis payment
rate. We discuss general comments on the ESRD PPS base rate in section
II.B.4 of this final rule, and we discuss comments related to the
budget neutrality reduction to the AKI payment rate to account for the
training add-on payment adjustment in section III.C.3 of this final
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. As discussed
in section II.B.2.b of this final rule, we are finalizing a new ESRD
PPS wage index methodology, which utilizes BLS OEWS
[[Page 89168]]
data and freestanding ESRD facility cost report data. We proposed to
use this same methodology when adjusting AKI dialysis payments to ESRD
facilities, consistent with our historical practice of using the ESRD
PPS wage index for AKI dialysis payments. 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. ESRD facilities would utilize the
same staff to provide renal dialysis services to and educate
beneficiaries with AKI as those beneficiaries with ESRD. Therefore,
utilizing the same wage index methodology would be appropriate in
accordance with Sec. 413.372, which addresses the payment rate for AKI
dialysis and refers to Sec. 413.231 for the wage adjustment. As stated
previously, we are finalizing a CY 2025 AKI dialysis payment rate of
$273.82, adjusted by the ESRD facility's wage index. We did not receive
specific comments related to the CY 2025 AKI geographic adjustment
factor. We discuss general comments related to the new ESRD PPS wage
index methodology in section II.B.2 of this final rule.
3. Other Adjustments to the AKI Payment Rate
Section 1834(r)(1) of the Act also provides that the payment rate
for AKI dialysis may be adjusted by the Secretary (on a budget neutral
basis for payments under section 1834(r)) by any other adjustment
factor under subparagraph (D) of section 1881(b)(14) of the Act. As
discussed in the previous section of this final rule, we proposed to
extend AKI dialysis payment to home dialysis.
As we explained in the CY 2025 ESRD PPS proposed rule (89 FR
55807), we considered our existing payment policies for home dialysis
for beneficiaries with ESRD in implementing payment for home dialysis
in the AKI patient population. In the CY 2011 ESRD PPS final rule, we
explained that although we included payments for providing training to
beneficiaries in computing the ESRD PPS base rate, we agreed with
commenters that we should pay for home dialysis training as a training
add-on payment adjustment under the ESRD PPS to account for the cost of
providing training to beneficiaries on the use of home dialysis
modalities. Thus, we finalized the home dialysis training add-on
payment adjustment of $33.44 per treatment as an additional payment
made under the ESRD PPS when one-on-one home dialysis training is
furnished by a nurse for either hemodialysis or peritoneal dialysis
training and retraining (75 FR 49063). We clarified our policy on
payment for home dialysis training again in the CY 2013 ESRD PPS final
rule, in which we stated that training costs are included in the ESRD
PPS base rate; however, we also provide a training add-on payment
adjustment for each home and self-dialysis training treatment furnished
by a Medicare-certified home dialysis training facility (77 FR 67468).
We explained in the CY 2017 ESRD PPS final rule that it is not the
intent of the training add-on payment adjustment to reimburse a
facility for all of the training costs furnished during training
treatments. Rather, the single ESRD PPS base rate, all applicable case-
mix and facility-level adjustments, as well as the add-on payment
should be considered the Medicare payment for each training treatment
and not the training add-on payment alone (81 FR 77854).
In the CY 2025 ESRD PPS proposed rule we considered making payment
for home dialysis for beneficiaries with AKI under the ESRD PPS base
rate without a training add-on payment adjustment for home modality
training (89 FR 55807). As we noted in section III.A. of the final
rule, the ESRD PPS base rate upon which the AKI dialysis payment rate
is established contains monies for training related costs. However, we
stated in the proposed rule (89 FR 55809) that we are concerned that
not providing a home and self-dialysis training add-on payment
adjustment for AKI dialysis may limit access to home dialysis care for
the AKI beneficiary population. As previously noted, incorporation of
an adjustment factor under subparagraph (D) of section 1881(b)(14) of
the Act into AKI dialysis payments must be done on a budget neutral
basis for payments under section 1834(r) of the Act. Therefore, we
stated that establishing a training add-on payment adjustment for
training for home and self-care dialysis could have an impact on the
AKI base rate.
As discussed in the proposed rule, we reviewed options for applying
budget neutrality to a home and self-dialysis training add-on payment
adjustment for beneficiaries with AKI. We considered applying a budget
neutrality adjustment factor by reducing the AKI dialysis payment rate
amount (which is based on the ESRD PPS base rate and is then adjusted
for wages according to Sec. 413.372) for renal dialysis services
provided to patients with AKI to account for the training add-on
payment adjustment. We provided an example for a potential calculation
based on ESRD PPS data in the proposed rule (89 FR 55809).
Additionally, we noted our concern that a decrease in the AKI dialysis
payment rate to account for the home dialysis training add-on payment
adjustment might create a disincentive for ESRD facilities to treat
beneficiaries with AKI. We welcomed comments regarding budget
neutralizing the home dialysis training add-on payment adjustment and
solicited comments on other venues where beneficiaries might receive
training for a home dialysis modality (89 FR 55809).
We proposed, in accordance with section 1834(r)(1) of the Act and
Sec. 413.373, to extend the home and self-dialysis training add-on
payment adjustment under Sec. 413.235(c) to payments for renal
dialysis services provided to beneficiaries with AKI using a home
modality. We proposed to make payment for a home and self-dialysis
training add-on payment adjustment at the same amount currently
applicable under the ESRD PPS of $95.60 with a limit of 15 training
treatments for PD and a limit of 25 training treatments for HD per
patient excluding retraining sessions (75 FR 49063). Additional
information regarding the maximum number of training treatments for
which CMS provides payment under the ESRD PPS is located in the
Medicare Claims Processing Manual.\98\ We requested data, either actual
or estimated, regarding the number of training sessions provided to
beneficiaries with AKI and the number of beneficiaries with AKI using a
home modality (89 FR 55809) to use this information to make a
determination on a training add-on payment adjustment in the CY 2025
ESRD PPS final rule or in future rulemaking for subsequent years.
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\98\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c08.pdf.
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We invited public comment on our proposal for a payment adjustment
for training of beneficiaries with AKI that elect to dialyze in a home
setting. Approximately 27 commenters including LDOs; a coalition of
dialysis organizations; a regional health system; a provider advocacy
organization; a non-profit dialysis association; and a
[[Page 89169]]
home dialysis stakeholder alliance commented on the proposed payment
adjustment for training of beneficiaries with AKI that elect to dialyze
in a home setting. The following is a summary of the public comments
received on these proposals and our responses.
Comment: Several commenters stated concerns regarding budget
neutrality. The commenters indicated that they believe the home
dialysis training add-on payment adjustment was previously budget
neutralized in the ESRD PPS CY 2017 final rule. Additionally, they
stated that they believe ESRD facilities that have provided services to
beneficiaries with AKI have been underpaid since the budget
neutralization in the CY 2017 ESRD PPS final rule. A few of the
commenters indicated that beneficiaries with AKI that progressed to
ESRD would already have received training for home dialysis and would
not need to receive training as a beneficiary with ESRD. They believed
this satisfied the budget neutrality requirement. Additionally, some
commenters urged that CMS delay implementation of budget neutrality for
these training add-on payment adjustments for AKI beneficiaries until
sufficient data was collected on home utilization in the AKI
beneficiary population.
Response: We appreciate the concerns of commenters that believe the
training add-on payment adjustment was previously budget neutralized
and therefore budget neutrality should not be a factor in this rule. We
find that interpretation to be inconsistent with the statute because it
would result in increased total AKI payments for CY 2025 relative to
what they would be if CMS did not incorporate the training add-on
payment adjustment. CMS rejected this premise in the ESRD PPS CY 2017
final rule where we indicated we interpret the payment rate for AKI to
be the finalized base payment rate for ESRD, as the statute was clear
that the payment rate for AKI dialysis must be the ESRD PPS base rate
determined for a year under section 1881(b)(14) of the Act (81 FR
77867). CMS is compelled by section 1834(r)(1) of the Act to apply
budget neutrality to the AKI payment to maintain total payments under
section 1834(r) of the Act when incorporating an adjustment factor
under subparagraph (D) of section 1881(b)(14) of the Act.
CMS appreciates the commenters that expressed that training
beneficiaries with AKI for home dialysis would offset the training for
the beneficiaries who progress to ESRD. However, the beneficiaries who
progress to ESRD would be eligible for the onset add-on payment
adjustment, since both the training add-on payment adjustment and onset
add-on payment adjustment cannot be applied at the same time (75 FR
49063). Furthermore, we would not rule out that some beneficiaries with
AKI might require retraining after their disease progresses to ESRD. We
do not believe that training beneficiaries to perform self-dialysis
would create budget neutrality if their disease should progress to
ESRD. Additionally, we appreciate the commenter who suggested that
budget neutrality be delayed until sufficient data was collected.
However, this would not be consistent with our general interpretation
of statutes requiring budget neutrality, such as section 1834(r)(1) of
the Act, as payments would increase for CY 2025. Generally, when we
implement policies within the ESRD PPS budget neutrally, we do so based
on estimates for the rulemaking year rather than retrospectively, and
we do not adjust such adjustment post-hoc. For example, when we
implemented the LVPA in CY 2011 we applied a budget-neutrality
adjustment factor to the CY 2011 ESRD PPS base rate which accounted for
all budget-neutral payment adjustments, including the LVPA, by holding
total estimated payments for CY 2011 constant (75 FR 49194). Because
this downward adjustment to the CY 2011 ESRD PPS base rate carried
forward into future years (in which the base rate is only increased by
the applicable annual market basket increase), it continues to offset
the spending associated with those budget-neutral payment adjustments
in future years as well.
Comment: Several commenters expressed concern that CMS had over-
estimated the utilization of home modalities in the AKI beneficiary
population. These commenters believe that providers and patients would
need time to receive education about beneficiaries with AKI receiving
dialysis in a home setting and that growth would be slow. These
commenters believe that because of the over-estimation of utilization
there is the potential to disincentivize ESRD facilities from providing
services to beneficiaries with AKI. Additionally, some of the
commenters indicated that CMS had over-estimated the number of training
sessions that would be required for beneficiaries with AKI to
successfully manage a home modality. These commenters indicated that
initial training for a home dialysis modality may be provided while the
beneficiary is hospitalized. They indicated that beneficiaries with AKI
would likely only require 5 to 6 training sessions to successfully
manage a home dialysis modality.
Response: We appreciate the commenters that provided information
regarding CMS's estimation of utilization in the CY 2025 ESRD PPS
proposed rule (89 FR 55809). We agree with commenters that the majority
of beneficiaries with AKI who choose a home dialysis modality likely
will be those that transition from the hospital utilizing PD as their
home treatment modality. Additionally, we agree that utilization of
home modalities for beneficiaries with AKI will be dependent on
education to providers and patients. We have reviewed the available
data considering these comments and have made revisions to the
calculation for budget neutrality. After considering the comments on
the use of PD for AKI, we have determined that it would be more
reasonable to estimate utilization for home AKI based on in-center PD
utilization. We found that from 2017 through 2023, there were 10
beneficiaries with AKI that received PD in-center. For the calculation
of budget neutrality, this is approximately 2 beneficiaries with AKI
per year receiving PD. As we agree with commenters that beneficiaries
with AKI likely will receive partial training in the hospital to manage
the home dialysis modality, we will estimate 6 training treatments for
beneficiaries with AKI transitioning to a home modality. Lastly, as the
training add-on payment adjustment would be adjusted by the wage index
for the ESRD facility furnishing the training, we will multiply the
training add-on payment adjustment amount of $95.60 by the average wage
index for AKI, which is 1.0204. Using this data, we could estimate a
cost of training to be $1170.60 (2 x 6 x $95.60 x 1.0204) or $0.0042.
($1170.60/279,000) per AKI treatment. Since the per treatment budget
neutrality estimate would round to $0.00, we believe that applying this
amount of reduction to the AKI base payment will be negligible. While
budget neutrality was applied to the AKI base rate for home training
for beneficiaries with AKI, we note that the actual amount of the
reduction to the AKI payment per treatment rounds to $0.00, and
therefore the AKI CY 2025 base rate would be $273.82 ($273.82 - $0.00)
using this estimate. We plan to monitor data related to AKI including
the uptake of home dialysis. We may revisit the calculation for budget
neutrality as appropriate in the future.
Comment: One commenter suggested that training within a nursing
facility should be paid only if the patient was
[[Page 89170]]
transitioning to home dialysis outside of the nursing facility.
Response: We note the commenter addressed concerns regarding
training of beneficiaries with AKI in nursing facilities. CMS addressed
this in the ESRD PPS CY 2011 final rule. Nursing caregivers at nursing
facilities are not paid through the ESRD PPS (75 FR 49057). Therefore,
training provided by nursing caregivers at nursing facilities would not
be paid through the ESRD PPS. A nursing home resident that is
independently performing home dialysis treatments would be eligible for
a training add-on adjustment if there is the expectation the
beneficiary can successfully complete the training and perform self-
dialysis.
Final Rule Action: We are finalizing our proposal to extend a
payment adjustment for training of beneficiaries with AKI that elect to
dialyze in a home setting, beginning January 1, 2025. Specifically, we
are finalizing our proposal to provide a payment for home dialysis
training and home dialysis modalities for beneficiaries with AKI, with
certain changes to the proposed methodology for calculating budget
neutrality. As discussed previously, we are finalizing the requirement
for a per-treatment budget neutrality reduction of $0.00 ($1146.84/
279,000) which would be applied to the AKI base payment rate. We are
codifying this requirement in regulation at Sec. 413.373. As discussed
in section III.C.3. of this final rule, we are finalizing the addition
of a wage-adjusted training add-on payment adjustment per treatment for
home and self-dialysis training as set forth at Sec. 413.235(c) to
payments for AKI dialysis claims. Furthermore, we are codifying in
regulation at Sec. 410.52, as discussed in section III.C.3. of this
final rule, to provide Medicare payment for the treatment of patients
with AKI in the home setting.
D. AKI and the ESRD Facility Conditions for Coverage
1. Statutory and Regulatory Background
ESRD is a kidney impairment that is irreversible and permanent.
Dialysis is a process for cleaning the blood and removing excess fluid
artificially with special equipment when the kidneys have failed.
People with ESRD require either a regular course of dialysis or kidney
transplantation to live. Given the high costs and absolute necessity of
transplantation or dialysis for people with failed kidneys, Medicare
provides health care coverage to qualifying individuals diagnosed with
ESRD, regardless of age, including coverage for kidney transplantation,
maintenance dialysis, and other health care needs. Acute kidney injury
(AKI) is different than ESRD; it is an acute decrease in kidney
function due to kidney damage or kidney failure that may require
dialysis. Unlike people with ESRD, most individuals with AKI who
require dialysis are expected to regain kidney function within three
months. People with either ESRD or AKI can receive outpatient dialysis
services from Medicare-certified ESRD facilities, also called dialysis
facilities.
The Medicare ESRD program became effective July 1, 1973, and
initially operated under interim regulations published in the Federal
Register on June 29, 1973 (38 FR 17210). In the July 1, 1975, Federal
Register (40 FR 27782), we published a proposed rule that proposed to
revise sections of the ESRD requirements. On June 3, 1976, the final
rule was published in the Federal Register (41 FR 22501). Subsequently,
the ESRD Amendments of 1978 (Pub. L. 95-292), amended title XVIII of
the Social Security Act (the Act) by adding section 1881. Sections
1881(b)(1) and 1881(f)(7) of the Act further authorize the Secretary to
prescribe health and safety requirements (known as conditions for
coverage or CfCs) that a facility providing dialysis and
transplantation services to dialysis patients must meet to qualify for
Medicare payment. In addition, section 1881(c) of the Act establishes
ESRD Network areas and Network organizations to assure that dialysis
patients are provided appropriate care. The ESRD facility CfCs were
first adopted in 1976 and comprehensively revised in 2008 (73 FR
20369). 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.
Medicare pays for routine maintenance dialysis provided by
Medicare-certified ESRD facilities, also known as dialysis facilities.
To gain certification, the State survey agency or CMS-approved
accrediting organization performs an on-site survey of the facility to
determine if it meets the ESRD facility CfCs at 42 CFR part 494. If a
survey indicates that a facility is in compliance with the conditions,
and all other Federal requirements are met, CMS then certifies the
facility as qualifying for Medicare payment. Medicare payment for
outpatient maintenance dialysis is limited to facilities meeting these
conditions. As of March 2024, there are approximately 7,700 Medicare-
certified dialysis facilities in the United States,\99\ providing
dialysis services and specialized care to people with ESRD; 3,700 of
which provide home dialysis services, including training and
support.\100\
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\99\ https://qcor.cms.gov/active_nh.jsp?which=7&report=active_nh.jsp.
\100\ https://qcor.cms.gov/active_nh.jsp?which=7&report=active_nh.jsp.
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The ESRD facility CfCs found at 42 CFR part 494, consist of the
health and safety standards that all Medicare participating dialysis
facilities must meet. These standards set baseline requirements for
patient safety, infection control, care planning, staff qualifications,
record keeping, and other matters to ensure that all patients with
kidney failure receive safe and appropriate care. In addition, the CfCs
require patients to be informed about all treatment modalities
(hemodialysis or peritoneal dialysis) and settings (home dialysis
modalities or in-facility hemodialysis) (Sec. 494.70(a)(7)). A
dialysis facility that is certified to provide services to home
patients must ensure that home dialysis services are at least
equivalent to those provided to in-facility patients and meet all
applicable conditions of Sec. 494.100. The patient's interdisciplinary
team must oversee training of the home dialysis patient, the designated
caregiver, or self-dialysis patient before the initiation of home
dialysis or self-dialysis (as defined in Sec. 494.10). Dialysis
facilities monitor home dialysis by documenting adequate comprehension
of the training; retrieving and reviewing complete self-monitoring data
and other information at least every two months; and
[[Page 89171]]
maintaining this information in the patient's medical record.
In the CY 2017 ESRD PPS final rule (81 FR 77834), we clarified that
ESRD facility CfCs apply to ESRD facilities, not to people with ESRD,
and noted that the ESRD facility CfCs would be the appropriate
regulatory location for standards addressing care provided to
beneficiaries with AKI in ESRD facilities. While the language of the
ESRD facility CfCs does not directly address treatment of beneficiaries
with AKI, we believe that the current ESRD facility requirements are
sufficient to ensure that such patients are dialyzed safely. For
example, infection control protocols are the same for any individual
receiving hemodialysis, regardless of the cause or likely trajectory of
their kidney disfunction. For the areas in which care and care planning
may differ, such as frequency of certain patient assessments, we note
that the CfCs set baseline standards and do not limit additional or
more frequent services that may be necessary for beneficiaries with AKI
receiving temporary dialysis as they recover kidney function.
During the development of the CY 2017 ESRD PPS final rule, we did
not anticipate that beneficiaries with AKI would be candidates for home
dialysis due to the likely short-term duration of treatment and the
unique needs of AKI. Therefore, we did not propose to extend the home
dialysis benefit to beneficiaries with AKI at that time (81 FR 77870).
The initial concerns about the appropriateness of dialysis at home for
individuals with AKI have been allayed by the existing scientific
evidence of the effectiveness of that modality in this population. By
revising the CfCs to facilitate beneficiaries with AKI utilizing home
dialysis, we would increase patient options for renal replacement
treatment beyond in-center hemodialysis and better empower these
patients to make decisions about their care. We encourage readers to
refer to the CY 2025 ESRD PPS proposed rule for this detailed
discussion (CMS-1805-P).
2. Provisions of the Proposed Regulations and Analysis and Response to
Public Comments
In response to the proposed rule, we received 22 comments
pertaining to the expansion of home dialysis for AKI patients, with 6
comments specifically mentioning the conforming changes to the CfCs.
Commenters included patient care organizations, dialysis facilities,
and individual patients. To support treatment location choices for
individuals with AKI requiring dialysis and to align with the coverage
changes, we proposed conforming changes throughout the ESRD facility
CfCs at 42 CFR part 494. We noted that the phrase ``ESRD patients'' is
exclusive of beneficiaries with AKI, while phrase ``kidney failure'' is
inclusive of people whose kidney function is inadequate such that
dialysis is necessary to maintain or prolong life. This can be a
temporary (AKI) or permanent (ESRD) condition. Accordingly, we proposed
to amend the definitions of home dialysis and self-dialysis at
Sec. Sec. 494.10, 494.70(c)(1)(i), and 494.130 introductory text by
removing the descriptor ``ESRD.'' In addition, we proposed to amend the
following requirements: Sec. Sec. 494.70(a)(1) and (10) and 494.80
introductory texts by revising the phrase ``ESRD'' to say ``kidney
failure;'' Sec. 494.90(b)(4) by revising the phrase ``ESRD care'' to
say ``dialysis care;'' Sec. 494.100(a)(3)(i) by revising the phrase
``management of ESRD'' to say ``management of their kidney failure;''
Sec. 494.120 introductory text by revising the phrase ``serve ESRD
patients'' to say ``serve patients with kidney failure;'' and lastly
Sec. 494.170 introductory text by revising the phrase ``provider of
ESRD services'' to say ``provider of dialysis services.''
Comment: All the comments expressed support for the expansion of
coverage for home dialysis to beneficiaries with AKI, with a couple
specifically agreeing with the conforming changes in the CFCs.
Commenters cited many benefits including choosing hours that work best
for the patient, reducing travel burden (especially for patients in
rural areas), and saving on healthcare costs. In addition to increasing
access to home dialysis for all AKI patients, commenters indicated that
they believe this policy supports our goal to expand home dialysis
services for those AKI patients that proceed to ESRD. Commenters stated
that the provision would reduce health disparities associated with home
dialysis services. Commenters agreed that ``patient'' and ``kidney
failure'' are the appropriate terminology for the CfCs to encompass
both ESRD & AKI patients.
One commenter shared concerns about the safety of getting dialysis
at home for what will generally be a short or limited period. Another
commenter requested clarification on application of this policy to
residents of long-term care facilities.
Response: We thank commenters for their support and taking the time
to respond. We believe that patients with AKI are medically complex,
and the clinical decision regarding the next stage of treatment should
be evaluated by a physician or other licensed advanced practitioner and
agreed upon mutually among the patient, care partners, and physician.
Importantly, the entire armamentarium of treatment options must be
available to provide the most patient-centered care and allow for the
best outcomes. This policy aligns with the broader goals of patient-
centered care and individualized treatment plans. We believe the
current CfCs for home dialysis services provide sufficient training,
education, and safety standards for AKI patients to safely dialyze at
home, regardless of the duration of the services. We view home
therapies as supervised care that is of at least similar quality and
intensity to in-center hemodialysis and highlight our commitment to
ensuring the success of all patients with AKI, regardless of whether
they are receiving dialysis in the home or in a hemodialysis facility.
Additionally, the home dialysis CfCs are applicable to home dialysis
suppliers who provide such services in long-term care settings, since
these locations are considered to be a patient's home. The Quality,
Safety and Oversight Group (QSOG) has published sub-regulatory guidance
(QSO-18-24-ESRD) that addresses patients receiving home dialysis
services in nursing homes. This guidance is applicable to AKI patients
receiving home dialysis services in LTC facilities.
Final Rule Action: We are finalizing our proposal to amend the ESRD
facility CfCs to be inclusive of patients with AKI, without
modification. For the reasons discussed in section III.B. of this final
rule, we are extending coverage of home dialysis services to
beneficiaries with AKI, allowing them flexibility in choosing their
preferred treatment modality (hemodialysis vs. peritoneal dialysis) and
location (in-center vs. home). Since the ESRD facility CfCs apply to
ESRD facilities as a whole, not to solely to their patients with ESRD,
we are providing clarifying revisions to the CfCs to align with the
final coverage changes.
3. Expected Impact
Beneficiaries with AKI requiring dialysis represent a small subset
of individuals treated in outpatient dialysis facilities. Specifically,
around 12,000 patients will be eligible for this optional service.\101\
Expanding coverage to include beneficiaries with AKI will not present
any changes in burden on ESRD facilities or establish new information
collections subject to the Paperwork Reduction Act.
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\101\ USRDS Annual Data Report 2023.
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[[Page 89172]]
E. Clarification About Medicare Payment for Phosphate Binders for
Beneficiaries With AKI
In the CY 2025 ESRD PPS proposed rule, we did not propose any
policies related to payment for phosphate binders for beneficiaries
with AKI during the period beginning January 1, 2025, when these drugs
will be incorporated into the ESRD PPS and paid for using the TDAPA.
While we did not receive any public comments on this topic, we are
taking the opportunity in this final rule to provide clarity on this
issue.
Under our longstanding policy, we have not applied any ESRD PPS
adjustments to the AKI payment amount, other than the wage index
adjustment. When we established the AKI benefit in the CY 2017 ESRD PPS
final rule, we adopted regulations at Sec. 413.372, which specify that
only the adjustment for wages as set forth in Sec. 413.231 shall apply
to the amount of payment for AKI dialysis services. We also finalized
regulations at Sec. 413.373, which state that any other adjustment
factor under subparagraph (D) of section 1881(b)(14) of the Act that
may be applied to the payment for AKI dialysis services is applied on a
budget neutral basis for payments under section 1834(r). We stated in
the CY 2017 ESRD PPS final rule that we were not adjusting the payment
amount by any other factors at that time but indicated that we would
potentially do so in future years (81 FR 77868). In that same final
rule, we further explained that we finalized a policy to pay separately
for all items and services that are not part of the ESRD PPS base rate.
We explained that once we have substantial data related to the AKI
population and its associated utilization, we would determine the
appropriate steps toward further developing the AKI payment rate (81 FR
77868).
In the CY 2018 ESRD PPS final rule, a commenter requested that we
clarify whether the TDAPA applies to AKI renal dialysis services. In
response, we stated that we would issue additional program guidance
that would address the application of the TDAPA to AKI services and
other billing guidance. We stated that if we determine that it is
appropriate for the TDAPA to apply to AKI services, we would consider
that to be a substantive payment policy, which would be established
through notice and comment rulemaking (82 FR 50756). CMS subsequently
issued guidance 102 103 which clarified that ESRD facilities
would not be responsible for furnishing calcimimetics to individuals
with AKI while calcimimetics were being paid for under the TDAPA. We
further explained that Sensipar (HCPCS code J0604) remained payable
under Medicare Part D for AKI beneficiaries until the costs were rolled
into the ESRD PPS bundled payment, at which point it would transition
to the bundled payment amount. With regard to Parsabiv (HCPCS code
J0606), we stated that this drug was not indicated for AKI and
therefore no bills should be submitted for Parsabiv in the AKI
population.
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\102\ https://www.cms.gov/regulations-and-guidance/guidance/
transmittals/2017downloads/r1941otn.pdf.
\103\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/mm102811.pdf.
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We believe that with respect to Medicare payment for phosphate
binders for beneficiaries with AKI, it is appropriate to maintain the
same policy which applied for calcimimetics during the period in which
they were paid for using the TDAPA under the ESRD PPS. Section 1834(r)
of the Act requires that any adjustments made to the AKI payment amount
under 1881(b)(14)(D) of the Act, other than the applicable geographical
adjustment factor applied under subparagraph (D)(iv)(II) of the Act,
must be applied on a budget neutral basis for payments under section
1834(r) of the Act. Because the TDAPA is a non-budget neutral add-on
payment adjustment under section 1881(b)(14)(D)(iv) of the Act, we do
not believe that it is appropriate to apply the TDAPA to claims for AKI
dialysis under section 1834(r) of the Act. More specifically, if we
were to apply the TDAPA to AKI payments, we believe that section
1834(r) of the Act would require us to apply a budget neutrality
adjustment factor, which would reduce the AKI dialysis payment rate and
be contrary to the policy objective of the TDAPA to provide additional
payment for certain new renal dialysis drugs and biological products.
We also believe that consistent with our policy for calcimimetics
during CY 2018 through CY 2020, allowing phosphate binders to remain
separately payable under Part D for beneficiaries with AKI that have a
Part D medically-accepted indication meets the requirements under
section 1834(r) of the Act and the requirements under Sec. 413.374(a)
to make payment under the AKI dialysis payment rate for renal dialysis
services (as defined in subparagraph (B) of section 1881(b)(14) of the
Act) furnished under Part B by a renal dialysis facility or provider of
services paid under section 1881(b)(14) of the Act. We have not
interpreted these statutory and regulatory requirements to apply to
renal dialysis drugs and biological products that are not considered
included in the ESRD PPS base rate. Specifically, we note that oral-
only drugs are renal dialysis services under subparagraph (B) of
section 1881(b)(14) of the Act; however, we have not paid for these
drugs as part of the AKI dialysis payment rate, because they were not
included in the ESRD PPS base rate. If we had interpreted section
1834(r) of the Act and Sec. 413.374(a) to require payment under the
AKI dialysis payment rate for oral-only renal dialysis drugs and
biological products, then we would have been required to include
payment for these drugs in the AKI dialysis payment rate before payment
was included under the ESRD PPS, which we believe would have conflicted
with the statutory requirements of ATRA, as amended by PAMA, and
amended by ABLE, which ultimately delayed the inclusion of oral-only
drugs into the ESRD PPS until January 1, 2025. Rather, we have
interpreted the requirements of section 1834(r) of the Act and Sec.
413.374(a) to provide a single payment for those renal dialysis
services that are considered included in the ESRD PPS base rate.
Consistent with that interpretation, as discussed earlier in this final
rule, we explained in sub-regulatory guidance that oral calcimimetics
remained separately payable under part D for AKI beneficiaries until
they were incorporated into the ESRD PPS base rate.
For this CY 2025 ESRD PPS final rule, we are clarifying that we are
maintaining the same policy for phosphate binders provided to
beneficiaries with AKI that we applied to calcimimetics. That is, we
are clarifying that ESRD facilities will not be responsible for
furnishing phosphate binders to individuals with AKI while phosphate
binders are being paid for using the TDAPA under the ESRD PPS. As
discussed in section II.B.7 of this final rule, CMS published guidance
containing information about the HCPCS codes for phosphate binders at
https://www.cms.gov/files/document/including-oral-only-drugs-esrd-pps-bundled-payment.pdf. None of the drugs described by these HCPCS codes
is indicated for patients with AKI, and therefore we do not expect
these drugs will be provided for the treatment of AKI and billed for on
AKI claims. To the extent that phosphate binders are provided to AKI
beneficiaries other than for the treatment of their AKI, such as for
preexisting chronic kidney disease, they will remain separately payable
[[Page 89173]]
under Part D for beneficiaries with AKI that have a Part D medically-
accepted indication until they are incorporated into the ESRD PPS base
rate. We believe this policy will provide appropriate payment for
phosphate binders furnished to beneficiaries with AKI.
IV. Updates to the End-Stage Renal Disease Quality Incentive Program
(ESRD QIP)
A. Background
For a detailed discussion of the ESRD QIP's background and history,
including a description of the Program's authorizing statute and the
policies that we have adopted in previous final rules, we refer readers
to the citations provided at IV.A of the CY 2024 ESRD PPS final rule
(88 FR 76433). We have also codified many of our policies for the ESRD
QIP at 42 CFR 413.177 and 413.178.
B. Updates to Requirements Beginning With the PY 2027 ESRD QIP
1. PY 2027 ESRD QIP Measure Set
In the proposed rule, we proposed to replace the Kt/V Dialysis
Adequacy Comprehensive clinical measure, a comprehensive measure on
which facilities are scored for each payment year using one set of
performance standards, with a Kt/V measure topic comprised of four
individual Kt/V measures, beginning with PY 2027 (89 FR 55814 through
55815). We also proposed to remove the National Healthcare Safety
Network (NHSN) Dialysis Event reporting measure from the ESRD QIP
measure set beginning with PY 2027 (89 FR 55815 through 55816). Table
12 of the proposed rule summarized the previously finalized and
proposed updated measures that we would include in the PY 2027 ESRD QIP
measure set (89 FR 55813). As discussed in IV.B.2 and IV.B.3 of this
final rule, we are finalizing our updates to the PY 2027 ESRD QIP
measure set as proposed. We describe the finalized PY 2027 ESRD QIP
measure set in Table 13, which includes the previously finalized
measures and the measures we are finalizing in this final rule. In the
proposed rule, we stated that the technical specifications for current
measures that would remain in the measure set for PY 2027 can be found
in the CMS ESRD Measures Manual for the 2024 Performance Period (89 FR
55812).\104\ We also noted that the proposed technical specifications
for the measures in the proposed Kt/V measure topic can be viewed at
https://www.cms.gov/medicare/quality/end-stage-renal-disease-esrd-quality-incentive-program/technical-specifications-esrd-qip-measures.
Finally, we stated that if the Kt/V measure topic is finalized, these
specifications will be included in the CMS ESRD Measures Manual for the
2025 Performance Period.
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\104\ https://www.cms.gov/files/document/esrd-measures-manual-v91.pdf.
\105\ 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.
[GRAPHIC] [TIFF OMITTED] TR12NO24.012
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[GRAPHIC] [TIFF OMITTED] TR12NO24.013
2. Replacement of the Kt/V Dialysis Adequacy Comprehensive Clinical
Measure With a Kt/V Dialysis Adequacy Measure Topic Beginning With the
PY 2027 ESRD QIP
Section 1881(h)(2)(A)(i) states that the ESRD QIP must evaluate
facilities based on measures of dialysis adequacy. Beginning with the
PY 2027 ESRD QIP, we proposed to replace the Kt/V Dialysis Adequacy
Comprehensive clinical measure, a single comprehensive measure on which
facility performance is calculated using one set of performance
standards for each payment year, with a Kt/V Dialysis Adequacy Measure
Topic, a measure topic comprising four individual Kt/V measures on
which facility performance is calculated using performance standards
for each individual Kt/V measure (89 FR 55814 through 55815).\106\ In
the CY 2025 ESRD PPS proposed rule, we proposed to remove the Kt/V
Dialysis Adequacy Comprehensive clinical measure under Sec.
413.178(c)(5)(i)(E), which is Measure Removal Factor 5 (a measure that
is more strongly associated with desired patient outcomes for the
particular topic becomes available), and proposed to replace it with
the proposed Kt/V Dialysis Adequacy Measure Topic, which consists of
four individual Kt/V measures. Under this proposed update, we stated
that the individual Kt/V measures would be adult hemodialysis (HD) Kt/
V, adult peritoneal dialysis (PD) Kt/V, pediatric HD Kt/V, and
pediatric PD Kt/V (89 FR 55814).
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\106\ For further information related to the Kt/V Dialysis
Adequacy Comprehensive clinical measure, we refer readers to 77 FR
67487 through 67490, 79 FR 66197 through 66198, and 80 FR 69053
through 69057.
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By replacing the current Kt/V Dialysis Adequacy Comprehensive
clinical measure with four separate measures, we noted that we would be
able to assess Kt/V performance more accurately based on whether the
patient is an adult or child and what type of dialysis modality the
patient is receiving. We also proposed to score the four measures as a
Kt/V Dialysis Adequacy Measure Topic and to limit the total weight of
that topic to 11 percent of the total performance score (TPS), which we
stated is the weight of the current Kt/V Dialysis Adequacy
Comprehensive clinical measure. We noted that these proposals would
continue to maintain Kt/V measurement as an important part of the
quality of care assessed by the ESRD QIP (89 FR 55814). Facilities are
eligible to receive an individual Kt/V measure score if they treat at
least 11 eligible patients using the modality addressed by that
particular measure. For example, a facility treating at least 11
eligible pediatric HD patients during the applicable performance period
would be scored on the Kt/V Pediatric HD measure. In the proposed rule,
we stated that we would calculate a facility's measure topic score by
first calculating the facility's performance on each of the Adult HD
Kt/V, Adult PD Kt/V, Pediatric HD Kt/V, and Pediatric PD Kt/V measures,
as applicable, using the applicable achievement threshold, benchmark,
and improvement threshold for the payment year (89 FR 55814). Second,
we would calculate the total number of eligible patients for weighting
each of these measure scores to calculate a single measure topic score.
We would calculate this total number by summing all eligible patients
included in the denominator for each individual measure. Third, we
would calculate the weighted score for each
[[Page 89175]]
measure within the measure topic by dividing the number of patients
included in the denominator for each individual measure by the total
number of eligible patients for all of the measures within the measure
topic and multiplying by the respective measure score. Finally, we
would add the weighted measure scores together and round them to the
nearest integer. An example of how we would calculate the measure topic
score for a facility that treats the minimum number of patients to be
eligible for scoring on all four of the measures is provided below.
[GRAPHIC] [TIFF OMITTED] TR12NO24.014
We noted in the proposed rule that a facility would not need to be
eligible for scoring on all four individual measures to receive a
measure topic score (89 FR 55814). For example, a facility that
exclusively treats adult HD patients and, for that reason, is eligible
to be scored on only the Kt/V Adult HD measure would receive a topic
score that is the same score as its individual Kt/V measure score. We
stated that the proposed measure topic scoring considers both a
facility's individual ESRD patient population and the treatment
modalities it offers, and then weights its performance on the topic
proportionately to its overall ESRD patient population. As a result, we
believe that a facility's measure topic score will be more reflective
of its actual performance among its patient population and offered
modalities than its current Kt/V Dialysis Adequacy Comprehensive
clinical measure score, which is a composite assessment that blends the
Kt/V measure data of all patients treated at that facility.
We noted that we previously adopted a Kt/V Dialysis Adequacy
Measure Topic that included three of the four measures that we were now
proposing to include in the topic (adult HD Kt/V, adult PD Kt/V, and
pediatric HD Kt/V) in the CY 2013 ESRD PPS final rule (77 FR 67487
through 67490). In the CY 2015 ESRD PPS final rule (79 FR 66197 through
66198), we updated the Kt/V Dialysis Adequacy Measure Topic to include
the pediatric PD Kt/V measure as well. In the CY 2016 ESRD PPS final
rule (80 FR 69053 through 69057), we replaced the Kt/V Dialysis Measure
Topic with the current Kt/V Dialysis Adequacy Comprehensive clinical
measure, which assesses the percentage of all patient-months for both
adult and pediatric patients whose average delivered dose of dialysis
(either hemodialysis or peritoneal dialysis) met the specified
threshold during the performance period. This change allowed more
facilities to be eligible for measure scoring, which in turn allowed us
to evaluate the care provided to a greater proportion of ESRD patients.
At the time we finalized the Kt/V Dialysis Adequacy Comprehensive
clinical measure, three facilities were eligible for scoring on the
pediatric HD Kt/V measure, six facilities were eligible for scoring on
the pediatric PD Kt/V measure, 1,402 facilities were eligible for
scoring on the adult PD Kt/V measure, and 6,117 facilities were
eligible for scoring on the adult HD Kt/V measure. Given the relatively
low numbers of facilities eligible for scoring on the pediatric HD Kt/
V, pediatric PD KT/V, and adult PD Kt/V measures at that time, we
adopted the Kt/V Dialysis Adequacy Comprehensive clinical measure to
help ensure that data reflecting those patient populations contributed
to facilities' total performance scores. Since the CY 2016 ESRD PPS
final rule, however, we noted that Kt/V measure data (using the PY
2024/CY 2022 ESRD QIP eligible facility list, CY 2022 EQRS data, and CY
2022 claims data) indicates that more facilities are treating greater
numbers of pediatric HD patients and pediatric PD patients, as well as
greater numbers of adult PD patients, and therefore would be eligible
to be scored on the individual measures based on an 11-patient case
minimum (89 FR 55815). For example, there are now 21 pediatric HD
facilities and 28 pediatric PD facilities with at least 11 qualifying
patients. We stated that this shows a 600 percent increase in
facilities eligible to be scored on the pediatric HD Kt/V measure, and
a 366 percent increase in facilities eligible to be scored on the
pediatric PD Kt/V measure, since the CY 2016 ESRD PPS final rule (89 FR
55815). Additionally, there are now 2,538 facilities eligible for
scoring on the adult PD Kt/V measure, an 81 percent increase since the
CY 2016 ESRD PPS final rule. By contrast, we noted that the number of
facilities eligible for scoring on the adult HD Kt/V measure has
increased by 14 percent during that same period of time.
In light of the increase in the proportions of pediatric HD
patients, pediatric PD patients, and adult PD patients being treated at
ESRD facilities since the time we adopted the Kt/V Dialysis Adequacy
Comprehensive clinical measure, we have determined that it is
appropriate and more reflective of facility performance to reintroduce
the Kt/V Dialysis Adequacy Measure Topic in the ESRD QIP. In addition,
we stated in the proposed rule that the proposed measure topic scoring
methodology will more accurately capture facility performance with
respect to dialysis adequacy because it assesses those facilities based
on performance standards tailored according to Kt/V measurements that
reflect ESRD patient age and treatment modality (89 FR 55815).
We noted that the proposed replacement of the Kt/V Dialysis
Adequacy Comprehensive clinical measure with a Kt/V Dialysis Adequacy
Measure Topic would also not affect a facility's measure data reporting
requirements. A facility would continue to report the same Kt/V measure
data into EQRS and Medicare claims as it would for the current Kt/V
Dialysis Adequacy Comprehensive clinical measure. However, under the
proposed Kt/V Dialysis Adequacy Measure Topic, the measure data would
be used to score the facility on four individual Kt/V measures, as
applicable based on their
[[Page 89176]]
ESRD patient population and treatment modalities.
In the proposed rule, we stated that the proposed replacement of
the Kt/V Dialysis Adequacy Comprehensive clinical measure with a Kt/V
Dialysis Adequacy Measure Topic would also advance the CMS National
Quality Strategy Goals by scoring facilities on measure data that more
accurately reflects the quality of care provided to different kinds of
ESRD patients on different treatment modalities (89 FR 55815). We noted
that the proposed Kt/V Dialysis Adequacy Measure Topic would allow us
to evaluate dialysis adequacy in adult HD patients, adult PD patients,
pediatric HD patients, and pediatric PD patients by scoring facilities
in a way that accounts for differences in patient populations and
treatment modalities. Therefore, this proposed update would ensure that
a facility's performance on the measure topic more accurately reflects
the quality of care provided by the facility.
We welcomed public comment on this proposal to replace the Kt/V
Dialysis Adequacy Comprehensive clinical measure with a Kt/V Dialysis
Adequacy Measure Topic consisting of an adult HD Kt/V measure, an adult
PD Kt/V measure, a pediatric HD Kt/V measure, and a pediatric PD Kt/V
measure, for the PY 2027 ESRD QIP and subsequent years. The comments we
received, and our responses are set forth below.
Comment: Several commenters expressed support for the proposal to
remove the current Kt/V Dialysis Adequacy Comprehensive clinical
measure and replace it with a Kt/V Dialysis Adequacy Measure Topic,
noting that the measure topic will more accurately reflect a facility's
performance based on different patient populations and treatment
modalities. Several commenters expressed the belief that the proposed
Kt/V Dialysis Adequacy Measure Topic will provide a more nuanced
assessment of dialysis adequacy which will enhance the accuracy and
relevance of quality assessments within the program. A few commenters
also expressed support for the proposed Kt/V Dialysis Adequacy Measure
Topic, noting that the current Kt/V Dialysis Adequacy Comprehensive
clinical measure lacks transparency in terms of performance regarding
patient population or dialysis modality, and also masks underlying
social disparities in dialysis adequacy. A commenter expressed support
for the proposal to replace the Kt/V Dialysis Adequacy Comprehensive
clinical measure with a Kt/V Dialysis Adequacy Measure Topic, noting
that it does not change the current Kt/V data reporting requirements so
there is minimal administrative burden associated with the proposed
change.
Response: We thank the commenters for their support.
Comment: A few commenters expressed support for the proposal to
replace the Kt/V Dialysis Adequacy Comprehensive clinical measure with
the four individual Kt/V Dialysis Adequacy measures. A commenter
expressed appreciation that the proposed update would align with other
publicly reported data programs.
Response: We thank the commenters for their support.
Comment: A commenter expressed support for the inclusion of the
pediatric HD Kt/V Dialysis Adequacy measure and the pediatric PD Kt/V
Dialysis Adequacy measure, noting that including these measures in the
Kt/V Dialysis Adequacy Measure Topic will help account for meaningful
differences between pediatric and adult patient populations.
Response: We thank the commenter for their support.
Comment: A few commenters recommended that CMS adopt the original
reporting requirements that assessed performance at the individual
measure level, noting that reporting facility performance on the
individual Kt/V measures would provide greater transparency to
patients, caregivers, and health care providers. These commenters
believed that such reporting requirements would be consistent with the
legislative intent underlying the statutory authority of the ESRD QIP.
A different commenter expressed concern that the measure data is not
sufficiently transparent and that patients would not be able to assess
a facility's performance relative to their specific treatment modality.
Response: We believe that the Kt/V Dialysis Adequacy Measure Topic,
consisting of an adult HD Kt/V measure, an adult PD Kt/V measure, a
pediatric HD Kt/V measure, and a pediatric PD Kt/V measure, strikes a
balance between scoring a facility on its overall quality of care
related to Kt/V dialysis adequacy while also reflecting its performance
on Kt/V dialysis adequacy specific to different patient populations and
treatment modalities. We note that information regarding a facility's
performance on the individual measures, as well as the resulting
measure topic score, is provided during the preview period and in final
reports shared with the facility. We believe that this approach to
measuring dialysis adequacy will further incentivize improvement on
dialysis adequacy performance standards, consistent with section
1881(h) of the Act. We also note that data regarding facility
performance on individual Kt/V dialysis adequacy measures is available
through Dialysis Facility Compare, which reports the Kt/V dialysis
adequacy measures individually on Care Compare. We will continue to
monitor the Kt/V Dialysis Adequacy Measure Topic as it is implemented
to ensure that it is sufficiently transparent in a way that is
meaningful to patients, caregivers, and health care providers.
Comment: A commenter recommended that CMS ensure that the new
individual measures do not impose new administrative or reporting
burdens on care providers that may divert resources away from patient
care.
Response: As we stated in the CY 2025 ESRD PPS proposed rule, the
replacement of the Kt/V Dialysis Adequacy Comprehensive clinical
measure with a Kt/V Dialysis Adequacy Measure Topic would not affect a
facility's measure data reporting requirements, and therefore would not
impose new administrative or reporting burdens on care providers (89 FR
55815). A facility would continue to report the same Kt/V measure data
into EQRS and Medicare claims as it does for the current Kt/V Dialysis
Adequacy Comprehensive clinical measure.
Comment: A commenter recommended including a measurement of
residual kidney function (RKF) when appropriate in the determination of
the HD Kt/V measure, noting the importance of taking RKF into account
when assessing dialysis adequacy and the potential benefit to patient
outcomes. Another commenter recommended that CMS adopt an alternate
measure of dialysis adequacy for HD patients by looking at the percent
of patients leaving dialysis at +/- 2 kg above/below their estimated
dry weight.
Response: We thank the commenters for these recommendations and
will take them into consideration for future updates. We consider the
current HD Kt/V measure specifications to be sufficient for purposes of
assessing dialysis adequacy among HD patients because these
specifications reflect current clinical practices in dialysis adequacy
measurement and assess measurable data that may incentivize improvement
in quality of care provided to HD patients. However, we will continue
to monitor the HD Kt/V dialysis adequacy measures and will also
continue to monitor scientific advances in the field of ESRD care to
assess appropriate alternative measures of dialysis adequacy for
consideration in future rulemaking.
[[Page 89177]]
Comment: A commenter expressed concern regarding the use of Kt/V as
a measure of dialysis adequacy for PD patients, noting that it may not
be the most appropriate metric for patients who are new to dialysis or
who have residual kidney function. This commenter recommended that CMS
explore alternative measures of assessing dialysis adequacy for PD
patients in future rulemaking.
Response: We thank the commenters for these recommendations and
will take them into consideration for future updates. The current PD
Kt/V measure considers residual kidney function as part of the measure
calculation, and excludes patients who have been on ESRD treatment for
less than 91 days as of the first day of the reporting month, which
makes it an appropriate metric for all PD patients who have residual
kidney function and have been on ESRD treatment long enough to be
eligible for inclusion in the measure's calculations.\107\ We consider
the current PD Kt/V measure specifications to be sufficient for
purposes of assessing dialysis adequacy among PD patients because these
specifications reflect current clinical practices in dialysis adequacy
measurement and assess measurable data that may incentivize improvement
in quality of care provided to PD patients. However, we will continue
to monitor the PD Kt/V dialysis adequacy measures for potential
unintended consequences and will also continue to monitor scientific
advances in the field of ESRD care to assess appropriate alternative
measures of dialysis adequacy for PD patients for consideration in
future rulemaking.
---------------------------------------------------------------------------
\107\ https://www.cms.gov/files/document/esrd-measures-manual-v100.pdf.
---------------------------------------------------------------------------
Comment: A few commenters expressed concern regarding the potential
impact of the proposed Kt/V Dialysis Adequacy Measure Topic on home
dialysis patients. A commenter expressed concern that the PD Kt/V
measures could have unintentional consequences such as incentivizing
in-center dialysis over home dialysis, which the commenter believed
would result in diminished patient experience. A different commenter
expressed concern that the proposed Kt/V Dialysis Adequacy Measure
Topic will not sufficiently capture dialysis adequacy for home dialysis
patients and recommended that CMS continue to explore ways to measure
quality of care for home dialysis patients.
Response: For facilities offering both in-center dialysis and home
dialysis treatment options, the Kt/V Dialysis Adequacy Measure Topic
will more accurately reflect a facility's dialysis adequacy performance
by differentiating between the Kt/V measure data of all patients
treated at that facility and assessing facilities based on the Kt/V
measurements according to ESRD patient age and treatment modality.
Because of this differentiation, we expect that the Kt/V Dialysis
Adequacy Measure Topic will better reflect the quality of care provided
to patients on home dialysis, without incentivizing in-center
hemodialysis over home dialysis. We expect that care providers will
assess whether in-center hemodialysis or home dialysis would be more
appropriate for a patient based on the patient's specific case and
treatment plan. However, we will continue to monitor the Kt/V Dialysis
Adequacy Measure Topic as it is implemented to assess the impact on the
home dialysis patient population.
Comment: A few commenters did not support the proposal to replace
the Kt/V Dialysis Adequacy Comprehensive clinical measure with a Kt/V
Dialysis Adequacy Measure Topic. A commenter expressed concern that the
Kt/V Dialysis Adequacy Comprehensive clinical measure is topped out.
This commenter stated that replacing the Kt/V Dialysis Adequacy
Comprehensive clinical measure with a Kt/V Dialysis Adequacy Measure
Topic comprised of individual Kt/V Dialysis Adequacy measures will not
be effective because the commenter believed that those individual
measures are also topped out, and therefore recommended changing the
current Kt/V Dialysis Adequacy Comprehensive clinical measure to a
reporting measure instead. Another commenter recommended that, instead
of the proposed update to measure Kt/V data by different modalities and
patient ages, CMS should measure dialysis adequacy based on patient
differences.
Response: We disagree with the commenter's assertion that the
individual Kt/V measures are topped out and therefore would make the
Kt/V Dialysis Adequacy Measure Topic ineffective as a measure of a
facility's dialysis adequacy performance. Quality measures that have
been in use for several years may reach a stage where meaningful
differences and improvement in performance are no longer achievable.
These measures are referred to as ``topped-out'' and considered for
removal from CMS quality improvement or value-based purchasing programs
such as the ESRD QIP. When developing proposals for the CY 2025 ESRD
PPS proposed rule, we assessed the ESRD QIP measure set to identify any
measures that may be appropriate for removal due to their topped-out
status. Based on our analysis, the NHSN Dialysis Event reporting
measure was the only measure that achieved topped-out status.
Furthermore, a facility's score on the Kt/V Dialysis Adequacy Measure
Topic, consisting of an adult HD Kt/V measure, an adult PD Kt/V
measure, a pediatric HD Kt/V measure, and a pediatric PD Kt/V measure,
would be unique to each facility based on its own patient populations
and their specific treatment modalities. This approach takes patient
differences into account when measuring dialysis adequacy.
Final Rule Action: After considering public comments, we are
finalizing our proposal to replace the Kt/V Dialysis Adequacy
Comprehensive clinical measure with a Kt/V Dialysis Adequacy Measure
Topic consisting of an adult HD Kt/V measure, an adult PD Kt/V measure,
a pediatric HD Kt/V measure, and a pediatric PD Kt/V measure, for the
PY 2027 ESRD QIP and subsequent years.
3. Removal of the NHSN Dialysis Event Reporting Measure From the ESRD
QIP Measure Set Beginning With PY 2027
To ensure continued impact and effectiveness of our measure set on
facility performance, we proposed to remove the NHSN Dialysis Event
reporting measure beginning with PY 2027 (89 FR 55815). When we first
adopted the NHSN Dialysis Event reporting measure in the CY 2012 ESRD
PPS final rule (76 FR 70268 through 70269), we stated that reporting
dialysis events to the NHSN by all facilities supports national goals
for patient safety, including the reduction of Hospital Acquired
Infections (HAIs). In the CY 2014 ESRD PPS final rule, we replaced the
NHSN Dialysis Event reporting measure with the NHSN Bloodstream
Infection (BSI) clinical measure (78 FR 72204 through 72207). We
introduced the clinical version of the measure to hold facilities
accountable for monitoring and preventing infections in the ESRD
population, and to hold facilities accountable for their actual
clinical performance on the measure. In the CY 2017 ESRD PPS final rule
(81 FR 77879 through 77882), we reintroduced the NHSN Dialysis Event
reporting measure to complement the NHSN BSI clinical measure as a way
to incentivize facilities to report complete and accurate monthly
dialysis event data in compliance with the NHSN Dialysis Event
protocol.\108\ In reintroducing the
[[Page 89178]]
measure, we noted our concerns that facilities were not consistently
reporting monthly dialysis event data, given the incentive to achieve
high clinical performance scores on the NHSN BSI clinical measure. We
stated that this may have been an unintended consequence of replacing
the previous NHSN Dialysis Event reporting measure with the NHSN BSI
clinical measure (81 FR 77879). Therefore, in the CY 2017 ESRD PPS
final rule, we reintroduced the NHSN Dialysis Event reporting measure
to be included in the ESRD QIP measure set along with the NHSN BSI
Clinical Measure.
---------------------------------------------------------------------------
\108\ For further information related to the NHSN Dialysis Event
reporting measure, we refer readers to 76 FR 70268 through 70269 and
78 FR 72204 through 72207.
---------------------------------------------------------------------------
In the CY 2025 ESRD PPS proposed rule, we stated that, based on our
analyses, facilities are consistently reporting monthly dialysis event
data, and have been doing so for several years (89 FR 55815). In an
assessment of ESRD QIP measure rate performance trends during PY 2020
through PY 2022, performance in the 5th percentile through the 100th
percentile was 100 percent on the NHSN Dialysis Event reporting measure
for all three performance years, meaning that most eligible facilities
reported data on the measure for each of those years.\109\ If most
eligible facilities are reporting NHSN Dialysis Event measure data each
year and measure performance levels at the 5th percentile and the 100th
percentile are the same each year, then NHSN dialysis event data are
now reported consistently and the measure is not likely to drive
improvements in care.
---------------------------------------------------------------------------
\109\ Partnership for Quality Measurement. 2023 Measure Set
Review (MSR): End Stage Renal Disease Quality Incentive Program
(ESRD-QIP). September 2023. Available at: https://p4qm.org/sites/default/files/2023-09/MSR-Report-ESRD-QIP-20230911.pdf.
---------------------------------------------------------------------------
We stated that our proposal to remove the NHSN Dialysis Event
reporting measure is consistent with evolving the program to focus on a
measure set of high-value, impactful measures that have been developed
to drive care improvements for a broader set of ESRD patients (89 FR
55816). As such, we proposed to remove this measure from the ESRD QIP
measure set under Sec. 413.178(c)(5)(i)(A), which is Measure Removal
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). Although we believe that removing
this measure would enable facilities to focus on the remaining measures
in the ESRD QIP measure set, we noted that facilities would still be
required to fully comply with the NHSN Dialysis Event protocol and
report all dialysis event data, including BSI, for the NHSN BSI
Clinical Measure.
We welcomed public comment on our proposal to remove the NHSN
Dialysis Event reporting measure from the ESRD QIP measure set,
beginning with PY 2027. The comments we received, and our responses are
set forth below.
Comment: Several commenters expressed support for the proposal to
remove the NHSN Dialysis Event reporting measure from the ESRD QIP
measure set, beginning with PY 2027. A few commenters expressed support
for the proposed removal because the measure is unlikely to drive
improvements in care due to consistent reporting and high compliance. A
few commenters expressed the belief that removing the measure from the
ESRD QIP measure set will allow dialysis centers to focus on impactful
measures and meaningful improvements in care. A few commenters
recommended that CMS continue to reduce the number of measures in the
ESRD QIP and focus on incentivizing improvements in critical and
meaningful quality measures. A commenter expressed support for the
proposed removal of the NHSN Dialysis Event reporting measure because
facilities will still be required to comply with NHSN dialysis event
protocol for the NHSN BSI clinical measure. A different commenter
expressed support for the proposed removal because it would align the
ESRD QIP with other publicly reported data programs. Another commenter
expressed support for the proposal to remove the NHSN Dialysis Event
reporting measure because the commenter believed the measure created
incentives to decrease reported events that would potentially
negatively impact patient care.
Response: We thank the commenters for their support.
Comment: A few commenters did not support the proposal to remove
the NHSN Dialysis Event reporting measure from the ESRD QIP measure
set, beginning with PY 2027. A commenter recommended that CMS retain
the NHSN Dialysis Event reporting measure, noting that facilities would
still need to report the data to comply with Dialysis Event protocol as
part of the NHSN BSI clinical measure and therefore removing the
measure from the ESRD QIP would not alleviate facility burden. A
different commenter expressed concern with the proposal to remove the
NHSN Dialysis Event reporting measure, believing that the removal will
lead to facilities underreporting adverse events and recommended
retaining the measure to encourage and incentivize accurate reporting
to NHSN.
Response: We thank the commenters for their feedback. Although we
endeavor to minimize facility burden to the extent feasible, we
proposed to remove the NHSN Dialysis Event reporting measure from the
ESRD QIP measure set because 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. Additionally,
removing the NHSN Dialysis Event reporting measure would enable
facilities to focus on the remaining measures in the ESRD QIP measure
set. We do not anticipate that removing the NHSN Dialysis Event
reporting measure from the ESRD QIP measure set will lead to
underreporting, as facilities would still be required to fully comply
with the NHSN Dialysis Event protocol and report all dialysis event
data (that is, BSI, IV antimicrobial starts, and pus, redness, and
swelling) for the NHSN BSI Clinical Measure.
Final Rule Action: After considering public comments, we are
finalizing our proposal to remove the NHSN Dialysis Event reporting
measure from the ESRD QIP measure set, beginning with PY 2027.
4. Revisions to the Clinical Care and Reporting Measure Domains
Beginning With the PY 2027 ESRD QIP
In the CY 2024 ESRD PPS final rule (88 FR 76481 through 76482), we
finalized revisions to the ESRD QIP measure domains beginning with PY
2027. The measure domains and weights we finalized in the CY 2024 ESRD
PPS final rule were depicted in Table 13a of the CY 2025 ESRD PPS
proposed rule (89 FR 55816) and are depicted in this final rule in
Table 14a.
[[Page 89179]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.015
In the proposed rule, we proposed to revise the Clinical Care
Domain beginning with PY 2027 to reflect our proposal to replace the
Kt/V Comprehensive Dialysis Adequacy Comprehensive clinical measure
with a Kt/V Dialysis Adequacy Measure Topic, and to revise the measure
weights in the Reporting Measure Domain to reflect our proposal to
remove the NHSN Dialysis Event reporting measure from the ESRD QIP
measure set (89 FR 55816). Under our proposal, we stated that the
weight of the Kt/V Dialysis Adequacy Topic would continue to be the
same as the current weight of the Kt/V Dialysis Adequacy Comprehensive
Measure, but that weight would be applied to a facility's measure topic
score, instead of being applied, as it is now, to a facility's score on
the single Kt/V Comprehensive Dialysis Adequacy Comprehensive clinical
measure.
Given our proposal to remove the NHSN Dialysis Event reporting
measure from the ESRD QIP beginning with PY 2027, we also proposed to
update the individual measure weights in the Reporting Domain to
accommodate the proposed new number of measures (89 FR 55816).
Consistent with our approach in the CY 2023 ESRD PPS final rule, we
proposed 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). Although we
proposed to change the number of measures and the weights of the
individual measures in the Reporting Measure Domain, we did not propose
to change the weight of any of the five domains. The measures that
would be included in each domain, along with the proposed new measure
weights, for PY 2027 were depicted in Table 13b of the CY 2025 ESRD PPS
proposed rule (89 FR 55817). These measure domains and weights, which
we are finalizing as proposed, are depicted in this final rule in Table
14b.
[[Page 89180]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.016
We welcomed public comment on these proposals to update the
Clinical Care Measure Domain and Reporting Measure Domain. The comments
we received, and our responses are set forth below.
Comment: A few commenters expressed support for the proposal to
weight the Kt/V Dialysis Adequacy Measure Topic at 11 percent. A few
commenters expressed appreciation that the weight appropriately
reflects the statutorily required nature of the measure, while also
allowing flexibility to assign more weight to other measures for which
there is greater room for improvement. Another commenter expressed
support for the proposed weight for the Kt/V Dialysis Adequacy Measure
Topic because it is the same weight as the current Kt/V Dialysis
Adequacy Comprehensive clinical measure.
Response: We thank the commenters for their support.
Comment: A few commenters expressed concern with the proposal to
weight the Kt/V Dialysis Adequacy Measure Topic at 11 percent,
believing that the proposed measure weight will disproportionately
impact certain types of facilities. A commenter expressed concern that
the proposed measure weight for the Kt/V Dialysis Adequacy Measure
Topic disproportionately impacts home dialysis-only facilities, noting
that they are not eligible for scoring on certain other measures.
Another commenter recommended that CMS not limit the measure weight to
11 percent, and to only score pediatric facilities on pediatric-
specific or cohort-neutral measures to ensure that the QIP is relevant
to pediatric programs. This commenter expressed the belief that such
steps are necessary to prevent unfair or inaccurate penalties based on
ESRD QIP measures that are not relevant to the pediatric patient
population.
Response: We thank the commenters for their feedback and appreciate
their concerns. The Kt/V Dialysis Adequacy Measure Topic will more
accurately reflect a facility's dialysis adequacy performance by
differentiating between the Kt/V measure data of all patients treated
at that facility and assessing facilities based on the Kt/V
measurements according to ESRD patient age and treatment modality.
Although facilities are only scored on measures they are eligible for
based on their reported data, we acknowledge that home dialysis
facilities and pediatric facilities may be
[[Page 89181]]
disproportionately impacted because they are not eligible to be scored
on certain ESRD QIP measures due to their specific patient population.
However, we have concluded that the importance of accurately measuring
dialysis adequacy for home dialysis ESRD patients and pediatric ESRD
patients to incentivize improvements in the quality of care provided to
those patient populations outweighs possible concerns regarding
potential disproportionate impacts. Because facilities are not scored
on measures for which they are not eligible based on their reported
data, their score reflects the quality of care provided to patients
based on the measures for which they are eligible. We will continue to
assess potential policies aimed at expanding measure eligibility for
these facilities in future rulemaking.
Comment: A commenter requested that CMS limit the total weight of
Kt/V measures to 11 percent because the commenter believed that the
measure is topped out in many cases.
Response: In the CY 2025 ESRD PPS proposed rule, we proposed that
the weight of the Kt/V Dialysis Adequacy Topic would be 11 percent, the
same weight as the Kt/V Dialysis Adequacy Comprehensive Measure (89 FR
55816). Under our proposal, the total weight of the Kt/V measures would
be 11 percent under the Kt/V Dialysis Adequacy Measure Topic.
Comment: A few commenters expressed concern that the weights of
individual measures in the Reporting Measure Domain do not adequately
reflect the burden associated with each measure's criteria and
reporting requirements. A commenter recommended that the Reporting
Measure Domain carry a higher weight to reflect the significance of the
individual reporting measures, as well as the substantial burden
associated with compliance.
Response: We take numerous factors into account when determining
appropriate domain and measure weights, including clinical evidence,
opportunity for improvement, clinical significance, and patient and
provider burden (83 FR 56995 through 56996). We also consider (1) the
number of measures and measure topics in a domain; (2) how much
experience facilities have had with the measures and measure topics in
a domain; and (3) how well the measures align with CMS's highest
priorities for quality improvement for patients with ESRD (79 FR
66214). We assign weights to the measure domains based on the clinical
value and meaningfulness of the measures to patients, and the burden of
complying with individual measure requirements. We believe that the
Reporting Measure Domain weights are appropriate to incentivize the
provision of high-quality health care for all ESRD QIP measures.
Comment: A few commenters expressed the belief that the ESRD QIP's
focus on meaningful measures should be reflected in the weights
assigned to measure domains and individual measures. To ensure that the
ESRD QIP takes a clinically driven approach to incentivizing
improvement, a few commenters recommended that CMS work with
organizations and care providers in the ESRD community to identify
potential modifications to the individual measure weights. A few
commenters expressed concern regarding the weighting distribution of
individual measures relative to the growing number of measures in the
ESRD QIP measure set. These commenters expressed the belief that there
are too many individual measures within the ESRD QIP measure set, and
that scoring facilities based on nearly 20 individual measures means
that a facility's performance on each individual measure has little
impact on the facility's overall score. A few commenters recommended
that CMS reduce the ESRD QIP measure set by moving certain measures to
Dialysis Facility Compare or by removing certain measures altogether
where appropriate.
Response: We agree with commenters that the weights should reflect
clinical value and meaningfulness to patients, which we took into
account in developing our measure domains and individual measure
weights. We expect that the measure domains and weights provide
facilities with meaningful incentives to improve performance on
measures that align with clinical value and importance to patients. We
note that we have developed the ESRD QIP measure set specifically to
ensure that facilities focus on the most relevant clinical topics that
will lead to improved quality of care and better outcomes for patients.
Although we aim to minimize facility burden as much as feasible, we
disagree that reducing the number of measures in the ESRD QIP should be
a goal, absent justification under our measure removal factors codified
at Sec. 413.178(c)(5)(i).
Final Rule Action: After considering public comments, we are
finalizing our proposals to update the Clinical Care Measure Domain and
Reporting Measure Domain, beginning with PY 2027 as proposed, and
therefore, are finalizing the ESRD QIP measure domains and measure
weights provided in Table 14b in this section of the final rule.
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 sections 1881(h)(4)(B) and (C) of the
Act. We refer readers to the CY 2013 ESRD PPS final rule (76 FR 70277),
as well as Sec. 413.178(a)(1), (3), (7), and (12), for further
information related to performance standards.
In the CY 2024 ESRD PPS final rule (88 FR 76480 through 76481), we
set the performance period for the PY 2027 ESRD QIP as CY 2025 and the
baseline period as CY 2023. In the proposed rule, we estimated the
performance standards for the PY 2027 clinical measures in Table 14
using data from CY 2022, which was the most recent data available (89
FR 55818). We are updating these performance standards for all
measures, using CY 2023 data, in this final rule, in Table 15.
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[[Page 89182]]
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In addition, we summarize in Table 16 our requirements for
successful reporting on our previously finalized reporting measures for
the PY 2027 ESRD QIP.
[[Page 89183]]
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6. Eligibility Requirements for the PY 2027 ESRD QIP
In the proposed rule, we proposed to update eligibility
requirements as part of our proposal to replace the Kt/V Dialysis
Adequacy Comprehensive clinical measure with a Kt/V Dialysis Adequacy
Measure Topic beginning with PY 2027 (89 FR 55819). Our previously
finalized and proposed new minimum eligibility requirements are
described in Table 16 of the CY 2025 ESRD PPS proposed rule (89 FR
55820) and provided in Table 17 of this final rule.
[[Page 89184]]
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[[Page 89185]]
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We welcomed public comment on these proposals to update the minimum
eligibility requirements to reflect the proposed Kt/V Dialysis Adequacy
Measure Topic. We did not receive any comments on our proposals to
update the minimum eligibility requirements to reflect the Kt/V
Dialysis Adequacy Measure Topic.
Final Rule Action: We are finalizing our proposals to update the
minimum eligibility requirements to reflect the Kt/V Dialysis Adequacy
Measure Topic, beginning with PY 2027 as proposed, and therefore, are
finalizing the ESRD QIP eligibility requirements provided in Table 17
in this section of the final rule.
7. Payment Reduction Scale for the PY 2027 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 Sec. 413.178(a)(8).
Under Sec. 413.177(a), 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, up to a maximum reduction of 2 percent. In the proposed rule,
we stated that for PY 2027, we estimated using available data that a
facility must meet or exceed an mTPS of 51 to avoid a payment reduction
(89 FR 55821). We noted that the mTPS estimated in the proposed rule
was based on data from CY 2022 instead of the PY 2027 baseline period
(CY 2023) because CY 2023 data were not yet available. We presented the
estimated payment reduction scale in Table 17 of the CY 2025 ESRD PPS
proposed rule (89 FR 55821). We stated our intention to update and
finalize the mTPS and associated payment reduction ranges for PY 2027,
using CY 2023 data, in this CY 2025 ESRD PPS final rule. We have now
finalized the payment reductions that will apply to the PY 2027 ESRD
QIP using updated CY 2023 data. The mTPS for PY 2027 will be 51, and
the finalized payment reduction scale is shown in Table 18.
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C. Requests for Information (RFIs) on Topics Relevant to ESRD QIP
As discussed in the following sections, in the CY 2025 ESRD PPS
proposed rule we requested information on two topics to inform future
revisions to the ESRD QIP. First, we requested information regarding
potential future modifications to the existing ESRD QIP scoring
methodology to reward facilities based on their performance and the
proportion of their patients who are dually eligible for Medicare and
Medicaid (89 FR 55822). Second, we requested information regarding
potential updates to the data validation policy to encourage accurate,
comprehensive reporting of ESRD QIP data (89 FR 55822 through 55823).
In the CY 2025 ESRD PPS proposed rule, we noted that each of these
sections in the proposed rule is a RFI only (89 FR 55821). In
accordance with the implementing regulations of the Paperwork Reduction
Act of 1995 (PRA), specifically 5 CFR 1320.3(h)(4), these general
solicitations are exempt from the PRA. Facts or opinions submitted in
response to general solicitations of comments from the public,
published in the Federal Register or other publications, regardless of
the form or format thereof, provided that no person is required to
supply specific information pertaining to the commenter, other than
that necessary for self-identification, as a condition of the agency's
full consideration, are not generally considered information
collections and therefore not subject to the PRA.
[[Page 89186]]
We stated that respondents are encouraged to provide complete but
concise responses (89 FR 55821). These RFIs are issued solely for
information and planning purposes; they do not constitute a Request for
Proposal (RFP), applications, proposal abstracts, or quotations. These
RFIs do not commit the United States Government to contract for any
supplies or services or make a grant award. Further, we noted that we
were not seeking proposals through these RFIs and will not accept
unsolicited proposals. Responders were advised that the United States
Government will not pay for any information or administrative costs
incurred in response to these RFIs; all costs associated with
responding to these RFIs will be solely at the interested party's
expense. Not responding to these RFIs does not preclude participation
in any future procurement, if conducted. It is the responsibility of
the potential responders to monitor these RFI announcements for
additional information pertaining to this request. We noted that we
will not respond to questions about the policy issues raised in these
RFIs. CMS may or may not choose to contact individual responders. Such
communications would only serve to further clarify written responses.
Contractor support personnel may be used to review RFI responses.
Responses to this notice are not offers and cannot be accepted by the
United States Government to form a binding contract or issue a grant.
We stated that information obtained as a result of these RFIs may be
used by the United States Government for program planning on a non-
attribution basis (89 FR 55822). Respondents should not include any
information that might be considered proprietary or confidential. These
RFIs should not be construed as a commitment or authorization to incur
cost for which reimbursement would be required or sought. All
submissions become United States Government property and will not be
returned. Finally, we noted that CMS may publicly post the comments
received, or a summary thereof.
1. Request for Public Comment on Future Change to the Scoring
Methodology To Add a New Adjustment That Rewards Facilities Based on
Their Performance and the Proportion of Their Patients Who Are Dually
Eligible for Medicare and Medicaid
Achieving health equity, addressing health disparities, and closing
the performance gap in the quality of care provided to disadvantaged,
marginalized, or underserved populations continue to be priorities for
CMS as outlined in the CMS National Quality Strategy.\110\ CMS defines
``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.\111\ We are working to advance health equity by
designing, implementing, and operationalizing policies and programs
that reduce avoidable differences in health outcomes.
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\110\ Centers for Medicare & Medicaid Services. (2022) CMS
National Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
\111\ Health Equity Strategic Pillar. Centers for Medicare &
Medicaid Services. https://www.cms.gov/pillar/health-equity.
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The ESRD QIP adopted three new health-equity focused quality
measures in the CY 2024 ESRD PPS final rule (88 FR 76437 through 76446;
76466 through 76480). Although commenters were generally supportive of
the new measures, a few commenters recommended that the ESRD QIP take
additional action to support facilities that treat patient populations
with higher proportions of health-related social needs (HRSNs) (88 FR
76473). In the CY 2025 ESRD PPS proposed rule, we stated that we are
considering updating our scoring methodology in future rulemaking to
add Health Equity Adjustment bonus points to a facility's TPS that
would be calculated using a methodology that incorporates a facility's
performance across all five domains for the payment year and its
proportion of patients with dual eligibility status (DES), meaning
those who are eligible for both Medicare and Medicaid coverage (89 FR
55822).
In the 2016 Report to Congress on Social Risk Factors and
Performance Under Medicare's Value-Based Purchasing Programs, the
Office of the Assistant Secretary for Planning and Evaluation (ASPE)
reported that beneficiaries with social risk factors had worse outcomes
and were more likely to receive a lower quality of care.\112\ Patients
with DES experience significant disparities are also likely to be more
medically complex and remain one of the most vulnerable
populations.\113\ \114\ \115\ DES remains the strongest predictor of
negative health outcomes.\116\
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\112\ Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. First Report
to Congress on Social Risk Factors and Performance in Medicare's
Value-Based Purchasing Program. 2016. Available at: https://aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf.
\113\ Johnston, K.J., & Joynt Maddox, K.E. (2019). The Role of
Social, Cognitive, And Functional Risk Factors In Medicare Spending
For Dual And Nondual Enrollees. Health Affairs (Project Hope),
38(4), 569-576. https://doi.org/10.1377/hlthaff.2018.05032.
\114\ Johnston, K.J., & Joynt Maddox, K.E. (2019). The Role of
Social, Cognitive, and Functional Risk Factors in Medicare Spending
for Dual and Nondual Enrollees. Health Affairs (Project Hope),
38(4), 569-576. https://doi.org/10.1377/hlthaff.2018.05032.
\115\ Wadhera, R.K., Wang, Y., Figueroa, J.F., Dominici, F.,
Yeh, R.W., & Joynt Maddox, K.E. (2020). Mortality and
Hospitalizations for Dually Enrolled and Nondually Enrolled Medicare
Beneficiaries Aged 65 Years or Older, 2004 to 2017. JAMA, 323(10),
961-969. https://doi.org/10.1001/jama.2020.1021.
\116\ Office of the Assistant Secretary for Planning and
Evaluation, U.S. Department of Health & Human Services. Second
Report to Congress on Social Risk Factors and Performance in
Medicare's Value-Based Purchasing Program. 2020. Available at:
https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
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We recently finalized a Health Equity Adjustment scoring policy for
the Hospital Value-Based Purchasing (VBP) Program (88 FR 59092 through
59106) and the Skilled Nursing Facility (SNF) VBP Program (88 FR 53304
through 53316). These policies provide Health Equity Adjustment bonus
points to top tier performing hospitals and SNFs with a high proportion
of patients with DES, and each program's policy is tailored to meet the
needs of the specific program. For example, in the Hospital VBP
Program, the Health Equity Adjustment bonus is calculated based on a
hospital's performance on each of the four measure domains and its
proportion of patients with DES (88 FR 59095 through 59096). In the SNF
VBP Program, the Health Equity Adjustment bonus is calculated based on
a facility's performance on each measure and its proportion of patients
with DES (88 FR 53309 through 53311).
Our policy for scoring performance on the ESRD QIP is codified at
Sec. 413.178(e). In the proposed rule, we requested public comment on
potential future modifications to the existing scoring methodology to
reward excellent care to underserved populations (89 FR 55822). We also
noted that any Health Equity Adjustment bonus for the ESRD QIP would
need to align with the Program's statutory requirements under section
1881(h) of the Act. We welcomed public comment on the following:
Would a Health Equity Adjustment be valuable to the ESRD
QIP?
++ If a Health Equity Adjustment would be valuable to the ESRD QIP,
how should it be structured?
[[Page 89187]]
++ If a Health Equity Adjustment would not be valuable to the ESRD
QIP, why not?
Are there other approaches that the ESRD QIP could propose
to adopt to effectively address healthcare disparities and advance
health equity?
We received comments in response to this request for information
and have summarized them here.
Comment: Many commenters provided feedback on a Health Equity
Adjustment. Several commenters expressed support for a Health Equity
Adjustment, believing that it would be valuable to the ESRD QIP.
Several commenters noted that ESRD is more prevalent among patient
populations with higher social risk factors or from lower socioeconomic
status or communities of color and observed that a Health Equity
Adjustment could help promote more equitable care by rewarding
excellent performance to underserved populations. Several commenters
expressed support for a Health Equity Adjustment specific to the ESRD
QIP, believing that it will help to reduce disparities among facilities
that treat a greater proportion of DES patients. A few of these
commenters observed that a Health Equity Adjustment may help to
mitigate the impact of payment reductions that may disproportionately
impact facilities that care for a greater proportion of low-income
patients. A few other commenters noted that many facilities require
more resources and specific care expertise to meet the care needs
relevant to this patient population, and that a Health Equity
Adjustment may further incentivize parity among care providers by
providing them with resources necessary to provide high quality care to
a complex patient population. A commenter expressed support for
adopting a bonus scoring methodology for a Health Equity Adjustment in
the ESRD QIP, noting that such a framework would align with current
Health Equity Adjustments implemented in IPPS, SNF VBP, and ETC Model.
A few commenters agreed that a Health Equity Adjustment would be
valuable to the care providers and patients. These commenters
recommended that CMS engage with organizations and care providers in
the ESRD community to discuss potential Health Equity Adjustment
options and related policies for inclusion in future rulemaking, which
commenters believed would be helpful to ensure that a future Health
Equity Adjustment is developed and implemented in a meaningful way.
Several commenters expressed support for structuring the Health
Equity Adjustment as a bonus that is applied to a facility's TPS. A few
commenters recommended adding a Health Equity Adjustment bonus to a
facility's TPS based on its performance in each of the five measure
domains included in the TPS, adjusted for the facility's proportion of
socioeconomically disadvantaged patients. A few commenters recommended
that a Health Equity Adjustment be calculated based on a facility's
performance across select measure domains, rather than all 5 measure
domains. A commenter noted that fewer dialysis facilities are eligible
for scoring on ICH CAHPS due to measure eligibility requirements, and
therefore recommended that CMS exclude the Patient & Family Engagement
domain from the measure performance calculation for purposes of
calculating the Health Equity Adjustment. Another commenter recommended
that a facility's performance within each measure domain should be
assessed independently, such that a facility may be eligible for Health
Equity Adjustment bonus points based on its performance in each domain.
This commenter recommended that facility performance is grouped into
three tiers for each domain, and that eligibility for HEA points be
calculated based on the facility's performance within a given domain's
tertile. A different commenter recommended that CMS calculate potential
Health Equity Adjustment bonus points based on a facility's performance
in Coordination, Clinical Care, and Safety measure domains relative to
the quintile of that domain score.
Several commenters offered recommendations regarding Health Equity
Adjustment bonus application. A commenter recommended that a future
Health Equity Adjustment policy be designed to award bonus points to
facilities that serve greater proportions of underserved patient
populations and have higher quality performance. A commenter
recommended that CMS consider structuring the Health Equity Adjustment
as a positive payment adjustment tied to improved health outcomes for
DES patients, citing the health equity incentives in the ETC and IOTA
models. Another commenter suggested that Health Equity Adjustment bonus
points be awarded based on the percentage of patients from underserved
populations treated at the facility. This commenter believed that this
approach would help to ensure that facilities caring for patients in
underserved communities have adequate resources, observing that such
facilities are more likely to be impacted by payment penalties which
may result in decreased ability to provide care to such patient
populations.
A few commenters recommended that CMS apply a Health Equity
Adjustment bonus to a facility's TPS in a way that would allow
facilities to move to a lesser payment reduction tier or a zero-payment
reduction tier, believing that such a methodology would support
facilities serving greater proportions of DES patients. A commenter
recommended that Health Equity Adjustment bonus points should be
limited to a maximum of 10 points to appropriately reward facilities
for delivering excellent performance to underserved populations while
also not skewing the TPS or creating unintended incentives.
A commenter requested that any Health Equity Adjustment policy not
require changes to the current process for calculating a facility's TPS
or to the payment reduction scales. This commenter suggested the
potential equity points be combined as a weighted average that uses the
same weights as the TPS. The commenter recommended a methodology that
included: (1) multiplying the measure performance scalar by a logistic
exchange function representing the facility in the percent of DES
patient-months, which would provide the pre-scaled Health Equity
Adjustment bonus; (2) multiplying the pre-scaled Health Equity
Adjustment bonus by 10 to scale the Health Equity Adjustment bonus for
incorporation into the TPS; and (3) adding the Health Equity Adjustment
points to the existing TPS for a maximum value of 100 points. Pursuant
to this commenter's recommended framework, although facilities would be
assessed against a modified TPS, the payment reduction scale would be
set based on unmodified TPS ranges.
A few commenters recommended that a Health Equity Adjustment should
be structured so that it is not budget neutral, and therefore would not
negatively impact facilities that don't qualify for the Health Equity
Adjustment bonus. A few commenters observed that potential unintended
consequences may result from a Health Equity Adjustment in the ESRD
QIP, due to the unique nature of the program. These few commenters
observed that a Health Equity Adjustment within the ESRD QIP would
likely result in a decrease in the number and size of payment
reductions imposed and recommended that CMS should not seek to increase
overall payment reductions through other policy changes.
[[Page 89188]]
A few commenters offered recommendations regarding potential
grouping methodology for calculating eligibility for a Health Equity
Adjustment. A commenter recommended that CMS group facilities into
quartiles or quintiles to calculate eligibility for a Health Equity
Adjustment bonus. This commenter noted that there are a greater number
of eligible facilities in the ESRD QIP, as compared to other CMS
programs that apply a Health Equity Adjustment. A different commenter
recommended that CMS structure a ESRD QIP Health Equity Adjustment by
grouping facility performance into three tiers for each Measure Domain,
and that eligibility for Health Equity Adjustment bonus points be
calculated based on the facility's performance within a given domain's
tertile.
Several commenters provided recommendations regarding the
applicable patient population used to determine a facility's
eligibility for Health Equity Adjustment consideration. A few
commenters recommended that a Health Equity Adjustment account for both
Medicare fee-for-service patients as well as Medicare Advantage
patients to accurately represent the proportion of the targeted patient
population. A commenter recommended that, in addition to DES patients,
CMS include Medicaid-only and uninsured patients in its definition of
underserved patient population. Another commenter recommended that CMS
expand the applicability of Health Equity Adjustment eligibility to
include low-income subsidy recipients, noting potential different
impacts for facilities in states that did not expand their Medicaid
programs. A different commenter recommended that CMS award Health
Equity Adjustment bonus points based on the percentage of DES patients
as well as low-income subsidy patients treated at the facility, noting
that this approach would be consistent with the ETC Model. Another
commenter recommended that CMS set a minimum threshold of 20 percent
DES patient population for Health Equity Adjustment eligibility, noting
that such a threshold would be consistent with the SNF VBP scoring
policy.
A few commenters expressed concern regarding potential unintended
consequences that may result from a Health Equity Adjustment in the
ESRD QIP. A few commenters expressed concern that a Health Equity
Adjustment may create confusion by inflating or otherwise impacting a
facility's TPS. A commenter noted that an adjustment to a facility's
TPS based on a Health Equity Adjustment would create further confusion
for patients seeking to understand the significance of a facility's
publicly available TPS. A commenter observed that a Health Equity
Adjustment may suggest that facilities with higher proportions of DES
patients are held to a lower standard or that those patients are
allowed to have poorer health outcomes. Another commenter noted that a
Health Equity Adjustment may not be valuable to all ESRD facilities and
recommended that CMS consider the potential impact on facilities in
certain areas that may have limited resources. A different commenter
expressed concern that a Health Equity Adjustment may result in
unintended financial incentives and requested that CMS ensure that any
Health Equity Adjustment policy continues to focus on advancing health
equity. A commenter requested that CMS clarify how it anticipates
measuring for health equity success.
A few commenters expressed concern that a Health Equity Adjustment
may not be valuable to the ESRD QIP. A commenter observed that a Health
Equity Adjustment may not be sufficient or appropriate for the ESRD QIP
as a means to address health disparities. Another commenter expressed
concern that a Health Equity Adjustment would not be valuable because
the ESRD QIP is a penalty-only program that does not award bonuses.
A commenter recommended that the ESRD QIP adopt a peer grouping
methodology, similar to the methodology used in the Hospital
Readmissions Reduction Program (HRRP). This commenter expressed the
belief that stratification into quintiles would promote competition
among facilities within the same quintile and provide a more accurate
comparison of facility performance that takes patient population into
account.
Several commenters recommended other approaches that the ESRD QIP
could propose to adopt to effectively address healthcare disparities
and advance health equity. A few commenters recommended that the ESRD
QIP adopt efforts that are more directly aimed at addressing health
disparities. A commenter recommended that services aimed at navigating
care coordination and HRSN-related needs be included as part of the
quality care provided by ESRD facilities. This commenter noted that a
facility that has staff trained in identifying and addressing such
needs may help to mitigate the increased risk of poor outcomes for ESRD
patients tied to unmet HRSNs. A different commenter expressed support
for the three health equity measures recently added to the ESRD QIP,
but expressed concern that the measures do little to directly address
systemic health disparities and that facilities do not have the
resources necessary to identify and facilitate solutions to address
HRSNs. This commenter noted that, although collecting such data is
essential, health disparities will persist in the absence of additional
funding necessary to address these issues. Another commenter
recommended that CMS explore policy approaches outside the ESRD QIP to
reduce health disparities in the ESRD patient population, urging CMS to
invest in structural and systemic capabilities that facilities require
to comprehensively support the care needs of a complex patient
population.
A commenter recommended that CMS consider restructuring the ESRD
QIP to incorporate both negative and positive payment adjustments to
incentivize high quality care and provide access to additional
resources and support. This commenter expressed the belief that
financial penalties do not necessarily facilitate improvement in
quality of care, noting that such penalties also potentially reduce
resources available to facilities that would benefit from them the
most. Another commenter recommended that CMS continue to engage with
the ESRD community to explore effective approaches to address health
disparities and improve the quality of care provided to underserved
populations.
A commenter recommended that CMS consider whether within-facility
analysis is appropriate for addressing health disparities in the ESRD
patient population, noting that the diversity of patient populations
among different dialysis facilities often reflect the diversity of the
population of the area which the facility is located. A different
commenter recommended that CMS consider the role of patient autonomy
and agency in developing future health equity measures, noting that
individual patients may differ in their level of interest and
engagement.
Response: We appreciate all of the comments and interest in this
topic. We believe that this input is very valuable in the continuing
development of our efforts to effectively address healthcare
disparities and advance health equity. We will continue to take all
concerns, comments, and suggestions into account for future development
and expansion of our health equity-related efforts.
[[Page 89189]]
2. Request for Public Comment on Updating the Data Validation Policy
for the ESRD QIP
One of the critical elements of the ESRD QIP's success is ensuring
that the data submitted to calculate measure scores and TPSs are
accurate. The ESRD QIP includes two types of data validation for this
purpose: The EQRS data validation (OMB Control Number 0938-1289) and
the NHSN validation (OMB Control Number 0938-1340). In the CY 2019 ESRD
PPS final rule, we adopted the CROWNWeb (now EQRS) data validation as a
permanent feature of the Program (83 FR 57003). In the CY 2020 ESRD PPS
final rule, we adopted the NHSN data validation as a permanent feature
of the Program (84 FR 60727). Under both data validation policies, we
validate EQRS and NHSN data from a sample of facilities randomly
selected for validation. If a facility is randomly selected for
validation but does not submit the requested records, 10 points are
deducted from the facility's TPS.
In the proposed rule, we requested public comment on ways to update
the data validation policy to encourage accurate, comprehensive
reporting of ESRD QIP data (89 FR 55823). We have reviewed data
validation policies in other quality reporting programs such as the
Hospital Inpatient Quality Reporting (IQR) Program (81 FR 57180) and
the Hospital Outpatient Quality Reporting (OQR) Program (76 FR 74486).
These programs have adopted data validation policies that require a
hospital selected for data validation to achieve a 75 percent
reliability or accuracy threshold to receive full credit for data
validation reporting.
We welcomed comments on potential future policy proposals that
would encourage accurate, comprehensive reporting for data validation
purposes, such as introducing a penalty for facilities that do not meet
an established reporting or data accuracy threshold, introducing a
bonus for facilities that perform above an established reporting or
data accuracy threshold, developing targeted education on data
validation reporting, or requiring that a facility selected for
validation that does not meet an established reporting or data accuracy
threshold be selected again the next year.
We received comments in response to this request for information
and have summarized them here.
Comment: A few commenters offered feedback on ways to reduce
administrative burden associated with participating in data validation.
A few commenters recommended that CMS focus on improving the data
validation system because they believe that the current framework is
too burdensome for facilities. A few commenters recommended that CMS
prioritize enhancing the functionality of EQRS and NHSN systems to
facilitate easier data submission and correction, which commenters
believe will support more accurate and comprehensive reporting. A
commenter suggested that CMS adopt advanced technologies such as
artificial intelligence (AI) and machine learning algorithms to reduce
burden associated with traditional reporting mechanisms. A few
commenters noted that the current data validation system is burdensome
on facilities due to compliance requirements and timeframes, which
commenters observed may detract from the facility's ability to focus
resources on providing quality care. A few commenters expressed concern
that smaller facilities faced a disproportionately greater
administrative burden to comply with the data validation process, and
therefore recommended that CMS look into mitigating that burden. A
commenter recommended that CMS mitigate the burden on smaller
facilities by ensuring that the data validation policy reflect
variability across facility types. A few commenters recommended that
CMS extend the submission window because the 60-day compliance
timeframe is often challenging due to staffing constraints, absences,
and competing priorities. A few commenters recommended that, to reduce
administrative burden and encourage comprehensive and accurate
reporting, CMS establish and distribute a schedule outlining which
facilities will be included in the validation study and when, to
provide facilities with adequate notice. A commenter recommended that
CMS also provide a more predictable schedule for survey requests. A few
commenters recommended that CMS reduce survey frequency, noting that
completing surveys twice a year is time-consuming and further
constrains already limited staff resources. A few commenters observed
that previous validation study results suggest a level of stability
that reduces the need for annual re-measurement. A commenter
recommended that CMS reduce the frequency of data validation surveys to
every five years or reasonable intervals. A commenter noted that CMS
has reported consistently high accuracy rates of data reporting by
participating facilities, which the commenter believes is an indication
that the current data validation policy is generating accurate,
comprehensive reporting of QIP data. A commenter noted that reducing
the frequency of validation studies would provide facilities additional
time to understand data collection requirements and ensure the accuracy
of submissions.
A few commenters suggested that CMS consider providing a bonus for
facilities that perform above an established reporting or data accuracy
threshold, but only if the funding for such bonus were not obtained by
reducing payments to ESRD facilities. A commenter recommended that
participation in data validation be voluntary and that participating
facilities receive bonus points awarded to their TPS, rather than
penalties for non-participation.
A few commenters requested that CMS share the results of previous
data validation studies to inform their recommendations regarding the
establishment of a reporting or data accuracy threshold. A commenter
expressed concern with updating the data validation policy, noting that
insufficient data validation information was publicly available to
provide comment on future updates to the data validation policy at this
time. A few commenters recommended greater transparency with regard to
the results of the data validations surveys. A few commenters noted
that such transparency will help facilities understand their results
and support targeted education efforts, which will lead to more
accurate ESRD QIP data submitted for validation. Although a commenter
expressed support for targeted education, this commenter opposed
mandatory re-selection of facilities that do not meet an established
reporting or data accuracy threshold because commenter believes that
selected facilities need to be chosen at random.
A few commenters recommended that any updates to the data
validation system include robust due process protections that are
similar to those provided through other audit programs operated by CMS.
A commenter expressed the belief that due process policies will help to
ensure the accuracy of data submitted by ensuring that there is
opportunity to address potential issues with data submission and
interpretation to ensure that facilities are not unfairly penalized.
Response: We appreciate all of the comments and interest in this
topic. We believe that this input is very valuable in the continuing
development of our efforts to encourage accurate, comprehensive
reporting for data validation purposes. We will continue to take all
concerns, comments, and
[[Page 89190]]
suggestions into account for future development and expansion of these
efforts.
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 ESRD 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.\117\ CMS excludes all United States
Territories from the Selected Geographic Areas.
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\117\ ZIP code\TM\ is a trademark of the United States Postal
Service.
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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.
CMS has modified the ETC Model several times. In the CY 2022 ESRD
PPS final rule, we finalized a number of changes to the ETC Model. We
adjusted 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 LDT Beneficiaries (86 FR
61950 through 61951). We changed 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 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). In the CY 2024 ESRD PPS final rule (88 FR 76344) we finalized a
policy whereby an ETC Participant may seek administrative review of a
targeted review determination provided by CMS.
B. Provisions of the Proposed Rule
We proposed a modification to the definition of ESRD Beneficiary at
42 CFR 512.310 as that definition is used for the purposes of
attributing beneficiaries to the ETC Model. As finalized in the
Specialty Care Models final rule and codified at Sec. 512.360, CMS
retrospectively, that is, following a MY, attributes ESRD Beneficiaries
and Pre-emptive Living Donor Transplant (LDT) Beneficiaries to an ETC
Participant for each month during a MY. An ESRD Beneficiary may be
attributed to an ETC Participant if the beneficiary has already had a
kidney transplant and has a non-AKI dialysis or MCP claim less than 12
months after the beneficiary's transplant date and has a kidney
transplant failure ICD-10 diagnosis code documented on any Medicare
claim. Based on feedback from model participants, we became aware that
the use of the ICD-10 code T86.12 to identify transplant failures may
be incorrectly identifying beneficiaries for attribution to the ETC
Model because a claim that is only coded with T86.12 may signify
delayed graft function rather than a true transplant failure. To ensure
that we are correctly identifying ESRD beneficiaries for the purposes
of ETC Model ESRD Beneficiary attribution, we proposed to modify our
definition of an ESRD Beneficiary at Sec. 512.310. Our regulations
currently define an ESRD Beneficiary as a beneficiary that meets either
of the following criteria: (1) is receiving dialysis or other services
for end-stage renal disease, up to and including the month in which the
beneficiary receives a kidney transplant up to and including the month
in which the beneficiary receives a kidney transplant, or (2) has
already received a kidney transplant and has a non-AKI dialysis or MCP
claim at least 12-months after the beneficiary's latest transplant
date; or less than 12-months after the beneficiary's latest transplant
date and
[[Page 89191]]
has a kidney transplant failure diagnosis code documented on any
Medicare claim. We proposed to modify the second criterion to specify
that the beneficiary's latest transplant date must be identified by at
least one of the following: (1) two or more MCP claims in the 180 days
following the date on which the kidney transplant was received; (2) 24
or more maintenance dialysis treatments at any time after 180 days
following the transplant date; or (3) indication of a transplant
failure after the beneficiary's date of transplant based on data from
the Scientific Registry of Transplant Recipients (SRTR). We proposed
that if a beneficiary meets more than one of these criteria, that CMS
will consider that beneficiary an ESRD Beneficiary for the purposes of
ETC model attribution starting with the earliest month in which the
transplant failure was recorded. In our analysis of the proposed
methodology for identifying transplant failures, we found that the use
of all three criterion correctly identified more true transplant
failures than did the use of T86.12 alone.
We considered a proposal to modify the language at 42 CFR 512.310
that an ESRD Beneficiary is a beneficiary that has already received a
kidney transplant and has a non-AKI or MCP dialysis claim less than 12
months after the beneficiary's latest transplant date with kidney
transplant failure diagnosis code documented on any Medicare claim. We
considered removing the last clause; in other words, removing the
specification that that the beneficiary must have a kidney transplant
failure diagnosis code documented on any Medicare claim. We did not
propose this modification to the definition of an ESRD Beneficiary
because doing so would preclude the possibility for a beneficiary to be
attributed to the ETC Model for 12-months after a transplant,
regardless of if the transplant failed. We were concerned that this
scenario would reduce the number of attributed beneficiary-months that
would be available for us to use to calculate the home dialysis and
transplant rate for ETC Participants. We solicited comment on our
proposal to modify the definition of an ESRD Beneficiary to more
accurately identify beneficiaries that may be attributed to the ETC
Model due to receiving a kidney transplant that fails within 12-months
of its receipt.
Comment: We received four comments on this proposed policy and the
alternative policy put forth for consideration, all expressing
collective agreement on the methodology modification. Two Patient
Advocacy Organizations agreed with our plan to modify these definitions
as described and specifically agreed that if a beneficiary meets more
than one of the amended criteria, then they should be considered an
ESRD Beneficiary for the purposes of ETC model attribution starting
with the earliest month in which the transplant failure was recorded.
One commenter agreed with our decision to forgo the alternative policy
to remove the specification that that the beneficiary must have a
kidney transplant failure diagnosis code documented on any Medicare
claim. One dialysis organization stated that they commend CMS'
dedication to correctly identifying ESRD beneficiaries for attribution
to the ETC Model. They believe the proposed clarification will help
prevent beneficiaries with delayed graft function who have a claim
coded with T86.12 from being incorrectly attributed to the ETC Model.
The organization further encourages CMS to make needed refinements for
the ETC Model's remaining duration and utilize its regulatory authority
to mitigate penalties to physicians and dialysis providers.
Response: We appreciate the commenters' dedicated engagement with
the design of the ETC Model and the methodology by which we assess
transplant beneficiary attributions. However, we uncovered an
inconsistency in the rule text between Paragraph 3 and Paragraph 4 of
the proposed definition of an ESRD beneficiary. Paragraph 3 suggests
that a kidney transplant failure would be identified from a beneficiary
who has ``at least'' one of the following three criteria, whereas
Paragraph 4 in the proposed rule states that if a beneficiary meets
``more than one'' of the criteria described in paragraphs (3)(i)
through (iii) that they would then be considered an ESRD beneficiary.
Given the specific comment from one interested party that expressed
support for a beneficiary meeting more than one of the following
criteria to be considered an ESRD Beneficiary for the purposes of ETC
model attribution: (1) two or more MCP claims in the 180 days following
the date on which the kidney transplant was received; (2) 24 or more
maintenance dialysis treatments at any time after 180 days following
the transplant date; or (3) indication of a transplant failure after
the beneficiary's date of transplant based on data from the Scientific
Registry of Transplant Recipients (SRTR), we plan to update the
definition in paragraph three to resolve the inconsistency and delete
the phrase ``at least one of the following''.
Final Decision: In consideration of the comments received, we are
finalizing our proposed modification to the definition of ESRD
Beneficiary at 42 CFR 512.310 as that definition is used for the
purposes of attributing beneficiaries to the ETC Model with one
modification. We will delete the phrase ``at least one of the
following'' from the definition of kidney transplant failure in
paragraph 3 so it reads, ``Has a kidney transplant failure less than 12
months after the beneficiary's latest transplant date as identified
by''. Per paragraph 4 of the definition then, a beneficiary must meet
more than one of the criteria laid out in paragraph 3 to qualify as
having a kidney transplant failure.
C. Request for Information
1. Request for Information
In the Specialty Care Models final rule, we referenced a report
from the Public Policy/Advocacy Committee of the North American Chapter
of the International Society for Peritoneal Dialysis that describes
barriers to increased adoption of home dialysis including educational
barriers, the need for home care partner support, the monthly visit
requirement for the Monthly Capitation Payment (MCP) under the
Physician Fee Schedule, variations in dialysis business practices in
staffing allocation, lack of home clinic independence, and other
restrictions resulting in the inefficient distribution of home dialysis
supplies (85 FR 61265).\118\ The National Kidney Foundation (NKF)
Kidney Disease Outcomes Quality Initiative (KDOQI) controversies
conference report, ``Overcoming Barriers for Uptake and Continued Use
of Home Dialysis: An NKF-KDOQI Conference Report,'' describes clinical,
operational, policy, and societal barriers to increased prescribing of
and retention on home modalities. For example, lack of clinical
confidence in prescribing home dialysis, lack of infrastructure,
financial costs to patients associated with home modifications, the
need for space to store home dialysis supplies, lack of housing, lack
of appropriate education, care partner burnout, and patient fear of
self-cannulation.\119\
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\118\ Golper TA, Saxena AB, Piraino B, Teitelbaum, I, Burkart,
J, Finkelstein FO, Abu-Alfa A. Systematic Barriers to the Effective
Delivery of Home Dialysis in the United States: A Report from the
Public Policy/Advocacy Committee of the North American Chapter of
the International Society for Peritoneal Dialysis. American Journal
of Kidney Diseases. 2011; 58(6): 879-885.doi:10.1053/
j.ajkd.2011.06.028.
\119\ Chan, C.T., Collins, K., Ditschman, E.P., Koester-
Wiedemann, L., Saffer, T.L., Wallace, E., & Rocco, M.V. (2020).
Overcoming barriers for uptake and continued use of home dialysis:
An NKF-Kdoqi Conference Report. American Journal of Kidney Diseases,
75(6), 926-934. https://doi.org/10.1053/j.ajkd.2019.11.007.
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[[Page 89192]]
Since the Specialty Care Models final rule was published,
interested parties have spoken to us about challenges associated with
increasing access to home dialysis, particularly among beneficiaries
with lower socioeconomic status, who have lower rates of home dialysis
and kidney transplantation than people with higher socioeconomic
status. The ETC Model was designed to address these barriers; for
example, CMS applied the Home Dialysis Payment Adjustment (HDPA) to
assist dialysis organizations with overcoming market realities that
impose substantial barriers to opening and sustaining home dialysis
programs. The upside and downside risk associated with the Performance
Payment Adjustment (PPA) are designed to be strong incentives for
behavioral change towards increasing beneficiary access to home
dialysis. In the CY 2022 ESRD PPS final rule, we finalized a policy
whereby we stratify achievement benchmarks based on the proportion of
attributed beneficiaries who are dual eligible for both Medicare and
Medicaid or who receive the Low-Income Subsidy (LIS) (86 FR 61968). We
also finalized the Health Equity Incentive (HEI), which rewards ETC
Participant aggregation groups that demonstrate greater than 2.5
percentage points improvement on the home dialysis and transplant rate
among dual eligible and LIS recipient beneficiaries from the Benchmark
Year (BY) to the MY with a .5 increase in their improvement score (86
FR 61971).
Performance accountability in the ETC Model is scheduled to end on
June 30, 2026. We are concerned that the end of performance
accountability may reduce incentives for dialysis organizations to
invest in access to home dialysis and address the challenges of the
type we describe previously in this section. We were interested in
hearing from interested parties regarding policies that the Innovation
Center may consider specifically incorporating into any successor model
to the ETC Model or that CMS may consider generally. Given the growth
in ESRD beneficiaries choosing Medicare Advantage plans,\120\ we were
particularly interested in approaches CMS could take to improve
beneficiary access to home dialysis modalities in Medicare Advantage.
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\120\ Nguyen, K.H., Oh, E.G., Meyers, D.J., Kim, D., Mehrotra,
R., & Trivedi, A.N. (2023). Medicare advantage enrollment among
beneficiaries with end-stage renal disease in the first year of the
21st Century Cures Act. JAMA, 329(10), 810. https://doi.org/10.1001/jama.2023.1426.
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We sought input on the following topics that may improve our
understanding of other policy interventions that may increase access to
high quality home dialysis within the context of Innovation Center
models and across CMS.
1. How should any future Innovation Center model that incorporates
home dialysis incorporate what the community has learned from the ETC
Model?
2. What barriers to home dialysis could be addressed through the
ESRD Prospective Payment System (PPS)? We request that commenters be as
specific as possible.
3. What approaches could CMS consider to increase beneficiary
access to home dialysis modalities in Medicare Advantage?
4. How should nephrologist payment from traditional, fee-for-
service Medicare and from MAOs account for clinician-level barriers to
prescribing and retaining patients on home modalities?
We received comments in response to this request for information
and have summarized them here.
Comment: Inclusion of the Kidney Disease Education (KDE) Benefit.
Several commenters expressed their belief in the usefulness of KDE as a
tool for individuals with kidney failure to learn about their disease
state and options for treatment. The commenters mentioned it is also
well known that patients who receive early and accurate modality
education, such as what is provided through KDE, are more likely to
choose a home modality should their disease progress to ESRD.
Commenters urge CMS to maintain the ETC's changes to the KDE program in
any future models related to increasing home dialysis and waiving the
20 percent coinsurance.
Consideration of Pediatric Patients in Future Models. A
professional society for pediatric nephrologists expressed appreciation
for the exclusion of children under 18 from participation in the ETC
Model. The commenter reiterated their belief of current model goals and
further highlighted that young adults who continue to be treated by
pediatric nephrologists once they turn 18 years old are a particularly
complex group of patients. Of note, the commenter urged CMS to consider
collaboration with representatives of the pediatric nephrology
community on future models to incentivize home dialysis and
transplantation.
Increased Access to New and Innovative Drugs. A non-provider
industry-associated interested party noted that within various CMS
hospital inpatient and outpatient models advanced by the Innovation
Center, add-on payments for innovative new technologies and therapies
are purposely excluded from episode expenditures to ensure that
Medicare beneficiaries have consistent access to innovations that
improve their care. The interested party encourages the Innovation
Center to apply the same reasoning and approach under future kidney
models.
Data and Quality Metrics. A dialysis organization encouraged CMS to
reconsider the concept of comparing geographic areas in potential
successor models. Additionally, the commenter and several patient
advocacy organizations encouraged the inclusion of home dialysis
measures with greater specificity, such as a home retention metric or
optimal starts, and the development of a home dialysis patient
satisfaction and experience measure. Similarly, for transplant, CMS was
encouraged to consider removing metrics that run counter to
beneficiaries' waitlisting, such as waitlist mortality, and consider
adding metrics, such as referral to waitlist percentage and time from
referral to waitlist. A commenter further highlighted future models
with more efficient data sharing capabilities to access performance
data would be a strength.
Increased Efforts Towards Transplantation. Several commenters
provided recommendations on ways to effectively increase
transplantation, such as the creation of a patient navigator program to
improve patient experience of care in seeking transplants.
Social Drivers of Health. Several commenters expressed support of
future models that test how additional resources and/or direct patient
incentives aimed at addressing social drivers of health would impact
the uptake of home modalities and ultimately whether quality of life is
improved. Commenters reiterated previous recommendations that CMS work
with HHS and the states to revise federal, state, and local fraud and
abuse laws to support dialysis facilities and physicians in their
efforts to help individuals with kidney failure address socio-economic
barriers to home dialysis. A commenter also suggested some barriers
contributing to the lower uptake of home dialysis in communities of
color and underserved communities could be addressed by encouraging
Medicare Advantage (MA) plans to apply the Special Supplemental
Benefits for the Chronically Ill (SSBCI). The commenter suggested these
benefits could be used to reduce barriers to
[[Page 89193]]
home dialysis, such as copay assistance programs for necessary dialysis
related medications, stipends for utility costs and necessary home
modifications, assistance for care partners or respite when needed, and
assistance in installing and paying for broadband internet.
Model Structure. Several commenters expressed their support for
future models being voluntary and including more flexibilities for
smaller providers, like the Comprehensive ESRD Choices (CEC) model.
Additionally, stakeholders believe future models should have a
financial structure based on anticipated savings to increase incentives
and should include Medicare Advantage (MA) beneficiaries. Other
commenters recommend a model that tests the impact of additional
Medicare payments for a package of comprehensive care services to aid
in investments in infrastructure and care management capabilities for
dialysis providers.
Recurring Barriers Elevated by Patients and Caregivers. Commenters
elevated recurring barriers shared by patients and caregivers that
dialysis providers noted being limited in their capacity to address,
such as the fear of abandonment and/or lack of real time support in the
home, inadequate space in the home for equipment and supplies, and the
lack of available in-home support staff. A commenter suggested the
development of a Technical Expert Panel (TEP) to evaluate evidence from
the IM-HOME1 framework for resolving the barriers that exist for home
dialysis.
Incentivizing Peritoneal Dialysis (PD) Catheter Placement.
Commenters elevated several barriers impacting timely PD catheter
placement previously identified by CMS: (1) challenges scheduling
operating room time in the hospital setting for PD catheter placement,
(2) the need for additional training on PD catheter placement for both
surgeons and interventional nephrologists, and (3) the lack of
dedicated PD catheter insertion teams in the hospital setting who can
immediately place catheters for patients who ``crash'' into dialysis
and would benefit from urgent start PD. Commenters encourage CMS to
develop a demonstration to test the impact of policy changes for equal
reimbursement rates between PD catheter placement procedures and
vascular access placement procedures. A patient advocacy organization
recommended a bonus incentive payment for vascular surgeons, hospitals,
and surgical centers, that would increase reimbursement for PD catheter
placements and become equal with the reimbursements provided for
Arteriovenous (AV) Fistula reimbursement.
Fraud and Abuse Laws. Two commenters recommended we remove certain
barriers that they believe are created by the physician self-referral
law, Anti-Kickback Statute (AKS), and beneficiary inducement laws. The
commenters described various arrangements they believe may be
prohibited by such laws but would be beneficial to care coordination,
management of patient care and disease progression, and patient
education.
Increased Data Transparency. Commenters strongly suggested that
publicly accessible data is needed to ensure that beneficiaries with
kidney failure who elect an MA plan maintain access to the care they
need. CMS is encouraged to update MA data collection and reporting
efforts to match other Medicare programs and better align incentives
across the health care continuum.
Time and Distance Standards and Network Adequacy. Commenters urge
CMS to reconsider requiring time and distance standards in MA, as
described in regulations at 42 CFR 422.116, for dialysis facilities
that were removed in 2020. Interested parties across the kidney
community have noticed unintended consequences on patients-including
home dialysis patients-as a result of this amended policy. Patients and
interested parties report that some plans have such narrow networks
that patients have difficulty accessing vascular access surgeons,
nephrologists, or even a dialysis facility near their homes. Commenters
further note other patients have been listed as inactive on transplant
waitlists because MA plans have removed their center from the network.
Expanded Staff Training Requirements. A commenter noted that a big
obstacle to home dialysis is the current training requirements that
limit training to one patient at a time, and for that trainer be a
Registered Nurse (RN). This leads to significant backlogs for training
and deters potential patients. The national shortage of RNs limits the
availability of trainers, and a core curriculum could be developed to
train other professionals who could provide home dialysis training. CMS
is further encouraged to create incentives to support new technologies
that support mobile dialysis such that patients living in rural or
remote parts of our country may have access to same standard of care as
those that reside in a large urban area.
Medicare Advantage (MA) Benchmarks and Plan Finder Tools.
Commenters note that CMS should ensure that corresponding adjustments
in MA benchmarks for ESRD are made to reflect any adjustments in FFS
ESRD payments. Additionally, commenters stated that CMS should
reinforce statutory requirements that MA patients maintain access to
the same services as Medicare FFS patients, including home dialysis.
Despite statutory requirements, commenters reported that many MA
organizations (MAOs) limit beneficiary access to in-network home
dialysis, a treatment modality to which all Medicare beneficiaries
should maintain equitable access. Commenters further highlight that the
Medicare.gov Plan Finder is a useful tool from CMS that helps people
find MA and Medicare Part D plans available in their area and should
include information regarding the availability of home dialysis
programs by MA plan. In doing so, CMS can shift the responsibility away
from patients and onto MAOs to ensure they are communicating clearly
their plans' offerings and whether enrollees will have access to a home
dialysis program. Commenters also believe MA plans would be
incentivized to prioritize home dialysis uptake if home dialysis
penetration was included as a new quality marker, in addition to
established standards that measure their performance against a set of
quality measures determined by CMS.
Changes to Physician Payments for Referrals and Training.
Interested parties believe that upstream incentive payments could serve
as a benefit for those physicians doing particular work with patients
in later CKD stages. CMS is also urged to consider providing a one-time
incentive payment for referral to home dialysis--either PD or Home
Hemodialysis (HHD). A complimentary policy change to the
recommendations earlier, is the increased payment for HCPCS codes G0420
and G0421, which are used for individual face-to-face education
services and group face-to-face education services related to CKD.
Commenters note that the codes have not been meaningfully updated.
Commenters highlighted the payment system is currently underfunded
by approximately 6.9 percent due to inadequate adjustments for
inflation and may be insufficient to achieve the goal of 20 to 25
percent of patients receiving dialysis at home. Minor inflationary
updates have not accounted for the increased demand for home training
nurses and staffing intensive TCU programs. Technological advances,
like remote patient monitoring and other digital tools could help to
fill the gap. A commenter noted that a TEP convened in May 2020
concluded that
[[Page 89194]]
facilities spent between 7.5 and 8 hours training patients on home
hemodialysis. CMS is encouraged to conduct an analysis to determine a
more accurate number of hours per session needed for successful home
dialysis training and subsequently revise the home dialysis training
add-on payment amount to capture growing costs.
Interested parties have reported barriers to physician training in
home dialysis modalities has led to a reluctance to prescribe these
therapies in practice. Additionally, the home dialysis training service
codes, CPT codes 90989 (for a completed course of home dialysis
training) and 90993 (for a single training session when the course is
not completed) have not been updated. These are unique service codes in
that they do not have relative value units (RVUs) assigned to them but
rather flat rates of $500 for 90989 and $20 per session for 90993.
Stakeholders believe an adjustment of this fee to $1,500 to $2000 would
be a step in the right direction for incentivizing the nephrologists to
offer home modality to their patients. Additionally, stakeholders
recommend that CMS issue a transmittal for Medicare Administrative
Contractors (MACs) clarifying that home dialysis training via CPT codes
90989 and 90993 are covered services in the Medicare physician fee
schedule.
Response: We appreciate all the comments on and interest in the
topics. We note that several of the suggestions made by commenters are
beyond the scope of CMS' rulemaking authority. Nonetheless, we highly
value this input, as it is essential to deliberations on future model
successors and ESRD policy development as we work to advance
administration initiatives to expand access to home dialysis and
increase transplantation efforts.
With respect to comments on fraud and abuse laws, thank you for the
comments related to certain arrangements that facilitate value-based
health care delivery and payment. We note that to the extent such
arrangements create financial relationships for purposes of the
physician self-referral law, we see no reason why the parties to the
arrangements described by the commenters could not use existing
exceptions to the physician self-referral law, including those for
value-based arrangements, and why the financial relationships could not
be structured to satisfy the requirements of an existing applicable
exception. Also, CMS may determine that the AKS safe harbor for CMS-
sponsored model arrangements and CMS-sponsored model patient incentives
(42 CFR 1001.952(ii)) is available to protect remuneration exchanged
pursuant to certain financial arrangements or patient incentives
permitted under future models. Such determination, if any, would be set
forth in documentation separately issued by CMS.
Final Decision: We intend to use comments received in response to
this RFI to inform future policy development. CMS would propose any
potential changes to payment policies through a separate notice and
comment rulemaking.
2. Exemption of the RFI From the Paperwork Reduction Act Implementing
Regulations
Please note, this is a RFI only. In accordance with the
implementing regulations of the Paperwork Reduction Act of 1995 (PRA),
specifically 5 CFR 1320.3(h)(4), this general solicitation is exempt
from the PRA. Facts or opinions submitted in response to general
solicitations of comments from the public, published in the Federal
Register or other publications, regardless of the form or format
thereof, provided that no person is required to supply specific
information pertaining to the commenter, other than that necessary for
self-identification, as a condition of the agency's full consideration,
are not generally considered information collections and therefore not
subject to the PRA.
Respondents are encouraged to provide complete but concise
responses. This RFI is issued solely for information and planning
purposes; it does not constitute a Request for Proposal (RFP),
applications, proposal abstracts, or quotations. This RFI does not
commit the United States Government to contract for any supplies or
services or make a grant award. Further, we did not seek proposals
through this RFI and will not accept unsolicited proposals. Responders
are advised that the United States Government will not pay for any
information or administrative costs incurred in response to this RFI;
all costs associated with responding to this RFI will be solely at the
interested party's expense. Not responding to this RFI does not
preclude participation in any future procurement, if conducted. It is
the responsibility of the potential responders to monitor this RFI
announcement for additional information pertaining to this request.
Please note that we will not respond to questions about the policy
issues raised in this RFI. We may or may not choose to contact
individual responders. Such communications would only serve to further
clarify written responses. Contractor support personnel may be used to
review RFI responses. Responses to this notice are not offers and
cannot be accepted by the United States Government to form a binding
contract or issue a grant. Information obtained as a result of this RFI
may be used by the United States Government for program planning on a
non-attribution basis. Respondents should not include any information
that might be considered proprietary or confidential. This RFI should
not be construed as a commitment or authorization to incur cost for
which reimbursement would be required or sought. All submissions become
United States Government property and will not be returned. We may
publicly post the comments received, or a summary thereof.
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. 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 solicited public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
A. ESRD QIP--Wage Estimates (OMB Control Numbers 0938-1289 and 0938-
1340)
We refer readers to the CY 2024 ESRD PPS final rule for information
regarding wage estimates and resulting information collection burden
calculations used in this final rule (88 FR 76484 through 76485). To
derive wage estimates in the CY 2025 ESRD PPS proposed rule, we used
data from the United States Bureau of Labor Statistics' May 2022
National Occupational Employment and Wage Estimates for Medical Records
[[Page 89195]]
Specialists, 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 Centers for Disease Control and Prevention's (CDC's) NHSN, as
well as compiling and submitting patient records for the purpose of
data validation (89 FR 55825). In the proposed rule, we noted that when
this analysis was conducted, the most recently available median hourly
wage of a Medical Records Specialist was $22.69 per hour.\121\ In this
final rule, we are updating the median hourly wage to $23.45 per hour,
which reflects the most recently available data from the United States
Bureau of Labor Statistics' May 2023 National Occupational Employment
and Wage Estimates.\122\ 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. Using these
assumptions, in the proposed rule we estimated an hourly labor cost of
$45.38 as the basis of the wage estimates for all collections of
information calculations in the ESRD QIP (89 FR 55825). In this final
rule, we are updating our previously estimated hourly labor cost to
$46.90 as the basis of the wage estimates for all collections of
information calculations in the ESRD QIP.
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\121\ https://www.bls.gov/oes/2022/may/oes292072.htm.
\122\ https://www.bls.gov/oes/current/oes292072.htm.
---------------------------------------------------------------------------
We used this 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 2027. We provide the re-estimated
information collection burden associated with the PY 2027 ESRD QIP in
section VI.C of this final rule.
B. Estimated Burden Associated With the Data Validation Requirements
for PY 2027 (OMB Control Numbers 0938-1289 and 0938-1340)
We refer readers to the CY 2024 ESRD PPS final rule for information
regarding the estimated burden associated with data validation
requirements for PY 2027 (88 FR 76485 through 76486). In the CY 2024
ESRD PPS final rule, we estimated that the aggregate cost of the EQRS
data validation for PY 2027 would be approximately $34,035 (750 hours x
$45.38), or an annual total of approximately $113.45 ($34,035/300
facilities) per facility in the sample. In this final rule, we are
updating the aggregate cost of EQRS data validation for PY 2027 to
reflect updated wage estimates. Using the most recently available data,
we estimate that the aggregate cost of the EQRS data validation for PY
2027 would be approximately $35,175 (750 hours x $46.90), or an annual
total of approximately $117.25 ($35,175/300 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 2024 ESRD PPS final rule and re-stated in the CY 2025 ESRD PPS
proposed rule, we estimated that the aggregate cost of the NHSN data
validation for PY 2027 would be approximately $68,070 (1,500 hours x
$45.38), or a total of approximately $226.90 ($68,070/300 facilities)
per facility in the sample (89 FR 55826). We are updating the aggregate
cost of NHSN data validation to reflect updated wage estimates in this
final rule. Based on the updated wage data, we estimate that the
aggregate cost of the NHSN data validation for PY 2027 would be
approximately $70,350 (1,500 hours x $46.90), or a total of
approximately $234.50 ($70,350/300 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).
C. Estimated EQRS Reporting Requirements for 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 2024 ESRD PPS
final rule, we estimated that the burden associated with EQRS reporting
requirements for the PY 2027 ESRD QIP was approximately $130.5 million
for approximately 2,877,743 total burden hours (88 FR 76486).
We are finalizing changes to the ESRD QIP measure set in this final
rule, but do not anticipate that any of these policies would affect the
burden we have previously estimated for EQRS reporting requirements for
PY 2027. Beginning with PY 2027, we are finalizing our proposal to
replace the Kt/V Dialysis Adequacy Comprehensive measure with a Kt/V
Dialysis Adequacy Measure Topic. However, we are not updating facility
reporting requirements as part of that finalized policy. Additionally,
although we are finalizing our proposal to remove one measure from the
ESRD QIP measure set beginning with PY 2027, the measure removal would
not impact EQRS reporting requirements on facilities. We provided the
burden estimate for PY 2027 in the CY 2025 ESRD PPS proposed rule (89
FR 55826) and are updating the information collection burden to reflect
updated wage estimates, along with updated facility and patient counts,
in this final rule. In the CY 2025 ESRD PPS proposed rule, we estimated
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 final rule. There are 136 data
elements for 511,957 patients across 7,695 facilities, for a total of
69,626,152 elements (136 data elements x 511,957 patients). At 2.5
minutes per element, this would yield approximately 377.01 hours per
facility. Therefore, the PY 2027 burden would be 2,901,090 hours
(377.01 hours x 7,695 facilities). Using the updated wage estimate for
a Medical Records Specialist, we estimate that the PY 2027 total burden
cost would be approximately $136.1 million (2,901,090 hours x $46.90).
The information collection request under the OMB Control Number: 0938-
1289 will be revised and sent to OMB.
D. ESRD Treatment Choices Model
Section 1115A(d)(3) of the Act exempts Innovation Center model
tests and expansions, which include the ETC Model, from the provisions
of the PRA. Specifically, this section provides that the provisions of
the PRA do not apply to the testing and evaluation of Innovation Center
models or to the expansion of such models.
VII. 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
[[Page 89196]]
furnished by ESRD facilities as required by section 1881(b)(14) of the
Act, as added by section 153(b) of 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 Affordable Care Act (Pub. L. 111-
148), established that beginning 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. This final rule
includes updates and policy changes to the ESRD PPS for CY 2025. These
changes include a new wage index methodology which utilizes BLS data
and reflects revised OMB CBSA delineations, a wage index budget-
neutrality adjustment factor, an expansion to the ESRD PPS outlier
list, methodological changes to the outlier calculation, updates to the
TPNIES offset amount, updates to the post-TDAPA add-on payment
adjustment amounts for Korsuva[supreg] and Jesduvroq, changes to the
LVPA payment structure, and an increase to the calculation of the TDAPA
for phosphate binders. Failure to publish this final rule would result
in ESRD facilities not receiving appropriate payments in CY 2025 for
renal dialysis services furnished to ESRD beneficiaries.
This final rule also has several policy changes to improve payment
stability and adequacy under the ESRD PPS. These include updates to the
LVPA and payments for ESRD outlier services. We believe that each of
these changes will improve payment stability and adequacy under the
ESRD PPS.
2. AKI
This rule finalizes updates to the payment rate for renal dialysis
services furnished by ESRD facilities to individuals with AKI.
Additionally, we are extending Medicare payment for home dialysis to
beneficiaries with AKI. As discussed in section III.C of this final
rule, we also are applying the updates to the ESRD PPS base rate, wage
index, and training add-on payment adjustment for home dialysis to the
AKI dialysis payment rate. Failure to publish this final rule would
result in ESRD facilities not receiving appropriate payments in CY 2025
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 for a year by up to two
percent if the facility does not satisfy the requirements of the ESRD
QIP for that year. This rule finalizes updates for the ESRD QIP, which
would remove the NHSN Dialysis Event reporting measure from the ESRD
QIP measure set beginning with PY 2027 and replace the Kt/V Dialysis
Adequacy Comprehensive clinical measure with a Kt/V Dialysis Adequacy
Measure Topic beginning with PY 2027.
4. ETC Model
The ETC Model is a mandatory Medicare payment model tested under
the authority of section 1115A of the Act, which authorizes the
Innovation Center to test innovative payment and service delivery
models expected to reduce Medicare, Medicaid, and CHIP expenditures
while preserving or enhancing the quality of care furnished to the
beneficiaries of such programs.
This final rule finalizes a change to the ETC Model, specifically
to the methodology CMS uses to identify transplant failures for the
purposes of defining an ESRD beneficiary and attributing an ESRD
beneficiary to the ETC Model. As described in detail in section V.B of
this final rule, we believe it is necessary, for the purposes of
accuracy, to adopt this change to the ETC Model.
B. Overall Impact Analysis
We have examined the impacts of this final 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, entitled
``Modernizing Regulatory Review'' (April 6, 2023), the Regulatory
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section
1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of
1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
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 amends section 3(f) 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, 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.
A regulatory impact analysis (RIA) must be prepared for a
regulatory action that is significant under section 3(f)(1). Based on
our estimates of the combined impact of the ESRD PPS, ESRD QIP, and ETC
provisions in this final rule, OIRA has determined this rulemaking is
significant under section 3(f)(1) of E.O. 12866. Accordingly, we have
prepared a Regulatory Impact Analysis that presents the costs and
benefits of the rulemaking to the best of our ability. Pursuant to
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of
1996 (also known as the Congressional Review Act), OIRA has determined
that this rule meets the criteria set forth in 5 U.S.C. 804(2).
Therefore, OMB has reviewed this final regulation, and the Department
has provided the following assessment of their impact.
1. ESRD PPS
We estimate that the final revisions to the ESRD PPS would result
in an increase of approximately $260 million in Medicare payments to
ESRD facilities in CY 2025. This includes $220 million associated with
the payment rate update, the updated post-TDAPA add-on payment
adjustment amounts, and continuation of the approved TDAPA as
identified in Table 19. This also includes approximately $40 million
for the additional TDAPA payment for operational costs in excess of 100
percent of ASP for phosphate binders, which is derived from 6 percent
of per-patient phosphate binder spending based on utilization and cost
data as discussed in section II.B.7.c. of this final rule. In addition,
this amount includes, but is not impacted by, the following budget
neutral changes to the ESRD PPS: updates to the outlier list, updates
to the outlier methodology and thresholds, updates to the wage index
methodology, updates to the OMB CBSA delineations, and changes to the
LVPA.
[[Page 89197]]
Although the incorporation of oral-only renal dialysis drugs and
biological products into the ESRD PPS in CY 2025 is provided for by
existing regulations and is not impacted by this final rule, we
estimate for reference that total ESRD PPS spending for phosphate
binders will be approximately $870 million ($220 million in beneficiary
coinsurance payments and $650 million in Medicare Part B spending) in
CY 2025 for the original phosphate binder TDAPA payment at 100 percent
of ASP; however we note that these drugs are currently being paid for
under Medicare Part D, which we estimate will lead to a decrease in
spending of approximately $690 million ($0 million in beneficiary
premium offset and $690 million in Medicare Part D spending), for a net
payment increase of approximately $180 million.
2. AKI
We estimate that the final updates to the AKI payment rate will
result in an increase of approximately $2 million in Medicare payments
to ESRD facilities in CY 2025.
3. ESRD QIP
We estimate that, as a result of our previously finalized policies
and the policies we are finalizing in this final rule, the updated ESRD
QIP will result in $17.9 million in estimated payment reductions across
all facilities for PY 2027.
4. ETC Model
The change we are finalizing is the definition of an ESRD
Beneficiary for the purposes of attribution in the ETC Model. This
policy change is not expected to change the model's projected economic
impact.
5. Summary of Impacts
We estimate that the combined impact of the policies finalized in
this rule on payments for CY 2025 is $260 million based on the
estimates of the updated ESRD PPS and the AKI payment rates. We
estimate the impacts of the ESRD QIP for PY 2027 to be $136.1 million
in information collection burden and $17.9 million in estimated payment
reductions across all facilities. Finally, we estimate that the final
methodology change to the ETC Model will not affect the model's
projected economic impact described in the Specialty Care Models final
rule (85 FR 61114) and in the CY2022 ESRD PPS final rule (86 FR 61874).
C. Detailed Economic Analysis
In this section, we discuss the anticipated benefits, costs, and
transfers associated with the changes in this final rule. Additionally,
we estimate the total regulatory review costs associated with reading
and interpreting this final rule.
1. Benefits
Under the CY 2025 ESRD PPS and AKI payment, ESRD facilities will
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
will enhance the efficiency of the Medicare program. Additionally, we
expect that updating the Medicare ESRD PPS base rate and rate for AKI
treatments furnished by ESRD facilities by 2.2 percent based on the
final CY 2025 ESRDB market basket percentage increase of 2.7 percent
reduced by the final CY 2025 productivity adjustment of 0.5 percentage
point will 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 overall payments under the ESRD PPS will increase by 2.7 percent
as a result of the finalized policies in this rule.
2. Costs
a. ESRD PPS and AKI
We do not anticipate the provisions of this final rule regarding
ESRD PPS and AKI rates-setting will create additional cost or burden to
ESRD facilities.
b. ESRD QIP
We have made no changes to our methodology for calculating the
annual burden associated with the information collection requirements
for EQRS data validation (previously known as the CROWNWeb validation
study) or NHSN data validation. Although we do not anticipate that the
policies finalized in this final rule regarding ESRD QIP will create
additional cost or burden to ESRD facilities for PY 2027, we are
updating 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.
3. Transfers
We estimate that the updates to the ESRD PPS and AKI payment rates
will result in a total increase of approximately $220 million in
Medicare payments to ESRD facilities in CY 2025, which includes the
amount associated with final updates to the outlier thresholds, and
final updates to the wage index. This estimate includes an increase of
approximately $2 million in Medicare payments to ESRD facilities in CY
2025 due to the updates to the AKI payment rate, of which approximately
20 percent is increased beneficiary coinsurance payments. We estimate
approximately $180 million in transfers from the Federal Government to
ESRD facilities due to increased Medicare program payments and
approximately $40 million in transfers from beneficiaries to ESRD
facilities due to increased beneficiary coinsurance payments because of
this final rule.
We also estimate that the updates to the TDAPA payment policy for
phosphate binders will result in an increase of approximately $40
million in Medicare payments to ESRD facilities in CY 2025, which
includes approximately $30 million in transfers from the Federal
Government to ESRD facilities due to increased Medicare program
payments and approximately $10 million in transfers from beneficiaries
to ESRD facilities due to increased beneficiary coinsurance payments.
4. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this ESRD PPS final rule,
we should estimate the cost associated with regulatory review. Due to
the uncertainty involved with accurately quantifying the number of
entities that will review the ESRD PPS final rule, we assume that the
total number of unique commenters on this year's ESRD PPS proposed
rule, which was 191 for the CY 2025 ESRD PPS proposed rule, is equal to
the number of individual reviewers of this final rule. We acknowledge
that this assumption may understate or overstate the costs of reviewing
this final rule. It is possible that not all commenters reviewed this
year's proposed rule in detail, and it is also possible that some
reviewers chose not to comment on the CY 2025 ESRD PPS proposed rule.
For these reasons we determined that the number of past commenters
would be a fair estimate of the number of reviewers of this final rule.
We used a similar methodology for calculating the regulatory review
costs in the CY 2025 ESRD PPS proposed rule; in that proposed rule we
welcomed any comments on the approach in estimating the number of
entities which would review that proposed rule and did not receive any
direct responses.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this final
[[Page 89198]]
rule, and therefore for the purposes of our estimate we assume that
each reviewer reads approximately 50 percent of this proposal. We
sought comments on this assumption.
Using the May 2023 wage information from the BLS for medical and
health service managers (Code 11-9111), we estimate that the cost of
reviewing this rule is $129.28 per hour, including overhead and fringe
benefits \123\ (https://www.bls.gov/oes/current/oes_nat.htm). Assuming
an average reading speed of 250 words per minute, we estimate that it
will take approximately 260 minutes (4.33 hours) for the staff to
review half of this final rule, which has a total of approximately
130,000 words. For each entity that reviews the rule, the estimated
cost is $559.78 (4.33 hours x $129.28). Therefore, we estimate that the
total cost of reviewing this regulation is $106,917.98 ($559.78 x 191).
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\123\ Calculated by multiplying the mean wage for medical and
health service managers by 2 to account for overhead and fringe
benefits.
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5. Impact Statement and Table
a. CY 2025 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 2024 to estimated payments in CY 2025. To
estimate the impact among various types of ESRD facilities, it is
imperative that the estimates of Medicare payments in CY 2024 and CY
2025 contain similar inputs. Therefore, we simulated Medicare payments
only for those ESRD facilities for which we can calculate both current
Medicare payments and new Medicare payments.
For this final rule, we used CY 2023 data from the Medicare Part A
and Part B Common Working Files as of August 02, 2024, as a basis for
Medicare dialysis treatments and payments under the ESRD PPS. We
updated the 2023 claims to 2024 and 2025 using various updates. The
final updates to the ESRD PPS base rate are described in section II.B.4
of this final rule. Table 19 shows the impact of the estimated CY 2025
ESRD PPS payments compared to estimated Medicare payments to ESRD
facilities in CY 2024.
BILLING CODE 4120-01-P
[[Page 89199]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.022
[[Page 89200]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.023
BILLING CODE 4120-01-C
Column A of the impact table indicates the number of ESRD
facilities for each impact category and column B indicates the number
of dialysis treatments (in millions). The overall effect of the final
routine updates to the outlier payment policy, including final changes
to the inflation factors used for calculating MAP and FDL amounts
described in section II.B.3 of this final rule, is shown in column C.
For CY 2025, the impact on all ESRD facilities because of the final
changes to the outlier payment policy would be an increase in estimated
Medicare payments of approximately 0.4 percent.
Column D shows the effect of the final 2-tiered LVPA as described
in section II.B.8 of this final rule. This adjustment is implemented in
a budget neutral manner, so the total impact of this change will be 0.0
percent. However, there will be distributional impacts of this change,
primarily increasing payments to facilities that furnish fewer than
3,000 treatments by 0.8 percent and lowering payments to ESRD
facilities that furnish between 3,000 and 4,000 treatments by 0.5
percent. Because we are finalizing our proposal to use the scaled
adjustment factors, the only impact of this policy is among ESRD
facilities that are eligible for the LVPA.
Column E shows the effect of year-over-year payment changes related
to the post-TDAPA add-on payment adjustment amounts as described in
section II.B.6 of this final rule and current TDAPA payments. The post-
TDAPA add-on payment adjustment will not be budget neutral, but the
total impact on payment is 0.1 percent due to relatively low
utilization of drugs for which we will pay this adjustment in CY 2025.
Column F reflects the impact of the expansion of outlier
eligibility to formerly composite rate drugs. Overall, the changes to
the outlier policy, including those reflected in column C of this
table, are budget neutral insofar as we estimate that we will better
hit the 1 percent target for outlier payments. These changes will
increase payments for facilities that treat a higher proportion of
exceptionally costly cases.
Column G reflects the effect of the finalized changes to the ESRD
PPS wage index methodology, the adoption of the new OMB CBSA
delineations, the continued application of the 5 percent cap on wage
index decreases, and the rural transition policy as described in
section II.B.2 of this final rule. This update will be budget neutral,
so the total impact of this policy change is 0.0 percent. However,
there will be distributional impacts of this change. The largest
increase will be to ESRD facilities in Puerto Rico and the Virgin
Islands, which would receive 2.6 percent higher payments because of the
updated ESRD PPS wage index. The largest decrease would be for ESRD
facilities in the Pacific Census region, which will receive 2.4 percent
lower payments because of the updated ESRD PPS wage index and
methodological changes.
Column H reflects the overall impact, that is, the effects of the
outlier policy changes, LVPA changes, the post-TDAPA add-on payment
adjustment amounts, the new wage index methodology, the new CBSA
delineations, the rural transition policy, and the payment rate update
as described in section II.B.4 of this final rule. The final ESRD PPS
payment rate update for CY 2025 is 2.2 percent, which reflects the
final ESRDB market basket percentage increase for CY 2025 of 2.7
percent and the productivity adjustment of 0.5 percentage point. We
expect that overall ESRD facilities will experience a 2.7 percent
increase in estimated Medicare payments in CY 2025. The categories of
types of ESRD facilities in the impact table show impacts ranging from
a 0.2 percent increase to a 5.2 percent increase in their CY 2025
estimated Medicare payments.
This table does not include the impact of the inclusion of oral-
only drugs to the ESRD PPS as we are unable to calculate facility level
estimates at this time, nor does it include the impacts of the increase
to the TDAPA amount for phosphate binders as finalized in section
II.B.7.c of this final rule. We cannot include the impact of this final
change in Table 19 because we do not have the patient-level utilization
data required to model facility-level uptake. As noted previously, the
overall impact of this TDAPA increase is approximately $40 million.
Furthermore, we note that the incorporation of oral-only renal dialysis
drugs and biological products into the ESRD PPS beginning in CY 2025 is
provided for by existing regulations and is not impacted by this final
rule, other than the change in the TDAPA amount for phosphate binders.
For public awareness, we estimate an increase in Medicare Part B
spending of approximately $870 million in CY 2025, and a corresponding
decrease in Medicare Part D spending of approximately $690 million in
CY 2025, associated with payment for phosphate binders under the ESRD
PPS.
(2) Effects on Other Providers
Under the ESRD PPS, Medicare pays ESRD facilities a single bundled
payment for renal dialysis services,
[[Page 89201]]
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
2025, 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 2025 would be approximately $6.2
billion. This estimate considers a projected decrease in fee-for-
service Medicare ESRD beneficiary enrollment of 2.1 percent in CY 2025.
(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
2.7 percent overall increase in the CY 2025 ESRD PPS payment amounts,
we estimate that there would be an increase in beneficiary coinsurance
payments of 2.7 percent in CY 2025, which translates to approximately
$40 million.
As we have previously noted, the incorporation of oral-only renal
dialysis drugs and biological products into the ESRD PPS in CY 2025 is
provided for by existing regulations and is not impacted by this final
rule. For public awareness, we estimate an increase in beneficiary
coinsurance payments of $230 million. As noted in section II.B.7 of
this final rule, we anticipate that the inclusion of oral-only drugs in
the ESRD PPS will increase access to these drugs for beneficiaries,
particularly disadvantaged populations who currently do not have Part D
coverage.
(5) Alternatives Considered
(a) Wage Index Changes
We considered, but did not finalize, a one-year delay to the
implementation date for the new ESRD PPS wage index methodology. This
delay would have allowed us further time to consider several potential
methodological suggestions, including MedPAC's suggestions for
smoothing across and variation within CBSAs. However, we have decided
that such a delay is not appropriate, because we believe the new ESRD
PPS wage index methodology is the best estimation available for the
geographic variation in wages ESRD facilities face. We considered
MedPAC's suggestions for the proposed rule and decided that they would
introduce additional complexity and would involve parameters which
could be seen as arbitrary for purposes of estimating wages for
occupations related to furnishing renal dialysis services and involve
lower-quality data sources. These alternatives would not have any
specific impact on small entities as discussed in section VII.E of this
final rule.
(b) Expansion of Outlier Eligibility
We considered only expanding outlier eligibility to drugs and
biological products previously paid for under the TDAPA after the end
of the TDAPA period. As discussed in section II.B.3.b of this final
rule, we have instead decided to finalize to expand outlier eligibility
to all drugs and biological products that were or would have been
composite rate services prior to the inception of the ESRD PPS. We
believe that this is appropriate because formerly composite rate drugs
represent potentially significant costs which are not currently
accounted for by the outlier adjustment. Furthermore, most of the
commenters' concerns with the inclusion of composite rate drugs
revolved around concerns that should we overestimate outliers in one
year we would reduce the ESRD PPS base rate in future years, which is
with a misinterpretation of our outlier policy. These alternatives
would not have any specific impact on small entities as discussed in
section VII.E of this final rule.
(c) TDAPA Amount for Phosphate Binders
We considered, but are not finalizing, paying the TDAPA for
phosphate binders based on 106 percent of ASP, rather than the fixed
addition to the TDAPA amount which we have finalized. Paying the TDAPA
for phosphate binders at 106 percent of ASP for at least 2 years to
mirror our TDAPA payment approach for the first 2 years for
calcimimetics would have many of the same effects of the flat TDAPA
increase we finalized, as we based the size of the flat increase off of
6 percent of TDAPA expenditures. However, as discussed in section
II.B.7.c of this final rule, we believe that paying 106 percent of ASP
could potentially incentivize ESRD facilities to prescribe higher-cost
phosphate binders to receive additional payment. We note that our final
policy, with respect to TDAPA payment for phosphate binders, would best
support small entities, as discussed in section VII.E of this final
rule, as we expect small entities would have less bargaining power than
large entities in negotiating prices for phosphate binders.
(d) Changes to the LVPA
We considered, but did not finalize, a three tier LVPA which would
be funded by eliminating the rural facility adjustment. This was a
suggestion of several commenters who recommended the LVPA be expanded
beyond the current 4,000 treatment volume threshold. However, our
analysis found that the elimination of the rural facility adjustment
would not provide nearly enough funds to establish a third LVPA tier,
even if we were to lower the treatment volume threshold to 5,000 from
the 6,000 suggested by commenters. As discussed in section II.B.8.c of
this final rule, we are finalizing a two-tiered scaled LVPA in part
because it would not lead to any budget neutrality reduction to the
ESRD PPS base rate. In the proposed rule, we presented an alternative
three-tiered LVPA which could be implemented by reducing the base rate,
but commenters were generally not supportive of the idea. Although our
proposal did not involve the elimination of the rural facility
adjustment and the reallocation of those funds, we did not believe that
commenters would support the proposal. Additionally, we believe that
the rural facility adjustment is a useful tool which protects ESRD
facilities in potentially vulnerable areas. The continued use of the
rural facility adjustment likely benefits small entities, as discussed
in section VII.E of this final rule, operating in rural areas. As
discussed previously, eliminating the rural facility adjustment would
not provide enough funds to fully cover the suggested approach, so such
a policy would require budget neutrality reduction which would reduce
payment to small entities that receive the LVPA.
b. Continuation of Approved Transitional Drug Add-On Payment
Adjustments (TDAPA) for New Renal Dialysis Drugs or Biological Products
for CY 2025
Two renal dialysis drugs for which the TDAPA was paid in CY 2024
will continue to be eligible for the TDAPA in CY 2025.
(1) Jesduvroq (Daprodustat)
On July 27, 2023, CMS Transmittal 12157 \124\ implemented the 2-
year TDAPA period specified in Sec. 413.234(c)(1) for Jesduvroq
(daprodustat). The TDAPA payment period began on October 1, 2023, and
will continue through September 30, 2025. As stated previously, TDAPA
[[Page 89202]]
payment is based on 100 percent of ASP. If ASP is not available, then
the TDAPA is based on 100 percent of WAC and, when WAC is not
available, the payment is based on the drug manufacturer's invoice.
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\124\ CMS Transmittal 12157, dated July 27, 2023, is available
at: https://www.cms.gov/files/document/r12157cp.pdf.
---------------------------------------------------------------------------
In the proposed rule, we based our impact analysis on the most
current 72x claims data from November 2023, when utilization first
appeared on the claims, through February 2024. During that timeframe,
the average monthly TDAPA payment amount for Jesduvroq (daprodustat)
was $23,075. In applying that average to each of the 9 remaining months
of the TDAPA payment period in CY 2025, we estimated $207,675 in
spending ($23,075 * 9 = $207,675) of which, approximately $41,535
($207,675 * 0.20 = $41,535) would have been attributed to beneficiary
coinsurance amounts.
Several commenters indicated that GlaxoSmithKline (GSK),
Jesduvroq's manufacturer, is removing the drug from the market. The
FDA's Orange Book \125\ identifies Jesduvroq's marketing status as
discontinued. GSK indicated that the change in marketing status does
not reflect a change in availability or in FDA's approval of the
product. GSK could not state definitively that there will be no TDAPA
claims in CY 2025. Because we have no way of estimating how the change
in Jesduvroq's marketing status will affect utilization, we have
carried the proposed rule estimates forward unchanged. That is, we
estimate $207,675 in spending, of which, approximately $41,535 will be
attributed to beneficiary coinsurance amounts.
---------------------------------------------------------------------------
\125\ FDA's Orange Book: Approved Drug Products with Therapeutic
Equivalence Evaluations. Accessed September 26, 2024. Available at:
https://www.accessdata.fda.gov/scripts/cder/ob/results_product.cfm?Appl_Type=N&Appl_No=216951.
---------------------------------------------------------------------------
(2) DefenCath[supreg] (Taurolidine and Heparin Sodium)
On May 9, 2024, CMS Transmittal 12628 \126\ implemented the 2-year
TDAPA period specified in Sec. 413.234(c)(1) for DefenCath[supreg]
(taurolidine and heparin sodium). The TDAPA payment period began on
July 1, 2024, and will continue through June 30, 2026. As stated
previously, TDAPA payment is based on 100 percent of ASP. If ASP is not
available, then the TDAPA is based on 100 percent of WAC and, when WAC
is not available, the payment is based on the drug manufacturer's
invoice.
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\126\ CMS Transmittal 12628, dated May 9, 2024, is available at:
https://www.cms.gov/files/document/r12628CP.pdf.
---------------------------------------------------------------------------
As of the drafting of this final rule, DefenCath[supreg] was in the
first few months of the TDAPA payment period. Complete claims data,
upon which we could base CY 2025 Medicare impact estimates, was limited
to the month of July 2024. Due to the limited timeframe of complete and
available claims data, we believe that it would have been more
appropriate to base Medicare impacts on cost and utilization volume
estimates furnished by the manufacturer, recognizing that the
manufacturer is most familiar with the market conditions affecting its
products. We requested but did not receive utilization volume estimates
from the manufacturer. Therefore, we based our impact analysis on the
most current 72x claims data for the month of July 2024, when
utilization first appeared on the claims. In July 2024, the average
monthly TDAPA payment amount for DefenCath[supreg] was $2,118,827. In
applying that average to each of the 12 months of the TDAPA payment
period in CY 2025, we estimate $25,425,924 in spending ($2,118,827 * 12
= $25,425,924) of which, approximately $5,085,184 ($25,425,924 * 0.20 =
$5,085,184) will 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 finalized 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 2024 to estimated Medicare
payments in CY 2025. 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 2024
and CY 2025 contain similar inputs. Therefore, we simulated Medicare
payments only for those ESRD facilities for which we can calculate both
current Medicare payments and new Medicare payments.
For this final rule, we used CY 2023 data from the Medicare Part A
and Part B Common Working Files as of August 02, 2024, as a basis for
Medicare for renal dialysis services furnished to individuals with AKI.
We updated the 2023 claims to 2024 and 2025 using various updates. The
updates to the AKI payment amount are described in section III.C of
this final rule. Table 20 shows the impact of the estimated CY 2025
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 2024.
BILLING CODE 4120-01-P
[[Page 89203]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.024
[[Page 89204]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.025
BILLING CODE 4120-01-C
Column A of the impact table indicates the number of ESRD
facilities for each impact category, and column B indicates the number
of AKI dialysis treatments (in thousands). Column C shows the effect of
the final CY 2025 wage index changes, including the changes to the ESRD
PPS wage index methodology, the adoption of the new OMB CBSA
delineations, the continued application of the 5 percent cap on wage
index decreases, and the rural transition policy as described in
section II.B.2.f.(2) of this final rule. We note the rural adjustment
does not apply to beneficiaries with AKI, so this column only
incorporates the budget neutrality factor associated with that policy.
Column D shows the overall impact, that is, the effects of the
final wage index budget-neutrality adjustment factor, wage index
updates, and the payment rate update of 2.2 percent, which reflects the
final ESRDB market basket percentage increase for CY 2025 of 2.7
percent and the final productivity adjustment of 0.5 percentage point,
as well as the training add-on budget neutrality reduction of $0.00. We
expect that overall ESRD facilities will experience a 2.3 percent
increase in estimated Medicare payments in CY 2025 for treatment of AKI
beneficiaries. This table does not include any distributional impacts
of payments to ESRD facilities associated with the extension of payment
for AKI home dialysis or extension of the add-on payment adjustment for
training for home and self-dialysis (outside of the budget-neutrality
reduction, as discussed), as we are unable to estimate potential uptake
at a facility level at this time. The categories of types of ESRD
facilities in the impact table show impacts ranging from an increase of
0.0 percent to an increase of 3.8 percent in their CY 2025 estimated
Medicare payments for renal dialysis services provided by ESRD
facilities to individuals with AKI.
(2) Effects on Other Providers
Under section 1834(r) of the Act, as added by section 808(b) of
TPEA, we are finalizing 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 2025 because 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 coinsurance obligation
when they receive AKI dialysis in the hospital outpatient setting. When
these services are furnished in an ESRD facility, the patients will
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 coinsurance 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
[[Page 89205]]
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 will assist us in developing
knowledgeable, data-driven proposals.
As discussed in section III.B of this final rule, we are finalizing
payment for AKI dialysis in the home setting, and as discussed in
section III.C.3 of this final rule we will apply the home and self-
dialysis training add-on payment adjustment for such services provided
to AKI patients. We considered paying for AKI home dialysis without the
training add-on adjustment; however, we were concerned that access to
home dialysis for AKI beneficiaries could be negatively impacted in the
absence of an add-on payment adjustment to support home dialysis
training. These alternatives would not have any specific impact on
small entities as discussed in section VII.E of this final rule.
d. ESRD QIP
(1) Effects of the PY 2027 ESRD QIP on ESRD Facilities
The ESRD QIP is intended to promote improvements 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 Sec. 413.178(e).
Any reductions in the ESRD PPS payments as a result of a facility's
performance under the PY 2027 ESRD QIP will apply to the ESRD PPS
payments made to the facility for services furnished in CY 2027,
consistent with our regulations at Sec. 413.177.
For the PY 2027 ESRD QIP, we estimate that, of the 7,695 facilities
(including those not receiving a TPS) enrolled in Medicare,
approximately 36.9 percent or 2,750 of the facilities that have
sufficient data to calculate a TPS would receive a payment reduction
for PY 2027. Among an estimated 2,750 facilities that would receive a
payment reduction, approximately 63 percent or 1,730 facilities would
receive the smallest payment reduction of 0.5 percent. We are updating
the estimated impact of the PY 2027 ESRD QIP that we provided in the CY
2024 ESRD PPS final rule (88 FR 76495 through 76497). Based on the
policies finalized in this rule, the total estimated payment reductions
for all the 2,750 facilities expected to receive a payment reduction in
PY 2027 would be approximately $17,887,355. Facilities that do not
receive a TPS do not receive a payment reduction.
Table 21 shows the updated overall estimated distribution of
payment reductions resulting from the PY 2027 ESRD QIP.
[GRAPHIC] [TIFF OMITTED] TR12NO24.026
To estimate whether a facility would receive a payment reduction
for PY 2027, we scored each facility on achievement and improvement on
several clinical measures 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 22) in accordance
with the policies finalized in this final rule. Measures used for the
simulation are shown in Table 22.
[[Page 89206]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.027
For all measures except the SHR clinical measure, the SRR clinical
measure, the STrR measure, and the ICH CAHPS measure, measures with
less than 11 eligible 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. For the ICH CAHPS measure, facilities were required to
have at least 30 survey-eligible patients to be included in the
facility's TPS. Each facility's TPS was compared to an estimated mTPS
and an estimated payment reduction table consistent with the final
policies outlined in section IV.B of this final rule. Facility
reporting measure scores were estimated using available data from CY
2023. 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 final rule, we multiplied the total
Medicare payments to the facility during the 1-year period between
January 2023 and December 2023 by the facility's estimated payment
reduction percentage expected under the ESRD QIP, yielding a total
payment reduction amount for each facility.
Table 23 shows the updated estimated impact of the ESRD QIP payment
reductions to all ESRD facilities for PY 2027. 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 2027 ESRD QIP, the actual
impact of the PY 2027 ESRD QIP may vary significantly from the values
provided here.
[[Page 89207]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.028
[[Page 89208]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.029
(3) Effects on Medicare Beneficiaries
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
continue to monitor and evaluate 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 by examining these impacts through the
analysis of available data from our existing measures.
(4) Alternatives Considered
In section IV.B.2 of this final rule, we are finalizing the
replacement of the Kt/V Dialysis Adequacy Comprehensive clinical
measure with a Kt/V Dialysis Adequacy Measure Topic beginning with PY
2027. We considered not adopting this change. However, we concluded
that replacing this measure was appropriate to ensure that facilities
are scored on Kt/V measure data according to the individual facility's
ESRD patient population and treatment modalities.
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), the CY 2023 ESRD PPS final rule
(87 FR 67136), and the CY 2024 ESRD PPS final rule (88 FR 76344) 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. For the
results of the detailed economic analysis of the ETC Model and a
description of the methodology used to perform the analysis, 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 25 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). The minor methodological change to the
definition of an ESRD Beneficiary is not expected to change this
estimate.
(3) Medicare Estimate--Primary Specification, Assume Rolling Benchmark
[[Page 89209]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.030
In Table 25, 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 change finalized in this rule is not expected to 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 change finalized in this rule is not expected to 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 2022 ESRD PPS
final rule (86 FR 62017).
(6) Effects on Medicare Beneficiaries
Our decision to finalize changes to the definition of an ESRD
Beneficiary for the purposes of attribution is not expected to impact
the findings reported for the effects of ETC Model on 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) and the CY 2022 ESRD PPS final rule (86 FR 61874).
(7) Alternatives Considered
Throughout this final rule, we have identified finalized changes to
our policy and alternatives considered and provided information as to
the likely effects of these alternatives and rationale for our changed
policy.
The Specialty Care Models final rule (85 FR 61114), the CY 2022
ESRD PPS final rule (86 FR 61874), the CY 2023 ESRD PPS final rule (87
FR 67136), the CY 2024 ESRD PPS final rule (88 FR 76344), and the
finalized policy herein address a model specific to ESRD. These rules
provide descriptions of the requirements that we waive, identify the
performance metrics and payment adjustments to be tested, and presents
rationales for our changes, and where relevant, alternatives
considered. For context related to alternatives previously considered
when establishing and modifying the ETC Model we refer readers to
section V.B. and to the previous citations.
D. 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 26 showing the classification of the impact associated with the
provisions of this final rule.
[[Page 89210]]
[GRAPHIC] [TIFF OMITTED] TR12NO24.031
E. Regulatory Flexibility Act (RFA)
The 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 $47 million in any 1 year.\128\ 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 $6.5 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 FFS 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 485 ESRD facilities that are independent and 351 ESRD
facilities that are hospital-based, as shown in the ownership category
in Table 19, to be small businesses. These ESRD facilities represent
approximately 11 percent of all ESRD facilities in our data set.
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\128\ http://www.sba.gov/content/small-business-size-standards.
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Additionally, we identified in our analytic file that there are 792
ESRD facilities that are considered nonprofit organizations, which is
approximately 10 percent of all ESRD facilities in our data set. In
total, accounting for the 369 nonprofit ESRD facilities that are also
considered small businesses, there are 1,259 ESRD facilities that are
either small businesses or nonprofit organizations, which is
approximately 16 percent of all ESRD facilities in our data set.
As its measure of significant economic impact on a substantial
number of small entities, HHS's practice in interpreting the RFA is to
consider effects economically ``significant'' on a ``substantial''
number of small entities only if greater than 5 percent of providers
reach a threshold of 3 to 5 percent or more of total revenue or total
costs. We did not receive any public comments on our regulatory impact
analysis for small entities. As shown in Table 19, we estimate that the
overall revenue impact of this final rule on all ESRD facilities is a
positive increase to Medicare FFS payments by approximately 2.7
percent. For the ESRD PPS updates in this final rule, a hospital-based
ESRD facility (as defined by type of ownership, not by type of ESRD
facility) is estimated to receive a 4.5 percent increase in Medicare
FFS payments for CY 2025. An independent facility (as defined by
ownership type) is likewise estimated to receive a 0.8 percent increase
in Medicare FFS payments for CY 2025. Among hospital-based and
independent ESRD facilities, those furnishing fewer than 3,000
treatments per year are estimated to receive a 5.3 percent increase in
Medicare FFS payments, and those furnishing 3,000 or more treatments
per year are estimated to receive a 2.1 percent increase in Medicare
FFS payments. Among nonprofit ESRD facilities, those furnishing fewer
than 3,000 treatments per year are estimated to receive a 6.0 percent
increase in Medicare FFS payments, and those furnishing 3,000 or more
treatments per year are estimated to receive a 2.8 percent increase in
Medicare FFS payments.
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.
Based on the estimated Medicare payment impacts described
previously, we believe that the change in revenue threshold will be
reached by some categories of small entities as a result of the
policies in this final rule. This analysis is based on the assumptions
described earlier in this section of this final rule as well as the
detailed impact analysis discussed in section VII.C of this final rule,
which includes a discussion of data sources, general
[[Page 89211]]
assumptions, and alternatives considered.
For the ESRD QIP, we estimate that of the 2,750 ESRD facilities
expected to receive a payment reduction as a result of their
performance on the PY 2027 ESRD QIP, 468 are ESRD small entity
facilities. We present these findings in Table 21 (``Updated Estimated
Distribution of PY 2027 ESRD QIP Payment Reductions'') and Table 23
(``Updated Estimated Impact of ESRD QIP Payment Reductions to ESRD
Facilities for PY 2027''). Table 21 shows the updated overall estimated
distribution of payment reductions resulting from the PY 2027 ESRD QIP.
Table 23 shows the updated estimated impact of the ESRD QIP payment
reductions to all ESRD facilities for PY 2027, and also details the
distribution of ESRD facilities by size, geography, and facility type.
For the ETC Model, we do not anticipate any impact on ESRD
facilities from our decision to finalize a change to the definition of
an ESRD Beneficiary for the purposes of beneficiary attribution in the
model. As previously stated, we estimate that the Medicare program
would save a net total of $43 million from the ETC 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.
Therefore, the Secretary has determined that this final rule will
have a significant economic impact, reflecting a positive revenue
increase, on a substantial number of small entities. This RFA section
along with the RIA constitutes our final regulatory flexibility
analysis.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. We do not believe this
final rule would have a significant impact on operations of a
substantial number of small rural hospitals because most dialysis
facilities are freestanding. While there are 108 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 108 rural hospital-
based ESRD facilities would experience an estimated 5.9 percent
increase in payments. Therefore, the Secretary has certified that this
final rule will not have a significant impact on the operations of a
substantial number of small rural hospitals.
F. Unfunded Mandates Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2024, that
threshold is approximately $183 million. 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. Therefore, this final rule does not mandate any requirements
for State, local, or Tribal governments, or for the private sector.
G. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has federalism
implications. We have reviewed this final rule under the threshold
criteria of Executive Order 13132, Federalism, and have determined that
it will not have substantial direct effects on the rights, roles, and
responsibilities of State, local, or Tribal government.
H. Congressional Review Act
This final regulation is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress
and the Comptroller General for review.
VIII. 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 CMS's website
under the regulation number, CMS-1805-F, 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 October 23, 2024.
List of Subjects
42 CFR Part 410
Diseases, Health facilities, Health professions, Laboratories,
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.
42 CFR Part 413
Diseases, Health facilities, Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
42 CFR Part 494
Diseases, Health facilities, Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 512
Administrative practice and procedure, Health care, Health
facilities, Health insurance, Intergovernmental relations, Medicare,
Penalties, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS
0
1. The authority citation for part 410 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.
0
2. Section 410.52 is amended by revising paragraph (a) introductory
text to read as follows:
Sec. 410.52 Home dialysis services, supplies, and equipment: Scope
and conditions.
(a) Medicare Part B pays for the following services, supplies, and
equipment furnished to a patient with ESRD or an individual with Acute
Kidney Injury (AKI) as defined in Sec. 413.371 of this chapter in his
or her home:
* * * * *
[[Page 89212]]
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
3. 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
4. Section 413.196 is amended by revising paragraph (d)(2) to read as
follows:
Sec. 413.196 Notification of changes in rate-setting methodologies
and payment rates.
* * * * *
(d) * * *
(2) The wage index using the most current wage data for occupations
related to the furnishing of renal dialysis services from the Bureau of
Labor Statistics and occupational mix data from the most recent full
calendar year of Medicare cost reports submitted in accordance with
Sec. 413.198(b).
* * * * *
0
5. Section 413.231 is amended by revising paragraph (a) to read as
follows:
Sec. 413.231 Adjustment for wages.
(a) CMS adjusts the labor-related portion of the base rate to
account for geographic differences in the area wage levels using an
appropriate wage index (established by CMS) which reflects the relative
level of wages relevant to the furnishing of renal dialysis services in
the geographic area in which the ESRD facility is located.
* * * * *
0
6. Section 413.234 is amended by revising paragraph (c) introductory
text and adding paragraph (c)(4) to read as follows:
Sec. 413.234 Drug designation process.
* * * * *
(c) Transitional drug add-on payment adjustment. A new renal
dialysis drug or biological product is paid for using a transitional
drug add-on payment adjustment, which is based on 100 percent of
average sales price (ASP), except as provided in paragraph (c)(4) of
this section. If ASP is not available then the transitional drug add-on
payment adjustment 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. Notwithstanding the provisions in
paragraphs (c)(1) and (2) of this section, if CMS does not receive a
full calendar quarter of ASP data for a new renal dialysis drug or
biological product within 30 days of the last day of the 3rd calendar
quarter after we begin applying the transitional drug add-on payment
adjustment for the product, CMS will no longer apply the transitional
drug add-on payment adjustment for that product beginning no later than
2-calendar quarters after we determine a full calendar quarter of ASP
data is not available. If CMS stops receiving the latest full calendar
quarter of ASP data for a new renal dialysis drug or biological product
during the applicable time period specified in paragraph (c)(1) or (2)
of this section, CMS will no longer apply the transitional drug add-on
payment adjustment for the product beginning no later than 2-calendar
quarters after CMS determines that the latest full calendar quarter of
ASP data is not available.
* * * * *
(4) For calendar years 2025 and 2026, the transitional drug add-on
payment adjustment amount for a phosphate binder is based on 100
percent of ASP plus an additional amount derived from 6 percent of per-
patient phosphate binder spending based on utilization and cost data.
* * * * *
0
7. Section 413.236 is amended by revising paragraphs (b)(4) and (c) to
read as follows:
Sec. 413.236 Transitional add-on payment adjustment for new and
innovative equipment and supplies.
* * * * *
(b) * * *
(4) Has a complete Healthcare Common Procedure Coding System
(HCPCS) Level II code application submitted, in accordance with the
HCPCS Level II coding procedures on the CMS website, by the HCPCS Level
II code application deadline for biannual Coding Cycle 2 for non-drug
and non-biological items, supplies, and services as specified in the
HCPCS Level II coding guidance on the CMS website prior to the
particular calendar year;
* * * * *
(c) Announcement of determinations and deadline for consideration
of new renal dialysis equipment or supply applications. CMS will
consider whether a new renal dialysis supply or equipment meets the
eligibility criteria specified in paragraph (b) of this section and
announce the results in the Federal Register as part of its annual
updates and changes to the ESRD prospective payment system. CMS will
only consider a complete application received by CMS by February 1
prior to the particular calendar year. FDA marketing authorization for
the equipment or supply must occur by the HCPCS Level II code
application deadline for biannual Coding Cycle 2 for non-drug and non-
biological items, supplies, and services as specified in the HCPCS
Level II coding guidance on the CMS website prior to the particular
calendar year.
0
8. Section 413.237 is amended by adding paragraph (a)(1)(vii) to read
as follows:
Sec. 413.237 Outliers.
(a) * * *
(1) * * *
(vii) Renal dialysis drugs and biological products that are
Composite Rate Services as defined in Sec. 413.171.
* * * * *
0
9. Section 413.373 is revised to read as follows:
Sec. 413.373 Other adjustments to the AKI dialysis payment rate.
(a) CMS applies the wage-adjusted add-on per treatment adjustment
for home and self-dialysis training as set forth at Sec. 413.235(c) to
payments for AKI dialysis claims that include such training.
(b) The payment rate for AKI dialysis may be adjusted by the
Secretary (on a budget neutral basis for payments under section 1834(r)
of the Act) by any other adjustment factor under subparagraph (D) of
section 1881(b)(14) of the Act.
0
10. Section 413.374 is amended by revising paragraph (a) to read as
follows:
Sec. 413.374 Renal dialysis services included in the AKI dialysis
payment rate.
(a) The AKI dialysis payment rate applies to renal dialysis
services (as defined in subparagraph (B) of section 1881(b)(14) of the
Act) furnished under Part B by a renal dialysis facility or provider of
services paid under section 1881(b)(14) of the Act, including home
services, supplies, and equipment, and self-dialysis.
* * * * *
PART 494--CONDITIONS FOR COVERAGE FOR END-STAGE RENAL DISEASE
FACILITIES
0
11. The authority citation for part 494 continues to read as follows:
Authority: 42 U.S.C. l302 and l395hh.
0
12. Section 494.10 is amended by revising the definitions of ``Home
dialysis'' and ``Self-dialysis'' to read as follows:
[[Page 89213]]
Sec. 494.10 Definitions.
* * * * *
Home dialysis means dialysis performed at home by a patient or
caregiver who has completed an appropriate course of training as
described in Sec. 494.100(a).
Self-dialysis means dialysis performed with little or no
professional assistance by a patient or caregiver who has completed an
appropriate course of training as specified in Sec. 494.100(a).
* * * * *
0
13. Section 494.70 is amended by revising paragraphs (a)(1) and (10)
and (c)(1)(i) to read as follows:
Sec. 494.70 Condition: Patients' rights.
* * * * *
(a) * * *
(1) Respect, dignity, and recognition of his or her individuality
and personal needs, and sensitivity to his or her psychological needs
and ability to cope with kidney failure;
* * * * *
(10) Be informed by the physician, nurse practitioner, clinical
nurse specialist, or physician's assistant treating the patient for
kidney failure of his or her own medical status as documented in the
patient's medical record, unless the medical record contains a
documented contraindication;
* * * * *
(c) * * *
(1) * * *
(i) How plans in the individual market will affect the patient's
access to, and costs for the providers and suppliers, services, and
prescription drugs that are currently within the individual's plan of
care as well as those likely to result from other documented health
care needs. This must include an overview of the health-related and
financial risks and benefits of the individual market plans available
to the patient (including plans offered through and outside the
Exchange).
* * * * *
0
14. Section 494.80 is amended by revising the introductory text to read
as follows:
Sec. 494.80 Condition: Patient assessment.
The facility's interdisciplinary team consists of, at a minimum,
the patient or the patient's designee (if the patient chooses), a
registered nurse, a physician treating the patient for kidney failure,
a social worker, and a dietitian. The interdisciplinary team is
responsible for providing each patient with an individualized and
comprehensive assessment of his or her needs. The comprehensive
assessment must be used to develop the patient's treatment plan and
expectations for care.
* * * * *
0
15. Section 494.90 is amended by revising paragraph (b)(4) to read as
follows:
Sec. 494.90 Condition: Patient plan of care.
* * * * *
(b) * * *
(4) The dialysis facility must ensure that all dialysis patients
are seen by a physician, nurse practitioner, clinical nurse specialist,
or physician's assistant providing dialysis care at least monthly, as
evidenced by a monthly progress note placed in the medical record, and
periodically while the hemodialysis patient is receiving in-facility
dialysis.
* * * * *
0
16. Section 494.100 is amended by revising paragraph (a)(3)(i) to read
as follows:
Sec. 494.100 Condition: Care at home.
* * * * *
(a) * * *
(3) * * *
(i) The nature and management of their kidney failure.
* * * * *
0
17. Section 494.120 is amended by revising the introductory text to
read as follows:
Sec. 494.120 Condition: Special purpose renal dialysis facilities.
A special purpose renal dialysis facility is approved to furnish
dialysis on a short-term basis at special locations. Special purpose
dialysis facilities are divided into two categories: vacation camps
(locations that serve patients with kidney failure while the patients
are in a temporary residence) and facilities established to serve
patients with kidney failure under emergency circumstances.
* * * * *
0
18. Section 494.130 is revised to read as follows:
Sec. 494.130 Condition: Laboratory services.
The dialysis facility must provide, or make available, laboratory
services (other than tissue pathology and histocompatibility) to meet
the needs of the patient. Any laboratory services, including tissue
pathology and histocompatibility must be furnished by or obtained from,
a facility that meets the requirements for laboratory services
specified in part 493 of this chapter.
0
19. Section 494.170 is amended by revising the introductory text to
read as follows:
Sec. 494.170 Condition: Medical records.
The dialysis facility must maintain complete, accurate, and
accessible records on all patients, including home patients who elect
to receive dialysis supplies and equipment from a supplier that is not
a provider of dialysis services and all other home dialysis patients
whose care is under the supervision of the facility.
* * * * *
PART 512--RADIATION ONCOLOGY MODEL AND END STAGE RENAL DISEASE
TREATMENT CHOICES MODEL
0
20. The authority citation for part 512 continues to read as follows:
Authority: 42 U.S.C. 1302, 1315a, and 1395hh.
0
21. Section 512.310 is amended by revising the definition of ``ESRD
Beneficiary'' to read as follows:
Sec. 512.310 Definitions.
* * * * *
ESRD Beneficiary means a beneficiary who meets any of the
following:
(1) Is receiving dialysis or other services for end-stage renal
disease, up to and including the month in which the beneficiary
receives a kidney transplant up to and including the month in which the
beneficiary receives a kidney transplant.
(2) Has already received a kidney transplant and has a non-AKI
dialysis or MCP claim at least 12 months after the beneficiary's latest
transplant date.
(3) Has a kidney transplant failure less than 12 months after the
beneficiary's latest transplant date as identified by:
(i) Two or more MCP claims in the180 days following the date on
which the kidney transplant was received;
(ii) 24 or more maintenance dialysis treatments at any time after
180 days following the transplant date; or,
(iii) Indication of a transplant failure after the beneficiary's
date of transplant based on data from the Scientific Registry of
Transplant Recipients (SRTR) database.
(4) If a beneficiary meets more than one of criteria described in
paragraphs (3)(i) through (iii) of this definition, the beneficiary
will be considered an ESRD beneficiary starting with the earliest month
in which transplant failure was recorded.
* * * * *
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-25486 Filed 11-1-24; 4:15 pm]
BILLING CODE 4120-01-P