[Federal Register Volume 91, Number 122 (Friday, June 26, 2026)]
[Proposed Rules]
[Pages 38784-38875]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-12925]
[[Page 38783]]
Vol. 91
Friday,
No. 122
June 26, 2026
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 413
Medicare Program; CY 2027 Changes to the End-Stage Renal Disease (ESRD)
Prospective Payment System, Acute Kidney Injury Dialysis (AKI) Payment,
and ESRD Quality Incentive Program; Proposed Rule
Federal Register / Vol. 91, No. 122 / Friday, June 26, 2026 /
Proposed Rules
[[Page 38784]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 413
[CMS-1846-P]
RIN 0938-AV81
Medicare Program; CY 2027 Changes to the End-Stage Renal Disease
(ESRD) Prospective Payment System, Acute Kidney Injury Dialysis (AKI)
Payment, and ESRD Quality Incentive Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would update and revise the End-Stage Renal
Disease (ESRD) Prospective Payment System for calendar year 2027. This
rule also proposes to update the payment rate for renal dialysis
services furnished by an ESRD facility to individuals with acute kidney
injury. In addition, this rule proposes to update the requirements for
the ESRD Quality Incentive Program.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by August 24, 2026.
ADDRESSES: In commenting, please refer to file code CMS-1846-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov/docket/CMS-2026-2245. Follow
the ``Submit a comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1846-P, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1846-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
[email protected] or Abigail Ryan (410) 786-4343, 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).
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to
view public comments. CMS will not post on Regulations.gov public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
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 proposed rule, we use CPT[supreg] codes and descriptions to refer
to a variety of services. We note that CPT[supreg] codes and
descriptions are copyright 2020 American Medical Association (AMA). All
Rights Reserved. CPT[supreg] is a registered trademark of the AMA.
Applicable Federal Acquisition Regulations (FAR) and Defense Federal
Acquisition Regulations (DFAR) apply.
I. Executive Summary
A. Purpose
This rule proposes changes related to the End-Stage Renal Disease
(ESRD) Prospective Payment System (PPS) and payment for renal dialysis
services furnished to individuals with acute kidney injury (AKI). This
rule also proposes to update requirements for the ESRD Quality
Incentive Program (QIP).
1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
On January 1, 2011, we implemented the ESRD PPS, a case-mix
adjusted, bundled PPS for renal dialysis services furnished by ESRD
facilities as required by section 1881(b)(14) of the Social Security
Act (the Act), as added by section 153(b) of the Medicare Improvements
for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275).
Section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA,
and amended by section 3401(h) of the Patient Protection and Affordable
Care Act (the Affordable Care Act) (Pub. L. 111-148), established that
beginning calendar year (CY) 2012, and each subsequent year, the
Secretary of the Department of Health and Human Services (the
Secretary) shall annually increase payment amounts by an ESRD market
basket percentage increase, reduced by the productivity adjustment
described in section 1886(b)(3)(B)(xi)(II) of the Act. This rule
proposes updates to the ESRD PPS for CY 2027, including a routine
proposal to rebase and revise the ESRD Bundled (ESRDB) market basket.
This rule also proposes to modify the ESRD PPS base rate to reflect the
incorporation of phosphate binders \1\ into the ESRD PPS bundled
payment and to make budget neutral changes to certain ESRD PPS payment
adjustments, including proposed changes to the case mix adjusters for
pediatric ESRD patients, changes to the low-volume payment adjustment
(LVPA), and modifications to the TDAPA and post-TDAPA add-on payment
adjustment.
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\1\ We note that all currently available phosphate binders are
oral. Throughout this rule, we use the term ``oral phosphate
binders'' when specifically discussing these drugs in certain
contexts, such as the TDAPA or historical payment policies. The
proposed CY 2027 ESRD PPS base rate increase would encompass all
current and future phosphate binders, including a hypothetical
future injectable phosphate binder or other form of administration.
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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
[[Page 38785]]
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 rule
proposes updates to the AKI dialysis payment rate for CY 2027. The AKI
dialysis payment rate update would be indirectly affected by the
proposed rebasing and revision of the ESRDB market basket under the
ESRD PPS because the AKI dialysis payment rate is the ESRD PPS base
rate, which is annually updated by the ESRDB market basket percentage
increase factor minus a productivity adjustment, adjusted by the wage
index. The proposed change to the ESRD PPS case mix adjusters for
pediatric ESRD patients, the proposed expansion of the LVPA, and the
proposed technical changes to the TDAPA and post-TDAPA add-on payment
adjustment would not directly affect the CY 2027 AKI dialysis payment
rate update.
3. End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
The ESRD QIP is authorized by section 1881(h) of the Act. The
Program establishes incentives for facilities to achieve high quality
performance on measures with the goal of improving outcomes for ESRD
beneficiaries. This proposed rule proposes the following changes to the
ESRD QIP measure set beginning with PY 2029: replace the Hypercalcemia
reporting measure with the Facility-Level Percentage of Chronic
Hyperphosphatemia in Dialysis Patients (Hyperphosphatemia) clinical
measure, update the National Healthcare Safety Network Bloodstream
Infection (NHSN BSI) clinical measure, remove the Medication
Reconciliation (MedRec) reporting measure, and remove the COVID-19
Vaccination Coverage Among Healthcare Personnel (HCP) reporting
measure. Finally, this proposed rule requests public comment on the
inclusion of the Dialysis Facility Discussion of Patient Life Goals (D-
PaLS) Patient-Reported Outcome Performance Measure (PRO-PM) in the ESRD
QIP.
4. Requests for Information (RFIs) on Advancing Dialysis Care
This proposed rule includes RFIs to solicit public input to inform
potential future policy development related to increasing home dialysis
uptake, improving palliative dialysis, and supporting alternative
dialysis schedules. We seek to better understand how Medicare payment
policy may support care for ESRD beneficiaries while maintaining the
integrity of existing prospective payment systems, including the ESRD
PPS, AKI dialysis payment, the Hospice benefit (section 1814(i) of the
Act), and the Home Health PPS (section 1895 of the Act).
B. Summary of the Major Provisions
1. ESRD PPS
Proposed rebasing and revising of the End-Stage Renal
Disease Bundled (ESRDB) market basket for CY 2027: We are proposing to
rebase and revise the ESRDB market basket to a 2024 base year,
reflecting the most recent and complete set of Medicare cost report
data as well as other publicly available data. In addition, we are
proposing to update the labor-related share of the ESRD PPS base rate
to reflect the proposed 2024 base year labor-related cost share weights
designated in the ESRDB market basket.
Proposed update to the ESRD PPS base rate for CY 2027: The
proposed CY 2027 ESRD PPS base rate is $299.55, an increase from the CY
2026 ESRD PPS base rate of $281.71. This proposed amount reflects the
application of the proposed wage index budget neutrality adjustment
factor (1.00267), the proposed addition to the base rate of $15.96 to
include phosphate binders, the budget neutrality factor for the
proposed budget neutral changes to several payment adjustments
(0.98783), and a proposed ESRDB market basket update of 1.6 percent as
required by section 1881(b)(14)(F)(i)(I) of the Act, equaling $299.55
((($281.71 + $15.96) x 1.00267 x 0.98783) x 1.016 = $299.55).
Proposed annual update to the wage index: We adjust the
ESRD PPS wage index on an annual basis using the most current mean
hourly wage data for occupations related to the furnishing of renal
dialysis services from the Bureau of Labor Statistics (BLS)
Occupational Employment and Wage Statistics (OEWS) program and
occupational mix data from the most recent full CY of freestanding ESRD
facility Medicare cost reports. This wage index uses the latest core-
based statistical area (CBSA) delineations to account for differing
wage levels in areas in which ESRD facilities are located. For CY 2027,
we are proposing to update the wage index based on this methodology and
the latest available data.
Proposed annual update to the outlier policy: We are
proposing to update the outlier policy based on the most current data
and established methodology. Accordingly, we are proposing to update
the Medicare allowable payment (MAP) amounts for adult and pediatric
patients for CY 2027 using the latest available CY 2025 claims data. We
are proposing to update the ESRD outlier services fixed dollar loss
(FDL) amount for pediatric patients using the latest available CY 2025
claims data and update the FDL amount for adult patients using the
latest available claims data from CY 2023, CY 2024, and CY 2025. For
pediatric beneficiaries, the FDL amount would increase from $162.43 to
$206.43, and the MAP amount would increase from $50.19 to $60.86, as
compared to CY 2026 values. For adult beneficiaries, the FDL amount
would increase from $14.80 to $114.98, and the MAP amount would
increase from $23.68 to $41.28, as compared to CY 2026 values. The 1.0
percent target for outlier payments was not achieved in CY 2025, as
outlier payments represented approximately 0.9 percent of total
Medicare payments. Our current estimates indicate outlier payments are
above the 1.0 percent target for CY 2026, which also reflects the
underlying utilization and cost trends that are contributing to
increases in the MAP and FDL amounts.
Proposed update to the offset amount for the transitional
add-on payment adjustment for new and innovative equipment and supplies
(TPNIES) for CY 2027: The proposed CY 2027 average per treatment offset
amount for the TPNIES for capital-related assets that are home dialysis
machines is $10.60. This proposed offset amount reflects the
application of the proposed ESRDB market basket update of 1.6 percent
($10.43 x 1.016 = $10.60). There are no capital-related assets set to
receive the TPNIES in CY 2027 for which this offset would apply.
Proposed update to the post-TDAPA add-on payment
adjustment amounts: We calculate the post-TDAPA add-on payment
adjustment in accordance with 42 CFR 413.234(g). We are proposing
modifications to the post-TDAPA add-on payment adjustment to calculate
the adjustment quarterly and publish the post-TDAPA add-on payment
adjustment amount via Change Request (CR). The estimated post-TDAPA
add-on payment adjustment amount for Korsuva[supreg] is $0.1068 per
treatment, which would be included in the calculation of the total
post-TDAPA add-on payment adjustment for only the first quarter of CY
2027. Accordingly, for the first quarter of CY 2027, this amount would
be incorporated into ESRD PPS payments for all dialysis treatments and
adjusted by applicable patient-level adjustment factors. The estimated
post-TDAPA add-on payment adjustment amount for DefenCath[supreg] is
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$5.5951 per treatment, which would be included in the calculation for
each quarter of CY 2027. The estimated post-TDAPA add-on payment
adjustment amount for Vafseo[supreg] is $0.9437 per treatment, which
would be included in the calculation for each quarter of CY 2027. We
would finalize the post-TDAPA add-on payment adjustment amounts for
each of these drugs, conditional on the continued receipt of ASP data,
in the final rule. Should the proposal to update the post-TDAPA add-on
payment adjustment amounts quarterly be finalized, we would only
finalize the post-TDAPA add-on payment adjustment amount for the first
quarter of CY 2027 in that final rule and would publish the amounts for
the other quarters in CRs published after that final rule. The final
post-TDAPA add-on payment adjustment amount for a given quarter would
be added to ESRD PPS payments for all dialysis treatments furnished
during that quarter and would be adjusted by applicable patient level
adjustment factors.
Proposed incorporation of phosphate binders into the base
rate: We are proposing to incorporate phosphate binders into the ESRD
PPS base rate at the end of the TDAPA period for the drugs, for CY 2027
and beyond. We are proposing to increase the ESRD PPS base rate by
$15.96. This proposed amount would include an increase to account for
operational costs, as discussed in section II.B.7. of this proposed
rule.
Proposed expansion of the LVPA: We are proposing to expand
the LVPA to ESRD facilities which furnish up to 8,000 treatments per
year. We are proposing to make payments based on 6 tiers of volume. We
are proposing that this change be budget neutral with a budget
neutrality factor of 0.98898.
Proposed modifications to certain adjustments for
pediatric ESRD patients: We are proposing to modify the case mix
adjusters for pediatric ESRD patients. Additionally, we are proposing
to allow ESRD facilities to receive the LVPA for pediatric ESRD
patients. These proposals coincide with the end of the Transitional
Pediatric ESRD Add-on Payment Adjustment (TPEAPA) as of December 31,
2026. We are proposing permanent policies to address payment for
pediatric ESRD patients after the temporary increase through TPEAPA is
no longer available.
Proposed modifications to the home and self-dialysis
training add-on: We are proposing to increase the home and self-
dialysis training add-on payment adjustment to $138.22 from the current
amount of $95.60. We are also proposing to allow training sessions
during the onset period (the first 120 days of ESRD dialysis). For the
reasons discussed in section II.B.10. of this proposed rule, we are
proposing that this change be budget neutral with a budget neutrality
factor of 0.99884.
Proposed modifications to the TDAPA and post-TDAPA add-on
payment adjustment: We are proposing that, when Average Sales Price
(ASP) data is not usable because ASP is zero or negative, we would use
the most recent usable quarter of ASP data, if available, as the basis
for the TDAPA and the post-TDAPA add-on payment adjustment.
2. Payment for Renal Dialysis Services Furnished to Individuals With
AKI
Proposed update to the dialysis payment rate for
individuals with AKI: We are proposing to update the AKI dialysis
payment rate for CY 2027. The proposed CY 2027 payment rate is $299.55,
which is the same as the proposed CY 2027 ESRD PPS base rate.
3. ESRD QIP
We are proposing to replace the Hypercalcemia reporting measure
with the Hyperphosphatemia clinical measure beginning with PY 2029.
Beginning with PY 2029, we are proposing to update the NHSN BSI
clinical measure to use the most recently available national baseline
data and to update the risk adjustment methodology. We are proposing to
remove the MedRec reporting measure and the COVID-19 Vaccination
Coverage Among HCP reporting measure from the ESRD QIP measure set
beginning with PY 2029. We are also including an RFI on the potential
inclusion of the Dialysis Facility Discussion of Patient Life Goals
Patient-Reported Outcome Performance measure (D-PaLS PRO-PM) in the
ESRD QIP.
4. RFIs on Advancing Dialysis Care
These RFIs solicit comments on increasing home dialysis uptake,
improving palliative dialysis care, and supporting alternative dialysis
schedules.
C. Summary of Costs and Transfers
In section VIII.C.5. of this proposed rule, we set forth a detailed
analysis of the impacts that the proposed changes would have on
affected entities and beneficiaries. Table 1 summarizes the impacts of
each proposed change in this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP26JN26.016
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1. Impacts of the Proposed Updates to the ESRD PPS
The impact table in section VIII.C.5.a. of this proposed rule
displays the estimated change in Medicare payments to ESRD facilities
in CY 2027 compared to estimated Medicare payments in CY 2026. The
overall impact of the proposed CY 2027 payment changes is projected to
be a 1.1 percent increase in Medicare payments. Hospital-based ESRD
facilities would have an estimated 2.0 percent increase in Medicare
payments compared with freestanding ESRD facilities with an estimated
1.1 percent increase. We estimate that the aggregate Medicare program
payments under the ESRD PPS would increase by approximately $70 million
in CY 2027 compared to CY 2026 because of the proposed payment policies
in this rule. Because of the projected 1.1 percent overall payment
increase, we estimate there would be an increase in beneficiary
coinsurance payments of 1.1 percent in CY 2027, which translates to
approximately $20 million. This overall $90 million estimated increase,
or 1.1 percent, includes the estimated impact of the proposed ESRD PPS
market basket update of 1.6 percent ($130 million), as well as the
estimated changes in payments associated with several proposed changes
that are expected between CY 2026 and 2027. First, as discussed in
section II.B.3.b. of this proposed rule, we estimate that outlier
payments in CY 2026 will be approximately 3.0 percent of total ESRD PPS
payments. Accordingly, the proposed increases to the FDL and MAP
amounts for CY 2027 are projected to reduce ESRD PPS payments by
approximately 1.9 percent ($150 million). At the same time, we estimate
that approximately $430 million will be paid through the TDAPA for
DefenCath[supreg], Vafseo[supreg], and phosphate binders in CY 2026.
The end of the TDAPA periods for these drugs is projected to result in
a corresponding decrease to CY 2027 payments of $430 million (5.5
percent), which is offset by the proposed 5.3 percent increase to the
ESRD PPS base rate for phosphate binders and the estimated 2.0 percent
increase in payments under the post-TDAPA add-on payment adjustment in
CY 2027. The net difference between estimated CY 2026 TDAPA payments
and estimated CY 2027 payments through the post-TDAPA add-on payment
adjustment and the ESRD PPS base rate, including the incorporation of
phosphate binders, is a 1.5 percent increase in payments to ESRD
facilities. For CY 2027, we estimate total payments associated with the
post-TDAPA add-on payment adjustment would be approximately $170
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(c) to
establish the TDAPA, a transitional drug add-on payment adjustment for
certain new renal dialysis drugs and biological products; Sec. 413.236
to establish the TPNIES, a transitional add-on payment adjustment for
certain new and innovative equipment and supplies; and Sec. 413.234(g)
to establish the post-TDAPA add-on payment adjustment. The TDAPA, the
TPNIES, and the post-TDAPA add-on payment adjustment are not budget
neutral. As discussed in section II.D. of this proposed rule, there
will be no new or continuing TPNIES payments for CY 2027. As discussed
in section II.E. of this proposed rule, there are currently no
continuing TDAPA payments in CY 2027.
2. Impacts of the Proposed Payment Rate for Renal Dialysis Services
Furnished to Individuals With AKI
The impact table in section VIII.C.5.c. of this proposed rule
displays the estimated change in Medicare payments to ESRD facilities
for renal dialysis services furnished to individuals with AKI for CY
2027 compared to estimated Medicare payments for such services in CY
2026. The overall impact of the proposed CY 2027 changes is projected
to be a 6.0 percent increase in Medicare payments for individuals with
AKI. Hospital-based ESRD facilities would have an estimated 5.9 percent
increase in Medicare payments compared with freestanding ESRD
facilities that would have an estimated 6.0 percent increase. The
overall impact reflects the effects of the proposed Medicare ESRD PPS
payment rate update and the proposed CY 2027 ESRD PPS wage index and
proposed labor related share of 63.5 percent. We estimate that the
aggregate Medicare payments made to ESRD facilities for renal dialysis
services furnished to individuals with AKI, at the proposed CY 2027
ESRD PPS base rate, would increase by approximately $5 million in CY
2027 compared to CY 2026.
3. Impacts of the PY 2029 ESRD QIP
We estimate that, as a result of previously finalized policies and
changes to the ESRD QIP that we are proposing, the overall economic
impact of the PY 2029 ESRD QIP would be approximately $125.4 million.
The $125.4 million estimate for PY 2029 includes $102.1 million in
costs associated with the collection of information requirements and
approximately $23.3 million in payment reductions across all
facilities.
4. RFIs on Advancing Dialysis Care
These RFIs do not propose any policy changes and therefore do not
have a direct economic impact under Executive Order 12866.
II. Calendar Year (CY) 2027 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 \2\ (excluding oral-only ESRD-
related drugs). Consistent with this requirement, in the CY 2014 ESRD
PPS final rule, we finalized $29.93 as the total drug utilization
reduction and finalized a policy to implement the amount over a 3- to
4-year transition period (78 FR 72161 through 72170).
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\2\ 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
proposed rule except when 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
[[Page 38788]]
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. Effective January 1, 2025, all oral-only renal dialysis drugs and
biological products are paid for under the ESRD PPS.
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, and
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 dialysis (PD) or hemodialysis
(HD) (Sec. 413.235(a) and (b)(1)).
The ESRD PPS provides four facility-level adjustments. The first
payment adjustment reflects differences in area wage levels developed
from core-based statistical areas (CBSAs) (Sec. 413.231). The second
payment adjustment, the low volume payment adjustment (LVPA), accounts
for ESRD facilities furnishing a low volume of dialysis treatments,
with two tiers such that smaller low-volume facilities receive a higher
payment adjustment (Sec. 413.232). The third payment adjustment
accounts for ESRD facilities furnishing renal dialysis services in a
rural area (Sec. 413.233(a)). The fourth payment adjustment, the non-
contiguous areas payment adjustment (NAPA), accounts for non-labor
costs for ESRD facilities in certain non-contiguous areas of the U.S.
(Sec. 413.233(b)).
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 for CYs 2024 through 2026 (Sec.
413.235(b)(2)); \3\ 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\ As the TPEAPA only applies for CYs 2024, 2025, and 2026, it
will not apply for the CY 2027 payment year.
---------------------------------------------------------------------------
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 24, 2025, 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 2026 ESRD PPS final rule.'' In that rule (90 FR 53068 through
53142), we updated the ESRD PPS base rate, wage index, and outlier
policy for CY 2026. This rule also finalized modifications to the
eligibility timeframe for the TDAPA and established a new payment
adjustment for ESRD facilities in certain non-contiguous areas, the
NAPA. For further detailed information regarding the CY 2026 updates
and policy changes, see 90 FR 53068.
B. Proposed Provisions of the CY 2027 ESRD PPS Update
1. Proposed Rebasing and Revising of the ESRD Bundled (ESRDB) Market
Basket; and Proposed CY 2027 Market Basket Percentage Increase,
Productivity Adjustment, and Labor-Related Share (LRS)
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 increase
factor and reduced by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act. The application of the productivity
adjustment may result in the increase factor being less than 0.0 for a
year and may result in payment rates for a year
[[Page 38789]]
being less than the payment rates for the preceding year. Section
1881(b)(14)(F)(i) of the Act also provides that the market basket
increase factor should reflect the changes over time in the prices of
an appropriate mix of goods and services included in renal dialysis
services.
As required under section 1881(b)(14)(F)(i) of the Act, CMS
developed an all-inclusive ESRD Bundled (ESRDB) input price index using
CY 2008 as the base year effective for CY 2012 (75 FR 49151 through
49162). We subsequently rebased and revised 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), and to a base year of CY 2016 in the CY 2019 ESRD
PPS final rule (83 FR 56951 through 56964). In the CY 2023 ESRD PPS
final rule (87 FR 67141 through 67157), we finalized a rebased ESRDB
input price index to reflect a CY 2020 base year. Effective for CY
2027, we are proposing to rebase and revise the ESRDB market basket to
a 2024 base year.
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.
The index itself is constructed in three steps. First, a base
period is selected (in this proposed rule, we propose to use 2024 as
the base period) and total base period costs are estimated for a set of
mutually exclusive and exhaustive spending categories, with the
proportion of total costs that each category represents being
calculated. These proportions are called cost weights. Second, each
cost category is matched to an appropriate price or wage variable,
referred to as a ``price proxy.'' In almost every instance, these price
proxies are derived from publicly available statistical series that are
published on a consistent schedule (preferably at least on a quarterly
basis). Finally, the cost weight for each cost category is multiplied
by the level of its respective price proxy. The sum of these products
(that is, the cost weights multiplied by their price index levels) for
all cost categories yields the composite index level of the market
basket in a given period. Repeating this step for other periods
produces a series of market basket levels over time. Dividing an index
level for a given period by an index level for an earlier period
produces a rate of growth in the input price index over that timeframe.
As previously noted, the market basket is described as a fixed-
weight index because it represents the change in price over time of a
constant mix (quantity and intensity) of goods and services needed to
provide renal dialysis services. The effects on total costs resulting
from changes in the mix of goods and services purchased after the base
period are not measured. For example, an ESRD facility hiring more
staff to accommodate the needs of patients would increase the volume of
goods and services purchased by the ESRD facility but would not be
factored into the price change measured by a fixed-weight ESRDB market
basket. Only when the index is rebased would changes in the quantity
and intensity be captured, with those changes being reflected in the
cost weights. Therefore, we rebase the market basket periodically so
that the cost weights reflect changes between base periods in the mix
of goods and services that ESRD facilities purchase to furnish ESRD
treatment.
We last rebased the ESRDB market basket cost weights effective for
CY 2023 (87 FR 67141 through 67157), with 2020 data used as the base
period for the construction of the market basket cost weights. For this
CY 2027 ESRD PPS proposed rule, we propose to rebase the ESRDB market
basket to reflect the 2024 cost structure for ESRD facilities and to
revise applicable cost categories and price proxies used to determine
the ESRDB market basket, as discussed in this proposed rule.
We refer to the proposed market basket as a CY market basket
because the base period for all price proxies and weights is set to CY
2024 (that is, the average index level for CY 2024 is equal to 100).
The major source data for the proposed ESRDB market basket is the 2024
Medicare cost reports (Form CMS-265-11, OMB No. 0938-0236),
supplemented with 2022 data from the United States (U.S.) Census
Bureau's Services Annual Survey (SAS) inflated to 2024 levels and the
Bureau of Economic Analysis's (BEA) 2017 Benchmark Input-Output (I-O)
data, inflated to 2024. The 2022 SAS data and 2017 Benchmark I-O data
are the most recent year of detailed cost data published by the Census
Bureau and the BEA for North American Industry Classification System
(NAICS) Code 6214: Outpatient Care Centers, which is the 4-digit
industry code that Kidney Dialysis Centers are classified within. We
also are proposing to use May 2024 OEWS data from BLS for NAICS 6214 to
further disaggregate the Wages and Salaries and Employee Benefits cost
weights into occupational categories. We provide more detail on our
proposed methodology in section II.B.1.b. of this proposed rule.
In the following section, we provide an overview of the proposed
ESRDB market basket, describe the proposed methodologies for developing
the cost weights, and provide information on the proposed price
proxies. Then, we present the proposed CY 2027 market basket update and
labor-related share based on the proposed 2024-based ESRDB market
basket.
b. Proposed Rebasing and Revising of the ESRDB Market Basket
The terms ``rebasing'' and ``revising,'' while often used
interchangeably, denote different activities. ``Rebasing'' means moving
the base year for the structure of costs of an input price index (for
example, in this proposed rule, we propose to shift the base year cost
structure from 2020 to 2024). ``Revising'' means changing data sources
or price proxies used in the input price index. For CY 2027, we are
proposing to rebase the ESRDB market basket to reflect the 2024 cost
structure of ESRD facilities and to revise the index, that is, make
changes to cost categories or price proxies used in the index.
We invite public comments on our proposed methodology for deriving
the proposed 2024-based ESRDB market basket discussed in this section
of the proposed rule.
(1) Development of Cost Categories and Weights
(a) Use of Medicare Cost Report Data
The major source of cost data for developing the proposed rebased
and revised ESRDB market basket cost weights is the 2024 Medicare cost
reports. The 2024 Medicare cost reports are for those freestanding ESRD
facilities whose cost reporting period began on or after October 1,
2023, and before October 1, 2024 (approximately 95 percent of
freestanding ESRD facilities had a begin date on January 1, 2024,
approximately 4 percent had a begin date prior to January 1, 2024, and
approximately 1 percent had a begin date after January 1, 2024). Using
this methodology allowed our sample to include ESRD facilities with
varying cost report years including, but not limited to, the federal
fiscal year (FY) or CY. We propose to use 2024 as the base year because
we believe that the 2024 Medicare cost reports represent the most
recent, complete set of Medicare cost report data available to develop
cost weights for ESRD facilities at the time of rulemaking. We are
proposing to maintain our policy of using data from freestanding ESRD
facilities (which
[[Page 38790]]
account for over 95 percent of total ESRD facilities in CY 2024)
because freestanding ESRD facility data reflects only the cost
structure faced by the ESRD facility itself. In contrast, cost data for
hospital-based ESRD facilities reflect the allocation of overhead from
the entire institution.
The current set of instructions and associated forms for the
Medicare cost reports for ESRD facilities (Form 265-11, OMB No. 0938-
0236) can be found in Chapter 42 of the Provider Reimbursement Manual
at the following website (https://www.cms.gov/regulations-and-guidance/guidance/manuals/paper-based-manuals-items/cms021935). We reviewed cost
data from freestanding ESRD Medicare cost reports (CMS Form 265-11, OMB
No. 0938-0236) for 2024 for each facility that reported costs and
payments.
The major types of costs underlying the proposed 2024-based ESRDB
market basket are derived from the Medicare cost reports (Form 265-11,
OMB No. 0938-0236). Specifically, we propose to use the Medicare cost
reports for eleven specific types of costs: Wages and Salaries;
Employee Benefits; Pharmaceuticals (both Erythropoiesis Stimulating
Agents (ESAs) and All Other Drugs in the ESRDB PPS bundled payment);
Supplies; Laboratories; Housekeeping; Operations & Maintenance;
Capital-related: Buildings and Fixtures; Capital-related: Moveable
Equipment; Professional Liability Insurance; and Administrative &
Other. Total Costs are defined as the sum of the eleven cost categories
and associated costs identified previously.
To create a market basket that is representative of ESRDB
facilities and to help ensure the major cost weights accurately reflect
the percentage of total costs for furnishing ESRD treatment, we propose
to apply edits to remove reporting errors and outliers. Specifically,
edits were applied to include only Medicare cost reports that had total
costs greater than zero. Total costs as reported on the Medicare cost
report include those costs reimbursable under the ESRD PPS. For
example, we excluded costs related to vaccines from total expenditures
since these are not paid for under the ESRD PPS. Next, to reduce
potential distortions from outliers in the calculation of the
individual cost weights for the major expenditure categories for each
cost category, values less than the 5th percentile or greater than the
95th percentile were excluded from the major cost weight computations.
The resulting 2024 data set, after removing cost reports with total
costs equal to or less than zero and excluding outliers, included
information from approximately 6,514 independent ESRD facilities' cost
reports from an available pool of 7,297 cost reports (roughly 89
percent of the universe). This sample of ESRD facilities is
representative of the national universe of providers by ownership-type
(proprietary, nonprofit, and government) and by urban/rural status.
Since each cost weight is determined independently, that is, the 5
percent trim is applied to each cost category, the resulting weights
may not sum to 100.0. We propose normalizing the results proportionally
so that the sum of each of the cost category weights will equal 100.0.
A similar methodology was used to derive the major cost weights in the
2020-based ESRDB market basket.
We note that for the 2024 Medicare cost reports, a discrepancy was
found with most Medicare cost reports submitted by a major large
dialysis organization (LDO) where the Medicare cost report field
designating the facility as a chain was completed incorrectly.
Worksheet S, Part II, column 1, line 19 states ``Are you part of a
chain organization? Enter ``Y'' for yes or ``N'' for no. If yes,
complete lines 20 through 22.'' Many of these facilities entered ``N'';
however, they provided the location of the chain organization in lines
Worksheet S, Part II, lines 20 through 22, indicating that the correct
response to line 19 should have been ``Y''. (We note that these
facilities had also indicated being part of a chain organization in
their prior year's cost report.) This led to reporting of
Administrative & Other net expenses that was inconsistent with the
chain designation. Worksheet A-3 provides for the computation of any
needed adjustments to costs applicable to services, facilities, and
supplies furnished to the facility by a related organization (by common
ownership or control). This worksheet is potentially completed when a
facility answers `Y' to Worksheet S, Part II. These adjustments to
costs are transferred to Worksheet A, column 7 (to be reflected in
Worksheet A, column 8) and, therefore, would then be reflected in the
Administrative & Other net expenses.
To correct this misreporting, we first checked if the value
reported on Worksheet A-3, Part B, column 1, line 1 was missing or 0,
and whether the value reported on Worksheet A-3, Part B, column 6, line
1 was greater than zero. If these conditions were satisfied, we added
the dollar ($) value of the related organization adjustment (Worksheet
A-3, Part B, column 6, line 1) to the Administrative & Other cost
center net expenses reported on Worksheet B, column 9, line 8.01. For
any facility that didn't have a discrepancy, no adjustment was required
to the Administrative & Other net expenses.
(i) Wages and Salaries Costs
We propose to determine Wages and Salaries costs as the sum of (1)
direct patient care wages and salaries costs and (2) non-direct patient
care wages and salaries costs. Direct patient care wages and salaries
for 2024 are equal to the sum of costs from Worksheet B, column 4.01
(salaries for dialysis equipment technicians) and column 5 (direct
patient care salaries), lines 8.01 through 17.03 (reimbursable cost
centers) of the Medicare cost reports. Non-direct patient care wages
and salaries are equal to the sum of all other wages and salaries costs
for non-health workers, which we are proposing to derive using the
following steps:
Step 1: To capture the salary costs associated with non-direct
patient care cost centers, we calculated salary percentages for non-
direct patient care from Worksheet A of the Medicare cost reports. The
estimated ratios were calculated as the ratio of salary costs
(Worksheet A, columns 1 and 2) to total costs (Worksheet A, column 4).
The salary percentages were calculated for seven distinct groups of
cost centers: `Operations & Maintenance of Plant' combined with
`Capital Related Costs-Renal Dialysis Equipment' (line 3 and 6),
Housekeeping (line 4), Employee Health and Wellness (EH&W) Benefits for
Direct Patient Care (line 8), Supplies (line 9 and 9.01), Laboratory
(line 10), Administrative & General (line 11), and Drugs (line 12).
Step 2: We then multiplied the salary percentages computed in step
1 by the total net costs for each corresponding reimbursable cost
center as reported on Worksheet B. The Worksheet B totals are based on
the sum of reimbursable costs reported on lines 8.01 through 17.03. For
example, the salary percentage for Supplies (as measured by line 9 and
9.01 on Worksheet A) was applied to the total net costs for the
Supplies cost center (the sum of costs reported on Worksheet B, column
7, lines 8.01 through 17.03). We complete this calculation for each of
the seven groups of cost centers listed in step 1.
Step 3: The estimated wages and salaries for each of the non-direct
patient cost centers in step 2 were summed and then added to the direct
patient care wages and salaries costs to calculate total Wages and
Salaries costs.
[[Page 38791]]
(ii) Employee Benefits Costs
We propose to determine the Employee Benefits costs as the sum of
direct patient care EH&W benefits (which we will refer to as direct
patient care employee benefit costs) and estimated non-direct patient
care employee benefit costs. Direct patient care employee benefit costs
are reported on Worksheet B, column 6, lines 8.01 through 17.03 of the
Medicare cost reports. Non-direct patient care employee benefit costs
are not reported separately but are included in Worksheet A, column 3
(``Other''). We propose to derive the non-direct patient care benefit
costs using the following steps:
Step 1: We calculated the ratio of direct patient care employee
benefit costs to direct patient care salaries for each facility. This
ratio is calculated as direct patient care employee benefit costs
(Worksheet B, column 6, lines 8.01 through 17.03) divided by the direct
patient care wages and salaries costs (Worksheet B, columns 4.01 and 5,
lines 8.01 through 17.03).
Step 2: We estimate total salaries for all non-direct patient care
cost centers except Administrative & Other. This would be the sum of
direct patient care salaries plus estimated salaries for the non-direct
patient care cost centers: EH&W benefits, pharmaceuticals, supplies,
laboratory, housekeeping, and operation and maintenance of plant and
equipment.
Step 3: To determine estimated non-direct patient care employee
benefit costs for all cost centers other than Administrative & Other we
multiply the costs from step 2 by the ratio determined in step 1.
Step 4: To calculate the employee benefit costs for Administrative
& Other cost centers, we first estimate adjusted Administrative & Other
costs by subtracting Professional Liability Insurance costs, estimated
employee benefits costs for all workers except those associated with
the Administrative & Other cost center (as derived in step 3), and
Administrative & Other costs associated with Non-ESRD related costs or
costs that are paid outside the bundle (Worksheet B, column 9, lines 5
through 7).
Step 5: We estimate the adjusted Administrative & Other salary
costs by multiplying the salary percentage for Administrative & Other
cost centers (calculated in step 1 of the wages and salaries section)
by the adjusted Administrative & Other costs calculated in step 4 of
this section.
Step 6: Total salaries are calculated by summing up the salary
costs associated with the non-direct patient care cost centers (derived
in step 2) and the adjusted Administrative & Other salary costs
(derived in step 5).
Step 7: To determine employee benefits costs for all employees, we
multiply the total salaries (calculated in step 6) by the ratio of
direct patient care benefits to direct patient care salaries
(calculated in step 1).
We note that this proposed methodology for deriving total employee
benefits costs from the Medicare cost report differs from the
methodology we have used in prior ESRDB market baskets. Previously, we
derived the Employee Benefits cost weight from Medicare cost report
data for direct patient care employee benefits and supplemented with
data from the 2012 U.S. Census Bureau's Services Annual Survey (SAS)
for NAICS 621492, Kidney Dialysis Centers, which were inflated to the
applicable base year (for example 2020) to account for non-direct
patient care employee benefits. The U.S. Census Bureau discontinued
publication of the SAS data for NAICS 621492 beginning in 2012 and
discontinued publication of the SAS effective after the 2022 data
release. For years between 2012 and 2022, the SAS data was only
available at the four-digit NAICS level of detail, and we therefore
continued to rely on the inflated 2012 data. We believe the proposed
methodology is a technical improvement to the prior methodology used to
derive the non-direct patient care employee benefits because it relies
on more recent Medicare cost report data that are specific to ESRD
facilities.
(iii) Pharmaceuticals Costs
The proposed 2024-based ESRDB market basket includes expenditures
for all drugs, including formerly separately billable drugs and all
other renal dialysis drugs that were covered under Medicare Part D
before the ESRD PPS was implemented. We propose to determine the
pharmaceuticals costs using data reported on Worksheet B; specifically,
the sum of lines 8.01 through 17.03, for the following columns: column
11, ``Drugs Included in Composite Rate,'' column 12, ``Erythropoiesis
stimulating agents (ESAs)''; and column 13, ``ESRD-Related and AKI -
Related Drugs.'' We did not include the drug costs for Non- ESRD
Related Drugs, Supplies, and Labs as reported on line 5, column 10 or
the AKI Non-Renal Related Drugs, Supplies, & Lab as reported on line
5.01 column 10 as these costs are not included in the ESRD PPS bundled
payment amount. Section 1842(o)(1)(A)(iv) of the Act requires that
influenza, pneumococcal, COVID-19, and hepatitis B vaccines described
in paragraph (A) or (B) of section 1861(s)(10) of the Act be paid based
on 95 percent of average wholesale price (AWP) of the drug. Since these
vaccines are not paid for under the ESRD PPS, we did not include costs
reported on Worksheet B, column 9, line 7 in the proposed 2024-based
ESRDB market basket. Finally, to avoid double-counting, the
pharmaceuticals costs are reduced by the estimated share of non-direct
patient care wages and salaries associated with the applicable drug
cost centers referenced previously. This resulted in a proposed 2024-
based ESRDB market basket cost weight for Pharmaceuticals of 5.3
percent, with ESA costs accounting for 3.0 percentage points and All
Other Drugs accounting for the remaining 2.3 percentage points.
(iv) Supplies Costs
We calculated the proposed Supplies costs using the costs reported
in the Supplies cost center (Worksheet B, column 7, lines 8.01 through
17.03) of the Medicare cost report. To avoid double-counting, the
Supplies costs were reduced to exclude the estimated share of non-
direct patient care wages and salaries associated with this cost
center.
(v) Laboratory Costs
We calculated the proposed Laboratory costs using the costs
reported in the Laboratory cost center (Worksheet B, column 8, lines
8.01 through 17.03) of the Medicare cost report. To avoid double-
counting, the Laboratory costs were reduced to exclude the estimated
share of non- direct patient care wages and salaries associated with
this cost center.
The Medicare cost report data include reported costs for
Housekeeping, Operations & Maintenance, Capital-related: Buildings and
Fixtures, and Capital-related: Moveable Equipment in a single cost
center. We estimated the net costs for each of these four categories
using the following steps.
Step 1: We calculate the total net costs for Housekeeping,
Operations & Maintenance, and Capital-related as the sum of costs
reported on Worksheet B, column 3, lines 8.01 through 17.03).
Step 2: For each of the four subcategories, we estimate the share
of the total costs of each subcategory as follows:
The Housekeeping share is determined based on the total
costs for Housekeeping reported on Worksheet A, column 4, line 4
divided by the total costs for all four subcategories reported on
Worksheet A, column 4, line 5.
[[Page 38792]]
The Operations & Maintenance share is determined based on
the total costs for Operations & Maintenance costs reported on
Worksheet A, column 4, line 3 divided by the total costs for all four
subcategories reported on Worksheet A, column 4, line 5.
The Capital-related: Buildings and Fixtures share is
determined based on the total costs for Capital-related buildings and
fixtures reported on Worksheet A, column 4, line 1 divided by the total
costs for all four subcategories reported on Worksheet A, column 4,
line 5.
The Capital-related: Moveable Equipment share is
determined based on the total costs for Capital-related moveable
equipment reported on Worksheet A, column 4, line 2 divided by the
total costs for all four subcategories reported on Worksheet A, column
4, line 5.
(vi) Housekeeping Costs
The proposed Housekeeping costs are estimated by multiplying the
housekeeping share determined in step 2 by the total net costs
calculated in step 1. To avoid double-counting, the costs for the
Housekeeping category were reduced to exclude the estimated share of
non-direct patient care wages and salaries associated with this cost
center.
(vii) Operations & Maintenance Costs
The proposed Operations & Maintenance costs are estimated by
multiplying the operations & maintenance share determined in step 2 by
the total net costs calculated in step 1. The operations & maintenance
costs include the direct costs incurred in the operation and
maintenance of the plant and equipment such as heat, light, water
(excluding water treatment for dialysis purposes), air conditioning,
and air treatment; the maintenance and repair of buildings, parking
facilities, and equipment; painting; elevator maintenance; performance
of minor renovation of buildings and equipment; and protecting
employees, visitors, and facility property. To avoid double counting,
the costs for the Operations & Maintenance category were reduced to
exclude the estimated share of non-direct patient care wages and
salaries associated with this cost center.
(viii) Capital-Related: Buildings and Fixtures Costs
The proposed Capital-related: Buildings and Fixtures costs are
estimated by multiplying the capital-related buildings and fixtures
share from step 2 by the total net costs calculated in step 1. The
capital-related buildings and fixture costs include depreciation and
lease costs for buildings and fixtures, property taxes, insurance
costs, and capital improvements.
(ix) Capital-related: Moveable Equipment Costs
The proposed Capital-related: Moveable Equipment costs are
estimated by multiplying the capital-related moveable equipment share
from step 2 by the total net costs calculated in step 1. The capital-
related moveable equipment costs include depreciation and lease costs
for moveable equipment, property taxes, insurance costs, and capital
improvements. Next, we sum the costs for capital-related moveable
equipment to the Capital-related Renal Dialysis Equipment costs
(Worksheet B, column 4, lines 8.01 through 17.03). We reasoned this
delineation was particularly important given the critical role played
by dialysis machines. Likewise, because price changes associated with
buildings and fixtures could move differently than those associated
with moveable equipment, we continue to believe that two capital-
related cost categories are appropriate.
(x) Professional Liability Insurance Costs
We propose for the 2024-based ESRDB market basket to have a
separate category for professional liability insurance (PLI) costs
(often referred to as malpractice costs). The PLI costs are equal to
the sum of premiums, paid losses, and self-insurance costs reported on
Worksheet S, Part II, column 1, lines 15 through 17. For the 2020-based
ESRDB market basket we did not create a separate cost category and the
PLI costs were included with the Administrative & Other costs.
(xi) Administrative & Other Costs
We computed the proportion of total Administrative & Other costs
using the Administrative & Other cost center data from Worksheet B, the
sum of column 9, lines 8.01 through 17.03, less PLI costs and other
costs reported in this cost center but paid separately from the ESRDB
PPS, which include Non-ESRD Related Drugs, Supplies, & Lab (line 5);
AKI Non-renal Related Drugs, Supplies, & Labs (line 5.01); Whole Blood
and Packed Red Blood cells (line 6); and Vaccines (line 7). To avoid
double-counting, the costs for the Administrative & Other category were
also reduced to exclude the estimated share of non-direct patient care
wages and salaries associated with this cost center and the estimated
non-direct patient care employee benefits costs.
(b) Final Major Cost Category Computation
After we derived costs for the major cost categories for each
provider using the Medicare cost report data as previously described,
we propose to address data outliers using the following steps.
First, for each of the major cost weights, we propose to trim the
data to remove outliers (a standard statistical process) by: (step 1)
requiring that major costs (such as Wages and Salaries costs) and total
costs be greater than zero; (step 2) dividing the costs for each of the
eleven categories (calculated as previously described in this section)
by total costs to obtain cost weights for each ESRD facility; and (step
3) excluding the top and bottom five percent of the major cost weight
(for example, Wages and Salaries costs as a percent of total costs). We
note that missing values are assumed to be zero consistent with the
methodology for how missing values were treated in the 2020-based ESRDB
market basket.
After the outliers have been removed, we sum the costs for each
category across all remaining providers. We then divide this by the sum
of total costs across all remaining providers to obtain a cost weight
for the proposed 2024-based ESRDB market basket for the given category.
This is the same methodology used for the 2020-based ESRDB market
basket.
The trimming process is done individually for each cost category so
that facilities excluded from one cost weight calculation are not
automatically excluded from another cost weight calculation. We note
that these proposed trimming methods are the same types of edits
performed for the 2020-based ESRDB market basket, as well as other PPS
market baskets (including but not limited to Inpatient Prospective
Payment System (IPPS) operating market basket, Skilled Nursing Facility
(SNF) market basket, and home health market basket). We note that for
each of the cost weights we evaluated the distribution of providers and
costs by ownership-type, and by urban/rural status. For all cost
weights, the trimmed sample was nationally representative.
Table 2 presents the proposed 2024-based ESRDB market basket major
cost weights as derived directly from the Medicare cost report data
compared to the 2020-based ESRDB market basket major costs weights
derived directly from the Medicare cost report data.
[[Page 38793]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.017
From 2020 to 2024, the Wages and Salaries and Employee Benefits
cost weights increased by 2.9 percentage points and 3.6 percentage
points, respectively. The increase in the proposed 2024-based Wages and
Salaries and Employee Benefits cost weights is the result of faster
growth in labor costs compared to costs associated with the other
market basket cost weights (such as Pharmaceutical costs). This faster
growth is consistent with comments received during prior ESRD PPS
rulemaking. The Pharmaceuticals cost weight as calculated directly from
the Medicare cost reports decreased by 4.8 percentage points, which
continues the downward trend in the Pharmaceuticals cost weight
observed since the implementation of the ESRD PPS in 2011. We believe
this falling Pharmaceuticals cost weight is attributable to three main
inter-related factors: (1) reduced utilization per treatment of certain
high-cost drug classes (such as ESAs), (2) a shift to more
price[hyphen]competitive products, including generic drugs or
biosimilars, and (3) facility[hyphen]level cost management and
efficiency.
(c) Derivation of the Detailed Cost Weights
There are three instances where the proposed ESRDB market basket
costs weights are further adjusted using secondary data sources. The
first adjustment is to estimate contract labor costs, which would be
reflected in the Administrative & Other cost weight of 16.8 percent
shown in Table 2 derived from the Medicare cost report data. We propose
to estimate the contract labor share of costs and reallocate those from
Administrative & Other to Wages and Salaries and Employee Benefits. The
second adjustment further disaggregates the Wages and Salaries and
Employee Benefits weight, inclusive of contract labor costs, into
occupational subcategories. The third adjustment is to further
disaggregate the remaining Administrative & Other cost weight (less the
contract labor cost weight) into further detail using data from the
Bureau of Economic Analysis Benchmark Input-Output data.
(i) Contract Labor Costs
Contract labor costs are reported in the Medicare cost report;
however, they are embedded in the Other Costs from the trial balance
reported on Worksheet A, Column 3 and cannot be disaggregated. We
propose the following methodology to derive the contract labor cost
weight. Similar to the methodology used in the 2020-based ESRDB market
basket, we are proposing to use data from the U.S. Census Bureau's
Services Annual Survey (SAS) to estimate these costs for the 2024-based
ESRDB market basket. We propose to use data from the 2022 SAS for NAICS
6214, Outpatient Care Centers, inflated to 2024 to estimate the
contract labor weight for the 2024-based ESRDB market basket.
Previously, we used the 2012 SAS data for NAICS 621492, Kidney Dialysis
Centers inflated to the applicable base year. Since 2012 the SAS data
is no longer available from the Census Bureau at the 6-digit NAICS
level of detail, we believe that proposing to use the data for NAICS
6214 is a technically appropriate alternative as ESRD facilities would
be included within this NAICS category and the data reflects the more
recent experience of this industry's contract labor usage.
We propose to use the share of the total costs for NAICS 6214
expenses for Temporary staff and leased employee expense from the 2022
SAS. Using this data, the proposed 2024-based ESRDB Contract Labor cost
weight is 2.1
[[Page 38794]]
percent. To avoid double counting these costs we are proposing to
remove the 2.1 percent Contract Labor cost weight from the
Administrative & Other cost weight (where we believe most contract
labor costs would be reported). The resulting Administrative & Other
Residual Cost weight is 14.7 percent, which reflects the 16.8 percent
Administrative & Other cost weight from Medicare cost reports less the
2.1 percent Contract Labor cost weight.
As we did for the 2020-based ESRDB market basket (87 FR 67143), we
propose to allocate contract labor costs to the Wages and Salaries and
Employee Benefits cost weights based on their relative proportions for
employed labor under the assumption that contract labor costs are
comprised of both wages and salaries and employee benefits. The
contract labor allocation proportion for wages and salaries is equal to
the Wages and Salaries cost weight as a percent of the sum of the Wages
and Salaries cost weight and the Employee Benefits cost weight. Using
the 2024 Medicare cost report data, this percentage is 77 percent.
Therefore, we propose to allocate 77 percent of the Contract Labor cost
weight to the Wages and Salaries cost weight and 23 percent to the
Employee Benefits cost weight. The 2020-based ESRDB market basket
allocated 80 percent of the Contract Labor cost weight to the Wages and
Salaries cost weight and 20 percent to the Employee Benefits cost
weight.
Table 3 shows the Wages and Salaries and Employee Benefits cost
weights after contract labor allocation for the 2020-based ESRDB market
basket and the proposed 2024-based ESRDB market basket. In aggregate,
the Compensation cost weight (calculated using more detailed decimal
places) increased from 45.9 percent to 50.9 percent, or 5.0 percentage
points.
[GRAPHIC] [TIFF OMITTED] TP26JN26.018
(ii) Disaggregation of Compensation Costs Into Occupational Categories
To further disaggregate the ``Wages and Salaries'' and ``Employee
Benefits'' cost weights into four occupational subgroups (Health-
Related, Management, Administrative, and Service), we propose to use
the number of full time equivalents (FTEs) reported on Worksheet S-1,
column 3, lines 22 through 35 of the Medicare cost reports and annual
mean wages for the occupations within each group from the May 2024 BLS
OEWS for NAICS 6214, Outpatient Care Centers.\4\
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\4\ https://www.bls.gov/oes/.
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The ESRD Medicare cost report FTE categories assigned to the
Health-Related subgroup include ``Physicians,'' ``Registered Nurses,''
``Licensed Practical Nurses,'' ``Nurses Aides,'' ``Technicians,'' and
``Dieticians''; assigned to the Management subgroup is ``Management'';
assigned to the Administrative subgroup is ``Administrative''; and
assigned to the Services subgroup are ``Social Workers'' and ``Other''.
For each FTE category, we estimate the mean annual wage from the May
2024 BLS OEWS data. We multiply the number of ESRD FTEs in each
subgroup by the estimated mean annual wage. Table 4 shows the share of
each FTE group's compensation (number of FTEs multiplied by the mean
annual wage) to total compensation for the proposed 2024-based ESRD
market basket and the 2020-based ESRDB market basket. Table 5 shows the
Wages and Salaries and Employee Benefits occupational mix for the
proposed 2024-based ESRDB market basket compared to the 2020-based
occupational mix. The proposed 2024 occupational distribution shows a
shift to more health-related FTEs and fewer Management and
Administrative Support Occupation FTEs.
[[Page 38795]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.019
[GRAPHIC] [TIFF OMITTED] TP26JN26.020
We propose to multiply the proposed occupational mix weights by the
Wages and Salaries proposed cost weight and the Employee Benefits
proposed cost weight (both inclusive of contract labor) to determine
the occupational subgroups' weights for Wages and Salaries and Employee
Benefits as shown in Table 6. This is similar to the methodology used
in the 2020-based ESRDB market basket to derive these occupational
subgroup weights.
(iii) Disaggregation of Administrative & Other Residual Cost Weight
To further divide the ``Administrative & Other'' residual cost
weight estimated from the 2024 Medicare cost report data into more
detailed cost categories, we propose to use the 2017 Benchmark I-O
``The Use Table (Supply-Use Framework)'' for NAICS 621400, Outpatient
care Centers, published by the Bureau of Economic Analysis (BEA). These
data are publicly available at the following website: https://www.bea.gov/industry/input-output-accounts-data. The BEA Benchmark I-O
data are generally scheduled for publication every 5 years on a lagged
basis, with the most recent data available for 2017. The 2017 Benchmark
I-O data are derived from the 2017 Economic Census and are the building
blocks for BEA's economic accounts. Therefore, they represent the most
comprehensive and complete set of data on the economic processes or
mechanisms by which output is produced and distributed.\5\ BEA also
produces Annual I-O estimates; however, while based on a similar
methodology, these estimates reflect less comprehensive and less
detailed data sources and are subject to revision when benchmark data
become available. Instead of using the less detailed Annual I-O data,
we propose to inflate the detailed 2017 Benchmark I-O data forward to
2024 by applying the annual price changes from the respective price
proxies to the appropriate market basket cost categories that are
obtained from the 2017 Benchmark I-O data and calculate the cost shares
that each cost category represents using the inflated data. These
resulting 2024 cost shares from this I-O based approach were applied to
the ``Administrative & Other'' cost weight to obtain the detailed cost
weights for the proposed 2024-based ESRDB market basket. For example,
the cost for Paper & Printing represents 3.9 percent of the sum of the
residual ``All Other'' 2017 Benchmark I-O Outpatient Care Center
expenditures inflated to 2024. Therefore, the Paper & Printing cost
weight represents 3.9 percent of the proposed 2024-based ESRDB market
basket's ``Administrative & Other'' cost category (14.7 percent),
yielding a Paper & Printing proposed cost weight of 0.6 percent in the
proposed 2024-based ESRDB market basket (3.9 percent x 14.7 percent =
0.6 percent). For the 2020-based ESRDB market basket (87 FR 67145), we
used a different data source to disaggregate the Administrative & Other
residual cost weight. The prior method used data from the 2012 U.S.
Census Bureau's SAS for NAICS 621492, inflated to the 2020 base year of
the ESRDB market basket. As mentioned previously, this data is no
longer produced or published by the Census Bureau and, therefore, we
are proposing to use an alternative data source.
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\5\ http://www.bea.gov/papers/pdf/IOmanual_092906.pdf.
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Using this methodology, we propose to derive 12 detailed cost
categories from the proposed 2024-based ESRDB market basket
Administrative & Other cost weight of 14.7 percent. These categories
are: (1) Electricity; (2) Natural Gas; (3) Rubber & Plastics; (4) Paper
& Printing; (5) Miscellaneous Products; (6) Telephone and internet
Service; (7) Administrative Services; (8) Financial Services; (9)
Professional Fees: Labor-related; (10) Professional Fees: Nonlabor-
related; (11) All Other
[[Page 38796]]
Services: Labor-related; (12) All Other Services: Nonlabor-related.
We note that the proposed cost category for Professional Fees:
Labor-related reflects the proportion of ESRD facilities' professional
fees expenses that we believe vary with local labor market. We
conducted a survey of ESRD facilities in 2008 to better understand the
proportion of contracted professional services that ESRD facilities
typically purchase outside of their local labor market. These purchased
professional services include functions such as accounting and
auditing, management consulting, engineering, and legal services. Based
on the survey results, we determined that, on average, 87 percent of
professional services are purchased from local firms, and 13 percent
are purchased from businesses located outside of the ESRD's local labor
market. Thus, to derive the Professional Fees: Labor-related weight we
allocate 87 percent of the expenses for Professional Fees for these
selected services as labor-related; we note that 87 percent is the same
percentage as used in prior years.
This proposed methodology allows for seven additional detailed cost
categories than used in the 2020-based ESRDB market basket because the
Benchmark I-O data is more comprehensive than the SAS data. The 2020-
based ESRDB market basket included categories for Electricity, Natural
Gas, Telephone, Professional Fees, and All Other Goods and Services.
Table 6 sets forth the proposed 2024-based ESRDB market basket,
including the cost categories and their respective cost weights. For
comparison purposes, the corresponding 2020-based ESRDB market basket
cost weights also are listed.
BILLING CODE 4910-13-P
[[Page 38797]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.021
BILLING CODE 4910-13-C
We invite public comments on our proposed methodology for deriving
the proposed 2024-based ESRDB cost categories and weights.
[[Page 38798]]
(2) Proposed Price Proxies for the 2024-Based ESRDB Market Basket
After computing the proposed 2024-based cost weights for the ESRDB
market basket, it was necessary to select appropriate wage and price
proxies to reflect the rate of price change for each expenditure
category. Except for the proxy for professional liability insurance
(PLI), all proposed price proxies are based on BLS data and are grouped
into one of the following BLS categories:
Producer Price Indexes--Producer Price Indexes (PPIs)
measure the average change over time in the selling prices received by
domestic producers for their output. The prices included in the PPI are
from the first commercial transaction for many products and some
services (https://www.bls.gov/ppi/).
Consumer Price Indexes--Consumer Price Indexes (CPIs)
measure the average change over time in the prices paid by urban
consumers for a market basket of consumer goods and services (https://www.bls.gov/cpi/). CPIs are only used when the purchases are similar to
those of retail consumers rather than purchases at the producer level,
or if no appropriate PPIs are available.
Employment Cost Indexes--Employment Cost Indexes (ECIs)
measure the rate of change in employee wage rates and employer costs
for employee benefits per hour worked. These indexes are fixed-weight
indexes and strictly measure the change in wage rates and employee
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE)
as price proxies for input price indexes because they are not affected
by shifts in occupation or industry mix, and because they measure pure
price change and are available by both occupational group and by
industry. The industry ECIs are based on the NAICS and the occupational
ECIs are based on the Standard Occupational Classification System
(SOC).
We evaluated the price proxies using the criteria of reliability,
timeliness, availability, and relevance:
Reliability. Reliability indicates that the index is based
on valid statistical methods and has low sampling variability. Widely
accepted statistical methods ensure that the data were collected and
aggregated in a way that can be replicated. Low sampling variability is
desirable because it indicates that the sample reflects the typical
members of the population. (Sampling variability is variation that
occurs by chance because only a sample was surveyed rather than the
entire population.)
Timeliness. Timeliness implies that the proxy is published
regularly, preferably at least once a quarter. The market basket levels
are updated quarterly, and therefore, it is important for the
underlying price proxies to be up-to-date, reflecting the most recent
data available. We believe that using proxies that are published
regularly (at least quarterly, whenever possible) helps to ensure that
we are using the most recent data available to update the market
basket. We strive to use publications that are disseminated frequently,
because we believe that this is an optimal way to stay abreast of the
most current data available.
Availability. Availability means that the proxy is
publicly available. We prefer that our proxies are publicly available
because this would help ensure that our market basket updates are as
transparent to the public as possible. In addition, this enables the
public to be able to obtain the price proxy data on a regular basis.
Relevance. Relevance means that the proxy is applicable
and representative of the cost category weight to which it is applied.
We believe the proposed PPIs, CPIs, and ECIs selected meet these
criteria. Therefore, we believe that they continue to be the best proxy
of price changes for the cost categories to which they would be
applied.
In this proposed rule, we present a detailed explanation of the
price proxies that we propose for each cost category weight.
(a) Health-Related Wages and Salaries
We propose to use the ECI for Wages and Salaries for All Civilian
Workers in Hospitals (BLS series code #CIU1026220000000I) as the price
proxy for health-related occupations. Of the two health-related ECIs
that we considered (Hospitals and Health Care and Social Assistance),
the wage distribution within the Hospital NAICS sector (622) is more
closely related to the wage distribution of ESRD facilities than it is
to the wage distribution of the Health Care and Social Assistance NAICS
sector (62). This is the same price proxy used in the 2020-based ESRDB
market basket.
(b) Management Wages and Salaries
We propose to use the ECI for Wages and Salaries for Private
Industry Workers in Management, Business, and Financial (BLS series
code #CIU2020000110000I). We believe this ECI is the most appropriate
price proxy to measure the wages and salaries price growth of
management personnel at ESRD facilities. This is the same price proxy
used in the 2020-based ESRDB market basket.
(c) Administrative Wages and Salaries
We propose to use the ECI for Wages and Salaries for Private
Industry Workers in Office and Administrative Support (BLS series code
#CIU2020000220000I). We believe this ECI is the most appropriate price
proxy to measure the wages and salaries price growth of administrative
support personnel at ESRD facilities. This is the same price proxy used
in the 2020-based ESRDB market basket.
(d) Services Wages and Salaries
We propose to use the ECI for Wages and Salaries for Private
Industry Workers in Service Occupations (BLS series code
#CIU2020000300000I). We believe this ECI is the most appropriate price
proxy to measure the wages and salaries price growth of all other non-
health related, non-management, and non-administrative service support
personnel at ESRD facilities.
BLS does not publish ECI for Benefits price proxies for each wages
and salaries ECI; however, where these series are not published, they
can be derived by using the ECI for Total Compensation and the relative
importance of wages and salaries with total compensation as published
by BLS for each detailed ECI occupational index. Therefore, we propose
to use these derived ECI benefit price proxies for each of the
respective occupational benefit cost categories.
(e) Health-Related Benefits
We propose to use the ECI for Benefits for All Civilian Workers in
Hospitals to measure price growth of this subcategory. This is
calculated using the ECI for Total Compensation for All Civilian
Workers in Hospitals (BLS series code #CIU1016220000000I) and the
relative importance of Wages and Salaries within Total Compensation as
published by BLS. We believe this constructed ECI series is technically
appropriate for the reasons stated in the Wages and Salaries price
proxy section. This is the same price proxy used in the 2020-based
ESRDB market basket.
(f) Management Benefits
We propose to use the ECI for Benefits for Private Industry Workers
in Management, Business, and Financial to measure price growth of this
subcategory. This ECI is calculated using the ECI for Total
Compensation for Private Industry Workers in Management, Business, and
Financial (BLS series code #CIU2010000110000I) and the relative
importance of wages
[[Page 38799]]
and salaries within total compensation. We believe this constructed ECI
series is technically appropriate for the reasons stated in the Wages
and Salaries price proxy section. This is the same price proxy used in
the 2020-based ESRDB market basket.
(g) Administrative Benefits
We propose to use the ECI for Benefits for Private Industry Workers
in Office and Administrative Support to measure price growth of this
subcategory. This ECI is calculated using the ECI for Total
Compensation for Private Industry Workers in Office and Administrative
Support (BLS series code #CIU2010000220000I) and the relative
importance of Wages and Salaries within Total Compensation. We believe
this constructed ECI series is technically appropriate for the reasons
stated in the wages and salaries price proxy section. This is the same
price proxy used in the 2020-based ESRDB market basket.
(h) Services Benefits
We propose to use the ECI for Total Benefits for Private Industry
Workers in Service Occupations (BLS series code #CIU2030000300000I) to
measure price growth of this subcategory. We believe this ECI series is
technically appropriate for the reasons stated in the Wages and
Salaries price proxy section. This is the same price proxy used in the
2020-based ESRDB market basket.
(i) Electricity
We propose to use the PPI Commodity for Commercial Electric Power
(BLS series code #WPU0542) to measure the price growth of this cost
category. This is the same price proxy used in the 2020-based ESRDB
market basket.
(j) Natural Gas
We propose to use the PPI Commodity for Commercial Natural Gas (BLS
series code #WPU0552) to measure the price growth of this cost
category. This is the same price proxy used in the 2020-based ESRDB
market basket.
(k) ESAs
We propose to use the PPI Commodity for Biological Products,
Excluding Diagnostic, for Human Use (which we will abbreviate as PPI-
BPHU) (BLS series code #WPU063719) as the price proxy for the ESA drugs
in the market basket. The PPI-BPHU measures the price change of
prescription biologics, and ESAs would be captured within this index,
if they are included in the PPI sample. Since the PPI relies on
confidentiality with respect to the companies and drugs/biologicals
included in the sample, we do not know if these drugs are indeed
reflected in this price index. However, we believe the PPI-BPHU is an
appropriate proxy to use because although ESAs may be a small part of
the fuller category of biological products, we can examine whether the
price increases for the ESA drugs are similar to the drugs included in
the PPI- BPHU. We did this by comparing the historical price changes in
the PPI- BPHU and the average sales price (ASP) for ESAs and found the
cumulative growth to be consistent over the 2020 to 2024 timeframe. We
will continue to monitor the trends in the prices for ESA drugs as
measured by other price data sources to ensure that the PPI-BPHU is
still an appropriate price proxy.
(l) All Other Drugs
For all other drugs included in the ESRD PPS bundled payment other
than ESAs, we propose to use a blend of 47 percent of the PPI Commodity
for Vitamin, Nutrient, and Hematinic Preparations (which we will
abbreviate as PPI-VNHP) (BLS series code #WPU063807), and 53 percent of
the PPI Commodity for Pharmaceuticals for Human Use, Prescription
(which we will abbreviate as PPI-Pharmaceuticals) (BLS series code
#WPUSI07003). We continue to believe that the PPI-VNHP is an
appropriate price proxy for the iron supplements commonly used in the
treatment of ESRD, and an analysis of claims data indicate that iron
supplement costs and Vitamin D analogs account for about 47 percent of
the All Other Drugs costs. For the remaining drugs represented in the
All Other Drugs category we propose to use the PPI Commodity for
Pharmaceuticals for Human Use, Prescription, which captures the
inflationary price pressures for all types of prescription drugs rather
than a single therapeutic category of drugs. Though this PPI measure
includes a wide variety of prescription drugs, we believe it is
technically appropriate to use a broad indicator of prescription drug
price trends for three key reasons: (1) the more detailed PPI measure
where we believe these types of non-ESA drugs would be captured would
more likely reflect price trends not faced by ESRD facilities, such as
cancer drugs, (2) there have been notable changes to the types and mix
of drugs paid for under the ESRD PPS bundled payment since 2016, such
as the inclusion of formerly oral-only drugs and the addition of AKI-
related drugs, and (3) the potential for future changes to the types
and mix of drugs that may be paid for under the ESRD PPS bundled
payment. For these reasons, we believe that a broader drug index
representing a larger mix of prescription drugs is technically
appropriate to the proposed price proxy for this cost category. We will
continue to monitor the relative share of costs for iron supplements
and other types of drugs for this cost category to determine if the
proposed 47/53 PPI blend warrants an adjustment, and if so, we would
propose such an adjustment in future rulemaking. This is similar to the
price proxy used in the 2020-based ESRDB market basket, but the
composite weight was 50/50.
(m) Supplies
We propose to use the PPI Commodity for Surgical and Medical
Instruments (BLS series code #WPU1562) to measure the price growth of
this cost category. This is the same price proxy used in the 2020-based
ESRDB market basket.
We believe this is a technically appropriate price proxy for this
cost category. The Medicare cost report form instructions state that
Supplies include the direct cost of total dialysis supplies used in
furnishing dialysis services--for example, crit-lines, low volume lines
and dialyzers, catheter kits, fistula needles and tape, saline flushes,
bandages, chlorhexidine, tego caps for catheters, biopatch for catheter
dressing, oxygen, suction, emergency supplies, monitors for vitals, and
blood pressure cuffs. We are requesting comments on other price indexes
that could be applicable to the costs reported in this category, as the
instructions may not contain the exhaustive list of supply costs that
ESRD facilities include in this category. Examples of potential other
price proxies would include, but are not limited to, the PPI Commodity
for Medical and surgical appliances and supplies (BLS series code
WPU1563) and the PPI Commodity for Miscellaneous products, Personal
safety equipment and clothing (BLS series code WPU1571).
(n) Laboratories
We propose to use the PPI Industry for Medical Laboratories (BLS
series code #PCU621511621511) to measure the price growth of this cost
category. This is the same price proxy used in the 2020-based ESRDB
market basket.
(o) Paper & Printing
We propose to use a 25/75 blend of the PPI Commodity for
Publications Printed Matter and Printing Material (BLS Series Code
WPU094) and the PPI Commodity for Converted Paper and Paperboard
Products (BLS series code WPU0915) to proxy the price growth of this
cost category. The 2017 Benchmark I-O data shows that 25 percent of
paper
[[Page 38800]]
and printing costs are for Printing (NAICS 323110) and the remaining
costs are for Paper manufacturing (NAICS 322). The 2020-based ESRDB
market basket did not have a separate cost category for paper and
printing. These costs would have been included in the All Other Goods
and Services cost category and proxied by the PPI--Final demand--
Finished goods less foods and energy.
(p) Rubber & Plastics
We propose to use the PPI Commodity for Rubber and Plastic Products
(BLS series code WPU07) to proxy the price growth of this cost
category. The 2020-based ESRDB market basket did not have a separate
cost category for Rubber & Plastics. These costs would have been
included in the All Other Goods and Services cost category and proxied
by the PPI--Final demand--Finished goods less foods and energy.
(q) Miscellaneous Products
We propose to use the PPI Commodity for Finished Goods Less Food
and Energy (BLS series code WPUFD4131) to proxy the price growth of
this cost category. This is the same price proxy used in the 2020-based
ESRDB market basket as these costs were included in the All Other Goods
and Services cost category.
(r) Telephone and Internet Service
We propose to use the CPI U.S. city average for Telephone Services
(BLS series code #CUUR0000SEED) to measure the price growth of this
cost category. This is the same price proxy used in the 2020-based
ESRDB market basket.
(s) Housekeeping
We propose to use the PPI Commodity for Cleaning and Building
Maintenance Services (BLS series code #WPU49) to measure the price
growth of this cost category. This is the same price proxy used in the
2020-based ESRDB market basket.
(t) Operations & Maintenance
We propose to use the ECI for Total compensation for All Civilian
workers in Installation, Maintenance, and Repair (BLS series code
CIU1010000430000I) to measure the price growth of this cost category.
This is the same price proxy used in the 2020-based ESRDB market
basket.
(u) Administrative Services
We propose to use the ECI for Total Compensation for Private
Industry Workers in Office and Administrative Support (BLS series code
CIU2010000220000I) to proxy the price growth of this category. The
2020-based ESRDB market basket did not have a separate cost category
for Administrative Services. These costs would have been included in
the All Other Goods and Services cost category and proxied by the PPI--
Final demand--Finished goods less foods and energy.
(v) Financial Services
We propose to use the ECI for Total Compensation for Private
Industry Workers in Financial Activities (BLS series code
CIU201520A000000I) to proxy the price growth of this cost category. The
2020-based ESRDB market basket did not have a separate cost category
for Financial Services. These costs would have been included in the All
Other Goods and Services cost category and proxied by the PPI--Final
demand--Finished goods less foods and energy.
(w) Professional Fees: Labor-related
We propose to use the ECI for Total Compensation for Private
Industry Workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this cost category.
This is the same price proxy used in the 2020-based ESRDB market
basket; however, the 2012 SAS data did not provide enough detailed
information to split the Professional Fees category between labor-
related and nonlabor-related services.
(x) Professional Fees: Nonlabor-Related
We propose to use the ECI for Total Compensation for Private
Industry Workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this cost category.
This is the same price proxy used in the 2020-based ESRDB market
basket; however, the 2012 SAS data did not provide enough detailed
information to split the professional fees category between labor-
related and nonlabor-related services.
(y) All Other Services: Labor-Related
We propose to use the ECI for Total Compensation for Private
Industry Workers in Service Occupations (BLS series code
CIU2010000300000I) to proxy the price growth of this cost category. The
2020-based ESRDB market basket did not have a separate cost category
for All Other Services: Labor-related. These costs would have been
included in the All Other Goods and Services cost category and proxied
by the PPI--Final demand--Finished goods less food and energy.
(z) All Other Services: Nonlabor-Related
We propose to use the CPI for All Items Less Food and Energy (BLS
series code CUUR0000SA0L1E) to proxy the price growth of this cost
category. We believe that using the CPI for All Items Less Food and
Energy avoids double counting of changes in food and energy prices as
they are not included in the ESRD PPS (food) or are already captured
elsewhere in the market basket (energy). This is the same price proxy
used in other CMS market baskets, such as the IPPS, SNF, Long-term Care
Hospital (LTCH), Inpatient Rehabilitation Facility (IRF), and Inpatient
Psychiatric Facility (IPF), to proxy the growth in the remaining ``All
Other Services'' cost category. The 2020-based ESRDB market basket did
not have a separate cost category for All Other Services: Nonlabor-
related, these costs would have been included in the All Other Goods
and Services cost category and proxied by the PPI--Final demand--
Finished goods less food and energy.
(aa) Professional Liability Insurance
Unlike the other price proxies that are based on publicly available
price indexes from BLS and other public sources, the proxy for PLI is
based on data collected directly by CMS from a sample of commercial
insurance carriers. We propose to use the CMS Physician PLI index to
measure the price growth of this cost category in the proposed 2024-
based ESRDB market basket. This is the same proxy used in the Medicare
Economic Index (MEI) and the Home Health market basket. As detailed in
the CY 2014 Physician Fee Schedule (PFS) final rule (78 FR 74271), a
2012 MEI Technical Panel expressed that the current index appropriately
reflects the price changes in premiums throughout the industry.
(ab) Capital-Related: Buildings and Fixtures
We propose to use the PPI for Lessors of Nonresidential Buildings
(BLS series code PCU531120531120) to measure the price growth of this
cost category in the proposed 2024-based ESRDB market basket. This is
the same proxy used in the 2020-based ESRDB market basket.
(ac) Capital-Related: Moveable Equipment
We propose to use the PPI Commodity for Electrical Machinery and
Equipment (BLS series code #WPU117) to measure the price growth of this
cost category. This is the same price proxy used in the 2020-based
ESRDB market basket.
Table 7 shows all the proposed price proxies for the proposed 2024-
based ESRDB Market Basket as well as
[[Page 38801]]
whether the price proxy was used in the 2020-based ESRDB market basket.
As discussed in section II.B.1.b.(1)(b)(iii) of this proposed rule, for
the proposed 2024-based ESRDB market basket we are proposing additional
cost categories compared to the 2020-based ESRDB market basket.
Therefore, in Table 7, the cost category expenses listed as n/a were
included in the All Other Goods and Services cost category of the 2020-
based ESRDB market basket and were proxied by the PPI Final demand--
Finished goods less foods and energy.
BILLING CODE 4910-13-P
[GRAPHIC] [TIFF OMITTED] TP26JN26.022
[[Page 38802]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.023
We invite public comments on our proposed price proxies for the
proposed 2024-based ESRDB market basket.
(3) Proposed 2024-Based ESRDB Market Basket Percentage Increase Results
A comparison of the yearly differences of increase factors from CY
2021 to CY 2030 for the 2020-based ESRDB market basket and the proposed
2024-based ESRDB market basket is shown in Table 8. The proposed CY
2027 ESRDB market basket increase factor would be the same if we
continued to use the 2020-based ESRDB market basket.
[GRAPHIC] [TIFF OMITTED] TP26JN26.024
BILLING CODE 4910-13-C
[[Page 38803]]
Over the CY 2021 through CY 2025 timeframe, the average percent
change of the proposed 2024-based ESRDB market basket is 3.7 percent,
the same as the average percent change of the 2020-based ESRDB market
basket. For CY 2027, the proposed 2024-based ESRDB market basket is
projected to increase 2.6 percent, which is the same projected increase
as the CY 2027 projected increase of the 2020-based ESRDB market
basket. For the forecast period, CY 2026 through CY 2030, the proposed
2024-based ESRDB market basket percentage increase is on average the
same 5-year average projected increase as the 2020-based ESRDB market
basket.
c. Proposed Labor-Related Share for ESRD PPS
We define the labor-related share (LRS) 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.
We propose to use the proposed 2024-based ESRDB market basket cost
weights to determine the proposed labor-related share for ESRD
facilities. Therefore, effective for CY 2027, we are proposing a labor-
related share of 63.5 percent, compared to the current 55.2 percent
that was based on the 2020-based ESRDB market basket cost weights, as
shown in Table 9. These figures represent the sum of Wages and
Salaries, Employee Benefits, Housekeeping, Operations & Maintenance,
Administrative Services, Professional Fees: Labor-related, All Other
Services: Labor-related and 46 percent of the weight for Capital-
related: Buildings and Fixtures (details discussed later in this
section). We used a similar methodology to calculate the 2020-based
ESRDB market basket labor-related share.
[GRAPHIC] [TIFF OMITTED] TP26JN26.025
The proposed labor-related share for capital-related expenses
reflects the proportion of ESRD facilities' capital-related expenses
that we believe varies with local labor market wages (46 percent of
ESRD facilities' Capital-related: Buildings and Fixtures expenses).
Capital-related expenses are affected in some proportion by variations
in local labor market costs (such as construction worker wages) that
are reflected in the price of the capital asset. However, many other
inputs that determine capital costs are not related to local labor
market costs, such as interest rates. The 46-percent figure is based on
regressions run for the inpatient hospital capital PPS in 1991 (56 FR
43375). We use a similar methodology to calculate capital-related
expenses for the labor-related shares for rehabilitation facilities (70
FR 30233), psychiatric facilities, long-term care facilities, and
skilled nursing facilities (66 FR 39585).
We invite public comments on our proposed labor-related share based
on the proposed 2024-based ESRDB cost weights.
d. Proposed CY 2027 ESRD Market Basket Update
Under section 1881(b)(14)(F)(i) of the Act, beginning in CY 2012,
the ESRD PPS payment amounts are required to be annually increased by
an ESRD market basket percentage increase factor and reduced by the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act. We propose to use the proposed 2024-based ESRDB market basket
as described in section II.B.1.b. of this proposed rule to compute the
CY 2027 ESRDB market basket percentage increase based on the best
available data. Consistent with historical practice, we propose to
estimate the ESRDB market basket percentage increase based on IHS
Global Inc.'s (IGI) forecast using the most recently available data at
the time of rulemaking. IGI is a nationally recognized economic and
financial forecasting firm with which CMS contracts to forecast the
components of the market baskets. As discussed in section II.B.1.d.(3)
of this proposed rule, we are calculating the proposed ESRDB market
basket update for CY 2027 based on the proposed ESRDB market basket
percentage increase and the proposed productivity adjustment, following
our longstanding methodology.
[[Page 38804]]
(1) Proposed CY 2027 ESRDB Market Basket Percentage Increase
Using this methodology and IGI's first quarter of 2026 forecast of
the proposed 2024-based ESRDB market basket (with historical data
through the fourth quarter of 2025), and consistent with our historical
practice of estimating market basket increases based on the best
available data, the proposed CY 2027 ESRDB market basket increase
factor is 2.6 percent. We also propose that if more recent data becomes
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), we would use such data to
determine the CY 2027 ESRDB market basket percentage increase in the
final rule, provided such data is appropriate (meaning methodologically
consistent with the proposed approach, sufficiently complete, and
available in time to be reasonably evaluated for the final rule).
(2) Proposed CY 2027 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 (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), hereafter
referred to as the ``productivity adjustment''.
BLS publishes the official measures of productivity for the United
States economy. The productivity measure referenced in section
1886(b)(3)(B)(xi)(II) of the Act is published by BLS as private nonfarm
business total factor productivity ((TFP) previously referred to as
multifactor productivity).\6\ We refer readers to https://www.bls.gov/productivity/ for the BLS historical published TFP data. A complete
description of IGI's TFP projection methodology is available on CMS's
website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information.
---------------------------------------------------------------------------
\6\ https://www.bls.gov/productivity/notices/2021/mfp-to-tfp-term-change.htm.
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Based on IGI's first quarter 2026 forecast, the proposed
productivity adjustment for CY 2027 (the 10-year moving average growth
of TFP for the period ending CY 2027) is 1.0 percentage point.
Furthermore, we propose that if more recent data becomes available
after the publication of this proposed rule and before the publication
of the final rule (for example, a more recent estimate of the
productivity adjustment), we would use such data, if appropriate, to
determine the CY 2027 productivity adjustment in the final rule.
(3) Proposed CY 2027 ESRDB Market Basket Update
In accordance with section 1881(b)(14)(F)(i) of the Act, we propose
to base the CY 2027 ESRDB market basket percentage increase on IGI's
first quarter 2026 forecast of the proposed 2024-based ESRDB market
basket. We propose to then reduce the ESRDB market basket percentage
increase by the proposed productivity adjustment for CY 2027 based on
IGI's first quarter 2026 forecast. Therefore, the proposed CY 2027
ESRDB market basket update is equal to 1.6 percent (proposed 2.6
percent ESRDB market basket percentage increase reduced by a proposed
1.0 percentage point productivity adjustment). Furthermore, as noted
previously, we propose that if more recent data becomes available after
the publication of this proposed rule and before the publication of the
final rule (for example, a more recent estimate of the market basket
percentage increase or productivity adjustment), we would use such
data, if appropriate, to determine the CY 2027 ESRD market basket
percentage increase and productivity adjustment in the final rule.
We invite public comment on our proposals for the CY 2027 ESRDB
market basket percentage increase and productivity adjustment.
2. Proposed CY 2027 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. As
discussed in detail later in this section, we later implemented an ESRD
PPS specific wage index methodology in the CY 2025 ESRD PPS final rule
(89 FR 89108 through 89117). Under current policy, we use OMB's CBSA-
based geographic area designations to define urban and rural areas and
their corresponding wage index values (75 FR 49117).\7\ OMB publishes
bulletins regarding CBSA changes, including changes to CBSA numbers and
titles. We most recently updated the CBSA delineations in the CY 2025
ESRD PPS final rule (89 FR 89117) to the OMB delineations as described
in OMB Bulletin No. 23-01, beginning with the CY 2025 ESRD PPS wage
index.\8\
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\7\ We define urban areas at Sec. 413.231(b) as a Metropolitan
Statistical Area or a Metropolitan division (in the case where a
Metropolitan Statistical Area is divided into Metropolitan
Divisions), as defined by OMB. Rural areas are defined as any area
outside an urban area.
\8\ https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.
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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 U.S. 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 LRS of the ESRD PPS
base rate. In the CY 2023 ESRD PPS final rule (87 FR 67153), we
finalized the use of a LRS of 55.2 percent. In the CY 2021 ESRD PPS
final rule (85 FR 71436), we finalized a temporary policy which applied
a 5 percent cap on any decrease in an ESRD facility's wage index from
the ESRD facility's wage index from the prior CY. 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
[[Page 38805]]
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. As discussed in
section II.B.1.c. of this proposed rule, we are proposing that the CY
2027 LRS to which the wage index would be applied is 63.5 percent. This
proposed LRS is based on the proposed 2024-based ESRDB market basket as
discussed in section II.B.1.b. of this proposed rule.
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). Historically, the ESRD PPS
wage index values have been calculated without regard to geographic
reclassifications authorized for acute care hospitals under sections
1886(d)(8) and (d)(10) of the Act and utilized pre-floor hospital data
that are not adjusted for occupational mix. In the CY 2025 ESRD PPS
final rule (89 FR 89116) we finalized a new ESRD PPS wage index
methodology which uses mean hourly wage data from the BLS OEWS. This
wage data is then weighted by a national ESRD facility occupational mix
(NEFOM) which is derived from FTE data from freestanding ESRD facility
cost report data. Treatment data from ESRD facility cost reports is
also used to weigh the mean hourly wage data when aggregating the wage
data at a CBSA level. As set forth in Sec. 413.196(d)(2), we update
the ESRD PPS wage index using the most current wage data for
occupations related to the furnishing of renal dialysis services from
BLS and occupational mix data from the most recent full CY of Medicare
cost reports submitted in accordance with Sec. 413.198(b).
For a detailed explanation of the current ESRD PPS wage index
methodology, see the discussion in the CY 2025 ESRD PPS final rule (89
FR 89108 through 89117), and for a detailed explanation of the steps we
use to calculate the ESRD PPS wage index according to this methodology
see Addendum C of the CY 2025 ESRD PPS proposed rule available at
https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-payment-regulations-and-notices/cms-1805-p.
b. National ESRD Facility Occupational Mix
Table 10 presents the NEFOM alongside the BLS occupation titles and
codes for the occupations related to the furnishing of renal dialysis
services. In this proposed rule we present the NEFOM to aid interested
parties in their reconstruction of the proposed ESRD PPS wage index,
but the actual ESRD PPS wage index uses the total FTEs for each
occupation as described in the calculation in Addendum C of the CY 2025
ESRD PPS proposed rule rather than the rounded percentages presented in
Table 10. The data in Table 10 is based on data from CY 2024
freestanding ESRD facility cost reports.
[GRAPHIC] [TIFF OMITTED] TP26JN26.026
c. Proposed CY 2027 ESRD PPS Wage Index
For CY 2027, we propose to update the wage indices to account for
updated wage levels in areas in which ESRD facilities are located using
the ESRD PPS wage index methodology established in the CY 2025 ESRD PPS
final rule (89 FR 89098 through 89107) and specified in Sec.
413.196(d)(2). The ESRD PPS wage index is specific for ESRD facilities
as it uses specific wage data weighted by an ESRD facility occupational
mix; this differentiates the ESRD PPS wage index from other Medicare
PPSs, several of which utilize the pre-floor, pre-reclassification IPPS
wage index. We propose to use the most recent available BLS OEWS mean
hourly wage data for various occupations related to the furnishing of
renal dialysis services weighted by FTE data from CY 2024 freestanding
ESRD facility cost reports. The ESRD PPS wage index values are
calculated without regard to geographic reclassifications authorized
under sections 1886(d)(8) and (d)(10) of the Act. For CY 2027, the
updated wage data used in the analysis for this proposed rule are from
the May 2026 release of the BLS OEWS, which represents data from six
semiannual surveys spanning November 2022 through May 2025.\9\
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\9\ https://www.bls.gov/news.release/pdf/ocwage.pdf.
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[[Page 38806]]
For CY 2027, we propose to update the ESRD PPS wage index to use
the most recent available BLS OEWS wage data. We are proposing that if
more recent data becomes available after the analysis performed for the
publication of this proposed rule and before the publication of the
final rule (for example, an update to the May 2025 BLS OEWS mean hourly
wage data or more complete CY 2024 cost report data), we would use such
data, if appropriate, to determine the CY 2027 ESRD PPS wage index in
the final rule.
The proposed CY 2027 ESRD PPS wage index is set forth in Addendum A
and provides a crosswalk between the final CY 2026 wage index and the
proposed CY 2027 wage index. Addendum B provides an ESRD facility level
impact analysis. Both Addendum A and Addendum B are 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.
3. Proposed CY 2027 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 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:
Renal dialysis drugs and biological products that were or
would have been, prior to January 1, 2011, separately billable under
Medicare Part B.
Renal dialysis laboratory tests that were or would have
been, prior to January 1, 2011, separately billable under Medicare Part
B.
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.
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.
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.\10\
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\10\ 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.
---------------------------------------------------------------------------
Renal dialysis drugs and biological products that are
Composite Rate Services as defined in Sec. 413.171.
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.\11\ 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 (CRs), 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 on our monitoring efforts, are either
incorrectly included or missing from the list.
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\11\ 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 PPS 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.
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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 proposed
rule to more clearly distinguish the calculation of the average ESRD
outlier services MAP amount per treatment from the calculation of the
predicted MAP amount for a claim. The average ESRD outlier services MAP
amount per treatment is based on utilization from all ESRD facilities,
whereas the calculation of the predicted MAP amount for a claim is
based on the individual ESRD facility and patient characteristics of
the monthly claim. In accordance with Sec. 413.237(c), ESRD facilities
are paid 80 percent of the per treatment amount by which the imputed
MAP amount for outlier services (that is, the actual incurred amount)
exceeds this threshold. ESRD facilities are eligible to receive outlier
payments for treating both adult and pediatric dialysis patients.
In the CY 2011 ESRD PPS final rule and codified in Sec.
413.220(b)(4), using 2007 data, we established the outlier percentage--
which is used to reduce the per treatment ESRD PPS base rate to account
for the proportion of the estimated total Medicare payments under the
ESRD PPS that are outlier payments--at 1.0 percent of total payments
(75 FR 49142 through 49143). We also established the FDL amounts that
are added to the predicted outlier services MAP amounts. The outlier
services MAP amounts and FDL amounts are different for adult and
pediatric patients due to differences in the utilization of separately
billable services among adult and pediatric patients (75 FR 49140). As
we explained in the CY 2011 ESRD PPS final rule (75 FR 49138 through
49139), the predicted outlier services MAP amounts for a patient are
determined by multiplying the adjusted average outlier services MAP
amount by the product of the patient-specific case-mix adjusters
applicable using the outlier services payment multipliers developed
from the regression analysis used to compute the payment adjustments.
In the CY 2023 ESRD PPS final rule, we finalized an update to the
outlier methodology to better target 1.0 percent of total Medicare
payments (87 FR
[[Page 38807]]
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
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 CY2023
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).
Lastly, in the CY 2025 ESRD PPS final rule we finalized several
methodological and policy changes to the ESRD PPS outlier policy to
address concerns that interested parties have raised in recent years.
First, we finalized an expansion of the definition of ESRD outlier
services in Sec. 413.237(a)(1) to include drugs and biological
products that are Composite Rate Services as defined in Sec. 413.171
(89 FR 89126). Second, we finalized a policy to include the case-mix
adjusted post-TDAPA add-on payment adjustment amount in the calculation
of the predicted MAP amounts when applicable (89 FR89127). Lastly, we
finalized changes to the inflation factors for outlier eligible drugs
and biological products, laboratory tests, and supplies. For ESRD
outlier drugs and biological products, we use the projected inflation
factor for ESRD outlier services that are drugs and biological products
derived from the historical trend in average sales price (ASP) prices
and utilization for ESRD outlier drugs (89 FR 89127 through 89130). For
ESRD outlier laboratory tests and supplies, we use the growth in the
Producer Price Index (PPI) Industry for Medical and Diagnostic
Laboratories and the PPI Commodity for Surgical and Medical
Instruments, respectively (89 FR 89129 through 89130).
b. Proposed CY 2027 Update to the Outlier Services MAP Amounts and FDL
Amounts
For CY 2027, we propose to update the MAP amounts for adult and
pediatric patients using the latest available CY 2025 claims data. We
propose to update the ESRD outlier services FDL amount for pediatric
patients using the latest available CY 2025 claims data, and to update
the ESRD outlier services FDL amount for adult patients using the
latest available claims data from CY 2023, CY 2024, and CY 2025, in
accordance with the methodology finalized in the CY 2023 ESRD PPS final
rule (87 FR 67170 through 67174) and the changes finalized in the CY
2025 ESRD PPS final rule (89 FR 89108 through 89130). The latest
available CY 2025 claims data show that outlier payments represented
approximately 0.9 percent of total Medicare payments. We propose to
update these values with the latest available data, if appropriate, in
the final rule.
[GRAPHIC] [TIFF OMITTED] TP26JN26.027
[[Page 38808]]
As demonstrated in Table 11, the proposed FDL amount per treatment
that determines the CY 2027 outlier threshold amount for adults (column
II; $114.98) is significantly higher than that used for the CY 2026
outlier policy (column I; $14.80). The higher threshold amount is
accompanied by an increase in the adjusted average MAP amount for
outlier services from $23.68 to $41.28. These increases are primarily
attributable to the projected utilization of drugs currently paid for
through the TDAPA in CY 2025, which will be ESRD outlier services in
CYs 2026 and 2027. Specifically, we project that payments under the
outlier adjustment would be approximately 3.0 percent of total ESRD PPS
payments in CY 2026 based on utilization from the latest available CY
2025 claims. As a result, we are proposing to increase the MAP and FDL
amounts to better achieve the 1.0 percent outlier target in CY 2027.
Although the proposed CY 2027 adult FDL amount is higher than the CY
2026 adult FDL amount, we note that the retrospective FDL methodology
that we finalized in the CY 2023 ESRD PPS final rule accounts for the
introduction of these new ESRD outlier services by calculating a
retrospective trend line based on prior years' TDAPA or TPNIES
utilization (87 FR 67174). The retrospective FDL calculations for CYs
2023, 2024, and 2025 are $134.81, $132.36, and $124.44, respectively.
Following the methodology we finalized in the CY 2023 ESRD PPS final
rule (87 FR 67170 through 67174), we use these retrospective FDL
amounts to project a downward trend in the FDL amount for CY 2027,
resulting in the proposed adult FDL amount of $114.98.
For pediatric patients, there is also a proposed increase in the
FDL amount from $162.43 to $206.43. There is a corresponding proposed
increase in the adjusted average MAP amount for outlier services among
pediatric patients, from $50.19 to $60.86. We note that, as discussed
in section II.B.7. of this proposed rule, we are proposing to include
phosphate binders in the ESRD PPS base rate. Accordingly, phosphate
binders would be eligible as ESRD outlier services for CY 2027, and we
have included them in our calculations.
We estimate that the percentage of patient months qualifying for
outlier payments in CY 2027 would be 6.42 percent for adult patients
and 8.91 percent for pediatric patients, based on the 2025 claims data.
c. 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 CY 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 2025 claims available for this proposed
rule, outlier payments represented approximately 0.9 percent of total
payments, which is slightly below the 1.0 percent target.
4. Proposed Impacts to the CY 2027 ESRD PPS Base Rate
a. Background
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 included 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-level
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. Proposed Annual Payment Rate Update for CY 2027
We propose an ESRD PPS base rate for CY 2027 of $299.55, which is
approximately a 6.3 percent increase from the CY 2026 ESRD PPS base
rate of $281.71. As outlined in section II.B.1.d. of this proposed
rule, we are proposing that if more recent data becomes 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 2027 ESRDB market basket
update in the final rule. The proposed CY 2027 ESRD PPS base rate is
calculated 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 2027, we are not proposing any changes to the
methodology used to calculate this factor, which is described in detail
in the CY 2014 ESRD PPS final rule (78 FR 72174). We computed the
proposed CY 2027 wage index budget neutrality adjustment factor using
treatment counts from the 2025 claims and facility-specific CY 2026
payment rates to estimate the total dollar amount that each ESRD
facility would have received in CY 2026. The total of these payments
became the target amount of expenditures for all ESRD facilities for CY
2027. Next, we computed the estimated dollar amount that would have
been paid for the same ESRD facilities using the proposed CY 2027 ESRD
PPS wage index and proposed LRS for CY 2027. The total of these
payments becomes the new CY 2027 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 2027 amount. When
we multiplied the wage index budget neutrality factor by the applicable
CY 2027 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 proposed CY
2027 wage index budget neutrality adjustment factor is 1.00267. As we
are not proposing any changes to our established ESRD PPS wage index
policy, this proposed CY 2027 wage index budget neutrality adjustment
factor reflects the impact of all established wage index policies,
including the ESRD PPS wage index methodology based on BLS OEWS and
freestanding ESRD facility cost report FTE data, the 5 percent cap on
year-to-year decreases in wage index values, the 3-year rural phase-out
for ESRD facilities in CBSAs which we currently consider urban that
were considered rural prior to the new delineations
[[Page 38809]]
adopted in CY 2025,\12\ and the proposed LRS.
---------------------------------------------------------------------------
\12\ We note that the 3-year rural phase-out finalized in the CY
2025 ESRD PPS final rule (89 FR 89117 through 89119) ends January 1,
2027. As discussed in that rule, we will not apply a rural
transition adjustment factor in CY 2027 or any future year for ESRD
facilities that were rural in CY 2024 but were redesignated as urban
for CY 2025. The proposed wage index budget neutrality factor for CY
2027 reflects the budget neutrality associated with the end of this
policy.
---------------------------------------------------------------------------
We note that the proposed CY 2027 wage index budget neutrality
factor does not include any impacts associated with the TPEAPA, as was
the case with the 2024 combined wage index-TPEAPA budget neutrality
finalized factor for CY 2024. Although CY 2026 is the final year of the
TPEAPA, as discussed in section II.B.9. of this proposed rule, we are
proposing budget neutral changes to the payment adjustments that apply
for pediatric ESRD patients. Rather than calculating a combined TPEAPA-
wage index budget neutrality factor, we are including the effect of the
end of TPEAPA in the proposed budget neutrality factor for those
pediatric proposals. This is more consistent with what we have done in
past years where there were multiple budget neutral policy changes
outside the wage index in a given year, such as in the CY 2016 ESRD PPS
final rule (80 FR 69011). This proposed budget neutrality factor does
not incorporate the budget neutrality impact of the end of the TPEAPA
effective January 1, 2027. That budget neutrality impact is included in
the proposed budget neutrality factor for the payment adjustments
described in this proposal.
Proposed Budget Neutrality Factor for Certain Payment Adjustment
Changes: As outlined in sections II.B.8., II.B.9., and II.B.10. of this
proposed rule, under the authority granted by section
1881(b)(14)(D)(iv) of the Act, we are proposing changes to the LVPA,
payment adjustments for pediatric ESRD patients, and home and self-
dialysis training add-on payment adjustment. We are proposing that the
changes to these payment adjustments would be budget neutral and would
result in a proposed combined budget neutrality factor of 0.98783. This
is calculated based on the combined budget neutrality factor of 0.98898
for the proposed LVPA changes, 0.99999 for the proposed pediatric
changes, and 0.99884 for the proposed changes to the home and self-
dialysis training add-on payment adjustment. As noted previously, this
proposed budget neutrality factor also includes the budget neutrality
impact associated with the end of the TPEAPA effective January 1, 2027.
Proposed Addition of Phosphate Binders to the ESRD PPS Base Rate:
As discussed in section II.B.7. of this proposed rule, for CY 2027 we
are proposing to modify the ESRD PPS in a non-budget neutral manner
base rate by adding $15.96 to account for phosphate binders in the ESRD
PPS bundled payment. This application would yield a CY 2027 ESRD PPS
base rate of $297.67 ($281.71 + $15.96 = $297.67), prior to the
application of the proposed market basket update and budget neutrality
factors. We propose to apply the budget neutrality factors to the base
rate after the addition of the $15.96. This is appropriate because
those budget neutrality factors were calculated using estimated
payments, which incorporated the proposed increase to the base rate.
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 outlined in section II.B.1.d. of this proposed rule, the
proposed CY 2027 ESRDB market basket increase based on IGI's first
quarter 2026 forecast of the proposed 2024-based ESRDB market basket is
2.6 percent. For CY 2027, 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.d.(2) of this proposed rule, the
proposed CY 2027 productivity adjustment is 1.0 percentage point based
on IGI's first quarter 2026 forecast of the 10-year moving average of
TFP for the period ending CY 2027, thus yielding a proposed CY 2027
ESRDB market basket update of 1.6 percent for CY 2027. Therefore, the
proposed CY 2027 ESRD PPS base rate is $299.55 (($297.67 x 1.00267 x
0.98783) x 1.016 = $299.55).
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 rate. For
purposes of this proposed 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 ESRDB market basket update. 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 two CYs.
There are currently no capital-related assets that are home
dialysis machines set to receive the TPNIES for CY 2027, as the TPNIES
payment period for the Tablo[supreg] System ended on December 31, 2023,
and there are no TPNIES applications for CY 2027. However, as required
by Sec. 413.236(f)(3)(v), we propose to update the TPNIES offset
amount annually according to the methodology described previously.
We propose a CY 2027 TPNIES offset amount for capital-related
assets that are home dialysis machines of $10.60, based on the
application of the proposed CY 2027 ESRDB market basket update of 1.6
percent (proposed 2.6 percent ESRDB market basket percentage increase
reduced by the proposed 1.0 percentage point productivity adjustment)
to the CY 2026 TPNIES offset amount of $10.43. We request public
comments on our proposal to update the TPNIES offset amount for
capital-related assets for CY 2027.
6. Post-TDAPA Add-on Payment Adjustment Updates
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 adjusters and is applied to every ESRD PPS claim. In the CY 2024
ESRD PPS 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.
The post-TDAPA add-on payment adjustment amounts
[[Page 38810]]
are calculated based on the methodology codified at Sec. 413.234(g),
which is the total drug expenditure divided by the total ESRD PPS
treatments multiplied by the case mix standardization for the time
period and the 0.65 risk sharing factor, and the ESRDB pharmaceutical
price proxy for the payment year (88 FR 76396). In the CY 2025 ESRD PPS
final rule (89 FR 89136) we finalized our proposal to publish the post-
TDAPA add-on payment adjustment amount after the final rule in certain
circumstances to ensure that the post-TDAPA add-on payment adjustment
amount can be calculated using 12 months of utilization data.
For CY 2026 there is one drug, Korsuva[supreg] (difelikefalin),
included in the calculation of the post-TDAPA add-on payment adjustment
for each of the four calendar quarters and one drug, DefenCath[supreg],
included in the calculation for only the third and fourth calendar
quarters. In the CY 2026 ESRD PPS final rule (90 FR 53091 through
53092), we finalized that the post-TDAPA add-on payment adjustment
amount for Korsuva[supreg] would be $0.1131 for CY 2026 and we
finalized a post-TDAPA add-on payment adjustment amount for
DefenCath[supreg] of $2.3710 for the third and fourth quarter of 2026.
a. CY 2027 Post-TDAPA Add-on Payment Adjustment Amounts
For CY 2027, there will be four drugs in the 3-year period
following the end of their TDAPA period that are potentially eligible
to be included in the calculation of the post-TDAPA add-on payment
adjustment. Section 413.234(c)(3) states that, should CMS not receive
the latest full calendar quarter of ASP data for a drug or biological
product during the TDAPA or post-TDAPA add-on payment adjustment
period, we will not pay any post-TDAPA add-on payment adjustment for
such product in any future year. We refer to this policy at Sec.
413.234(c)(3) as the conditional ASP policy, which was finalized in the
CY 2024 ESRD PPS final rule (88 FR 76388 through 76396) and is modeled
off the conditional ASP policy for the TDAPA which was finalized in the
CY 2019 ESRD PPS final rule (84 FR 60677 through 60681). The intention
of these policies is to ensure that the TDAPA and post-TDAPA add-on
payment adjustment are always based on the best available data, which
we consider to be ASP (when ASP is available). The third quarter of
2026 reflecting the first quarter of 2026 sales would be the latest
quarter of ASP data at the time of rulemaking for the proposed
rule.\13\ As discussed in the CY 2026 ESRD PPS proposed rule (90 FR
53090), CMS did not receive ASP data for Jesduvroq[supreg] for the
third quarter of 2025, which reflects sales for the first quarter of
2025. As such, we are not proposing to include Jesduvroq[supreg] in the
calculation of the post-TDAPA add-on payment adjustment for CY 2027.
Therefore, conditional on the continued receipt of the latest full
calendar quarter of ASP data for the renal dialysis drugs discussed
later in this document, there are three drugs included in the
calculation of the post-TDAPA add-on payment adjustment for CY 2027.
---------------------------------------------------------------------------
\13\ ASP quarters are based on calendar years, so 3rd quarter
ASP reflecting 1st quarter data would reflect data from January to
March of the given year.
---------------------------------------------------------------------------
The post-TDAPA add-on payment adjustment period for one of these
drugs, Korsuva[supreg], began on April 1, 2024, so Korsuva[supreg]
would be included in the calculation for the post-TDAPA add-on payment
adjustment for only the first quarter of CY 2027, conditional on the
continued receipt of ASP data. DefenCath[supreg] began its TDAPA period
on July 1, 2024, so its post-TDAPA add-on payment adjustment period
will begin July 1, 2026. Vafseo[supreg] began its TDAPA period January
1, 2025, so its post-TDAPA period would begin January 1, 2027,
conditional on the continued receipt of ASP data. Both drugs would be
included in the post-TDAPA add-on payment adjustment calculation for
each quarter of CY 2027, conditional on the continued receipt of ASP
data.
We are presenting the proposed post-TDAPA add-on payment adjustment
amounts for each of these drugs based on the most recently available
full year of utilization data at this time. Utilization for this
proposed rule is from January 2025 to December 2025. The estimated
post-TDAPA add-on payment adjustment amount for Korsuva[supreg] is
$0.1068, the estimated post-TDAPA add-on payment adjustment amount for
DefenCath[supreg] is $5.5951, and the estimated post-TDAPA add-on
payment adjustment for Vafseo[supreg] is $0.9437. The cumulative
estimated post-TDAPA add-on payment adjustment amount for each quarter
is presented in Table 12. Consistent with the methodology finalized in
the CY 2024 ESRD PPS final rule (88 FR 76388 through 76389), we intend
to update these calculations with the most recent available utilization
and pricing data in the final rule. If the proposal in section
II.B.6.b. is finalized, we would update the post-TDAPA add-on payment
adjustment amounts quarterly via change requests (CRs). We invite
public comments on the estimated CY 2027 post-TDAPA add-on payment
adjustment amounts presented in Table 12.
[[Page 38811]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.028
b. Proposal To Update the Post-TDAPA Add-On Payment Adjustment Amounts
Quarterly
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.
In the CY 2025 ESRD PPS final rule, we established a policy that,
when there is less than a full year's utilization data at the time of
rulemaking, we would publish the post-TDAPA add-on payment adjustment
amount via Change Request (CR) once we have a full 12 months of data
(89 FR 89135). Under this policy, 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.
In the CY 2025 ESRD PPS final rule, we reiterated that 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) (89 FR
89135 through 89136). However, in that final rule, we did not finalize
other circumstances where we would update the post-TDAPA add-on payment
adjustment amount for a drug or biological product. Specifically, we
stated that we did not intend to routinely update the post-TDAPA add-on
payment adjustment amount quarterly, as we believed this would make it
more difficult for ESRD facilities to estimate payments (89 FR 89136).
In response to the proposed post-TDAPA add-on payment amount
published in the CY 2026 ESRD PPS proposed rule, we received a comment
requesting we finalize a policy to publish the post-TDAPA add-on
payment adjustment for DefenCath[supreg] after the publication of the
final rule (90 FR 53091). This commenter stated that publishing the
post-TDAPA add-on payment adjustment amount for that drug later, such
that data from the third and fourth quarter of 2025 could be included
in the calculation, would be more appropriate as it would reflect more
recent data that shows increased utilization compared to the third and
fourth quarter of 2024. Specifically, they noted that they believed
2024 utilization for DefenCath[supreg] was depressed by several
factors, which they stated would result in an undervaluing of the drug
for the post-TDAPA add-on payment adjustment. The commenter highlighted
that the 2024 data would be two years old by the time the post-TDAPA
add-on payment adjustment would begin in quarter 3 2026. While we did
not finalize any such changes in the CY 2026 ESRD PPS final rule, we
noted that we would evaluate whether additional flexibilities may be
warranted in the post-TDAPA add-on payment adjustment calculation.
Since the publication of the CY 2026 ESRD PPS final rule,
stakeholders have repeated their concerns with our established post-
TDAPA add-on payment adjustment methodology and stated a belief that it
undervalued new drugs and biological products. We understand the
concerns raised by stakeholders regarding the time delay of the post-
TDAPA add-on payment adjustment calculation inherent in calculating the
adjustment once per year during rulemaking and we have reevaluated our
policy. Although it is important for ESRD facilities to be able to
accurately plan for payments, we recognize that rapid changes in price
or utilization might not be fully captured by the current methodology.
We propose to modify the post-TDAPA add-on payment adjustment
methodology to routinely calculate the post-TDAPA add-on payment
adjustment amounts each quarter. This proposed modification would not
change the steps for the calculation of the post-TDAPA add-on payment
adjustment, insofar as we would still be using the most recent quarter
of ASP data and the most recently available full year of utilization
data. We are only proposing to perform the calculation more frequently
and publish the amounts in CRs quarterly. We acknowledge that, in the
past, we have stated that setting the post-TDAPA add-on payment amount
once annually would improve ESRD facilities' ability to estimate
payments. However, after further consideration, we believe that setting
the post-TDAPA add-on payment amount more frequently would better align
the post-TDAPA add-on payment amounts with the actual utilizations and
prices of the renal dialysis drugs and biological products. This would
allow for the payment amount to consistently be based on the most
recently available data, which we believe would address concerns which
stakeholders have raised that the post-TDAPA add-on payment adjustment
amount was often based on outdated data. Under this proposal, we would
still publish the first quarter post-TDAPA add-on payment adjustment
amounts annually in the rule. We expect that generally the post-TDAPA
add-on payment adjustment amounts would not change drastically
throughout the year, which would allow ESRD facilities to
[[Page 38812]]
reasonably estimate payments in advance.
As we are proposing to calculate the post-TDAPA add-on payment
adjustment quarterly, we are also proposing to modify the conditional
ASP policy such that the post-TDAPA add-on payment adjustment would
stop the next quarter after a non-submission of ASP data. This is a
change from current policy, in which we would wait until the next
rulemaking year to discontinue the post-TDAPA add-on payment adjustment
for a drug which failed to report ASP. We note that the amount of time
for processing a CR can vary and there are occasionally other factors
which create additional lag in the use of claims data, so the time
periods utilized in a given quarter could change from year to year.
However, we intend to generally aim to include data from two quarters
prior. For example, for the third quarter post-TDAPA add-on payment
adjustment, which begins July 1 of a year, we would generally include
data through December of the prior year, but depending on the year
December data may not be available at the time of processing. Under
this proposed policy, if an update to the post-TDAPA add-on payment
adjustment amount for a given quarter is not operationally feasible for
some currently unforeseen reason, the post-TDAPA add-on payment
adjustment amount for the prior quarter would continue until such a
time when updating it is operationally feasible. CMS intends to include
the months from which the post-TDAPA adjustment was calculated, as well
as the quarter of ASP we used for the calculation in the CR. We would
also note any discontinuations of the post-TDAPA add-on payment
adjustment due to failure to submit ASP data.
We are proposing changes to Sec. 413.234(c)(3) to state that the
post-TDAPA add-on payment adjustment would be calculated quarterly and
that if we stopped receiving ASP data, we would not calculate the post-
TDAPA add-on payment adjustment for any subsequent quarter (rather than
any subsequent year, as it currently reads). We are also proposing
changes to Sec. 413.234(g) to state that we would calculate the post-
TDAPA add-on payment adjustment quarterly.
7. Proposal To Incorporate Phosphate Binders Into the ESRD PPS Base
Rate
a. Background
(1) Background on Oral-Only Renal Dialysis Drugs
Section 1881(b)(14)(A)(i) of the Act requires the Secretary to
implement a payment system under which a single payment is made to a
provider of services or a renal dialysis facility for renal dialysis
services in lieu of any other payment. Section 1881(b)(14)(B) of the
Act defines renal dialysis services, and clause (iii) of such section
states that these services include other drugs and biologicals that are
furnished to individuals for the treatment of ESRD and for which
payment was made separately under this title, and any oral equivalent
form of such drug or biological.
As we explained in the CY 2011 ESRD PPS final rule (75 FR 49044),
we interpret this provision as including not only injectable drugs and
biological products used for the treatment of ESRD (other than ESAs)
and any oral form of ESAs, which are included under clause (ii) of
section 1881(b)(14)(B) of the Act, but also all oral drugs and
biological products used for the treatment of ESRD and furnished under
Title XVIII of the Act. We also concluded that, to the extent oral-only
drugs or biological products used for the treatment of ESRD do not fall
within clause (iii) of section 1881(b)(14)(B) of the Act, such drugs or
biological products would fall under clause (iv) of such section, and
constitute other items and services used for the treatment of ESRD that
are not described in clause (i) of section 1881(b)(14)(B) of the Act.
We finalized and promulgated the payment policies for oral-only
renal dialysis service drugs and biological products in the CY 2011
ESRD PPS final rule (75 FR 49038 through 49053), where we defined renal
dialysis services at Sec. 413.171 to include other drugs and
biological products 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 oral-only drugs (75 FR 49044).
We further described oral-only drugs as those that have no injectable
equivalent or other form of administration (75 FR 49038 through 49039).
Although we included oral-only renal dialysis service drugs and
biological products in the definition of renal dialysis services in the
CY 2011 ESRD PPS final rule (75 FR 49044), we also finalized a policy
to delay payment for oral-only renal dialysis service drugs and
biological products under the ESRD PPS until January 1, 2014, and
codified this delay at Sec. 413.174(f)(6) (75 FR 49042). In the CY
2011 ESRD PPS proposed and final rules (74 FR 49929 and 75 FR 49038,
respectively), we noted that the oral-only drugs and biological
products that we identified were limited to phosphate binders and
calcimimetics, which fall into the bone and mineral metabolism ESRD PPS
functional category. We stated that there were certain advantages to
delaying the implementation of payment for oral-only drugs and
biological products, including allowing ESRD facilities additional time
to make operational changes and logistical arrangements to furnish
oral-only renal dialysis drugs and biological products to their
patients. Accordingly, we codified the delay in payment for oral-only
renal dialysis drugs and biological products at Sec. 413.174(f)(6) and
specified that payment to an ESRD facility for renal dialysis drugs and
biological products with only an oral form will be incorporated into
the ESRD PPS payment rate on January 1, 2014. Since oral-only drugs
were generally not covered under Medicare Part B at this time, the
delay of payment under the ESRD PPS allowed these drugs to continue
being paid for under Medicare Part D until inclusion in the ESRD PPS,
consistent with CMS's discussion at 75 FR 49052 through 49053.
On January 3, 2013, the American Taxpayer Relief Act of 2012 (ATRA)
was enacted. Section 632(b) of ATRA precluded the Secretary from
implementing the policy under Sec. 413.174(f)(6) relating to oral-only
renal dialysis service drugs and biological products prior to January
1, 2016. Accordingly, in the CY 2014 ESRD PPS final rule (78 FR 72185
through 72186), we delayed payment for oral-only renal dialysis service
drugs and biological products under the ESRD PPS until January 1, 2016.
We implemented this statutory change through revisions of the effective
date at Sec. 413.174(f)(6) from January 1, 2014, to January 1, 2016,
as discussed in the applicable final rule. In addition, we changed the
date when oral-only renal dialysis service drugs and biological
products would be eligible for outlier services under the outlier
policy described in Sec. 413.237(a)(1)(iv) from January 1, 2014, to
January 1, 2016.
On April 1, 2014, the Protecting Access to Medicare Act of 2014
(PAMA) was enacted. Section 217(a)(1) of PAMA amended section 632(b)(1)
of ATRA and precluded the Secretary from implementing the policy under
Sec. 413.174(f)(6) relating to oral-only renal dialysis service drugs
and biological products prior to January 1, 2024. We implemented this
statutory change in the CY 2015 ESRD PPS final rule (79 FR 66262)
through revisions by modifying the effective date for providing payment
for oral-only renal dialysis service drugs and biological products
under the ESRD PPS at Sec. 413.174(f)(6) from January 1, 2016, to
January 1, 2024. We also
[[Page 38813]]
changed the date in Sec. 413.237(a)(1)(iv) regarding outlier payments
for oral-only renal dialysis service drugs made under the ESRD PPS from
January 1, 2016, to January 1, 2024. Section 217(a)(2) of PAMA further
amended section 632(b)(1) of ATRA by requiring that, in establishing
payment for oral-only drugs under the ESRD PPS, the Secretary must use
data from the most recent year available.
On December 19, 2014, the Achieving a Better Life Experience Act of
2014 (ABLE) was enacted. Section 204 of ABLE amended section 632(b)(1)
of ATRA, as amended by section 217(a)(1) of PAMA, and precluded the
Secretary from implementing the policy under Sec. 413.174(f)(6)
relating to oral-only renal dialysis service drugs and biological
products prior to January 1, 2025. We implemented this statutory change
in the CY 2016 ESRD PPS final rule (80 FR 69027 through 69028) by
modifying the effective date for providing payment for oral-only renal
dialysis service drugs and biological products under the ESRD PPS
through revisions at Sec. 413.174(f)(6) from January 1, 2024, to
January 1, 2025. We also changed the date in Sec. 413.237(a)(1)(iv)
regarding outlier payments for oral-only renal dialysis service drugs
made under the ESRD PPS from January 1, 2024, to January 1, 2025.
(2) ESRD PPS Drug Designation Process and Phosphate Binders
In addition to delaying implementation of the policy for oral-only
renal dialysis service drugs and biological products under the ESRD
PPS, discussed previously in this proposed rule, PAMA included section
217(c), which provided that as part of CY 2016 ESRD PPS rulemaking, the
Secretary shall establish a process for (1) determining when a product
is no longer an oral-only drug; and (2) including new injectable and
intravenous products into the ESRD PPS bundled payment. Therefore, in
the CY 2016 ESRD PPS final rule (80 FR 69013 through 69027), we
finalized a process that allows us to recognize when an oral-only renal
dialysis service drug or biological product is no longer oral-only, and
a process to include new injectable and intravenous (IV) products into
the ESRD PPS bundled payment, and when appropriate, modify the ESRD PPS
payment amount to reflect the costs of furnishing that product.
In accordance with section 217(c)(1) of PAMA, we established Sec.
413.234(d), which provides that an oral-only drug is no longer
considered oral-only if an injectable or other form of administration
of the oral-only drug is approved by FDA (80 FR 69024 through 69027).
We defined an oral-only drug at Sec. 413.234(a) to mean a drug or
biological with no injectable equivalent or other form of
administration other than an oral form.
Additionally, in accordance with section 217(c)(2) of PAMA, we
codified the drug designation process at Sec. 413.234(b). In the CY
2016 ESRD PPS final rule (80 FR 69024), we finalized that the drug
designation process is dependent upon the ESRD PPS functional
categories, consistent with our policy since the implementation of the
ESRD PPS in 2011, which we discussed in detail in the CY 2011 ESRD PPS
final rule (80 FR 69013 through 69015). We explained that, in the CY
2011 ESRD PPS final rule (75 FR 49044 through 49053), in order to
identify drugs and biological products that are used for the treatment
of ESRD and therefore meet the definition of renal dialysis services
(defined at Sec. 413.171) that would be included in the ESRD PPS base
rate, we performed an extensive analysis of Medicare payments for Part
B drugs and biological products billed on ESRD claims and evaluated
each drug and biological product to identify its category by indication
or mode of action. We stated in the CY 2011 ESRD PPS final rule that
categorizing drugs and biological products on the basis of drug action
allows us to determine which categories (and therefore, the drugs and
biological products within the categories) would be considered used for
the treatment of ESRD (75 FR 49047).
In the CY 2016 ESRD PPS final rule, we also explained that, in CY
2011 ESRD PPS rulemaking, we grouped the injectable and IV drugs and
biological products into ESRD PPS functional categories based on their
action (80 FR 69014). This was done for the purpose of adding new drugs
or biological products with the same functions to the ESRD PPS bundled
payment as expeditiously as possible after the drugs become
commercially available so that beneficiaries have access to them. In
the CY 2016 ESRD PPS final rule, we finalized the definition of an ESRD
PPS functional category at Sec. 413.234(a) as a distinct grouping of
drugs or biologicals, as determined by CMS, whose end action effect is
the treatment or management of a condition or conditions associated
with ESRD (80 FR 69077).
We finalized a policy in the CY 2016 ESRD PPS final rule (80 FR
69017 through 69022) that, effective January 1, 2016, if a new
injectable or IV product is used to treat or manage a condition for
which there is an ESRD PPS functional category, the new injectable or
IV product is considered included in the ESRD PPS bundled payment and
no separate payment is available. We stated that the new injectable or
IV product qualifies as an outlier service. We further explained that
the ESRDB market basket updates the ESRD PPS base rate annually and
accounts for price changes of the drugs and biological products
reflected in the bundled payment.
We established at Sec. 413.234(b)(2) that, if the new injectable
or IV product is used to treat or manage a condition for which there is
not an existing ESRD PPS functional category, the new injectable or IV
product is not considered included in the ESRD PPS bundled payment and
the following steps occur. First, an existing ESRD PPS functional
category is revised or a new ESRD PPS functional category is added for
the condition that the new injectable or IV product is used to treat or
manage. Next, the new injectable or IV product is paid for using the
transitional drug add-on payment adjustment (TDAPA) described at Sec.
413.234(c). Finally, the new injectable or IV product is added to the
ESRD PPS base rate following payment of the TDAPA.
(3) Transitional Drug Add-On Payment Adjustment (TDAPA) Framework
The TDAPA is a payment adjustment under the ESRD PPS for certain
new renal dialysis drugs and biological products, as codified at Sec.
413.234(c). As discussed in the CY 2019 and CY 2020 ESRD PPS final
rules, for new renal dialysis drugs and biological products that fall
into an existing ESRD PPS functional category, the TDAPA helps ESRD
facilities to incorporate new drugs and biological products and make
appropriate changes in their businesses to adopt such products.
Furthermore, the TDAPA provides additional payments for such associated
costs and promotes competition among the products within the ESRD PPS
functional categories, while also focusing Medicare resources on
products that are innovative (83 FR 56935 and 84 FR 60654,
respectively). For new renal dialysis drugs and biological products
that do not fall within an existing ESRD PPS functional category, the
TDAPA is a pathway toward a potential base rate modification (83 FR
56935).
In the CY 2016 ESRD PPS final rule, we finalized a policy at Sec.
413.234(c) to base the TDAPA on pricing methodologies under section
1847A of the Act and pay the TDAPA until sufficient claims data for
rate setting analysis for the new injectable or IV product are
available, but not for less
[[Page 38814]]
than two years (80 FR 69019 through 69025). During the time a new
injectable or IV product is eligible for the TDAPA, it is not eligible
as an outlier service. We established that, following payment of the
TDAPA, the ESRD PPS base rate will be modified, if appropriate, to
account for the new injectable or IV product in the ESRD PPS bundled
payment.
(4) Payment Policy for Phosphate Binders and Calcimimetics
In the CY 2016 ESRD PPS final rule (80 FR 69024 through 69027), CMS
also established an exception to the drug designation process for
calcimimetics and phosphate binders. We noted that in the CY 2011 ESRD
PPS proposed and final rules (74 FR 49929 and 75 FR 49038,
respectively), the only oral-only drugs and biological products we
identified were phosphate binders and calcimimetics, which fall into
the bone and mineral metabolism ESRD PPS functional category. We stated
that we defined these oral-only drugs as renal dialysis services in our
regulations at Sec. 413.171 (75 FR 49044), delayed the Medicare Part B
payment for these oral-only drugs until CY 2014 at Sec. 413.174(f)(6),
and continued to pay for them under Medicare Part D. We explained in
the CY 2016 ESRD PPS final rule that, under Sec. 413.234(b)(1), if
injectable or IV forms of phosphate binders or calcimimetics are
approved by FDA, these drugs would be considered reflected in the ESRD
PPS bundled payment because these drugs are included in an existing
functional category. Therefore, CMS does not make additional payment to
ESRD facilities for these drugs.
However, we recognized the uniqueness of these drugs and stated
that we will not apply this process to injectable or IV forms of
phosphate binders and calcimimetics when they are approved because
payment for the oral forms of these drugs was delayed and payment was
never included in the ESRD PPS base rate to account for these drugs (80
FR 69025 through 69027). Instead, we finalized a policy that once the
injectable or IV phosphate binder or calcimimetic is FDA approved and
has a Healthcare Common Procedure Coding System (HCPCS) code, we would
issue a CR to pay for all forms of the phosphate binder or calcimimetic
using the TDAPA based on the payment methodologies under section 1847A
of the Act, which could include average sales price (ASP) + 6 percent
(ASP + 6), for a period of at least two years. In the CY 2016 ESRD PPS
final rule, we explained that this would allow us to collect data
reflecting current utilization of both the oral and injectable or IV
forms of the drugs, as well as payment patterns and beneficiary co-
insurance, before we add these drugs to the ESRD PPS bundled payment.
We stated that during this period we would not pay outlier payments for
these drugs. We further stated that at the end of the two or more
years, we would adopt the methodology for including the phosphate
binders and calcimimetics into the ESRD PPS bundled payment through
notice-and-comment rulemaking (80 FR 69025).
(5) Evolution of TDAPA Policies and Payment for Calcimimetics
In the CY 2019 and 2020 ESRD PPS final rules (83 FR 56927 through
56949 and 84 FR 60653 through 60677, respectively), we revised the drug
designation process regulations at Sec. 413.234(a), (b), and (c) to
reflect that the process applies to all new renal dialysis drugs and
biological products that are FDA approved regardless of the form or
route of administration (83 FR 56932). In addition, we revised Sec.
413.234(b) and (c) to expand the TDAPA to all new renal dialysis drugs
and biological products, not just those in new ESRD PPS functional
categories (83 FR 56942 through 56943). Finally, we revised Sec.
413.234(c) to reflect that the TDAPA would be based on 100 percent of
ASP instead of the pricing methodologies available under section 1847A
of the Act, which includes ASP + 6. We explained that historically, the
six percent add-on to ASP was used to cover administrative and overhead
costs. However, the ESRD PPS base rate includes dollars for
administrative complexities and overhead costs for drugs and biological
products, so we stated that we believe ASP, without + 6, was a
reasonable basis for the TDAPA under the ESRD PPS (83 FR 56943 through
56944). In the CY 2020 ESRD PPS final rule, we revised the eligibility
criteria for the TDAPA, including defining specific New Drug
Application (NDA) categories that are excluded from the TDAPA (84 FR
60659 through 60673).
In 2017, FDA approved an injectable calcimimetic. In accordance
with the policy finalized in the CY 2016 ESRD PPS final rule, we issued
a CR to implement payment under the ESRD PPS for both the oral and
injectable forms of calcimimetics using the TDAPA. CR 10065,
Transmittal 1889, issued August 4, 2017, replaced by Transmittal 1999,
issued January 10, 2018, implemented the TDAPA for calcimimetics
effective January 1, 2018. The TDAPA for calcimimetics was paid at ASP
+ 6 for the first two years of the TDAPA period (83 FR 56944) and was
paid ASP for the third year of the TDAPA period (84 FR 60676). In the
CY 2020 ESRD PPS final rule we stated that after the first two years,
sufficient time had passed for ESRD facilities to address any
administrative complexities and overhead costs that may have arisen
related to furnishing calcimimetics (84 FR 60673). We then went through
notice-and-comment rulemaking to incorporate calcimimetics into the
ESRD PPS base rate beginning January 1, 2021, after the TDAPA payment
period ended on December 31, 2020, using the methodology codified at
Sec. 413.234(f) (85 FR 71404 through 71410).
(6) TDAPA Implementation for Oral Phosphate Binders
In the CY 2025 ESRD PPS final rule, CMS finalized payment for oral
phosphate binders under the ESRD PPS using the TDAPA, consistent with
Sec. 413.234(c), with incorporation into the ESRD PPS base rate to
occur through future rulemaking after sufficient data collection (89 FR
89136 through 89153). This implementation fulfilled existing
regulations at Sec. 413.174(f)(6) that required oral-only drugs to be
paid for under the ESRD PPS beginning in CY 2025, after multiple
legislative delays (ATRA, PAMA, and ABLE) dating back to the original
CY 2014 implementation date, as discussed in section II.B.7.a.(1) of
this proposed rule.
Since January 1, 2025, oral phosphate binders have been paid under
the ESRD PPS through the TDAPA, which is payable under our current
regulations for a period of at least two years until sufficient claims
data for rate setting analysis for the new renal dialysis drug or
biological product is available. The TDAPA amount for phosphate binders
currently includes 100 percent of ASP plus a flat rate increase of
$36.41 for monthly ESRD PPS claims to cover the operational costs
associated with supplying phosphate binders to ESRD facilities. This
$36.41 figure was based on 6 percent of per-patient phosphate binder
spending based on Part D cost and utilization data from before the
beginning of the TDAPA period (89 FR 89148). CMS has stated that we
would increase the ESRD PPS base rate to account for the average per-
treatment phosphate binder spending, consistent with past policy for
similar drugs (calcimimetics), after the end of the TDAPA period for
phosphate binders (89 FR 89148).
[[Page 38815]]
b. Proposed Methodology for Incorporating Phosphate Binders Into the
ESRD PPS Base Rate
(1) General Discussion of Claims Data and Intention
As we discussed previously, oral phosphate binders have been paid
under the ESRD PPS using the TDAPA since January 1, 2025. In the CY
2016 ESRD PPS final rule, CMS discussed that phosphate binders fall
into the bone and mineral metabolism ESRD PPS functional category but
are not accounted for in the base rate. We stated that we will utilize
the TDAPA to collect utilization data before incorporating these drugs
into the ESRD PPS base rate (80 FR 69025). We explained that this would
allow CMS to collect data reflecting current utilization of oral
phosphate binders, as well as payment patterns and beneficiary co-
insurance, and after a period of at least two years, we would adopt the
methodology for including these drugs in the ESRD PPS bundled payment
through notice-and-comment rulemaking. This would be consistent with
section 217(a)(2) of PAMA, which requires the Secretary to use data
from the most recent year available when establishing payment for oral-
only drugs under the ESRD PPS.
We have collected sufficient claims data to conduct a rate-setting
analysis for phosphate binders. Specifically, we have collected robust
claims data since January 1, 2025, and analyzed the utilization of
various oral phosphate binders, including sevelamer carbonate,
sevelamer hydrochloride, sucroferric oxyhydroxide, lanthanum carbonate,
ferric citrate, and calcium acetate. We monitored the ASP data
available during the specific utilization periods. Our overall analysis
of ESRD claims data for CYs 2025 and 2026 indicated utilization
patterns across the various phosphate binder formulations, with
variations in ASP reflecting the different product types and market
dynamics within this therapeutic class.
Therefore, we believe that we are at the step of the ESRD PPS drug
designation process (outlined at Sec. 413.234) where we propose the
methodology for modifying the ESRD PPS base rate to account for
phosphate binders in the ESRD PPS bundled payment for CY 2027. CMS
believes that a base rate increase is warranted in the case of
phosphate binders because, as discussed in the CY 2011 ESRD PPS final
rule, oral-only drugs, which included phosphate binders, were not
included in the ESRD PPS at the inception of the bundled payment system
(CY 75 FR 49043 through 49044) and currently remain unaccounted for
within the ESRD PPS base rate. We propose to add a per-treatment amount
to the ESRD PPS base rate to include phosphate binders in the ESRD PPS
bundled payment amount for dates of service on or after January 1,
2027.
In developing the proposed methodology for including phosphate
binders into the ESRD PPS base rate, we considered the methodology that
we used when we incorporated calcimimetics into the ESRD PPS base rate
beginning for CY 2021, as well as the methodology we used when we
included Part B drugs and biological products in the ESRD PPS base rate
as part of our initial implementation of the ESRD PPS. In the CY 2021
ESRD PPS final rule (85 FR 71404 through 71410), we discussed how we
established the methodology for incorporating calcimimetics into the
ESRD PPS base rate using utilization data from Medicare claims and
applying ASP to establish the price for each drug form.
In addition, as discussed in the CY 2011 ESRD PPS final rule (75 FR
49064), we established a dialysis treatment as the unit of payment.
Consistent with the approach we used to include calcimimetics in the
ESRD PPS base rate and the ESRD PPS unit of payment, we are proposing a
similar methodology in this rule to calculate a one-time modification
to the ESRD PPS base rate on a per-treatment basis to account for
phosphate binders. The proposed methodology is similar to the
calcimimetics approach because we would determine utilization of the
drugs, in this case, phosphate binders, along with the payment amounts
associated with each phosphate binder product based on ASP, consistent
with our established TDAPA pricing policy.
The following sections discuss each element of our proposed
methodology in detail. As an overview, we propose to calculate a per-
treatment amount for phosphate binders that would be added to the ESRD
PPS base rate. We would apply 100 percent of the ASP value from the
most recent calendar quarter ASP calculations to the utilization data
for phosphate binders between April 1, 2025, and December 31, 2025,
based on Medicare ESRD claims data. This would provide the phosphate
binder expenditure amount. We would then multiply the phosphate binder
expenditure amount by 1.06, consistent with the methodology that we
used to calculate the flat rate add-on per-monthly claim amount of
$36.41 during the TDAPA period, to yield the adjusted phosphate binder
expenditure amount. Next, we would divide the adjusted phosphate binder
expenditure amount by the total number of hemodialysis-equivalent
dialysis treatments paid between April 1, 2025, and December 31, 2025,
under the ESRD PPS. We would reduce this average per-treatment amount
by one percent to account for the outlier policy, since phosphate
binders would be ESRD outlier services eligible for outlier payments
beginning January 1, 2027, under this proposal. We propose to add the
resulting amount to the ESRD PPS base rate, as discussed in section
II.B.4. of this proposed rule. We note that this amount would stay in
the base rate and be subject to the annual updates (ESRDB market basket
update and application of wage index budget neutrality adjustment
factor). Under this proposal, CMS would stop paying for these drugs
using the TDAPA for dates of service on or after January 1, 2027.
If finalized, this proposal would complete the implementation of
Sec. 413.174(f)(6), which provides that oral-only renal dialysis drugs
are paid under the ESRD PPS beginning January 1, 2025, and that
separate payment for oral-only phosphate binders is no longer provided
beginning January 1, 2025. This proposal, if finalized, would establish
the methodology for incorporating phosphate binders into the ESRD PPS
base rate following the TDAPA period. We propose revising our drug
designation regulation at Sec. 413.234 by adding paragraph (h) to set
forth the methodology for modifying the ESRD PPS base rate to account
for the costs of phosphate binders. This proposed paragraph (h) would
include the data sources and the steps we would take to calculate a
per-treatment amount. We propose that, for dates of service on or after
January 1, 2027, oral phosphate binders would no longer be paid for
under the ESRD PPS using the TDAPA (Sec. 413.234(c)) and would be paid
for through the ESRD PPS base rate and be eligible for outlier payments
as ESRD outlier services under Sec. 413.237.
We note that the methodology proposed in this rule is only for
modifying the ESRD PPS base rate to include phosphate binder drugs.
This is consistent with our established policy for renal dialysis drugs
and biological products that are not considered to be included in the
ESRD PPS base rate, and as outlined at Sec. 413.234(c) and (d). This
policy states that we would propose and adopt the methodology for
modifying the ESRD PPS base rate, if appropriate, to account for the
products through notice-and-comment rulemaking after sufficient claims
data collection through the TDAPA process.
[[Page 38816]]
(2) Determining Utilization of Phosphate Binders
For use in the proposed calculation, we analyzed the utilization of
phosphate binders reported on the ESRD facility claims for CY 2025.
ESRD facilities report this information to CMS on Medicare ESRD
facility claims, that is, the 837-institutional form with bill type
072X. The various phosphate binders are reported using their respective
HCPCS codes, including but not limited to codes for sevelamer
carbonate, sevelamer hydrochloride, sucroferric oxyhydroxide, lanthanum
carbonate, ferric citrate, and calcium acetate. For purposes of this
rate-setting analysis, we considered utilization of phosphate binders
as the units of the products furnished to an ESRD beneficiary.
For purposes of calculating the proposed addition to the ESRD PPS
base rate, we propose to use the latest available claims data with
dates of service from April 1, 2025, through December 31, 2025, rather
than beginning January 1, 2025. We believe this approach is appropriate
because the first quarter of CY 2025 (January 1, 2025, through March
31, 2025) reflects a transitional period during which oral phosphate
binders moved from coverage under Medicare Part D to payment under the
ESRD PPS as TDAPA-eligible renal dialysis drugs. Utilization patterns
during this initial transition period may not be representative of
stable, ongoing utilization under the ESRD PPS, as ESRD facilities were
in the process of establishing billing, dispensing, and operational
workflows for these products. To ensure that our base rate calculation
reflects a more accurate and representative picture of phosphate binder
utilization and costs under the ESRD PPS, we propose to exclude first
quarter 2025 data and begin our reference period on April 1, 2025. We
believe this approach would produce a more reliable estimate of the
costs that should be incorporated into the ESRD PPS base rate beginning
January 1, 2027. We note that claims which have been received,
processed, paid, and passed to the National Claims History (NCH) \14\
file are considered ``complete'' because they have been adjudicated,
and that we propose to consider only complete claims when calculating
the ESRD PPS base rate addition for phosphate binders.
---------------------------------------------------------------------------
\14\ The National Claims History (NCH) file is a comprehensive
CMS data repository containing all processed Medicare Part A and
Part B claims since 1991.
---------------------------------------------------------------------------
For the CY 2027 ESRD PPS final rule, we propose to update this
calculation with the most recent available claims data, which we
anticipate to be claims with dates of service from April 1, 2025
through July 31, 2026 (that is, claims that were received, processed,
paid, and passed to the NCH File as of July 2026).
We are soliciting comments on the proposed use of claims data with
dates of service from April 1, 2025, through December 31, 2025 to
determine the utilization of phosphate binders and our proposal to omit
first quarter 2025 claims data for purposes of calculating the proposed
addition to the ESRD PPS base rate to account for phosphate binders at
the proposed Sec. 413.234(h).
(3) Methodology for Determining the Price of Phosphate Binders
For use in the proposed calculation, we would set the price for
phosphate binders using values from the most recent calendar quarter of
ASP calculations available to the public, at 100 percent of ASP. This
would be consistent with Sec. 413.234(c)(1), which provides that TDAPA
payment is based on 100 percent of ASP. The ASP-based value is a CMS-
derived weighted average of all National Drug Code (NDC) sales prices
submitted by drug manufacturers and assigned by CMS to the existing
HCPCS codes for phosphate binders. For each billing code, CMS
calculates a weighted ASP using data submitted by manufacturers, which
includes the following: ASP data at the 11-digit NDC level, the number
of units of the 11-digit NDC sold, and the ASP for those units. This
calculation methodology is consistent with the approach described in
the CY 2009 Physician Fee Schedule (PFS) final rule (73 FR 69752) and
authorized in section 1847A of the Act.
Consistent with the TDAPA basis of payment established for oral
phosphate binders in CY 2025, we propose to use 100 percent of the
weighted ASP value. As we explained in the CY 2020 ESRD PPS final rule,
the ESRD PPS accounts for storage and administration costs and ESRD
facilities do not have acquisition price variation issues when compared
to physicians (83 FR 56946). We believe ASP is reasonable for phosphate
binders because it reflects the average amount that ESRD facilities
spend to obtain the phosphate binders. As we discussed earlier in this
section of this proposed rule, the ESRD PPS base rate has dollars built
in for administrative complexities and overhead costs for renal
dialysis drugs and biological products. We are proposing an increase to
the base rate to account for the newfound responsibility and
substantial pill volume associated with ESRD facility dispensing of
phosphate binders, which we discuss in detail later in this proposed
rule.
We believe using a value based on the most recent calendar quarter
ASP calculations available to the public for phosphate binders would
provide an accurate representation of the price of these drugs for ESRD
facilities because it uses manufacturer sales information that includes
discounts (that is, rebates, volume discounts, prompt payment, and cash
payment specified in section 1847A of the Act).
For this proposed rule, the values from the most recent calendar
quarter of ASP calculations available to the public are from the second
quarter of 2026, and due to a two-quarter data lag, these ASP
calculations reflect manufacturer sales data submitted to CMS for the
fourth quarter of 2025. For the CY 2027 ESRD PPS final rule, the most
recent calendar quarter of ASP calculations available to the public
would be the fourth quarter of 2026, which reflects manufacturer sales
data submitted into CMS for the second quarter of 2026, and we propose
to use that value for purposes of our final calculation.
We propose to add Sec. 413.234(h)(2)(ii), under which CMS would
use 100 percent of the values from the most recent calendar quarter ASP
calculations available to the public for phosphate binders to calculate
a price for each product. We are soliciting comments on the proposed
use of the values from the most recent calendar quarter ASP
calculations available to the public for phosphate binders for setting
the price and the proposed language at Sec. 413.234(h).
(4) Methodology for Calculating the Addition to the ESRD PPS Base Rate
To Include Phosphate Binders
To calculate the proposed amount for phosphate binders that would
be added to the ESRD PPS base rate, we applied the values from second
quarter of 2026 at 100 percent of ASP. We propose to determine
utilization based on the number of units billed during the TDAPA
period. For each oral phosphate binder HCPCS code, the short
description states what the billing unit is for that drug or biological
product and is located in Table 13. Billing units are the standardized
quantities used by providers and suppliers when submitting Medicare
Part B claims and are specific to each HCPCS code. For example, for
sevelamer carbonate billed under J0602, one billing unit equals 20 mg/
tablet. We note that billing units differ from revenue units, which are
a commercial data construct used to standardize drug volume across
dosage strengths for market analysis purposes.
[[Page 38817]]
We determined that 5,547,594,800 total billing units of oral phosphate
binders were used between April 1, 2025, and December 31, 2025. Table
13 includes a column of billing units reported in claims data for each
individual HCPCS code from throughout the study period. Our monitoring
indicates that approximately 67 percent of ESRD beneficiaries received
oral phosphate binders during the study period.
For this proposed rule, we used the values from the most recent
calendar quarter ASP calculations available to the public, which is the
second quarter of 2026. This information can be found on the ESRD
Payment website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/ESRD-Transitional-Drug. Table 13 also lists
the per unit ASP for the various oral phosphate binder products based
on their respective HCPCS codes and unit definitions. (We note that,
for the CY 2027 ESRD PPS final rule, we would update the ASP-based
value on the most recent calendar quarter calculations available to the
public, which we anticipate being the fourth quarter of 2026.)
[GRAPHIC] [TIFF OMITTED] TP26JN26.029
Multiplying the utilization of the oral phosphate binders by their
respective ASP and then adding the expenditure amount for all forms of
phosphate binders together yield the total calculated phosphate binder
expenditure amount. For the period of April 1, 2025 through December
31, 2025, that was evaluated for this proposed rule, CMS calculated the
total phosphate binder expenditure amount to be $269,634,395.87. We
propose to update this amount in the CY 2027 ESRD PPS final rule using
the most recent available data.
(5) Accounting for Operational Costs
In addition to including direct drug costs, we are proposing to
incorporate an additional amount in the base rate to reflect the
operational costs associated with supplying phosphate binders to ESRD
facilities. During the TDAPA period, we provided a flat rate increase
of $36.41 for monthly ESRD PPS claims to cover these operational costs,
which include storage, distribution, staffing, and administrative
expenses unique to the high-volume, multi-product nature of phosphate
binder therapy. We expect that the ongoing provision of phosphate
binders will continue to result in additional operational costs for
ESRD facilities. Incorporating these operational costs into the base
rate is consistent with our authority under section 1881(b)(14) of the
Act to establish a bundled payment that reflects the costs of
furnishing renal dialysis services, as CMS considers phosphate binders
to be a renal dialysis service as described at Sec. 413.171.
As discussed earlier in this proposed rule, the ESRD PPS base rate
includes general overhead and administrative costs that apply broadly
across renal dialysis services. Because of this, CMS did not establish
a separate operational cost component for calcimimetics during the
TDAPA period for calcimimetics or when calcimimetics were incorporated
into the ESRD PPS base rate. However, as discussed in the CY 2025 ESRD
PPS final rule, oral phosphate binders present unique, high-volume
dispensing and logistical demands that are distinct from and not
captured by the general overhead and administrative costs discussed
previously (89 FR 89152). For example, in response to the CY 2025 ESRD
PPS proposed rule, one interested party commented that phosphate
binders represent an exponential increase in the volume of pills that
dialysis providers need to acquire, distribute, store, and manage, and
that 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 (89 FR 89141). CMS
addressed this comment, among many others, in the CY 2025 ESRD PPS
final rule, where we established a flat-rate TDAPA add-on of $36.41 per
monthly claim to address the circumstances \15\ associated with
dispensing oral phosphate binders (89 FR 89152). Specifically, CMS
stated that an increase in the payment adjustment amount that
approximates 6 percent of ASP would provide the appropriate payment for
incremental operational
[[Page 38818]]
costs associated with ESRD facilities furnishing phosphate binders (89
FR 89152). As discussed previously, CMS expects that the ongoing
provision of oral phosphate binders under Part B will result in a
permanent expansion in operational costs for ESRD facilities.
Therefore, CMS believes that proposing to incorporate an equivalent
operational cost component into the base rate is not duplicative of
existing base rate funds and is necessary to ensure that the base rate
accurately reflects the cost of furnishing these renal dialysis
services.
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\15\ In the CY 2025 ESRD PPS final rule, CMS stated that 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. (89 FR 89152).
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Based on our analysis of claims data from April 1, 2025, through
December 31, 2025, we determined that 711,875 monthly claims included
phosphate binders. To account for operational costs in the base rate
calculation, we considered two approaches: (1) applying the $36.41 flat
rate per monthly claim that was paid during the TDAPA period, and (2)
calculating an operational cost component equal to an amount
approximately equivalent to 6 percent of observed ASP-based
expenditures, derived from empirical TDAPA-period payment data rather
than from the statutory ASP + 6 percent methodology under section 1847A
of the Act. We emphasize that this proposed approach is not a
methodology for pricing phosphate binders; as we discussed earlier, we
propose to address the cost of phosphate binders using a weighted
average of 100 percent of ASP for each phosphate binder type and
dose.\16\ Separately, we propose to address the operational costs
associated with ESRD facilities providing phosphate binders due to the
large patient population and substantial pill volume. We propose to
estimate this cost by calculating a one-time increase to the ESRD PPS
base rate consistent with the approach CMS adopted in the CY 2025 ESRD
PPS final rule when establishing the $36.41 flat-rate TDAPA add-on
amount (89 FR 89152). We propose to base this calculation on the price
and utilization data collected during the TDAPA period, where oral
phosphate binders were provided by ESRD facilities at scale.
---------------------------------------------------------------------------
\16\ This refers to the per-treatment spending amount for
phosphate binders calculated using the ASP for all oral phosphate
binder HCPCS codes weighted by utilization.
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As discussed in the CY 2020 ESRD PPS final rule, we continue to
believe that 100 percent of ASP is an appropriate basis for pricing
renal dialysis drugs within the ESRD PPS because the bundled payment
already incorporates general overhead and administrative costs (83 FR
56943 through 56944). However, oral phosphate binders present unique,
high-volume dispensing and logistical demands that were not fully
reflected in the historical base rate given that phosphate binders were
excluded from the analysis performed for the CY 2011 ESRD PPS final
rule (89 FR 89152).
Accordingly, rather than adopting a pricing methodology that
includes an add-on to ASP, we propose to use the TDAPA-period data to
identify and incorporate a distinct, empirically observed operational
cost component into the base rate. Multiplying the 711,875 monthly
claims that included phosphate binders by the $36.41 flat rate yields a
total operational cost amount of $25,919,368.75 for the reference
period. As noted previously in this rule, the $36.41 figure was based
on 6 percent of 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 (89 FR 89152). Alternatively, applying 6 percent to the
total ASP-based drug expenditure for oral phosphate binders during the
same period yields a total operational cost amount of $16,178,063.75.
We are proposing to base operational costs associated with
furnishing phosphate binders on 6 percent of total ASP-based drug
expenditure for oral phosphate binders during the TDAPA period. While
the flat rate add-on per-monthly claim amount of $36.41 was
administratively straightforward during the TDAPA period, we believe
that an operational cost component that scales with drug utilization
better reflects the variable, volume-driven nature of phosphate binder
dispensing. An operational cost component within the base rate would
also be spread across all dialysis treatments, as intended with a PPS,
and would ensure that these operational costs are updated annually as
part of the ESRD market basket update.
Our analysis indicates that this utilization-based approach yields
an amount approximately equivalent to 6 percent of ASP-based
expenditures over the reference period.\17\ Therefore, we propose this
approach as a more data-driven and PPS-consistent method for
incorporating operational costs into the base rate.
---------------------------------------------------------------------------
\17\ This refers to the per-treatment spending amount for
phosphate binders calculated using the ASP for all oral phosphate
binder HCPCS codes weighted by utilization.
---------------------------------------------------------------------------
(6) Combined Calculation
The total number of paid hemodialysis-equivalent dialysis
treatments furnished to Medicare ESRD beneficiaries between April 1,
2025, and December 31, 2025, as mentioned previously, was 17,733,591.
This total number of paid treatments reflects all paid dialysis
treatments regardless of whether a phosphate binder was furnished.
To calculate the combined per-treatment amount, we add the direct
drug expenditure amount ($269,634,395.87) multiplied by 1.06 to account
for operational costs ($16,178,063.75) to get an adjusted phosphate
binder expenditure amount of $285,812,459.62. Dividing this adjusted
expenditure amount by the total number of paid hemodialysis-equivalent
dialysis treatments (17,733,591) provides an average per-treatment
payment amount of $16.12.
We propose to reduce this amount by 1 percent to account for the
outlier policy, consistent with the ESRD outlier policy at Sec.
413.237(a)(1)(iv), which provides for budget neutrality adjustments
associated with outlier payments, to get a total of $15.96 ($16.12 x
0.99 = $15.96). Under our proposal, we would apply this 1 percent
reduction before increasing the base rate to account for outlier
payments that would be paid beginning January 1, 2027, for oral
phosphate binders since they would become eligible ESRD outlier
services once the TDAPA period ends.
To determine the estimated costs in CY 2027, we would inflate the
outlier-adjusted average per-treatment payment amount for phosphate
binders ($15.96) to 2027 using the proposed CY 2027 ESRD PPS base rate
update. As discussed in section II.B.4. of this proposed rule, the
proposed CY 2027 ESRD PPS base rate is $299.55. This amount reflects a
proposed CY 2027 wage index budget-neutrality adjustment factor of
1.00267, a proposed budget neutrality factor of 0.98783 for the budget
neutral policies proposed in sections II.B.8., II.B.9., and II.B.10. of
this proposed rule, a proposed base rate addition of $15.96 to include
phosphate binders (including both direct drug costs and operational
expenses), and the proposed CY 2027 ESRDB payment rate update of 1.6
percent. We believe that using the annual payment rate update would
effectively update the prices set for phosphate binders from CY 2026 to
CY 2027 because this is consistent with how the other components of the
base rate are updated for inflation each year, which includes drugs. We
note that in
[[Page 38819]]
section II.B.1.b. of this proposed rule we are proposing to rebase and
revise the ESRDB market basket to a CY 2024 base year. The proposed
inflation factor used for drugs and biological products for the ESRDB
market basket is a composite of various drug-related Producer Price
Indexes as discussed in section II.B.1.b.(2) of this proposed rule.
We propose to add a new paragraph Sec. 413.234(h) regarding the
data sources and methodology for modifying the ESRD PPS base rate to
account for the costs of phosphate binders and the operational expenses
associated with providing oral phosphate binders in the ESRD PPS
bundled payment. This new paragraph would state that, for dates of
service on or after January 1, 2027, CMS would determine the
utilization of phosphate binders by aggregating total units from
Medicare ESRD facility claims (837-institutional form with bill type
072X) for the second, third, and fourth quarters of calendar year 2025
and the first two quarters of calendar year 2026. CMS would price each
phosphate binder at 100 percent of the most recent calendar quarter ASP
calculations available to the public. CMS would then multiply the
utilization of each phosphate binder by its respective price and sum
the expenditure amounts across all phosphate binder products to
calculate the total oral phosphate binder expenditure amount. CMS would
then calculate an adjusted phosphate binder expenditure amount by
multiplying the phosphate binder expenditure amount by 1.06 to account
for operational expenses. CMS would divide the adjusted total
expenditure amount by the total number of paid hemodialysis-equivalent
dialysis treatments from Medicare ESRD facility claims during the same
claims data period to calculate the average per-treatment payment
amount. Finally, CMS would reduce the average per-treatment payment
amount by 1 percent to account for the outlier policy under Sec.
413.237 to determine the amount added to the ESRD PPS base rate.
Beginning January 1, 2027, phosphate binders would also be eligible
ESRD outlier services under Sec. 413.237. The fundamental principle of
the ESRD PPS is that the costs of renal dialysis services, including
drugs, are incorporated into the base rate and spread across all
dialysis treatments rather than assigned only to those treatments for
which a particular item or service is furnished (75 FR 49030). In
keeping with this principle, we believe the cost of phosphate binders
should be spread across all dialysis treatments rather than be directed
only to the treatments for patients who are receiving phosphate
binders.
We are soliciting comment on the proposed revisions to add
paragraph (h) to Sec. 413.234 to establish the data sources and
methodology for modifying the ESRD PPS base rate to account for
phosphate binders in the ESRD PPS bundled payment.
8. Proposed 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 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 PD
patients, one week of PD is considered equivalent to three HD
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 payment adjustment factor
is applied to the ESRD PPS base rate for all applicable treatments
furnished by the ESRD facility (89 FR 89161).
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 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
[[Page 38820]]
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 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.
In the CY 2025 ESRD PPS final rule (89 FR 89153 through 89162) we
finalized a 2-tiered system for the LVPA. This system provided higher
payment for ESRD facilities which furnished a median of fewer than
3,000 treatments over the past three years, and a lower amount for
those which furnished a median treatment amount between 3,000 and 4,000
treatments. ESRD facilities in the first tier receive a 28.9 percent
LVPA, and ESRD facilities in the second tier receive an 18.3 percent
LVPA. We did not propose any changes to the LVPA criteria in that rule,
as we stated the purpose of that policy was not to expand the LVPA to
new ESRD facilities. We implemented this change budget neutrally by
scaling the factors down to maintain the total level of LVPA payments
at the same amount. In that rule, we noted that we believed this scheme
of budget neutrality was more appropriate because it contained the
changes within the LVPA (89 FR 89159). In CY 2025, 342 ESRD facilities
received the LVPA.
(1) Current LVPA Issues and Concerns
As discussed in the CY 2025 ESRD PPS final rule, CMS received
longstanding input from stakeholders, including MedPAC and the
Government Accountability Office (GAO),\18\ recommending 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 (89 FR 89154).\19\ These stakeholders also expressed concern that
the strict treatment count used to determine eligibility introduces a
``cliff effect'' that may incentivize ESRD facilities to restrict
patient volume to remain eligible.\20\ These recommendations were a
significant factor which led us to evaluate the LVPA and propose and
finalize the changes in the CY 2025 ESRD PPS rulemaking.
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\18\ https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun20_ch7_reporttocongress_sec.pdf.
\19\ https://www.cms.gov/files/document/end-stage-renal-disease-prospective-payment-system-technical-expert-panel-summary-report-april-2021.pdf.
\20\ 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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Additionally, at that time, CMS 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.
CMS considered incorporating geographic isolation into the LVPA.
However, section 1881(b)(14)(D)(iii) of the Act requires that the LVPA
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. CMS
analysis did not find that isolated low-volume facilities incur higher
costs than other low-volume facilities. Therefore, incorporating a
metric for geographic isolation, for example distance to next nearest
ESRD facility or number of ESRD facilities in a geographic area, into
the LVPA would not align with statutory requirements.
CMS is evaluating alternative approaches under section
1881(b)(14)(D)(iv) of the Act. Currently, we are analyzing claims and
cost data regarding dialysis treatment levels and cost to inform
options for potentially tailoring our methodology to meet the
requirements of the statute, while simultaneously collecting additional
data on geographic isolation of ESRD facilities. The ESRD PPS has
separate facility-level payment adjustments for low-volume facilities,
as set forth in 42 CFR 413.232, facilities in rural areas, as set forth
in Sec. 413.233(a), and facilities in certain non-contiguous areas, as
set forth in Sec. 413.233(b). To avoid overlapping with these existing
facility-level adjustments, we are analyzing the impact of potentially
creating a new payment adjustment and considering innovative
methodological options, such as the local dialysis need methodology on
which we requested information in the CY 2024 ESRD PPS proposed rule
(88 FR 42441 through 42445).
Interested parties have also indicated that LVPA eligibility
criteria and the attestation process may be administratively
burdensome, particularly for small ESRD facilities (85 FR 71442) and
believe it may discourage participation by small ESRD facilities with
limited resources that would otherwise qualify for the LVPA.\21\ CMS is
considering whether modification of these requirements could reduce
burden, mitigate incentives for gaming, and better align payment for
resource use.
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\21\ 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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As a part of our ongoing efforts to improve the LVPA, we have
requested information on improvements to the LVPA in several instances.
(2) Technical Expert Panels and CY 2022 RFI
CMS's contractor has held three Technical Expert Panels (TEPs) to
discuss potential refinements to the ESRD PPS.\22\ 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.\23\ 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 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
[[Page 38821]]
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.\24\
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\22\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/esrdpayment/educational_resources.
\23\ https://www.cms.gov/files/document/cy-2022-esrd-pps-rfi-summary-comments.pdf.
\24\ 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). 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
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.
(3) CY 2024 RFI on Potential Changes to the LVPA
In the CY 2024 ESRD PPS proposed rule (88 FR 42430 through 42544),
we issued an RFI regarding several possible modifications to the
current LVPA methodology. We provided the option of maintaining a
single LVPA threshold, establishing LVPA tiers, or utilizing a
continuous function to commenters. Specifically, we presented four
different tiered structures for the LVPA, all of which would expand the
LVPA beyond the current threshold of 4,000 treatments per year. These
four structures were presented as budget neutral, with two involving a
reduction to the base rate and two involving ``scaling'' down the
factors to maintain total LVPA payments.
We received 23 comments in response to the RFI, all of which had
differing opinions. Most commenters expressed support for some type of
a tiered LVPA, although some commenters expressed further concerns or
opposition to such a policy. A coalition of dialysis organizations
recommended a 2-tiered approach, while MedPAC reiterated their support
for an 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. Several commenters expressed concern with LVPA changes that
would impact the base rate. A full summary of responses to the RFI can
be found at https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-reports-and-educational-resources.
(4) CY 2025 LVPA Proposal
Informed by the comments on the CY 2024 LVPA RFI, we proposed a
simpler, 2-tier methodology in the CY 2025 ESRD PPS proposed rule (89
FR 55797 through 55804) which did not expand the LVPA beyond the
current treatment volume cap of 4,000 treatments per year. One reason
why we proposed that option was to maintain the impact of the budget
neutrality of that proposal within the LVPA without reducing the base
rate. We noted that expanding the LVPA beyond 4,000 treatments would
result in the adjustment factor being notably reduced for facilities
with fewer than 4,000 treatments, and particularly facilities with
fewer than 3,000 treatments (89 FR 55801). When we finalized this 2-
tier methodology in the CY 2025 ESRD PPS final rule, some commenters
highlighted that while it would reduce the impact of payment cliffs, it
would not completely remove them (89 FR 89158 through 89161).
We requested further information in the CY 2025 ESRD PPS proposed
rule (89 FR 55803 through 55803) on potential further improvements to
the LVPA. These questions focused on administrative processes regarding
the LVPA, specifically the attestation process. We did not receive any
substantive responses to many of these questions (89 FR 89162).
b. Analysis of Payment Adequacy for ESRD Facilities by Treatment Volume
CMS routinely evaluates payment adequacy under the ESRD PPS. While
we often use outside information, such as public comment letters and
MedPAC reports, we also conduct our own analysis of ESRD facility costs
and ESRD PPS payments. While the ESRD PPS is not a cost-based system,
analyses of Medicare- allowable ESRD facility costs provide insight
into whether payments align with resource use. Additionally, the ESRD
PPS has a long history of establishing payment adjustment factors based
on cost data (occasionally combined with claims data), including the
current 2-tiered LVPA (89 FR 89156) and most case-mix adjustment
factors, such as adult age and onset of dialysis (80 FR 68973 through
68974 and 68984 through 68994).
CMS analyzed cost report and claims data from 2022 through 2024 to
evaluate the ratio of payments to average costs for ESRD facilities. We
note that directly comparing ESRD PPS payments to ESRD facility costs
is not a perfect analysis as it disregards other payors, including
Medicare Advantage (MA) and private payors, which could be providing
higher payments for specific high-cost services. Nonetheless, this
analysis indicates that payments exceed costs for higher volume ESRD
facilities, while lower-volume ESRD facilities, particularly those
furnishing fewer than 10,000 treatments tend to have costs that exceed
payments. Notably, ESRD facilities furnishing between 4,000 and 10,000
treatments exhibit costs that exceed payments, suggesting that cost
differentials extend beyond the current LVPA threshold of 4,000
treatments.
Informed by this 2022-2024 cost to payment analysis, we conducted a
further analysis to account for the ESRD PPS wage index methodology
finalized in the CY 2025 ESRD PPS final rule (89 FR 89097 through
89116) and discussed in section II.B.2. of this proposed rule, as this
policy significantly changed relative payments by geographic area. We
conducted an additional analysis using available CY 2025 ESRD PPS
payments instead, to capture these changes, and compared it to CY 2024
costs projected to CY 2025. We removed the TDAPA amounts from the CY
2025 payments used for this analysis as the TDAPA amounts for phosphate
binders represented significant payments in CY 2025 which were not
present in the CY 2024 costs to which we are comparing. To account for
the fact that, due to the
[[Page 38822]]
NAPA policy finalized in the CY 2026 ESRD PPS final rule (90 FR 53095
through 53102), ESRD facilities in certain noncontiguous areas receive
higher non-labor payments, we further adjusted payments to Alaska,
Hawaii, Guam, American Samoa, and the Northern Mariana Islands to
account for the increased non-labor payment. We updated CY 2024 costs
to CY 2025 using the most recent forecast of the ESRDB market basket
increase for CY 2025 of 1.029. For simplicity, in this analysis we did
not reduce this factor by the most recent forecast of the productivity
adjustment for CY 2025, which is 0.9 percentage point. However, we
adjusted certain cost reports to account for a submission issue from an
LDO wherein some costs were not fully reflected. For this analysis we
further refined the volume categories from the prior analysis to
differentiate between ESRD facilities with 5,000 to 7,999 treatments
and 8,000 through 9,999 treatments. We believe that 8,000 treatments is
a good boundary point for this analysis because the median treatment
volume is slightly above 8,000. Results from this analysis are
presented in Table 14.
[GRAPHIC] [TIFF OMITTED] TP26JN26.030
We note that the previously described analysis should not be
interpreted directly in the terms of payment adequacy for several
reasons. First, the ESRD PPS is not a cost-based system, and we do not
make payments based on costs. Consistent with section 1881(b)(14)(A)
and 1881(b)(14)(F) of the Act, the ESRD PPS payment amount is based on
98 percent of what would have been paid in 2011 had the ESRD PPS not
been implemented, annually updated by an ESRDB market basket update
factor. Furthermore, as discussed previously, we had to make several
adjustments to both costs and payments for this analysis, which makes
these results less directly applicable to actual costs and payments,
although we believe they are a reasonable proxy for our purposes here.
Lastly, ESRD facility cost reports include costs for payors other than
Original Medicare (OM), which may be higher for several reasons. We
note that we are not proposing to base any changes to the LVPA on this
analysis, however, this analysis has helped CMS identify ESRD
facilities which may be receiving relative payments lower than their
resource use and has informed the analysis presented in section
II.B.8.c. of this proposed rule. Specifically, this analysis has led us
to reconsider our current LVPA policy to evaluate whether expansion of
the LVPA beyond 4,000 treatments would better align payment with
resource use.
We have also reviewed the patterns of ESRD facility closures over
the past few years and have found evidence that ESRD facilities which
have closed are disproportionately small. While we believe that the
LVPA tier changes finalized in the CY 2025 ESRD PPS final rule help
address this issue, by scaling the factors to keep the effect of the
policy within the LVPA and maintain budget neutrality, the LVPA factor
for ESRD facilities which furnish fewer than 3,000 treatments is not as
large as it would be if we had not scaled the factors. Our payment to
cost analysis indicates that these 3,000-treatments-and-fewer ESRD
facilities have costs which exceed their payments.
c. Updated Expanded Tiered Analysis
To estimate cost differences across treatment volumes, CMS
conducted a regression analysis using facility-level cost report data
from 2022 through 2024. The dependent variable was cost per treatment,
and the primary independent variable was facility size. The regression
analysis was conducted at the facility level and controlled for the
following characteristics: year, ownership, wage index, rurality,
region, Medicare percent, home dialysis percent, pediatric share, and
average non-LVPA payment adjustment multiplier.
Facility size was specified using the natural logarithm for total
treatments and included both linear and quadratic (squared) terms. This
specification is intended to estimate cost differences while reducing
the influence of extreme values and capturing non-linear effects. Cost
estimations associated with size as the natural logarithm makes the
scale of comparison smaller, which makes the results less subject to
variance of high volume facilities, and including a quadratic term
allows us to capture more than just a linear relationship, which is
preferable in this instance as we think the marginal cost-per-treatment
difference of an additional treatment is likely different between low
and high volume facilities.
CMS then calculated the predicted costs at the upper bound of each
tier using the mean values for continuous variables and composite
values for categorical variables wherein the value for the categorical
variable was the proportion of the overall population of ESRD
facilities which belong to that category. For example, if 10 percent of
ESRD facilities are in rural areas, the value used for the rural term
when determining the proxy would be 0.1. This allowed us to create a
proxy
[[Page 38823]]
facility per-treatment cost value for an ESRD facility based on
treatment count. We note that, for our purposes of deriving LVPA
factors, the values to construct the proxies do not actually impact the
final result, so long as the proxies are the same for all calculations;
this is because we are using these relative cost values to find the
relative difference between proxy values, so the terms cancel in the
calculation. As the LVPA is based on the difference in cost between
low-volume facilities and other facilities, we then calculate the
adjusters by comparing the calculated results to a proxy that
represents all non-LVPA facilities, by using the same mean value for
continuous control variables and categorical control variables, and the
median facility treatment count for non-LVPA facilities. For this non-
LVPA proxy, the median facility treatment count was calculated only
across non-LVPA facilities and all other values were kept the same
because we are attempting to find the extent to which low-volume
facilities faced higher costs than other such facilities, so it is
appropriate to have the only difference be the treatment count and it
is appropriate for the comparison treatment count to include all non-
LVPA facilities. We present these results in Table 15:
[GRAPHIC] [TIFF OMITTED] TP26JN26.031
The updated adjustment factors in Table 15 are derived from the
regression by taking the ratio of the exponentiated outcome for the
tier with the exponentiated outcome of the comparison value. That is,
we calculated the proxy value for the tier and the comparison value,
applied the exponential function for each, and then divided the proxy
value for the tier by the comparison value. For example, the proxy per-
treatment cost for a facility with 8,000 treatments in our analysis is
$317.77 and the proxy per-treatment cost for a facility with the median
non-LVPA treatment count of 10,332 is $302.77. We calculated the
adjustment factor for the 7,000-7,999-treatment tier by dividing
$317.77 by $304.77 which equals 1.050.
We note that using these factors in the LVPA would increase
payments to current LVPA facilities (those furnishing fewer than 4,000
treatments for each of the past 3 cost reporting years) by
approximately $17 million and increase payment to facilities not
currently eligible for the LVPA by approximately $67 million. These
estimated impacts include the proposed extension of the LVPA to
pediatric patients discussed in section II.B.9. of this proposed rule.
These proposed increased adjustment factors, if finalized, would bring
relative payments under the ESRD PPS more in line with relative costs,
as demonstrated by our cost-to-payment analysis discussed in the prior
section. We note that we are proposing both policies as budget neutral
by reducing the ESRD PPS base rate by a budget neutrality factor, as
noted in section II.B.4. of this proposed rule.
d. Proposal for Expanded 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)
exceed the costs incurred by other facilities. Under this authority,
CMS proposes to revise the definition of a low-volume facility for
purposes of Sec. 413.232 to reflect updated empirical findings
demonstrating higher costs among facilities furnishing fewer than 8,000
treatments annually, when controlling for various factors including
geographic area, wage index, and average case-mix adjustment factor.
This proposal is intended to better align ESRD PPS payments with the
observed differences in resource use and support access to care.
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. CMS analysis
indicates higher costs among facilities furnishing between 4,000 and
8,000 treatments per year. Proposing a revised methodology that would
increase payment to these ESRD facilities would help protect access to
care for ESRD services in areas served by these ESRD facilities.
Additionally, we believe that additional tiers would further reduce the
incentive for gaming, as the GAO described in its 2013 report.\25\ This
should reduce the incentive for some ESRD facilities to limit access to
renal dialysis services to keep their treatment volume below the 4,000-
treatment threshold. 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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\25\ Government Accountability Office. 2013. End-stage renal
disease: CMS should improve design and strengthen monitoring of low-
volume adjustment. Report 13-287. Washington, DC: GAO.
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For CY 2027 and beyond, CMS proposes to expand LVPA eligibility and
implement a tiered structure based on median treatment volume over the
prior three years. This expanded eligibility would apply to ESRD
facilities that
[[Page 38824]]
furnish more than 4,000 treatments per year. As discussed in the
previous section, we have data which demonstrates higher costs for ESRD
facilities which furnish fewer than 8,000 treatments. Building on the
tiered LVPA finalized in the CY 2025 ESRD PPS final rule, we are
proposing 6 tiers with decreasing adjustment factors as treatment
volume increases. The proposed adjustment factors are presented in
Table 16. Consistent with the current tiered LVPA, the tier
determination would be based on the median treatment volume from the
past three years. CMS proposes to apply this policy in a budget neutral
manner by applying a factor of 0.98898 to the ESRD PPS base rate. We
note that ESRD facilities must attest to being eligible for LVPA to
receive the payment adjustment, but our data indicates that not all
ESRD facilities which are eligible for the LVPA attest for it. Since
these ESRD facilities do not attest for the LVPA, they do not receive
it. For the impacts analysis from which this budget neutrality factor
was derived, we use an attestation proxy to estimate attestation
patterns so that our total estimated payments considers that not all
eligible ESRD facilities would attest for and receive the LVPA.
[GRAPHIC] [TIFF OMITTED] TP26JN26.032
We propose to apply this policy as budget neutral outside of the
LVPA, and, if finalized, we would apply the previously mentioned
0.98898 factor to the ESRD PPS base rate. When we established the 2-
tiered LVPA methodology in the CY 2025 ESRD PPS final rule (89 FR
89161), we did not apply a budget neutrality factor for that
methodological change. In the CY 2025 ESRD PPS proposed rule, we stated
that we were not proposing to apply a budget neutrality factor because
we were making changes only to the LVPA and believed at that time it
was most appropriate to keep the impact of the policy change contained
to ESRD facilities that were receiving the LVPA (89 FR 55801). We
stated that the purpose of that change was to better allocate relative
payments within the LVPA and it was not our intention at that time to
expand the LVPA beyond the facilities currently eligible for the LVPA
(89 FR 55802). We also discussed that expanding the LVPA beyond 4,000
treatments while scaling the factors to maintain budget neutrality
within the LVPA would reduce payments for the lowest volume facilities
in a way which was not in alignment with the goals of the LVPA (89 FR
55801). In contrast, CMS believes applying budget neutrality to the
base rate would be appropriate now because this proposal would expand
LVPA eligibility beyond currently qualifying facilities (that is, to
ESRD facilities that furnish more than 4,000 treatments per year). CMS
believes the proposed tiered structure balances stakeholder concerns
regarding payment cliffs while maintaining alignment with statutory
requirements.
In constructing this proposal, we carefully considered the
responses to the CY 2024 RFI on the LVPA.\26\ In this RFI, most
respondents supported some sort of tiered system, although most
respondents thought there were some issues with the tiered options
presented in the RFI. Many of the respondents who supported a tiered
system indicated specific support for a structure that included
payments up to 6,000 treatments. Many explicitly supported a
methodology that incorporated a metric for geographic isolation into
the LVPA; however, as we noted in the CY 2025 ESRD PPS final rule our
analysis did not find higher costs associated with low-volume
facilities in isolated areas (89 FR 89159). Further analysis does not
reveal higher costs associated with isolated low-volume facilities,
although we note that the CY 2026 ESRD PPS final rule contained an
unrelated payment adjustment for facilities in certain non-contiguous
states and territories, the NAPA. We believe the current NAPA addresses
some of the concerns of these commenters (90 FR 53102).
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\26\ https://www.cms.gov/medicare/payment/prospective-payment-systems/end-stage-renal-disease-esrd/esrd-reports-and-educational-resources.
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In the CY 2024 RFI, we included two potential LVPA structures which
both included up to 8,000 treatments per year, but these were 4-tiered
and 8-tiered structures. Some respondents opposed the 8-tier LVPA
presented in that RFI, with several raising concerns with the budget
neutrality factor and others stating that the adjustment factors for
the lower-volume tiers were too high and the factors for the higher-
volume tiers were miniscule. We considered these comments when
designing the 6-tier LVPA proposed in this rule. By eliminating the
1,000 and 2,000 treatment tiers, we have mitigated the overall budget
neutrality impact of the proposal. Additionally, this reduces concerns
related to the high factors associated with these lowest-volume tiers.
We disagree with those commenters that the higher-volume tiers'
adjustment factors are miniscule. Our analysis indicates that a 5.0
percent increase is warranted for the 7,000 treatment count tier, and
although this proposed adjustment factor is lower than others, it would
still represent a substantial increase in payments to those facilities.
Other commenters who supported the tiered approaches in response to
that RFI indicated that higher-volume tiers with lower payment
adjustments can serve to prevent facilities that are on the border with
the more substantial tiers to exceed the treatment volume threshold in
one year and still be eligible for the higher payment adjustment tiers
in the next year. Several other commenters raised concerns with the
tiered system and indicated a belief that it would not eliminate gaming
completely.
[[Page 38825]]
We believe that our proposed 6-tier LVPA strikes a balance between
appropriately providing higher payment to these higher cost ESRD
facilities and addressing the concerns raised by commenters. We believe
that the tiered policy finalized in the CY 2025 ESRD PPS final rule (89
FR 89161) which uses the median treatment volume from the past three
years helps to effectively reduce gaming by eliminating the incentive
to lower treatment volume in any single year. We believe that our
proposal to have 3,000 treatments be the lowest-volume treatment tier
also prevents any concerns related to the high adjustment factors
associated with potential lower-volume tiers and reduces budget
neutrality concerns. We believe that the higher tiers from 6,000 to
7,999 treatments serve to act as a sort of transition phase allowing
facilities to exceed the lower treatment tiers, while still receiving a
data-supported payment adjustment. Lastly, these proposed payment tiers
are evidence-based as they are derived from the analysis described
previously to more fully represent the extent to which these low-volume
facilities truly face higher costs.
To effectuate this change, we are proposing modifications to our
LVPA regulation at Sec. 413.232 to update the current maximum LVPA
threshold of 4,000 treatments to the proposed new threshold of 8,000
treatments. Specifically, we are proposing modifications to Sec.
413.232(b)(1), which contains the treatment volume threshold for the
LVPA, and (g)(5), which notes the exceptions to the treatment volume
threshold for disasters and other emergencies finalized in the CY 2024
ESRD PPS final rule, to indicate the new treatment threshold of 8,000.
We are proposing to update the threshold for the exception to the
treatment volume threshold for disasters and other emergencies to
ensure consistency with the threshold of Sec. 413.232(b)(1). We note
that these proposed modifications would retain the requirements that an
ESRD facility be below the treatment volume threshold in each of the
prior three cost reporting years, and that the median treatment volume
over the past three cost reporting years would only be used for tier
determination for eligible ESRD facilities.
We are proposing this policy change be effective January 1, 2027.
However, we recognize that the LVPA requires an attestation process
with which many ESRD facilities that furnish more than 4,000 treatments
per year are likely unfamiliar. We are soliciting comments on how we
can accommodate these facilities to allow them to properly attest for
the LVPA for CY 2027, including delaying the effective date of this
proposal or allowing attestations after the typical November 1, 2026,
deadline. We note that changes to the attestation deadline would
require a modification to Sec. 413.232(e), likely in the form of
adding a new paragraph. We are not proposing any of these changes, but
we note that we may finalize them, or other changes to address any
administrative challenges associated with this proposal in the CY 2027
ESRD PPS final rule, depending on comments we receive.
We request comments on all aspects of this proposal, including the
proposed expansion of the LVPA above 4,000 treatments per year, the
proposal to extend the LVPA to ESRD facilities which furnish fewer than
8,000 treatments per year, the proposed 6-tiered structure and
adjustment factors presented in Table 16, the proposed budget
neutrality factor, the proposed effective date of January 1, 2027, and
the proposed modifications to Sec. 413.232. Additionally, we are
requesting comments on the potential administrative challenges
associated with this proposed change and the potential solutions
discussed previously.
9. Proposed Payment for Pediatric Patients With ESRD Receiving Renal
Dialysis Services
a. Background and History of Pediatric ESRD Payment
Section 1881(b)(14)(D)(iv)(I) of the Act provides that the ESRD PPS
may include such payment adjustments as the Secretary determines
appropriate, including a payment adjustment for pediatric providers of
services and renal dialysis facilities. Historically, determining an
appropriate payment adjustment for pediatric ESRD patients \27\ has
been challenging due to limited data. The Medicare pediatric ESRD
patient population receiving dialysis is small compared to the adult
ESRD population; the pediatric ESRD patient population represents
approximately 0.16 percent of OM treatments in 2024 from Common Working
File data ending June 27, 2025.
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\27\ A ``Pediatric ESRD Patient'' is defined in Sec. 413.171 as
an individual less than 18 years of age who is receiving renal
dialysis services. In this section of the proposed rule, we use the
term ``pediatric ESRD patient'' except when referring to the
regulatory language.
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In the past, CMS has considered various payment adjustments for
pediatric patients with ESRD, including different Medicare payments by
sex or comorbidities (74 FR 49984 through 49986). However, many of
these adjustments were not used as we were unable to get acceptable
precision due to the small sample size of pediatric patients with ESRD.
Prior to the establishment of the ESRD PPS, payment for pediatric
ESRD renal dialysis services was generally the same rate as adult ESRD
renal dialysis services, unless the ESRD facility qualified for an
exception to the composite rate. Section 1881(b)(7) of the Act stated
that, subject to section 422(a)(2) of the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554)
(BIPA), the Secretary shall provide for exceptions as may be warranted
by unusual circumstances (including the special circumstances of sole
facilities located in isolated, rural areas and of pediatric
facilities). During this time, CMS received many comments and concerns
regarding the payment rate for renal dialysis services furnished to
pediatric patients with ESRD. Section 623(b) of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L.
108-173) later amended section 422(a)(2) of BIPA to provide that any
pediatric ESRD facility would be eligible for an exception to the
composite rate, effective October 1, 2002. This statute defined
pediatric ESRD facilities as facilities with at least 50 percent
patients under the age of 18. These policies enabled pediatric ESRD
facilities to receive payments recognizing the higher cost associated
with furnishing renal dialysis services to pediatric ESRD patients (69
FR 47530).
We finalized a basic case-mix adjustment to the composite payment
rate in the CY 2005 Physician Fee Schedule (PFS) final rule published
on November 15, 2004 (69 FR 66327). This included a 62 percent
pediatric ESRD payment increase (that is, an adjustment factor of 1.62)
applied to the composite payment rate per treatment for any facility
when furnishing outpatient renal dialysis services to pediatric
patients with ESRD. This factor was derived from the average exception
amounts for 20 ESRD facilities that had received exceptions for
pediatric patients. This was intended to be a temporary measure, which
would be eliminated once we developed the case-mix methodology that
would apply for the ESRD PPS bundled payment. The use of this
methodology allowed CMS to provide additional payment for the pediatric
ESRD population under the composite rate in a data-driven manner to
account for the higher costs pediatric ESRD patients faced (69 FR
66327).
Section 153(b) of MIPPA added section 1881(b)(14) of the Act, which
required CMS to implement an ESRD
[[Page 38826]]
bundled PPS beginning January 1, 2011, under which a single payment for
renal dialysis services is made in lieu of any other payment. Renal
dialysis services generally include items and services included in the
composite rate for renal dialysis services as of December 31, 2010, and
services furnished to individuals for treatment of ESRD, which were
formerly separately billable, including drugs and biological products
and laboratory tests. In the CY 2011 ESRD PPS proposed rule, we
proposed a single composite rate factor of 1.199 for all pediatric ESRD
patients receiving dialysis (74 FR 49982 through 49983). We also
proposed an eight-group system for separately billable renal dialysis
services furnished to pediatric ESRD patients with two subdivisions for
each of the following factors: age (under 13, 13 to 17), modality (HD,
PD) and number of comorbidities (none, one or more) (74 FR 49983
through 49987).
The CY 2011 ESRD PPS proposed rule then calculated an ``expanded
bundle'' factor, which combined the composite rate factor of 1.199 and
the separately billable factors for each of the eight groups (74 FR
44987). These expanded bundle factors were the proposed pediatric ESRD
patient-specific case- mix adjustment factors that would be applied to
the base rate under the ESRD PPS. These factors were based on a
regression of costs for all renal dialysis services furnished to
pediatric ESRD patients. Comments on this proposed rule indicated that
many interested parties believed the expanded bundle factor was
insufficient (75 FR 49128). In the CY 2011 ESRD PPS final rule, we
responded to those comments by implementing the first iteration of the
current four-group system for both the expanded bundle and the
separately billable services. This methodology was data driven, but
unlike the simple regression for composite rate costs, allowed for
different Medicare payment amounts based on two sets of two
characteristics: age of the patient (under 13 or 13 to 17) and modality
of the treatment (HD or PD). Additionally, this methodology used the
same groups for the expanded bundle and separately billable factors (75
FR 49134). We codified the pediatric ESRD patient payment adjustment in
Sec. 413.235(b), which states that CMS adjusts the per treatment base
rate for pediatric ESRD patients in accordance with section
1881(b)(14)(D)(iv)(I) of the Act, to account for patient age and
treatment modality. These multipliers were updated in the CY 2016 ESRD
PPS final rule using the same methodology (80 FR 69001 through 69002).
b. Transitional Pediatric ESRD Add-On Payment Adjustment (TPEAPA)
As discussed in the CY 2024 ESRD PPS final rule (88 FR 76375),
despite these changes intended to improve payment accuracy for renal
dialysis services furnished to pediatric ESRD patients, CMS continued
to receive comments and concerns from interested parties that payment
amounts for renal dialysis services furnished to pediatric ESRD
patients are insufficient. In addition to comments received through the
annual ESRD PPS rulemaking, we also solicited comments from interested
parties on several occasions. During the TEP of December 2020, we
queried a panel of experts on how to improve payment for pediatric
dialysis care under the ESRD PPS. Panelists generally preferred
creating more refined case-mix adjusters over creating an entirely new
pediatric ESRD PPS, citing the costs of creating an entirely new system
both on CMS and the ESRD facilities and the need for new legislation to
be able to increase payment through a separate pediatric ESRD PPS.
Panelists also pointed to labor costs as a major reason for higher
costs among pediatric dialysis clinics because these patients need more
nursing attention and specialized pediatric nutritionists.\28\ In the
CY 2023 ESRD PPS proposed rule (87 FR 38529), we issued a request for
information regarding equitable access for pediatric patients with
ESRD. We noted that stakeholders have emphasized the higher labor
costs, including the need for increased nursing attention and
specialized clinical staff. They asserted that Medicare payment for
pediatric ESRD patients is too low and that the ESRD PPS bundled
payment does not target the unique issues facing ESRD facilities
furnishing renal dialysis services to pediatric ESRD patients.
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\28\ 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 explained that CMS sought to improve payment accuracy for renal
dialysis services furnished to pediatric ESRD patients by better
aligning payments with observed costs. Ensuring Medicare payments are
appropriate and align costs for renal dialysis services furnished to
pediatric ESRD patients would support more ESRD facilities in providing
quality care to this vulnerable population. The main barrier to
aligning payment has been the lack of sufficient data to determine the
relative costs associated with furnishing renal dialysis services to
pediatric ESRD patients. To improve payment rate accuracy for pediatric
ESRD patients, CMS issued changes to the cost reports for hospital-
based and freestanding ESRD facilities effective October 1, 2022, and
January 1, 2023, respectively (87 FR 26760).29 30
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\29\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r7p242.
\30\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r18p240i.
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Nevertheless, accurate payment for pediatric ESRD dialysis under
the ESRD PPS remains challenging due to small sample sizes and
systematic differences between pediatric and adult renal dialysis
services. Pediatric dialysis treatments often occur in hospitals which
have lower volumes and higher costs. This complicates cost estimation.
To address these challenges, we conducted an alternative analysis which
used propensity score matching (PSM) to estimate costs accurately.
Findings presented in the CY 2024 ESRD PPS final rule indicated
facilities that only serve pediatric ESRD patients incur 40 percent
higher costs per patient than those not serving pediatric patients (88
FR 76376). Medicare accounted for the current adjustments for higher
pediatric costs from established case-mix adjusters, which were about
10 percent higher for pediatric dialysis than adults in 2022.
In the CY 2024 ESRD PPS final rule, CMS finalized the Transitional
Pediatric ESRD Payment Adjustment (TPEAPA) which increased payments for
all pediatric ESRD patients under 18 years of age (88 FR 76344). CMS
finalized the budget neutral 30 percent add-on payment adjustment in
the CY 2024 ESRD PPS final rule effective January 1, 2024, for CYs 2024
through 2026 (88 FR 76380). CMS finalized the TPEAPA as a time-limited
payment adjustment, so we could collect more targeted pediatric data.
The time-limited 3-year payment adjustment provided enough time to
evaluate data from updates to cost reports specific to pediatric
treatments. The TPEAPA is codified at Sec. 413.235(b)(2). Beginning
January 1, 2024, the ESRD PPS provided a per-treatment transitional
add-on payment adjustment of 30 percent of the per treatment payment
amount under Sec. 413.230 for renal dialysis services furnished to
Pediatric ESRD Patients, as defined in Sec. 413.171, during calendar
years 2024, 2025, and 2026. CMS continued to analyze payment and cost
data throughout the implementation of TPEAPA to determine whether to
extend the TPEAPA past December 31, 2026, or propose an alternative
approach after additional data analysis.
[[Page 38827]]
c. Analysis of Additional Pediatric ESRD Cost Data
As noted previously, payment accuracy historically has been
difficult for pediatric ESRD dialysis because of the small sample size
of pediatric ESRD patients receiving renal dialysis services under the
ESRD PPS. Pediatric ESRD dialysis treatments differ from adult ESRD
dialysis treatments in several crucial ways. For example, pediatric
ESRD facilities \31\ are more likely to be hospital-based and, on
average, have lower treatment volume and are in higher wage index
areas. These systematic differences in the treatment site, when
combined with the small sample size, make it very difficult to obtain
low variance estimates of the differences in costs between pediatric
and adult ESRD dialysis patients.
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\31\ The term ``pediatric ESRD facility'' is used at Sec.
413.170(b) in the context of exceptions to the composite rate prior
to 2011. This section specifically refers to Sec. 413.184 for the
specification of pediatric patient mix, which includes the
qualification at Sec. 413.184(a)(1) that at least 50 percent of the
patients are under 18 years of age, alongside other requirements.
Consistent with that section, for this proposal we use this term to
mean ESRD facilities with at least 50 percent of patients under 18
years of age, but we are not including the other qualifications of
Sec. 413.184(a) which were requirements for the exceptions for the
composite rate payments.
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To better understand these differences, CMS analyzed cost reports
from both freestanding (CMS-265-11) and hospital-based (CMS-2552)
facilities for 2023 and 2024 following cost report revisions. We found
relatively few freestanding facilities reported unique pediatric staff.
Additionally, approximately 30 percent of children's hospitals as
defined at 42 CFR 423(d) reported pediatric ESRD nursing staff and 25
percent reported pediatric ESRD staff other than registered nurses on
the cost report. For non-children's hospitals these figures were 1
percent and 0.5 percent, respectively.
CMS observed increased reporting of pediatric-specific supply costs
in hospital-based ESRD facilities between 2023 and 2024. In 2023, the
mean pediatric supply cost per treatment in hospital-based ESRD
facilities was $138.23; in 2024, it was $321.22. We note that this
increase in pediatric ESRD supply cost per treatment likely reflects
increased reporting, rather than increases in pediatric costs of
greater than 100 percent. Prior to 2024, the hospital-based (CMS-2552)
facilities cost report lacked the specificity to consistently delineate
pediatric ESRD supply cost from adult ESRD supply cost. Additionally,
CMS provided interested parties with additional guidance on the
completion of cost reports to share with children's hospitals that
provide renal dialysis services.
Despite continued limitations in pediatric-specific ESRD reporting,
CMS observed statistically significant higher costs associated with the
furnishing of renal dialysis services to pediatric ESRD patients. As
discussed in the following section, an updated regression analysis of
composite rate costs found the incremental cost impact of pediatric
ESRD treatment share was approximately 33 percent. Specifically, using
data from CYs 2022 and 2023, CMS estimates that the difference in total
cost per treatment between facilities with no pediatric ESRD treatments
and those furnishing exclusively pediatric ESRD treatments is
approximately 33 percent.
d. Proposals To Modify Payment for Pediatric ESRD Patients
(1) Updated Regression Analysis for CY 2027
In the CY 2011 ESRD PPS final rule, we established the pediatric
ESRD case-mix adjustments based on two age categories (age <13, 13-17)
and two dialysis modalities PD or HD. We used the resulting four case-
mix categories as the basis for classifying pediatric ESRD patients (75
FR 49132). The adjustment factors for each of these case-mix categories
were based on the product of two factors representing the cost of
composite rate services and another representing the costs of formerly
separately billable services. Specifically, the formula used the
average payment differential between adults and pediatric ESRD patients
(P), the average case mix multiplier for adults (C), the ratios for
composite rate (W_CR) and separately billable services (W_SB), and the
separately billable modifiers for each pediatric category (Mult_SB).
The expanded bundle payment multiplier established in the CY 2011 ESRD
PPS final rule (75 FR 49133) for CR and SB services for each of the
four pediatric classification cells can be calculated as:
Mult_EB = P * C * (W_CR + W_SB * Mult_SB)
The pediatric multipliers were most recently recalculated using
this established methodology in the CY 2016 ESRD PPS final rule (80 FR
69002). These multipliers are presented in Table 18.
We explained in the CY ESRD PPS 2011 final rule that to the extent
the additional payments currently provided for pediatric ESRD patients
under the basic case-mix composite payment system are likely to reflect
higher costs for smaller dialysis facilities otherwise qualifying for
the low-volume adjustment under the ESRD PPS, application of the low-
volume payment adjustment (LVPA) for pediatric ESRD patients would be
duplicative. Therefore, the LVPA was only applicable to adult ESRD
patients and was not used in calculating the payment rate per treatment
for pediatric dialysis patients. Facilities qualifying for the LVPA
which treat both adult and pediatric ESRD patients, have only received
the LVPA for adult dialysis patients (75 FR 49134).
For this CY 2027 ESRD PPS proposed rule, CMS revised its regression
model to evaluate the relationship between cost per treatment and
facility characteristics. CMS analyzed a logarithmic regression model
using 2022 and 2023 cost report data and controlled for geographical
and facility level characteristics (ownership, facility type, rurality,
treatment volume, and percentage of home dialysis training treatments)
to estimate cost differences based on pediatric share. These results
are presented in Table 17.
[[Page 38828]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.033
As shown in Table 17 both pediatric ESRD treatment share and ESRD
facility treatment volume, are statistically significant predictors of
cost. These findings indicate that facilities furnishing a higher share
of renal dialysis services to pediatric ESRD patients incur higher per-
treatment costs. These increased expenses are primarily attributable to
the need for specialized equipment, dedicated staffing, and unique
clinical protocols required for ESRD patients under 18 years of age.
However, hospital-based ESRD facilities, which are the primary sites
for pediatric dialysis, incur significantly greater operational costs
in comparison to freestanding ESRD facilities. Furthermore, this
analysis demonstrates that ESRD facilities with lower treatment volume
incur higher costs, independent of their share of pediatric patients.
Unlike the payment analysis conducted for the CY 2011 ESRD PPS final
rule, this analysis has separately isolated the marginal costs of
treating pediatric ESRD patients from the marginal costs associated
with low volume. As discussed in the following section, after
considering the results of our latest analysis, we are proposing
revisions to the pediatric ESRD case-mix adjusters and proposing to
change our longstanding LVPA policy to appropriately reflect these two
main drivers of pediatric ESRD cost.
---------------------------------------------------------------------------
\32\ LN denotes the natural logarithm which is to say the
logarithm of base (e).
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(2) Proposed Revision of Pediatric Adjusters
We propose to update the pediatric ESRD adjustment factors using
the calculation established in the CY 2011 ESRD PPS final rule (75 FR
49133). The updated calculation formula is as follows:
Mult_EB = D * C * (W_CR + W_SB * Mult_SB)
As discussed in the previous section, the CY 2011 calculation
utilized the estimated separately billable adjustments as well as 4
factors: average payment differential between adults and pediatric ESRD
patients (P), the average case mix multiplier for adults (C), the
weight for composite rate (W_CR) and the weight for separately billable
services (W_SB). We are proposing to update these figures according to
the most recent data, as follows. We note that instead of using the
average payment differential P, we propose to use the average cost
differential between adults and pediatric ESRD patients as derived from
our regression model, which we refer to as D. As previously discussed,
we conducted an updated regression analysis for the separately billable
adjustments using data from CYs 2022 and 2023. These figures are
presented in the ``Proposed SB Multiplier'' column in Table 18. Using
the same data, we updated the weights for the CR and SB costs to 0.915
and 0.085, respectively. From CY 2023 claims data, we determined that
the average case-mix adjustment factor for adult ESRD beneficiaries is
1.1045. Lastly, as discussed previously, we calculated that the average
difference in pediatric to adult ESRD costs is 1.3298 (that is, 32.98
percent).
[GRAPHIC] [TIFF OMITTED] TP26JN26.034
[[Page 38829]]
The CMS regression analysis presented previously in this section,
using cost report data with fields for more accurate reporting of
pediatric costs from 2022 and 2023, indicates 32.98 percent higher
costs incurred in treating pediatric ESRD patients compared to adult
ESRD patients. These findings suggest that the 30 percent TPEAPA, which
was based on a 40 percent cost differential, is approximately the same
order of magnitude with observed cost differentials. The current
regression analysis verifies the need for establishing more permanent
payment adjustments to account for higher pediatric costs on an ongoing
treatment basis.
We propose to update the SB (outlier) and EB (case-mix) multipliers
for pediatric patients according to the established methodology as
presented in Table 18.\33\ We note that these proposed updates would
result in functional adjustment factors for pediatric ESRD patients
below those established for purposes of the TPEAPA. We believe that
this is reasonable for two reasons. First, as discussed in the CY 2024
ESRD PPS final rule, the TPEAPA was based on a relatively high variance
analysis, and our new 33 percent cost differential falls within the
confidence interval of that analysis (88 FR 76376 through 76377).
Second, as discussed in the following section, we are proposing to
extend the LVPA to treatments furnished to pediatric ESRD patients.
Taken together, these two proposed modifications, updating the SB
(outlier) and EB (case-mix) multipliers for pediatric patients and
extending the LVPA to payments for treatments furnished to pediatric
ESRD patients, would provide a similar overall level of support while
more directly targeting the underlying cost drivers. Under this
proposed approach, low-volume facilities would receive higher payments
for treatments furnished to pediatric ESRD patients, while high-volume
facilities would receive somewhat lower payments relative to current
policy.
---------------------------------------------------------------------------
\33\ The EB, or expanded bundle, multipliers are the case-mix
adjustment factors that apply to the overall payment. The SB, or
separately billable, multipliers are the outlier services
multipliers which apply only in the calculation of the outlier
payment. As discussed earlier, we use the SB multipliers in the
calculation of the EB multipliers, consistent with the calculation
established in the CY 2011 ESRD PPS final rule (75 FR 49133).
---------------------------------------------------------------------------
(3) Proposed Expansion of the LVPA
Historically, the ESRD PPS has not applied the LVPA for treatments
furnished to pediatric ESRD patients. Section II.B.8. of this proposed
rule provides background on the LVPA. In the CY 2011 ESRD PPS final
rule, we codified the pediatric ESRD patient payment adjustment in
Sec. 413.235(b), which states that CMS adjusts the per treatment base
rate for pediatric ESRD patients in accordance with section
1881(b)(14)(D)(iv)(I) of the Act, to account for patient age and
treatment modality (75 FR 49134). Additionally, we finalized the
elimination of several exceptions including the pediatric facility
exception, which allowed for higher payment pediatric ESRD facilities
to receive additional payments when costs exceeded payment amounts
under the composite rate payment system. In other words, the pediatric
facility exceptions terminated for ESRD treatment on or after January
1, 2014 (75 FR 49178). Finally, the LVPA was only applicable to adult
ESRD patients and was not directly used in calculating the payment rate
per treatment for pediatric dialysis patients. Facilities qualifying
for the LVPA that treat both adult and pediatric ESRD patients have
only received the LVPA for adult dialysis patients (75 FR 49134). As
noted in section II.B.8. of this proposed rule, small ESRD facilities
incur higher costs than larger ESRD facilities, in part because they do
not benefit from the same economies of scale as many large ESRD
facilities. Due to the low incidents of pediatric ESRD patients most
pediatric units are small, which makes accounting for higher costs
associated with facility size accurately in payments important;
however, the small number of pediatric ESRD patients also makes
separate analysis on the costs of treating pediatric ESRD patients
difficult. As discussed previously, for the CY 2011 ESRD PPS final rule
we finalized an alternative methodology which was based on the average
payments for pediatric treatments under the composite rate system (75
FR 49132 through 49134), including those exceptions to the composite
rate system for high-cost pediatric facilities. The LVPA was only
extended to payments for adult patients in ESRD facilities because
facilities that primarily treat pediatric ESRD patients are typically
small, so the higher pediatric payments from which the methodology in
the CY 2011 ESRD PPS final rule derived the pediatric case mix
adjusters included any higher costs associated with low volume. As
such, we concluded that extending the LVPA to payments for pediatric
ESRD patients would be duplicative with the calculation of the
pediatric case mix adjusters under the methodology used for the CY 2011
final rule (75 FR 49134). However, for this proposed rule, we included
facility size as a separate characteristic in our regression model. As
noted in Table 17, the pediatric share is an independent indicator of
cost from the size of the facility.
As discussed previously, smaller ESRD facilities experience the
greatest financial burden, and our latest analysis finds that this
holds for pediatric ESRD facilities and adult ESRD facilities. As shown
in Table 17, the natural logarithm of facility size (based on the total
volume of treatment counts) is associated with a statistically
significant reduction in cost. This means that regardless of a
facility's share of pediatric patients, we observe that cost per
treatment decreases as the facility's total number of treatments
increases and, conversely, the cost per treatment increases as the
facility's total number of treatments decreases. Based on this
analysis, we believe that expanding the LVPA to include treatments
furnished to pediatric ESRD patients would be appropriate.
Therefore, for CY 2027, we propose to revise Sec. 413.232(f) to
state that the LVPA is applicable for dialysis treatments furnished to
all ESRD patients. As discussed in section II.B.8. of this proposed
rule, we are proposing to make budget-neutral changes to the LVPA tier
structure and adjustment factors, and we propose that those changes
would be applicable to payments for all ESRD patients beginning in CY
2027. We estimate that this change would appropriately increase
payments to ESRD facilities that treat a large share of pediatric
patients, which our data demonstrates face higher costs due to low
volume status in addition to the specific costs associated with
treating pediatric ESRD patients. Our analysis of the distributional
impacts associated with the proposed LVPA changes and the proposed
expansion of the LVPA to pediatric ESRD patients can be found in
section II.B.8. of this proposed rule.
Additionally, we note that although the LVPA does not currently
apply to pediatric ESRD PPS claims, ESRD facilities that provide renal
dialysis to pediatric ESRD beneficiaries are nevertheless permitted to
attest to low-volume status and receive the LVPA for any adult ESRD
beneficiaries they treat, under current regulation. Among the 32
dedicated children's hospitals furnishing ESRD treatments, two
children's hospitals currently receive LVPA payments. Similarly, four
of the 52 ESRD facilities that provide most of their treatments to
pediatric ESRD patients are also receiving the LVPA for their adult
ESRD patients. We believe
[[Page 38830]]
that the relatively low rates of low-volume attestation among pediatric
ESRD facilities is primarily because the LVPA is not applied to most of
the treatments furnished to these facilities' patients. We estimate
that approximately 24 pediatric ESRD facilities could be eligible for
the LVPA based on the current 4,000-treatment threshold. We expect that
if we finalize our proposal to expand the LVPA to pediatric patients
beginning for CY 2027, then additional ESRD facilities like these,
which are not currently attesting to low-volume status, would begin to
attest and would begin receiving the LVPA in CY 2027.
We also considered that small pediatric ESRD facilities within
larger institutions could be small, high-cost centers specializing in
care for pediatric ESRD patients. We recognize that in some cases,
common ownership with other ESRD facilities that are located 5 road
miles or less from the pediatric ESRD facility could create barriers to
LVPA eligibility for some pediatric ESRD facilities. 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 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 HD equivalent treatments (Medicare
and non-Medicare). For PD patients, one week of PD is considered
equivalent to three HD treatments (80 FR 68994).
We considered the nature of pediatric ESRD facilities, those ESRD
facilities with at least a 50 percent pediatric patient mix, which are
uniquely equipped to meet the specialized needs of a small subset of
patients that other nearby adult-focused ESRD facilities may not be
able to treat, including ESRD facilities under common ownership. We
believe it would be appropriate to allow pediatric ESRD facilities to
request an exemption from the aggregation of volume for ESRD facilities
under common ownership. While we are not proposing a categorical
exemption from these regulations, we are proposing that a pediatric
ESRD facility that is seeking low-volume status could request an
exception from its MAC from the aggregation of treatment volume for
ESRD facilities under common ownership at Sec. 413.232(c). To request
such an exception, we propose that an ESRD facility would need to
submit documentation to the MAC demonstrating that: (1) the ESRD
facility is either owned and operated by a Medicare-certified
children's hospital under Sec. 412.23(d) or the ESRD facility provides
at least 50 percent of its total treatments (Medicare and non-Medicare)
to patients who are under the age of 18 and (2) the ESRD facility is
under common ownership with an ESRD facility that does not provide at
least 50 percent of its total treatments (Medicare and non-Medicare) to
patients who are under the age of 18. If approved, the MAC would not
consider the treatment volume of the commonly owned ESRD facility when
calculating the treatment volume for the excepted ESRD facility. Once
approved, the exception would continue for all future years so long as
the ESRD facility continues to either be a Medicare-certified
children's hospital or provide at least 50 percent of total treatments
to patients who are under the age of 18.
The excepted ESRD facility would still have to meet all other
requirements for the LVPA, including the treatment volume threshold
described at Sec. 413.232(b)(1). As this exception is only for the
purposes of the aggregation of volume of commonly owned ESRD
facilities, it is possible for an ESRD facility to receive this
exception and not be eligible for the LVPA if it furnished 8,000
treatments or more (or 4,000 should the proposal in section II.B.8. of
this proposed rule, not be finalized) in one of the past three cost
reporting years. The aggregation of volume for ESRD facilities under
common ownership would still apply for the excepted ESRD facility and
any other commonly owned ESRD facilities within 5 road miles for which
an exception has not been approved. An ESRD facility could receive
exceptions for multiple commonly owned ESRD facilities, should the
requirements for the exception be met for each of them. We are
proposing the addition of paragraph Sec. 413.232(g)(7) to effectuate
this proposed exception and detail the process for requesting the
exception.
We solicit comments on our proposed expansion to apply the LVPA to
payments for pediatric patients. We also solicit comments on the
proposed exception to the aggregation of volume for ESRD facilities
under common ownership, the administrative process required to request
such an exception, and whether such an exception is needed. We believe
that extending the LVPA to these facilities could alleviate financial
pressures. The LVPA is designed to offset the disproportionate costs
encountered by low-volume facilities. Expanding its application would
help ensure that pediatric ESRD facilities, which typically operate at
lower volumes due to the specialized nature of their patient
populations, receive essential financial support not fully addressed by
current payment adjustments under the ESRD PPS.
(4) Conforming Edits to Sec. 413.232(g) To Specify Calendar Days
As discussed, we are proposing to create an exception process for
ESRD facilities that are Medicare-certified children's hospitals or
that furnish more than 50 percent of treatments to pediatric ESRD
patients. In the proposed new paragraph Sec. 413.232(g)(7), we specify
a timeline based on ``calendar days,'' rather than ``days.'' We believe
that specifying ``calendar days'' avoids confusion between calendar
days, working days, business days, or any other type of day. When we
finalized the exceptions for disasters or other emergencies in the CY
2024 ESRD PPS final rule (88 FR 76344), we similarly created a timeline
but did not specify the type of ``days'' despite our intention being
calendar days. We are proposing edits to Sec. 413.232(g)(5) and (6) to
specify that the timeline for the exceptions is based on calendar days,
consistent with the proposed language of Sec. 413.232(g)(7). We are
also proposing an edit to Sec. 413.232(g)(6)(iv) to add the word
``of'' to the first sentence following ``30 calendar days,'' which was
omitted in a typographical error. We solicit comments on these proposed
changes, including whether we should finalize such changes even if the
exception detailed at the proposed new paragraph (g)(7) is not
finalized. We also solicit comments on whether another basis for the
timeline, for example business days, would be better for ESRD
facilities requesting any of these exceptions.
10. Home and Self-Dialysis Training Add-On Payment Adjustment
a. Background
Under the ESRD PPS, there are three components to payment for home
and self-dialysis training: (1) the base rate, (2) a wage-adjusted home
and self-dialysis \34\ training add-on payment adjustment, and (3) an
allowable number of training treatments. The ESRD PPS includes an add-
on payment adjustment for home and self-dialysis
[[Page 38831]]
training, which is described at Sec. 413.235(c). Hereafter, we refer
to the home and self-dialysis training add-on payment adjustment as the
training add-on.
---------------------------------------------------------------------------
\34\ Home dialysis is dialysis performed by a beneficiary or
caretaker in their home. Self-dialysis is dialysis performed by a
beneficiary in-center.
---------------------------------------------------------------------------
CMS makes the same training add-on for both HD and PD. We recognize
that the costs for home and self-dialysis training for HD and PD are
likely not identical, as supported by our analysis of ESRD facility
cost report data discussed later in this section. However, the ESRD PPS
is a prospective payment system under section 1881(b)(14)(A)(i) of the
Act. As such, payments are not intended to reflect the exact costs
incurred by individual facilities, but to provide standardized payments
that promote efficiency and access.
When the ESRD PPS was implemented in 2011, we proposed that the
cost for all home dialysis services would be included in the bundled
payment (74 FR 49930), and therefore, the computation of the base rate
included home dialysis training add-on payments made to ESRD facilities
as well as all composite rate payments, which account for facility
costs associated with equipment, supplies, and staffing. In response to
public comments, in the CY 2011 ESRD PPS final rule, we noted that
although we were continuing to include training payments in computing
the ESRD PPS base rate, we agreed with commenters that we should treat
training as an adjustment under the ESRD PPS. Accordingly, we finalized
the training add-on amount 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 HD or PD training or retraining (75
FR 49063), updated from the previous adjustment amount of $20. This
updated amount of $33.44 per treatment was based on the national
average hourly wage for Registered Nurses (RN) as published by the
Occupational Employment Statistics (OES) data compiled by BLS data
updated to 2011 (75 FR 49063), and reflected 1 hour of training time by
a RN for both HD and PD. This average hourly wage was then inflated to
2011 by the ESRD wages and salaries proxy used in the 2008-based ESRD
bundled market basket. In addition, we continued the policy of paying
the home dialysis training add-on payment for 15 training treatments
for PD and 25 training treatments for HD.
Section 494.100(a)(2) of the Conditions for Coverage for ESRD
Facilities stipulates that the RN must conduct the home or self-
dialysis training, and CMS has clarified through interpretive guidance
(ESRD Program Interpretive Guidance published October 3, 2008 (http://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/downloads/SCletter09-01.pdf) that other
members of the clinical dialysis staff may assist in providing the home
training. We also elaborate in this guidance that the qualified home
training RN is responsible for ensuring that the training is in
accordance with the requirements at Sec. 494.100, with oversight from
the ESRD facility's interdisciplinary team.
In the CY 2014 ESRD PPS final rule (78 FR 72185), CMS increased
this amount from $33.44 to $50.16 to reflect 1.5 hours of training time
by an RN in response to stakeholder concerns regarding payment
adequacy. The $50.16 training add-on amount was consistent with average
costs based on an analysis of pre-PPS cost report data.
In the CY 2017 ESRD PPS final rule (81 FR 77856), CMS further
updated the home and self-dialysis training add-on to $95.60 based on
2.66 hours of RN time using BLS wage data.
In 2025, Medicare paid approximately $7 million in home and self-
dialysis training add-on payment adjustment amounts, which remained
relatively stable compared to prior years. This relatively flat trend,
in conjunction with stakeholder feedback, may indicate that home
dialysis and self-dialysis modalities remain underutilized and that
payment adequacy for training may be a contributing factor.
b. Analysis of ESRD Cost Report Data
When we last updated the training add-on amount in the CY 2017 ESRD
PPS final rule (81 FR 77848 through 77856), we stated that we made
changes to the freestanding ESRD facility cost reports to allow for
better collection of training data, and that we would evaluate improved
cost report data once available. We stated that we intended to compare
the average cost per home dialysis training treatment for PD and HD to
the proxy value, and to assess the extent to which the training add-on
reflects ESRD facility costs for home dialysis training on average.
For this proposed rule, we analyzed the data collected on
Worksheets B and C on the average home dialysis training cost per
training treatment for freestanding ESRD facilities. Specifically, the
following analysis is from Worksheets B and C from the freestanding
ESRD facility cost report (CMS-265-11) and Worksheets I-2 and I-4 from
the hospital-based ESRD facility cost report (CMS-2552-10).\35\ We used
CY 2024 cost report data, which includes cost reporting periods
beginning between January 1, 2024, and December 31, 2024. AKI lines
were excluded from this analysis since AKI beneficiaries were not
eligible for the training add-on for the entirety of the study
period.\36\ Data was evaluated at the facility level, and the top and
bottom 1 percent of observations were winsorized.\37\
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\35\ Provider training costs from freestanding ESRD facility
worksheet B non-AKI lines between Lines 10-13, columns 3-9 and 11-13
and hospital cost report worksheet I-2 non-AKI lines between Lines
4-7, columns 1-8 and 10. Provider training session count
freestanding ESRD facility worksheet C non-AKI lines between Lines
10-13, Column 1 and hospital cost report worksheet I-4 non-AKI lines
between Lines 3-6, Column 1.
\36\ The training add-on was extended to AKI dialysis payments
in the CY 2025 ESRD PPS final rule (89 FR 89168).
\37\ Winsorizing is a statistical data transformation technique
that limits extreme values-outliers by replacing them with specific,
less extreme percentiles. For this analysis we replaced the top 1
percent of values with the 99th percentile value and the bottom 1
percent of values with the 1st percentile value. Unlike trimming, it
keeps the total number of data points unchanged while minimizing the
influence of outliers on the analysis.
---------------------------------------------------------------------------
We analyzed CY 2024 ESRD cost report data from freestanding and
hospital-based ESRD facilities. The median cost-per-training session
was approximately $712 overall, $381 for HD, and $797 for PD. The
median labor cost-per-training session was approximately $283 overall,
$164 for HD, and $314 for PD. CMS believes that these reported ESRD
facility costs include resources associated with routine renal dialysis
services in addition to training-specific activities. On average,
payment per dialysis treatment was approximately $300 in 2024. As
discussed in section II.B.1. of this proposed rule, the total
compensation in the proposed 2024-based ESRDB market basket is 50.9
percent as presented in Table 3. Applying this to the rough per-
treatment payment amount of $300 gives us a payment amount of
approximately $153. To appropriately determine the extent to which
training for home dialysis results in increased labor costs, we can
subtract this $153 amount from the median per-training-treatment labor
cost of $283. This results in a per-treatment labor net cost of about
$130 per training treatment above that which is included in the per-
treatment payment.
Because the ESRD PPS is not a cost-based system, and cost report
data may not reliably isolate the marginal cost of training, CMS does
not believe it is appropriate to base the training add-on directly on
these data. As discussed in further detail in the next section, CMS
[[Page 38832]]
is proposing to continue to rely on a standardized labor-based
methodology reflecting RN time, which is more consistent with the
design of the ESRD PPS. However, this $130 net labor per-training
treatment cost demonstrates the effectiveness of the methodology, the
results of which we discuss in the following section.
c. Proposed Increase to the Home and Self-Dialysis Training Add-On
Payment Adjustment
We propose to increase the training add-on according to the most
recently available BLS OEWS, using the same methodology finalized in
the CY 2017 ESRD PPS final rule (81 FR 77856), based on 2.66 hours of
RN time and updated wage data. CMS is proposing to maintain the 2.66-
hour basis as cost report data has indicated it is an appropriate basis
for the training payment and is administratively simple to calculate.
As discussed in the prior section, cost report data shows a net labor
cost of approximately $130 per training treatment for 2024. While we
are not proposing to base the training amount on this cost report data,
we note that it lines up with the result from our established
methodology closely. Specifically, applying this 2.66-hour basis to the
estimate of RN wages from the May 2024 BLS OEWS, $47.32, would give us
a training adjustment of $125.87 for 2024, before the application of
any wage index. This demonstrates that our longstanding methodology
generally accounts for the net labor costs associated with home
dialysis training.\38\ The training add-on is only intended to cover
the labor related costs for home and self-dialysis training, as the
ESRD PPS base rate includes payment for all other costs associated with
furnishing renal dialysis services, as discussed in the CY 2011 ESRD
PPS final rule (75 FR 49063).
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\38\ May 2024 BLS OEWS estimate for category SOC code 29-1141
(Registered Nurses) can be found at http://www.bls.gov/oes/tables.htm.
---------------------------------------------------------------------------
This proposed approach would maintain consistency with prior policy
while accounting for wage growth over time and aligning with the
prospective principles upon which the ESRD PPS was established.
Under the ESRD PPS, and in accordance with section
1881(b)(14)(A)(i) of the Act, CMS implemented a single base rate that
applies to all dialysis treatment modalities. CMS is not proposing to
differentiate payment amounts between PD and HD training. Although cost
report data suggest differences, maintaining a single rate is
consistent with the ESRD PPS structure as HD and PD are paid the same
for adult beneficiaries, and avoids creating financial incentives that
could influence modality selection.
We calculated the updated payment amount using the mean hourly wage
for RNs (SOC 29-1141) from the May 2025 BLS OEWS (http://www.bls.gov/oes/tables.htm) which was $48.76 in 2025. We then inflated this 2025
mean hourly wage figure to CY 2027 using the growth in the proposed
2024-based ESRDB market basket Wages and Salaries price proxy. We
believe this proposed increase would improve payment adequacy for
training while maintaining the integrity of the PPS. This would result
in a new RN hourly wage of $51.96. For the hours, we propose to
continue to use the 2.66 hours as the amount of time for home dialysis
training by an RN that is accounted for by the training add-on. This
results in a proposed training add-on payment of $138.22 (2.66 hours x
$51.96 = $138.22). We propose to update the RN hourly wage estimate in
the final rule with more recent data, such as an updated estimate in
the growth of the price proxy, if appropriate.
This proposal would provide for an increase of $42.62 per training
treatment (that is, $138.22-$95.60 = $42.62). This approach would
provide a significant increase in payment for home and self-dialysis
training for CY 2027 while maintaining consistent payment for both PD
and HD modalities. After evaluating the cost report data presented
previously in this section of the proposed rule, we believe that this
amount is an appropriate proxy for the costs of home dialysis training.
We propose to update this training add-on amount with additional data,
for example an update in the growth in the proposed 2024-based ESRDB
market basket Wages and Salaries price proxy in the final rule, if
appropriate.
CMS proposes to implement this increase for the training add-on in
a budget neutral manner through an adjustment to the ESRD PPS base
rate. We believe implementing this budget neutral change, similar to
the budget neutral training add-on in the CY 2017 ESRD PPS final rule
(81 FR 77856), is appropriate because the ESRD PPS base rate includes
certain training costs. For more information on the history of training
add-on changes, we refer readers to a discussion in response to
comments in the CY 2017 ESRD PPS final rule (81 FR 77853 through
77854). CMS will estimate aggregate impacts for this proposal using
claims and cost report data.
d. Payment for Training During Dialysis Onset
In the CY 2011 ESRD PPS final rule we finalized a payment
adjustment for ESRD patients in their first 4 months on dialysis (75 FR
49090 through 49094), which we refer to as the onset adjustment. We
stated that as home dialysis training costs represent one-on-one staff
time to train a patient for home dialysis, we believed we captured
staffing costs for training in the onset adjustment. Since we already
accounted for training salary costs in the onset adjustment, we
believed that applying the training add-on adjustment in addition to
the onset adjustment would have the effect of compounding the composite
rate costs and would result in an overpayment of nursing staff costs
associated with training dialysis patients for home dialysis.
Therefore, the rule finalized that ESRD facilities would not receive
the training add-on adjustment for patients who are receiving the onset
adjustment. In the CY 2011 final rule we stated that we would continue
to study the relationship between costs related to the onset of
dialysis and home dialysis training for future refinements of the ESRD
PPS (75 FR 49094).
At that time, we stated that we believed that the onset adjustment
captured additional labor costs for home dialysis training sessions
that occur during the onset period, which is the first four months a
patient is on dialysis (75 FR 49063). The CY 2011 onset adjustment
factor was finalized at 1.510 (75 FR 49094). As the training add-on was
$33.44, the onset adjustment factor was generally much larger than the
training add-on for any single patient, so it was reasonable to believe
that notable additional labor costs associated with home dialysis
training were captured by the analysis from which the onset adjustment
was derived.
The current onset adjustment factor is 1.327, as finalized in the
CY 2016 ESRD PPS final rule (80 FR 68992 through 68993). The current CY
2026 ESRD PPS base rate is $281.71 so a 1.327 adjustment factor would
be an increase of approximately $92, which is lower than the current
training add-on adjustment. As the onset adjustment is intended to
account for more than just home dialysis training, the lower
multiplicative onset adjustment factor, combined with the relatively
low utilization of home dialysis training during the onset period, led
us to reevaluate our longstanding policy of not applying the dialysis
training add-on during the onset period.
[[Page 38833]]
We propose to allow ESRD facilities to receive the home and self-
dialysis training add-on payment adjustment during the onset period.
Analysis of 2024 claims data indicates that approximately 7.7 percent
of onset claims include training. While this is an improvement from the
inception of the ESRD PPS, we believe that patient choice would be
improved by increased access to home and self-dialysis training during
the onset period. Currently, approximately 44 percent of training
sessions occurred during the onset period, which demonstrates that most
patients which receive training are not in the onset period. CMS
further believes that the training add-on reflects discrete training
labor-related resources that are not fully captured by the onset
adjustment and therefore would not result in duplicative payment. Home
dialysis was included in the data upon which the ESRD PPS base rate was
constructed in the 2011 ESRD PPS final rule (75 FR 49084). However, in
that rule, we discussed how the ESRD PPS base payment alone does not
address home dialysis training costs, so an additional adjustment was
warranted (75 FR 49062). In the regression analysis performed for that
rule, we stated that we believed the higher costs associated with the
onset period were, in part, due to some training labor costs (75 FR
49063). However, based on our analysis of the training labor cost and
the onset adjustment for this proposed rule, we no longer believe this
is the case. There are training costs, primarily equipment supply
costs, included in the ESRD PPS base rate (75 FR 49062) which are
likely higher during training which would be captured by the analysis
from which the onset adjustment was derived. But, as discussed
previously in this section of the proposed rule, the ESRD PPS base rate
does not contain significant monies for labor related to home dialysis
training, so we do not believe that allowing both adjustments would be
duplicative now, in large part because the onset adjustment factor has
decreased since 2011 (which could have reflected some shifting
utilization). Similar to how the training add-on accounts for the extra
costs not accounted for by the ESRD PPS base rate, we believe that most
costs associated with home dialysis training are not reflected in the
current onset adjustment. Furthermore, our proposal to implement this
policy budget neutrally further mitigates the risk of potential
duplicative payment. We propose to base the budget neutrality of this
change on the current utilization of home dialysis training during the
onset period.
e. Combined Budget Neutrality Implications and Comment Solicitation
The proposed increase to the training add-on and the proposed
allowance of the training add-on for ESRD PPS claims during the onset
period would result in a budget neutrality adjustment of 0.99884. We
are soliciting comments on these proposed modifications to the home and
self-dialysis training adjustment, as well as the proposed budget
neutrality of these proposals and the proposed budget neutrality
adjustment factor of 0.99884. Additionally, we are soliciting comments
on other ways in which we could improve both home dialysis and self-
dialysis utilization. We are also soliciting comments on the proposal
to continue to use the calculation established in the CY 2017 ESRD PPS
final rule (81 FR 77856), basing the training add-on on 2.66 hours of
RN time. As noted previously, we did not propose to base the training
add-on on Medicare cost report data, nor did we propose to set
different training payment rates for HD and PD but based on comments
received in response to this proposed rule, we may finalize a different
policy, if warranted. Such a policy could involve using cost reports to
determine the number of hours of nursing time required for home
dialysis training or modifying the training add-on for a modality based
on the relative cost of that modality reported on cost reports, and we
solicit comments on these potential alternative methodologies. We are
also soliciting comments on alternative ways we could budget neutralize
this proposal, and specifically whether it would be more appropriate to
make the proposal to allow the training add-on during the onset period
budget neutral by reducing the onset adjustment factor.
11. Proposed Modification to TDAPA and Post-TDAPA Average Sales Price
(ASP) Policy
In the CY 2020 ESRD PPS final rule, we finalized a conditional
policy for TDAPA payment based on the availability of ASP data (84 FR
60679). In that final rule, we explained that if drug manufacturers
were to stop submitting full quarters of ASP data for products that are
eligible for the TDAPA, and we had to revert to basing the TDAPA on the
wholesale acquisition cost (WAC) or invoice pricing, we believed we
would be overpaying for the TDAPA for those products. We stated that we
would no longer apply the TDAPA for a new renal dialysis drug or
biological product if CMS does not receive a full calendar quarter of
ASP data within 30 days after the last day of the 3rd calendar quarter
after the TDAPA is initiated for the product, or if CMS stops receiving
the latest full calendar quarter of ASP data during the applicable
TDAPA period specified in Sec. 413.234(c)(1) or (2). We explained that
once we determine that the latest full calendar quarter of ASP is not
available, we would stop applying the TDAPA for the new renal dialysis
drug or biological product within the next 2-calendar quarters. We
adopted this conditional policy to avoid overpaying for the TDAPA on an
ongoing basis and to ensure that TDAPA payment is based on the most
appropriate data, that is, ASP.
In the CY 2024 ESRD PPS final rule we finalized the post-TDAPA add-
on payment adjustment (88 FR 76388 through 76397). When we finalized
this payment adjustment, we also finalized a similar conditional ASP
policy where if CMS stopped receiving ASP data for a particular drug or
biological product, we would no longer apply a post-TDAPA add-on
payment adjustment for that drug or biological product.
The CY 2024 ESRD PPS proposed rule (88 FR 42472) discussed that our
regulation at Sec. 413.234(c) did not address the application of the
TDAPA conditional policy in situations where the manufacturer of the
new renal dialysis drug or biological product submitted zero or
negative sales ASP data to CMS. Zero or negative sales may occur for a
variety of reasons, including no sales, recalls of a product, or
repurchases of sold products. In the CY 2012 Physician Fee Schedule
(PFS) final rule (76 FR 73296), CMS clarified that zero or negative
values are valid for ASP, ASP units, and WAC. Therefore, when such a
scenario occurs for separately payable Medicare Part B
[[Page 38834]]
drugs, we consider the submission of zero or negative sales to fulfill
the reporting requirements of manufacturer ASP data to CMS as set forth
in sections 1927(b)(3)(A)(iii) and 1847A(f) of the Act.
In the CY 2024 ESRD PPS final rule (88 FR 76410) we clarified that
for purposes of the TDAPA conditional policy, in circumstances where a
manufacturer submitted zero or negative sales ASP data during the TDAPA
period, we consider CMS to have received the latest full calendar
quarter of ASP data, and we will not discontinue TDAPA payment under
the conditional policy in Sec. 413.234(c). We further indicated that,
consistent with the pricing methodologies for separately payable
Medicare Part B drugs, in such circumstances, we will set the TDAPA
payment amount based on WAC or, if WAC is not available, invoice
pricing, for the quarter in which zero or negative sales were reported.
Likewise, we finalized that we would also consider ASP reflecting zero
or negative sales during the post-TDAPA period as CMS having received
the latest full calendar quarter of ASP data and would not discontinue
the post-TDAPA payment. We finalized that we would use WAC or, if WAC
is not available, invoice pricing, for the post-TDAPA add-on payment
adjustment calculation (88 FR 76396).
In the CY 2025 PFS final rule (89 FR 97981 through 97982), we
specified that for the purposes of calculating a payment limit for Part
B drugs, we will consider positive manufacturer's ASP data
``available'' and negative or zero manufacturer's ASP data ``not
available.'' We further specified that the use of the most recent
positive ASP data available for a billing and payment code for a drug
is most consistent with the payment limit calculations described in
section 1847A(b) and (c) of the Act, including section 1847A(c)(5)(B)
of the Act. In the CY 2026 PFS final rule (90 FR 49737) we noted that
the published payment limit for a drug with negative or zero ASP data
reported after January 1, 2025, could be based on a positive amount
that is carried forward from a previous quarter in accordance with
Sec. 414.904(i).
We propose modifications to align the TDAPA and post-TDAPA add-on
payment adjustment methodologies with pricing methodologies applicable
to separately payable Medicare Part B drugs under section 1847A of the
Act, including the use of the most recent available positive ASP data.
This proposed modification would not change the TDAPA payment for a new
renal dialysis drug or biological product that is in the first three
quarters of the TDAPA payment period for which ASP data has not been
reported. Specifically, for any such product, TDAPA payment would
continue to be based on 100 percent of WAC and, if WAC is not
available, based on the drug manufacturer's invoice price. Consistent
with our policy, if CMS does not receive a full calendar quarter of ASP
data within 30 days of the last day of the 3rd calendar quarter
following the initiation of the TDAPA, CMS will discontinue the TDAPA
for that product beginning no later than 2-calendar quarters after CMS
determines that such ASP data is not available. We note that, for
purposes of this policy, the submission of zero or negative sales ASP
data satisfies the manufacturer's ASP reporting requirement under
sections 1927(b)(3)(A)(iii) and 1847A(f) of the Act.
Under this proposal, when ASP data are reported as negative or zero
for a renal dialysis drug or biological product and CMS has received
positive ASP data for the product in a prior calendar quarter, we would
no longer base the TDAPA payment amount on WAC or, if WAC is not
available, invoice pricing for that quarter. Instead, consistent with
the approach adopted for separately payable Part B drugs in Sec.
414.904(i), we would base the TDAPA payment amount on the most recent
prior calendar quarter, with positive ASP data, which we consider the
most recent available ASP for purposes of section 1847A of the Act. We
propose to apply a similar modification to the post-TDAPA add-on
payment adjustment methodology. Specifically, when the most recent full
calendar quarter of ASP data reflects negative or zero sales, and CMS
has received positive ASP data for the product in a prior calendar
quarter, we would not base the post-TDAPA add-on payment adjustment on
WAC, or invoice pricing. Instead, we would base the post-TDAPA add-on
payment adjustment on the most recent prior calendar quarter with
positive ASP data.
As under current policy, in circumstances where a manufacturer
submits ASP data reflecting zero or negative sales, CMS considers the
manufacturer to have satisfied its ASP reporting obligation, and such
submissions do not trigger the discontinuation of the TDAPA under Sec.
413.234(c). However, if a manufacturer ceases submitting ASP data, and
CMS determines that the latest full calendar quarter of ASP data is not
available, CMS will discontinue the TDAPA for the product within 2
calendar quarters, consistent with Sec. 413.234(c). For purposes of
the TDAPA and post-TDAPA add-on payment adjustment, zero or negative
ASP data are treated as not usable for purposes of determining the
payment amount but are treated as submitted for purposes of the ASP
reporting requirement.
We believe this proposed approach is consistent with section 1847A
of the Act because it relies on the most recent available positive ASP
data when current quarter ASP data is not usable for purposes of
determining a payment amount. We further believe this proposed policy
would improve payment accuracy and consistency across Medicare payment
systems by avoiding reliance on WAC or invoice pricing when more
representative ASP data are available. This is appropriate for the ESRD
PPS as it aligns payment with resource use and promotes efficiency,
consistent with the principles of the ESRD PPS.
We propose modifications to Sec. 413.234(c) and Sec.
413.234(g)(1) to effectuate this change by amending language to state
that when the most recently available quarter of ASP data is not usable
because it is zero or negative, we would instead use the most recently
available quarter of positive ASP data, and that we would only resort
to WAC or invoice pricing if a prior quarter of positive ASP data is
not available.
C. Transitional Add-On Payment Adjustment for New and Innovative
Equipment and Supplies (TPNIES)
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, pursuant
to the authority of section 1881(b)(14)(D)(iv) of the Act, to support
ESRD facility use and beneficiary access to these new items.
We added Sec. 413.236 to establish the eligibility criteria and
payment policies for the TPNIES. Under current Sec. 413.236(b), CMS
provides for a TPNIES to an ESRD facility for furnishing a covered
equipment or supply only if the item: (1) has been designated by CMS as
a renal dialysis service under Sec. 413.171; (2) is new, meaning a
complete application has been submitted to CMS under Sec. 413.236(c)
within 3 years of the date of the FDA marketing authorization; (3) is
commercially available by January 1 of the particular CY, meaning the
year in which the payment adjustment would take effect; (4) has a
complete HCPCS Level II code application submitted, in accordance with
the HCPCS Level II coding procedures on the CMS website, by the HCPCS
Level
[[Page 38835]]
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 CY; (5) is innovative, meaning it meets the criteria
specified in Sec. 412.87(b)(1); and (6) is not a capital-related
asset, except for capital-related assets that are home dialysis
machines. 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 2027, we did not include any
TPNIES application summaries, CMS analyses, or results in this proposed
rule.
D. Continuation of Approved Transitional Add-On Payment Adjustments for
New and Innovative Equipment and Supplies for CY 2027
In this section of the proposed rule, we identify any items
previously approved for the TPNIES and for which payment is continuing
for CY 2027. Because no new items were approved for the TPNIES for CY
2026 (90 FR 53102), there are no payments continuing in CY 2027.
E. Continuation of Approved Transitional Drug Add-On Payment
Adjustments for CY 2027
In this section of the proposed rule, we identify any items
previously approved for the TDAPA for which payment is continuing for
CY 2027. 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. As described in the CY 2026 ESRD
PPS final rule, no new renal dialysis drugs or biological products
items were approved for the TDAPA for CY 2026 (90 FR 53102 through
53103). The 2-year TDAPA period for each new renal dialysis drug or
biological product previously approved for the TDAPA will conclude on
December 31, 2026. As such, there are no items previously approved for
the TDAPA for which payment is continuing in CY 2027.
III. Proposed CY 2027 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 furnished by ESRD facilities (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 as set forth in Sec. 413.220, updated by the ESRDB market
basket percentage increase factor reduced by 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). In the CY 2025 ESRD PPS final rule, we finalized
a policy to allow payment for home dialysis for beneficiaries with AKI.
Additionally, we extended the payment adjustment for home and self-
dialysis training to AKI dialysis payments in a budget neutral manner
and calculated a reduction to the AKI dialysis payment rate which
rounded to $0.00 (89 FR 89170).
B. Proposed Update of AKI Dialysis Payment
1. Proposed CY 2027 AKI Dialysis Payment Rate
The payment rate for AKI dialysis, as set forth in section
1834(r)(1) of the Act, 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 amounts deemed appropriate
by the Secretary pursuant to section 1881(b)(14)(D) of the Act, 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. Accordingly, we propose
that the CY 2027 AKI dialysis payment rate would be equal to the
proposed CY 2027 ESRD PPS base rate of $299.55 (($281.71 + $15.96) x
1.00267 x 0.98783) x 1.016 = $299.55), as discussed in section II.B.4.
of this proposed rule. Additionally, we propose that if more recent
data becomes available after the publication of this proposed rule and
before the publication of the final rule, we would use such data, if
appropriate, to determine the final CY 2027 ESRD PPS base rate. As
discussed in section II.B.1.b. of this proposed rule, we are proposing
to rebase and revise the ESRDB market basket to reflect a 2024 base
year. This proposal would impact the ESRDB market basket update, which
would impact the CY 2027 ESRD PPS base rate and therefore the AKI
dialysis payment rate.
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 propose to apply the
same wage index under Sec. 413.231 that is used under the ESRD PPS. As
discussed in section II.B.2.a. of this proposed rule, the ESRD PPS wage
index is based on mean hourly wage data from the BLS OEWS weighted by
FTE data from freestanding ESRD facility cost reports. We finalized the
methodology for determining the wage index value for an ESRD facility
in the CY 2025 ESRD PPS final rule (89 FR 89097 through 89116),
[[Page 38836]]
and we propose to continue to apply this methodology to AKI dialysis
payments. Consistent with this approach, we propose to apply the same
wage index under Sec. 413.231 that is used under the ESRD PPS to the
AKI dialysis payment. We propose to continue using this methodology
when adjusting AKI dialysis payments to ESRD facilities, consistent
with our historical practice. We believe this approach is appropriate
because ESRD facilities utilize substantially similar staff, resources,
and cost structures in furnishing renal dialysis services to
beneficiaries with AKI and ESRD, and therefore the ESRD PPS wage index
reasonably reflects geographic variation in labor costs for both
populations. The AKI dialysis payment rate would be adjusted by the
wage index for a particular ESRD facility in the same way that the ESRD
PPS base rate would be adjusted by the wage index for that ESRD
facility (81 FR 77868). Specifically, we would apply the wage index to
the LRS of the ESRD PPS base rate that we utilize for AKI dialysis to
compute the wage adjusted per-treatment AKI dialysis payment rate. As
discussed in section II.B.1.c. of this proposed rule, we are proposing
to update the LRS of the ESRD PPS from 55.2 percent to 63.5 percent
based on the labor-related cost share weights of the proposed 2024-
based ESRDB market basket. We also propose to continue applying 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. Accordingly, we propose a CY 2027 AKI dialysis payment rate
of $299.55, adjusted by the ESRD facility's wage index. As discussed in
section II.B.2.c. of this proposed rule, we propose that, if more
recent data becomes available after the publication of this proposed
rule and before the publication of the final rule, we would use such
data, if appropriate, to update the CY 2027 ESRD PPS wage index, and we
would describe any such changes in the final rule.
3. Other Adjustments to the AKI Dialysis 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 CY 2025 ESRD PPS final rule, we extended the home and
self-dialysis training add-on payment adjustment under the ESRD PPS to
AKI dialysis payments in a budget neutral way (89 FR 89170). Under
Sec. 413.373(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. Section 413.235(c) provides for a training add-on payment
adjustment for home and self-dialysis modalities, which is wage-
adjusted and paid on a per-treatment basis. Therefore, we are proposing
that any revisions to the ESRD PPS training add-on payment adjustment
would be reflected in payments for AKI dialysis. That is, the proposed
ESRD PPS training add-on amount of $138.22 would be applicable to AKI
beneficiaries during the training period. AKI beneficiaries do not
receive the onset payment adjustment, so they would not be impacted by
the proposal to allow training during the onset period. However, we
note that for AKI beneficiaries that progress to ESRD the proposal to
allow training payments during the onset period would allow for
continued access to the training add-on during the onset period for
ESRD. Currently there are no other adjustments that apply to AKI
dialysis payments.
IV. Proposed 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. Proposed Updates to Requirements Beginning With the PY 2029 ESRD QIP
1. PY 2029 ESRD QIP Measure Set
We propose to replace the Hypercalcemia reporting measure with the
Facility-Level Percentage of Chronic Hyperphosphatemia in Dialysis
Patients clinical measure, update the National Healthcare Safety
Network Bloodstream Infection clinical measure, and remove both the
Medication Reconciliation reporting measure and the COVID-19
Vaccination Coverage Among Healthcare Personnel reporting measure
beginning with the PY 2029 measure set. Table 19 summarizes the
previously finalized measures, proposed new measures, and proposed
updated measures that we would include in the PY 2029 ESRD QIP measure
set. The technical specifications for current measures that would
remain in the measure set for PY 2029 can be found in the CMS ESRD
Measures Manual for the 2026 Performance Period.\39\
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\39\ Centers for Medicare & Medicaid Services. (November 2025).
CMS ESRD QIP CY 2026 Measure Technical Specifications. Available at
https://www.cms.gov/files/document/cy-2025-final-technical-specifications.pdf.
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[[Page 38837]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.035
[[Page 38838]]
2. Proposed Replacement of the Hypercalcemia Reporting Measure With the
Facility-Level Percentage of Chronic Hyperphosphatemia in Dialysis
Patients Clinical Measure
a. Proposed Removal of the Hypercalcemia Reporting Measure
Abnormalities of mineral and bone metabolism are exceedingly common
and contribute significantly to morbidity and mortality in patients
with advanced chronic kidney disease (CKD). Studies have associated
disorders of mineral and bone metabolism with mortality, fractures,
cardiovascular disease, and other morbidities.40 41 Section
1881(h)(2)(A)(iv)(II) of the Act states that the measures specified for
the ESRD QIP shall include other measures as the Secretary specifies,
including, to the extent feasible, measures of bone mineral metabolism.
Therefore, in the CY 2014 ESRD PPS final rule (78 FR 72200 through
72203), we adopted the Hypercalcemia clinical measure as part of the
ESRD QIP measure set, which encouraged adequate management of mineral
and bone disease in patients with ESRD. In the CY 2023 ESRD PPS final
rule, we converted the Hypercalcemia clinical measure to a reporting
measure in light of concerns that the measure was close to being topped
out and that small differences in measure performance may
disproportionately impact a facility's score on the measure (87 FR
67250 through 67251). Given the statutory requirement to include
measures of bone mineral metabolism to the extent feasible, we noted
that we would retain the Hypercalcemia reporting measure while we
explored possible replacement measures that would be more clinically
meaningful for purposes of quality improvement.
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\40\ Salera, D., Merkel, N., Bellasi, A., & de Borst, M.H.
(2025). Pathophysiology of chronic kidney disease-mineral bone
disorder (CKD-MBD): from adaptive to maladaptive mineral
homeostasis. Clinical kidney journal, 18(Suppl 1), i3-i14. https://doi.org/10.1093/ckj/sfae431.
\41\ Dempster, D.W., Evenepoel, P., Nickolas, T.L., Massy, Z.
A., Mazzaferro, S., Harvey, N.C., Miller, P.D., & Pazianas, M.
(2026). Osteoporosis and CKD-metabolic bone disease under the same
umbrella: Insights from a joint scientific symposium. Kidney
International Reports. https://doi.org/10.1016/j.ekir.2026.106362.
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Beginning with the PY 2029 ESRD QIP, we are proposing to remove the
Hypercalcemia reporting measure under measure removal factor 5, a
measure that is more strongly associated with desired patient outcomes
for the particular topic becomes available (Sec. 413.178(c)(5)(i)(E)),
and replace it with the Facility-Level Percentage of Chronic
Hyperphosphatemia in Dialysis Patients (Hyperphosphatemia) clinical
measure. Both calcium and phosphorus are important in mineral and bone
metabolism. The Hypercalcemia reporting measure only requires reporting
of the calcium value \42\ while the Hyperphosphatemia clinical measure
would encourage facilities to identify patients with chronically
elevated phosphorus levels who would benefit from additional
intervention, a meaningful clinical practice more strongly associated
with desired patient outcomes. Studies have demonstrated a consistent
association between chronic hyperphosphatemia and adverse outcomes,
including cardiovascular complications, bone fractures, and increased
mortality.43 44 Prospective studies have also reported lower
mortality among patients with improved phosphorus control or treatment
with phosphate-binding medications.45 46 The
Hyperphosphatemia clinical measure would help drive decreases in
cardiovascular complications, hospitalizations, and overall mortality
by incentivizing additional interventions such as nutritional
counseling, phosphorus binding medications, or adjustment of dialysis
prescription.47 48 49 50 Compared to the Hypercalcemia
reporting measure, the Hyperphosphatemia clinical measure would more
directly assess patient-focused clinical outcomes.
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\42\ Centers for Medicare & Medicaid Services. (2025). Centers
for Medicare & Medicaid Services (CMS) End-Stage Renal Disease
Quality Incentive Program (ESRD QIP) Calendar Year (CY) 2026 Measure
Technical Specifications. Available at https://www.cms.gov/files/document/esrd-qip-cy2026-final-technical-specifications.pdf.
\43\ Kim, J.E., Park, J., Jang, Y., Kang, E., Kim, Y.C., Kim,
D.K., Joo, K.W., Kim, Y.S., & Lee, H. (2025). Oral phosphate binders
and incident osteoporotic fracture in patients on dialysis.
Nephrology, dialysis, transplantation: official publication of the
European Dialysis and Transplant Association--European Renal
Association, 40(2), 329-340. https://doi.org/10.1093/ndt/gfae139.
\44\ Rivara, M.B., Ravel, V., Kalantar-Zadeh, K., Streja, E.,
Lau, W.L., Nissenson, A.R., Kestenbaum, B., de Boer, I.H.,
Himmelfarb, J., & Mehrotra, R. (2015). Uncorrected and Albumin-
Corrected Calcium, Phosphorus, and Mortality in Patients Undergoing
Maintenance Dialysis. Journal of the American Society of Nephrology:
JASN, 26(7), 1671-1681. https://doi.org/10.1681/ASN.2014050472.
\45\ Floege J. Phosphate binders in chronic kidney disease: an
updated narrative review of recent data. J Nephrol. 2020;33(3):497-
508. https://pubmed.ncbi.nlm.nih.gov/31865608.
\46\ Hall, R., Platt, A., Wilson, J., Ephraim, P.L., Hwang,
A.S., Chen, A., Weiner, D.E., Boulware, L.E., Pendergast, J.,
Scialla, J.J., & Comparative Effectiveness Studies in Dialysis
Patients Group (2020). Trends in Mineral Metabolism Treatment
Strategies in Patients Receiving Hemodialysis in the United States.
Clinical journal of the American Society of Nephrology: CJASN,
15(11), 1603-1613. https://doi.org/10.2215/CJN.04350420.
\47\ Kim, J.E., Park, J., Jang, Y., Kang, E., Kim, Y.C., Kim,
D.K., Joo, K.W., Kim, Y.S., & Lee, H. (2025). Oral phosphate binders
and incident osteoporotic fracture in patients on dialysis.
Nephrology, dialysis, transplantation: official publication of the
European Dialysis and Transplant Association--European Renal
Association, 40(2), 329-340. https://doi.org/10.1093/ndt/gfae139.
\48\ Rivara, M.B., Ravel, V., Kalantar-Zadeh, K., Streja, E.,
Lau, W.L., Nissenson, A.R., Kestenbaum, B., de Boer, I.H.,
Himmelfarb, J., & Mehrotra, R. (2015). Uncorrected and Albumin-
Corrected Calcium, Phosphorus, and Mortality in Patients Undergoing
Maintenance Dialysis. Journal of the American Society of Nephrology:
JASN, 26(7), 1671-1681. https://doi.org/10.1681/ASN.2014050472.
\49\ Floege J. Phosphate binders in chronic kidney disease: an
updated narrative review of recent data. J Nephrol. 2020;33(3):497-
508. https://pubmed.ncbi.nlm.nih.gov/31865608.
\50\ Hall, R., Platt, A., Wilson, J., Ephraim, P.L., Hwang,
A.S., Chen, A., Weiner, D.E., Boulware, L.E., Pendergast, J.,
Scialla, J.J., & Comparative Effectiveness Studies in Dialysis
Patients Group (2020). Trends in Mineral Metabolism Treatment
Strategies in Patients Receiving Hemodialysis in the United States.
Clinical journal of the American Society of Nephrology: CJASN,
15(11), 1603-1613. https://doi.org/10.2215/CJN.04350420.
---------------------------------------------------------------------------
b. Proposed Adoption of the Hyperphosphatemia Clinical Measure
(1) Measure Overview
The Hyperphosphatemia clinical measure is an outcome measure
developed by CMS to assess long-term phosphorus control across the
dialysis population by measuring the percentage of adult dialysis
patients with a 6-month rolling average serum phosphorus value greater
than or equal to 6.5 mg/dL.\51\ The cohort for the Hyperphosphatemia
clinical measure would consist of adult patients, aged 18 years and
older, with ESRD who are receiving in-center hemodialysis, home
hemodialysis, hemodiafiltration, or peritoneal dialysis and have been
under the care of the same dialysis facility for the entire reporting
month. Eligible patients must have had ESRD for more than 90 days and
sufficient laboratory data to calculate a 6-month rolling average serum
phosphorus level.\52\
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\51\ Partnership for Quality Measurement. Facility-Level
Percentage of Chronic Hyperphosphatemia in Dialysis Patients.
Available at https://p4qm.org/prmr-measures/muc2025-064.
\52\ Further details on the proposed Hyperphosphatemia clinical
measure are available at https://p4qm.org/measures/4650.
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For more information about the testing, feasibility, scientific
acceptability, meaningfulness, and validity of the Hyperphosphatemia
clinical measure, we refer readers to https://p4qm.org/prmr-measures/muc2025-064.
(2) Measure Calculation
The numerator of this measure includes patient reporting months
with a six-month rolling average phosphorus value of 6.5 mg/dL or
greater. The
[[Page 38839]]
number of patient reporting months with a phosphorus average of 6.5 mg/
dL or greater would then be divided by the total number of patient
reporting months for the facility and multiplied by 100 to calculate
the percentage of patient reporting months with hyperphosphatemia.
Patient reporting months would be excluded if the patient had a 6-month
rolling average albumin level of less than 3.5 g/dL or a body mass
index (BMI) of less than 18.5. The proposed measure would be calculated
only for facilities with more than 10 eligible patients during the
reporting period.
(3) Recommendation from the Pre-Rulemaking Measure Review Process
We refer readers to the Partnership for Quality Measurement for
details on the Pre-rulemaking Measure Review process convened by the
CBE, including the voting procedures used to reach consensus on measure
recommendations.53 54 The Pre-Rulemaking Measure Review
Hospital Committee, consisting of both the Pre-Rulemaking Measure
Review Hospital Recommendation Group (Recommendation Group) and Pre-
Rulemaking Measure Review Hospital Advisory Group, met on January 12
and 13, 2026, to review measures included by the Secretary on the
publicly available ``2025 Measures Under Consideration List,''
including the Hyperphosphatemia clinical measure (MUC2025-064).\55\
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\53\ Partnership for Quality Management. Pre-Rulemaking Measure
Review web page. Available at https://p4qm.org/prmr/about.
\54\ In 2025, the CBE updated the Pre-Rulemaking Measure Review
voting process such that Recommendation Group members will vote to
either ``recommend'' or ``do not recommend'' that a measure be added
to the intended CMS program(s), thus, removing the ``recommend with
conditions'' voting option. The threshold to reach consensus on a
given measure continues to be a minimum of 75 percent agreement
among members. Recommendation Group members can provide
considerations for CMS to review prior to implementation.
\55\ Centers for Medicare & Medicaid Services. (2025). 2025
Measures Under Consideration List. Available at https://mmshub.cms.gov/measure-lifecycle/measure-implementation/pre-rulemaking/lists-and-reports.
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The voting results of the Recommendation Group for the proposed
inclusion of the Hyperphosphatemia clinical measure in the ESRD QIP
were: 16 members (76 percent) recommended adopting the measure into the
ESRD QIP and 5 members (24 percent) voted not to recommend the measure
for adoption.\56\ With 76 percent of the votes for recommend, consensus
was reached, as the majority of the Recommendation Group expressed
support for use of the measure in the ESRD QIP. In expressing support
for use of the Hyperphosphatemia clinical measure in the ESRD QIP,
Recommendation Group members emphasized its importance given evidence
linking chronic hyperphosphatemia to adverse outcomes, including
increased mortality, hospitalizations, cardiovascular events, vascular
calcification, and bone fractures.\57\ The minority of Recommendation
Group members who voted not to recommend the measure for inclusion in
the ESRD QIP provided the following rationales: (1) the evidence base
does not justify use as a performance measure; (2) the protein
restrictions required to achieve the goals of this measure may lead to
unintended adverse outcomes; (3) phosphorus control is influenced by
multiple clinical and patient-level factors that are not fully captured
by this measure; and (4) the measure should undergo additional
development before implementation.\58\
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\56\ Partnership for Quality Measurement. (February 2026). 2025-
2026 Pre-Rulemaking Measure Review Recommendations Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2026-02/PRMR-Hospital-Recommendation-Group-Meeting-Final-Summary-508.pdf.
\57\ Partnership for Quality Measurement. (February 2026). 2025-
2026 Pre-Rulemaking Measure Review Recommendations Group Final
Meeting Summary: Hospital Committee. Available at https://p4qm.org/sites/default/files/2026-02/PRMR-Hospital-Recommendation-Group-Meeting-Final-Summary-508.pdf.
\58\ Partnership for Quality Management. (February 2026). 2025-
2026 Pre-Rulemaking Measure Review Final Recommendations Report.
Available at https://p4qm.org/sites/default/files/2026-02/Final-2025-2026-MUC-Recommendations-Report-508.pdf.
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Regarding concerns about the sufficiency of the evidence base
supporting use of the Hyperphosphatemia clinical measure, we note that
studies have demonstrated a consistent association between chronic
hyperphosphatemia and adverse outcomes, including cardiovascular
complications, bone fractures, and increased mortality.59 60
Prospective studies have also reported lower mortality among patients
with improved phosphorus control or treatment with phosphate-binding
medications.61 62 The Hyperphosphatemia clinical measure
would incentivize and assess additional interventions such as
nutritional counseling, phosphorus binding medications, or adjustment
of dialysis prescription.
---------------------------------------------------------------------------
\59\ Kim, J.E., Park, J., Jang, Y., Kang, E., Kim, Y.C., Kim,
D.K., Joo, K.W., Kim, Y.S., & Lee, H. (2025). Oral phosphate binders
and incident osteoporotic fracture in patients on dialysis.
Nephrology, dialysis, transplantation: official publication of the
European Dialysis and Transplant Association--European Renal
Association, 40(2), 329-340. https://doi.org/10.1093/ndt/gfae139.
\60\ Rivara, M.B., Ravel, V., Kalantar-Zadeh, K., Streja, E.,
Lau, W.L., Nissenson, A.R., Kestenbaum, B., de Boer, I.H.,
Himmelfarb, J., & Mehrotra, R. (2015). Uncorrected and Albumin-
Corrected Calcium, Phosphorus, and Mortality in Patients Undergoing
Maintenance Dialysis. Journal of the American Society of Nephrology:
JASN, 26(7), 1671-1681. https://doi.org/10.1681/ASN.2014050472.
\61\ Floege J. Phosphate binders in chronic kidney disease: an
updated narrative review of recent data. J Nephrol. 2020;33(3):497-
508. https://pubmed.ncbi.nlm.nih.gov/31865608.
\62\ Hall, R., Platt, A., Wilson, J., Ephraim, P.L., Hwang,
A.S., Chen, A., Weiner, D.E., Boulware, L.E., Pendergast, J.,
Scialla, J.J., & Comparative Effectiveness Studies in Dialysis
Patients Group (2020). Trends in Mineral Metabolism Treatment
Strategies in Patients Receiving Hemodialysis in the United States.
Clinical journal of the American Society of Nephrology: CJASN,
15(11), 1603-1613. https://doi.org/10.2215/CJN.04350420.
---------------------------------------------------------------------------
Regarding concerns about the need for additional measure
development, we note that the Hyperphosphatemia clinical measure was
developed and refined with input from a technical expert panel (TEP)
and underwent extensive feasibility, reliability, and validity testing.
The TEP consisted of interested parties, experts, and consumer
advocates who contributed their input through the Hyperphosphatemia
clinical measure design process.\63\ There were no concerns regarding
feasibility because phosphorus levels are routinely measured as part of
standard clinical care in dialysis facilities. Testing demonstrated
strong validity at the facility-level, with higher rates of
hyperphosphatemia associated with increased mortality and
hospitalization, consistent with expected clinical relationships. In
addition, testing demonstrated high reliability, and the measure was
endorsed by the CBE in the Fall 2024 cycle for use in the ESRD QIP.\64\
Please refer to section IV.B.2.b.(4) of this proposed rule for more
information on endorsement of the measure.
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\63\ Centers for Medicare & Medicaid Services. (May 2024). ESRD
Mineral and Bone Disorder Measure Development Technical Expert
Panel. Available at https://mmshub.cms.gov/sites/default/files/ESRD-MBD-TEP-Summary-Report.pdf.
\64\ Partnership for Quality Measurement. Facility-Level
Percentage of Chronic Hyperphosphatemia in Dialysis Patients.
Available at https://p4qm.org/prmr-measures/muc2025-064.
---------------------------------------------------------------------------
Regarding concerns about the potential for unintended adverse
outcomes associated with dietary protein restrictions, we note the
measure includes exclusions intended to mitigate potential unintended
consequences, including patients with indicators of poor nutritional
status, such as a 6-month rolling average albumin of less than 3.5 g/dL
and a BMI under 18.5. We also note that as part of
[[Page 38840]]
routine measure maintenance we conduct ongoing monitoring and
evaluation to identify any unintended consequences.
Regarding concerns that phosphorus control is influenced by
multiple clinical and patient-level factors not fully captured by the
measure, we note that phosphorus management is addressed through the
interdisciplinary care team of a facility, including the prescribing
physician and dietitian, who work together with ESRD patients through
clinical care, dietary counseling, and treatment decisions. The
Hyperphosphatemia clinical measure would capture the extent to which
facilities are able to address these multi-layered factors.
(4) Measure Endorsement
We refer readers to the Partnership for Quality Measurement website
for details on the measure endorsement and maintenance process,
including the measure evaluation procedures the Endorsement and
Maintenance Committees use to evaluate measures and whether they meet
endorsement criteria.\65\ Section 1881(h)(2)(B)(i) of the Act generally
requires that measures specified by the Secretary for the ESRD QIP be
endorsed by the entity with a contract under section 1890(a) of the
Act. The Hyperphosphatemia clinical measure was submitted to the CBE
for endorsement review in the Fall 2024 cycle (CBE #4650), and the CBE
endorsed the measure, without conditions, for use in the ESRD QIP on
February 12, 2025.\66\
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\65\ Partnership for Quality Management. Pre-Rulemaking Measure
Review web page. Available at https://p4qm.org/prmr/about.
\66\ Partnership for Quality Measurement. (April 2025). Fall
2024 Cycle Endorsement and Maintenance (E&M) Technical Report:
Management of Acute Events and Chronic Conditions. Available at
https://p4qm.org/sites/default/files/Management%20of%20Acute%20Events%2C%20Chronic%20Disease%2C%20Surgery%2C%20and%20Behavioral%20Health/material/EM-Fall-2024-Management-Final-Project-Report.pdf.
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(5) Data Submission and Reporting
We are proposing to require facilities to submit data needed to
calculate the Hyperphosphatemia clinical measure using EQRS beginning
with the performance period for PY 2029. Facilities would report the
required data through EQRS in accordance with the existing monthly data
submission processes used for other ESRD QIP clinical measures. Because
the measure uses a 6-month rolling average of serum phosphorus values,
we are proposing that facilities would need to submit phosphorus data
for the five months preceding the start of the performance period to
allow calculation of rolling averages for the first months of the
performance year. For example, the rolling average for January 2027
would be calculated using phosphorus values from August 2026 through
January 2027. We are proposing that data used to calculate the
Hyperphosphatemia clinical measure would be based on a 12-month
performance period, with data submission consistent with current
reporting deadlines for other ESRD QIP measures. For example, for PY
2029, facilities would report the required data through EQRS on a
monthly basis during CY 2027, with final data submission due by the end
of the December 2027 data reporting month.
As described in Table 19 of this proposed rule, we are proposing
performance standards for the Hyperphosphatemia clinical measure.
Facilities would be required to follow the existing submission and
reporting requirements for web-based measures under the ESRD QIP, as
described on the QualityNet website at https://qualitynet.cms.gov/esrd.
We welcome public comment on our proposals to remove the
Hypercalcemia reporting measure and adopt the Hyperphosphatemia
clinical measure beginning with PY 2029.
3. Proposed Update to the National Healthcare Safety Network
Bloodstream Infection in Hemodialysis Patients Clinical Measure
In the CY 2014 ESRD PPS final rule, we adopted the National
Healthcare Safety Network (NHSN) Bloodstream Infection (BSI) in
Hemodialysis Patients (hereafter referred to as the NHSN BSI) clinical
measure into the ESRD QIP to assess BSIs among patients receiving
hemodialysis at outpatient hemodialysis centers (78 FR 72204 through
72207). The NHSN BSI clinical measure is based on infection
surveillance data reported by facilities to the Centers for Disease
Control and Prevention (CDC) through the NHSN Dialysis Event
surveillance system.\67\ The current measure uses a standardized
infection ratio (SIR), which compares the number of observed BSIs to
the number of predicted BSIs among facilities. The predicted number of
BSIs represents the number expected if a facility had a BSI rate equal
to the national rate derived from 2014 NHSN surveillance data. The
predicted number is estimated using pooled national BSI rates by
patient access type, which are multiplied by facility-level patient-
months for each access type.\68\
---------------------------------------------------------------------------
\67\ Centers for Medicare & Medicaid Services. (November 2025).
CMS ESRD Measures Manual for the 2026 Performance Period: Final
Version 11.1. Available at https://www.cms.gov/files/document/esrd-measures-manual-v11-1.pdf.
\68\ Centers for Disease Control and Prevention. (March 2024).
The NHSN Standardized Infection Ratio (SIR). Available at https://www.cdc.gov/nhsn/pdfs/ps-analysis-resources/nhsn-sir-guide.pdf.
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We are proposing to update the baseline and risk adjustment used to
calculate the SIR for the NHSN BSI clinical measure beginning with PY
2029 to ensure that national benchmarks better reflect current
healthcare practices, surveillance protocols, and infection prevention
efforts. To estimate the expected number of BSIs, we are proposing to
update the national baseline from 2014 data to 2023 data and revise the
risk adjustment model to incorporate additional facility-level
characteristics, including patient access type, facility hospital
affiliation, and number of dialysis stations, which were identified as
significant predictors of BSI risk among the data reported to NHSN.
Additionally, these factors identified are not modifiable by the
facility and are outside a facility's direct control. The predicted
number of BSIs would be estimated using a regression model developed
from the 2023 national baseline data. This model uses parameter
estimates associated with the identified risk factors to calculate
predicted BSIs for each facility-access type combination and then
multiplies these estimates by facility patient-months to determine the
predicted number of BSIs. Additionally, this updated risk adjustment
model would better account for differences in facility characteristics
associated with BSI risk and cannot be modified by the facility. The
proposed 2023 national baseline updates would not change the underlying
SIR calculation formula but would instead be used to calculate revised
denominators for the SIR by estimating the number of predicted BSIs for
a given facility based on the 2023 national baseline data and facility
characteristics.\69\
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\69\ Centers for Disease Control and Prevention. (2023). Charter
the Course: 2023 Dialysis BSI Rebaseline. Available at https://www.cdc.gov/nhsn/pdfs/rebaseline/22-Rebaseline-FAQs-Final-Version.pdf.
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The proposed 2023 national baseline updates would allow facilities
to compare their performance to more recent national data, improve the
accuracy and fairness of external benchmark comparisons, and serve as a
new national reference point for measuring progress in BSI prevention.
Because the updated 2023 national baseline reflects more recent
national data, facilities may observe changes in their SIR values
calculated in comparison with their SIR values
[[Page 38841]]
calculated using the 2014 national baseline. These changes would
reflect differences in national baseline rates rather than changes in
facility performance. Additionally, the SIRs calculated under the 2014
national baseline would not be directly comparable to the SIRs
calculated under the 2023 national baseline because each baseline
relies on a distinct national reference dataset and risk adjustment
model.
For additional information on the 2023 BSI national baseline
process, please refer to the CDC NHSN website at https://www.cdc.gov/nhsn/bsirebaseline/bsi.html/.
We welcome public comment on our proposal to update the NHSN BSI
clinical measure beginning with PY 2029.\70\
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\70\ This proposed change would be a technical update to the
measure specifications, rather than a substantive change. However,
we are interested in feedback on this technical update and are
therefore proposing it in this rule to facilitate public comment.
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4. Proposed Removal of Two Measures From the ESRD QIP Measure Set
We have undertaken efforts to review the existing ESRD QIP measure
set to ensure continued clinical impact and effectiveness of the
measures on facility performance. Based on that analysis and our
evaluation of the ESRD QIP measure set, we are proposing to remove the
Medication Reconciliation reporting measure and the COVID-19
Vaccination Coverage Among Healthcare Personnel reporting measure,
beginning with PY 2029.
a. Proposed Removal of the Medication Reconciliation Reporting Measure
To ensure continued impact and effectiveness of our measure set on
facility performance, we are proposing to remove the Medication
Reconciliation (MedRec) reporting measure beginning with PY 2029. When
we first adopted the MedRec reporting measure in the CY 2019 ESRD PPS
final rule (83 FR 57008 through 57010), we stated that inclusion of the
measure in the ESRD QIP measure set would align with national goals for
patient safety and the reduction of harm caused by care delivery. The
MedRec reporting measure assesses whether a facility has appropriately
evaluated a patient's medications, an important safety concern for the
ESRD patient population because those patients typically see multiple
providers and may require numerous medications.
Our proposal to remove the MedRec reporting measure is consistent
with evolving the ESRD QIP 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. As such, we are proposing to remove
this measure from the ESRD QIP measure set under measure removal factor
8, the costs associated with the measure outweigh the benefit of its
continued use in the program (Sec. 413.178(c)(5)(i)(H)).
Although recent annual measure analyses have indicated that the
MedRec reporting measure may not be fully topped out based on the
statistical criteria that we adopted in the CY 2015 ESRD PPS final rule
(79 FR 66171 through 66174), available data show consistently high
performance and limited variation across facilities. For example, the
mean MedRec reporting measure performance in CY 2024 was 97.3 percent
and the median MedRec reporting measure score was 10 points, which
indicates more than 50 percent of providers achieved perfect scores for
the measure. These results suggest that the programmatic benefit of
retaining the measure is limited.
One of the goals of the ESRD QIP is to advance the program in the
least burdensome manner possible, while maintaining a parsimonious set
of the most meaningful quality measures and continuing to incentivize
improvement in the quality of care provided to patients. Our priority
is a continued focus on measurable clinical outcomes to incentivize the
improvement of dialysis care quality and health outcomes for all
patients through measurement and transparency. In light of consistently
high performance on the MedRec reporting measure, leaving limited
opportunity for further distinctions or improvements in facility
performance, and the burden facilities incur in collecting,
documenting, and reporting data for the measure, the costs associated
with the measure outweigh the benefit of its continued use in the ESRD
QIP. Our proposal to remove the MedRec reporting measure from the ESRD
QIP is consistent with these priorities.
We welcome public comment on our proposal to remove the MedRec
reporting measure from the ESRD QIP measure set, beginning with PY
2029.
b. Proposed Removal of the COVID-19 Vaccination Coverage Among
Healthcare Personnel Reporting Measure
We refer readers to the CY 2023 ESRD PPS final rule where we
adopted the COVID-19 Vaccination Coverage Among Healthcare Personnel
(HCP) measure (hereafter referred to as COVID-19 HCP Vaccination
measure) into the ESRD QIP (87 FR 67244 through 67248) and the CY 2024
ESRD PPS final rule where we modified the COVID-19 HCP Vaccination
measure to account for updated COVID-19 vaccine guidance (88 FR 76446
through 76451). The COVID-19 HCP Vaccination measure requires dialysis
facilities to report the COVID-19 vaccination status of HCP through the
CDC NHSN. Facilities must collect current vaccination status for all
employees, licensed independent practitioners, adult trainees,
students, and volunteers, as well as certain contract personnel one
week out of each month and report these data on a quarterly basis (88
FR 76448 through 76449).
We propose to remove the COVID-19 HCP Vaccination measure beginning
with the PY 2029 ESRD QIP under removal factor 3, a measure no longer
aligns with current clinical guidelines or practice (Sec.
413.178(c)(5)(i)(C)). When we originally adopted this measure, the
United States was in the midst of a Public Health Emergency (PHE) with
millions of COVID-19 cases and over 965,000 COVID-19 deaths (87 FR
67244). In April 2023, the last full month of the PHE, the weekly
number of deaths due to COVID-19 averaged around 1,300.\71\ While
preventing the spread of COVID-19 remains a public health goal, the PHE
ended on May 11, 2023,\72\ and the COVID-19 death rate has continued to
decrease. The weekly number of deaths attributed to COVID-19 during a
recent 6-month period (weeks ending 8/2/25 through 1/31/26) ranged from
188 to 498.\73\
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\71\ Centers for Disease Control and Prevention. (September
2025). Surveillance and Data Analytics. Available at https://www.cdc.gov/covid/php/surveillance/index.html.
\72\ U.S. Department of Health and Human Services. (2023).
COVID-19 Public Health Emergency. Available at https://www.hhs.gov/coronavirus/covid-19-public-health-emergency/index.html.
\73\ Centers for Disease Control and Prevention. Provisional
COVID-19 Mortality Surveillance. Available at https://www.cdc.gov/nchs/nvss/vsrr/covid19/.
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With the end of the PHE, the continued costs and burden to
providers of reporting on this measure outweighed the benefit of
continued information collection on COVID-19 HCP Vaccination in several
settings. We likewise removed this measure from several program measure
sets: the Hospital Inpatient Quality Reporting Program (90 FR 37010
through 37012), the Inpatient Psychiatric Facility Quality Reporting
Program (90 FR 37657 through 37658), the Inpatient Rehabilitation
Facility Quality Reporting Program (90 FR 37701 through 37702), the
Ambulatory
[[Page 38842]]
Surgical Center Quality Reporting Program (90 FR 53917 through 53919),
and the Hospital Outpatient Quality Reporting Program (90 FR 53917
through 53919). We did not initially remove this measure from other
settings, including ESRD facilities, due to the continuing benefit to
higher risk patient populations.
Since the end of the PHE, the CDC's clinical recommendations for
COVID-19 vaccination have changed. In December 2020, the CDC's Advisory
Committee on Immunization Practices (ACIP) recommended that HCP should
receive a complete vaccination course.\74\ At the time the COVID-19 HCP
Vaccination reporting measure was adopted, vaccination was a critical
part of the nation's strategy to effectively counter the spread of
COVID-19.\75\ There were well-defined parameters for receiving the
COVID-19 vaccination intended to capture routine, catch-up, and risk-
based immunization recommendations.
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\74\ Dooling, K, McClung, M, et al. ``The Advisory Committee on
Immunization Practices' Interim Recommendations for Allocating
Initial Supplies of COVID-19 Vaccine--United States, 2020.'' Morb.
Mortal Wkly Rep. 2020; 69(49): 1857-1859.
\75\ Centers for Disease Control and Prevention. (2020). COVID-
19 Vaccination Program Interim Playbook for Jurisdiction Operations.
Accessed March 6, 2026 at https://www.cdc.gov/vaccines/imz-managers/downloads/COVID-19-Vaccination-Program-Interim_Playbook.pdf.
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However, these parameters no longer apply, due to evolving
circumstances. The latest CDC COVID-19 vaccination recommendations for
the 2025 through 2026 season are now based on shared clinical decision-
making.\76\ For shared clinical decision-making, there is not a default
decision to vaccinate for a defined population.\77\ Given that there is
no single default recommendation to vaccinate a defined population,
both receipt and non-receipt of vaccination may reflect the guidance of
shared clinical decision-making. This differs from the guidance in
place when this measure was finalized.
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\76\ Centers for Disease Control and Prevention. (2025). 2025-
2026 COVID-19 Vaccination Guidance. Available at https://www.cdc.gov/covid/hcp/vaccine-considerations/routine-guidance.html.
\77\ Centers for Disease Control and Prevention. (January 2025).
ACIP Shared Clinical Decision-Making Recommendations. Available at
https://www.cdc.gov/acip/vaccine-recommendations/shared-clinical-decision-making.html.
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On this basis, we propose removing the measure from the ESRD QIP
measure set under removal factor 3, a measure does not align with
current clinical guidelines or practice.
If finalized, facilities would not be required to report COVID-19
HCP Vaccination reporting measure data beginning with the performance
period for PY 2029. Any COVID-19 HCP vaccination data received by CMS
beginning with the performance period for PY 2029 would not be used for
ESRD QIP public reporting.
We welcome public comment on our proposal to remove the COVID-19
Vaccination Coverage Among Healthcare Personnel measure from the ESRD
QIP beginning with PY 2029.
5. Proposed Updates To Measure Domains and to the Domain and Measure
Weights Used To Calculate the Total Performance Score
In the CY 2019 ESRD PPS final rule (83 FR 56991 through 56992), we
finalized revisions to the ESRD QIP measure domains. Specifically, in
that rule we eliminated the Reporting Domain and reorganized the
Clinical Domain into three distinct domains: Patient & Family
Engagement Domain, Care Coordination Domain, and Clinical Care Domain.
We finalized our proposal to eliminate the Reporting Measure Domain
from the ESRD QIP measure set, beginning in PY 2021, because there
would no longer be any measures in that domain.
In the CY 2023 ESRD PPS final rule, we finalized our proposal to
create a new Reporting Measure Domain (87 FR 67251 through 67254),
which would include the six individual reporting measures in the ESRD
QIP measure set at that time. In the CY 2023 ESRD PPS final rule, we
stated that a separate Reporting Measure Domain was necessary to
increase incentives for improving performance by increasing the weights
on measures where there is the most room for improvement, especially on
patient clinical outcomes.
Currently, ESRD QIP measures are weighted and distributed across
five measure domains: Patient & Family Engagement, Care Coordination,
Clinical Care, Safety, and Reporting. As discussed in section IV.B.2.
of this proposed rule, we are proposing to replace the Hypercalcemia
reporting measure with the Hyperphosphatemia clinical measure beginning
with the PY 2029 ESRD QIP. In sections IV.B.4.a. and IV.B.4.b. of this
proposed rule, we also propose to remove the COVID-19 Vaccination
Coverage among HCP reporting measure and the MedRec reporting measure
from the ESRD QIP measure set beginning with the PY 2029 ESRD QIP. If
these proposals are finalized as proposed, the ESRD QIP measure set
would not include any measures under the Reporting Measure Domain.
Therefore, we are proposing to remove the Reporting Measure Domain and
to update the domain weights and individual measure weights in the Care
Coordination Domain and the Clinical Care Domain accordingly to reflect
the proposed updates to the ESRD QIP measure set. As the ESRD QIP
measure set has evolved over the years, we believe that removing the
Reporting Measure Domain and updating the Care Coordination Domain and
the Clinical Care Domain, both of which contain multiple measures,
would help to address concerns regarding the impact of individual
measure performance on a facility's Total Performance Score (TPS),
while also further incentivizing improvement on clinical measures.
Although we are proposing to remove the Reporting Measure Domain
beginning with PY 2029 because the ESRD QIP measure set would no longer
include any reporting measures, we note that in future rulemaking,
reporting measures may be proposed for inclusion in the ESRD QIP
measure set under the remaining measure domains. For a comparison of
current and proposed measure domains and weighting, see Table 20 and
Table 21.
[[Page 38843]]
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We welcome public comment on our proposal to remove the Reporting
Measure Domain and to update the existing domains and measure weights
used to calculate the TPS, beginning with PY 2029.
6. Performance Standards for the PY 2029 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
[[Page 38844]]
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.
We continue to believe that our current policy of 12-month
performance and baseline periods provide us sufficiently reliable
quality measure data for the ESRD QIP. Under this policy, we would
adopt CY 2027 as the performance period and CY 2025 as the baseline
period for the PY 2029 ESRD QIP. In the proposed rule, we are
estimating the performance standards for the PY 2029 clinical measures
in Table 22 using data from CY 2024, which were the most recent data
available. We intend to update these performance standards for all
measures, using CY 2025 data, in the CY 2027 ESRD PPS final rule.
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7. Eligibility Requirements for the PY 2029 ESRD QIP
In this proposed rule, we are proposing to update eligibility
requirements as part of our proposal to replace the Hypercalcemia
reporting measure with the Hyperphosphatemia clinical measure beginning
with PY 2029. Our previously finalized and proposed new minimum
eligibility requirements are described in Table 23.
[[Page 38845]]
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8. Payment Reduction Scale for the PY 2029 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
[[Page 38846]]
reduction differentials of 0.5 percent for each 10 points that a
facility's TPS falls below the mTPS, up to a maximum reduction of 2
percent. For PY 2029, we estimate using available data that a facility
must meet or exceed an mTPS of 51 to avoid a payment reduction. We note
that the mTPS estimated in this proposed rule is based on data from CY
2024 instead of the PY 2029 baseline period (CY 2025) because CY 2025
data are not yet available. The estimated payment reduction scale for
PY 2029 based on the most recently available data is described in Table
24. We will update the mTPS and associated payment reduction ranges for
PY 2029, using CY 2025 data, in the CY 2027 ESRD PPS final rule.
[GRAPHIC] [TIFF OMITTED] TP26JN26.040
C. Request for Information on the Inclusion of the Dialysis Facility
Discussion of Patient Life Goals Patient-Reported Outcome Performance
Measure in the ESRD QIP
1. Background
We are seeking feedback related to the potential inclusion of the
Dialysis Facility Discussion of Patient Life Goals (D-PaLS) Patient-
reported Outcome Performance Measure (PRO-PM) in the ESRD QIP. For
people on chronic dialysis, regular discussion of patient life goals
with their dialysis facility care team can lead to better understanding
by facilities and providers of those life goals, and how patients'
goals can be considered as part of initial and ongoing treatment
planning and decision-making.78 79 Evidence suggests that
discussions to identify and incorporate patient life goals into
modality and treatment decisions do not consistently occur in practice
among ESRD patients.80 81 82 Individuals with ESRD report
that they often do not receive adequate information about treatment
options or do not feel they are the primary decision-maker in their
care.\83\ This suggests discussion of life goals as part of treatment
planning and decisions is desired by patients and is not always
happening.
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\78\ Dahlerus, C., Carlozzi, N.E., Price, K., Miner, J.A.,
Hirth, R.A., Gremel, G., Han, P., Zhang, W., Sardone, J., Roach, J.,
Agbenyikey, W., Clark, S.L., Horton, G., Yaldo, A., & Messana, J.M.
(2025). Preliminary Testing of the Discussion of Patient Life Goals
Patient-Reported Outcome Measure for Dialysis Facilities. Kidney
medicine, 7(4), 100972. https://doi.org/10.1016/j.xkme.2025.100972.
\79\ Dahlerus, C., Carlozzi, N.E., Hirth, R.A., Price, K.,
Sardone, J., Miner, J.A., Segal, J.H., Andress, J., Roach, J.,
Balovlenkov, E., Clark, S., & Messana, J.M. (2025). Conceptual
Development Informing the Kidney Failure Patient Life Goals Survey.
Kidney medicine, 8(2), 101203. https://doi.org/10.1016/j.xkme.2025.101203.
\80\ Dahlerus, C., Carlozzi, N.E., Price, K., Miner, J.A.,
Hirth, R.A., Gremel, G., Han, P., Zhang, W., Sardone, J., Roach, J.,
Agbenyikey, W., Clark, S.L., Horton, G., Yaldo, A., & Messana, J.M.
(2025). Preliminary Testing of the Discussion of Patient Life Goals
Patient-Reported Outcome Measure for Dialysis Facilities. Kidney
medicine, 7(4), 100972. https://doi.org/10.1016/j.xkme.2025.100972.
\81\ Dahlerus, C., Carlozzi, N.E., Hirth, R.A., Price, K.,
Sardone, J., Miner, J.A., Segal, J.H., Andress, J., Roach, J.,
Balovlenkov, E., Clark, S., & Messana, J.M. (2025). Conceptual
Development Informing the Kidney Failure Patient Life Goals Survey.
Kidney medicine, 8(2), 101203. https://doi.org/10.1016/j.xkme.2025.101203.
\82\ Ladin, K., Lin, N., Hahn, E., Zhang, G., Koch-Weser, S., &
Weiner, D.E. (2017). Engagement in decision-making and patient
satisfaction: a qualitative study of older patients' perceptions of
dialysis initiation and modality decisions. Nephrology, dialysis,
transplantation: official publication of the European Dialysis and
Transplant Association--European Renal Association, 32(8), 1394-
1401. Available at https://doi.org/10.1093/ndt/gfw307.
\83\ Ladin, K., Lin, N., Hahn, E., Zhang, G., Koch-Weser, S., &
Weiner, D.E. (2017). Engagement in decision-making and patient
satisfaction: a qualitative study of older patients' perceptions of
dialysis initiation and modality decisions. Nephrology, dialysis,
transplantation: official publication of the European Dialysis and
Transplant Association--European Renal Association, 32(8), 1394-
1401. Available at https://doi.org/10.1093/ndt/gfw307.
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Discussions of patient life goals are consistent with the patient
plan of care requirements under Sec. 494.90 and with clinical practice
guidelines that emphasize integrating patient life goals into kidney
replacement therapy decision-making and care planning as established
under the ESRD Conditions for Coverage finalized in 2008 (73 FR
20370).\84\ The National Kidney Foundation's Kidney Disease Outcomes
Quality Initiative guidelines underscore a longitudinal, patient-
centered approach to kidney replacement therapy planning that
incorporates a patient's medical circumstances, life goals, individual
preferences, and social support across the continuum of CKD and end-
stage kidney disease (ESKD) care.\85\ Incorporating patient life goals
[[Page 38847]]
into care planning also aligns with current CMS and HHS priorities to
empower beneficiaries, strengthen shared decision-making, and improve
health outcomes through person-centered approaches to care
delivery.86 87
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\84\ Chan, C.T., Blankestijn, P.J., Dember, L.M., Gallieni, M.,
Harris, D.C.H., Lok, C.E., Mehrotra, R., Stevens, P.E., Wang, A.Y.,
Cheung, M., Wheeler, D.C., Winkelmayer, W.C., Pollock, C.A., &
Conference Participants (2019). Dialysis initiation, modality
choice, access, and prescription: conclusions from a Kidney Disease:
Improving Global Outcomes (KDIGO) Controversies Conference. Kidney
international, 96(1), 37-47. Available at https://doi.org/10.1016/j.kint.2019.01.017.
\85\ Lok, C.E., Huber, T.S., Lee, T., Shenoy, S., Yevzlin, A.S.,
Abreo, K., Allon, M., Asif, A., Astor, B.C., Glickman, M.H., Graham,
J., Moist, L.M., Rajan, D.K., Roberts, C., Vachharajani, T.J.,
Valentini, R.P., & National Kidney Foundation (2020). KDOQI Clinical
Practice Guideline for Vascular Access: 2019 Update. American
journal of kidney diseases: the official journal of the National
Kidney Foundation, 75(4 Suppl 2), S1-S164. Available at https://doi.org/10.1053/j.ajkd.2019.12.001.
\86\ Centers for Medicare & Medicaid Services. (2025). Strategic
Direction: CMS Innovation Center 2025 Strategy to Make America
Healthy Again. Available at https://www.cms.gov/priorities/innovation/about/strategic-direction.
\87\ U.S. Department of Health and Human Services. (2025). HHS
Priorities. Available at https://www.hhs.gov/about/priorities/index.html.
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2. Measure Overview
The D-PaLS PRO-PM assesses patients' satisfaction with whether and
how their care team discusses life goals as part of treatment
planning.\88\ The D-PaLS PRO-PM self-report survey captures patient-
reported experiences and allows for facility-level comparison of
facility engagement in patient life goals discussions.\89\ The D-PaLS
PRO-PM survey contains a total of eight items and takes approximately 2
minutes to complete.\90\ The survey includes example life goals that
patients may consider when reflecting on their own life goals; however,
the list of goals is not intended to be exhaustive and is included only
as examples. Selecting or completing these goals is optional as they
are not scored or evaluated. There are six Likert-type items \91\,
including: (1) whether at least one member of the dialysis care team
knows about the patient's life goals; (2) whether the patient believes
it is important that a member of the care team discuss life goals with
them; (3) whether the patient's treatment plan is consistent with their
life goals; (4) whether a member of the care team talks with the
patient about their life goals; (5) whether the patient is comfortable
discussing changes in life goals with a member of the care team; and
(6) whether a member of the care team helps the patient meet their life
goals. These six Likert-type items are used to generate a patient -
level ``quality of facility care team discussion'' quality score as
described later in this rule. These six items form the quality score,
while the final survey item is not scored and is included to provide
additional contextual information regarding dialysis care team members
with whom the patient reports discussing their life goals. For further
information regarding the full survey instrument, including the
specific Likert-type items, please refer to https://p4qm.org/measures/3742.
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\88\ The D-PaLS PRO-PM was included in the 2023 and 2024
Measures Under Consideration (MUC) lists (MUC2023-138 and MUC2025-
011, respectively) for inclusion in the ESRD QIP. The 2023 MUC list
is available at https://mmshub.cms.gov/sites/default/files/2023-MUC-List.xlsx. The 2025 MUC list is available at https://mmshub.cms.gov/sites/default/files/2025-MUC-List.xlsx.
\89\ For additional information on the ESRD QIP measure domains
and domain weights please refer to section IV.B.5. of this proposed
rule.
\90\ Dahlerus, C., Carlozzi, N.E., Price, K., Miner, J.A.,
Hirth, R.A., Gremel, G., Han, P., Zhang, W., Sardone, J., Roach, J.,
Agbenyikey, W., Clark, S.L., Horton, G., Yaldo, A., & Messana, J.M.
(2025). Preliminary Testing of the Discussion of Patient Life Goals
Patient-Reported Outcome Measure for Dialysis Facilities. Kidney
medicine, 7(4), 100972. https://doi.org/10.1016/j.xkme.2025.100972.
\91\ ``Likert-type items'' refer to individual survey questions
with ordered categorical response options that capture gradations of
opinion or experience, such as ``strongly disagree,'' ``disagree,''
``neither agree nor disagree,'' ``agree,'' and ``strongly agree.''
For further information regarding the full survey instrument,
including the specific Likert-type items, please refer to https://p4qm.org/measures/3742.
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The population for this measure is patients on chronic dialysis in
the U.S. who are at least 18 years old at the time of the survey and
includes all payer types. The survey tool is available to dialysis
patients in both U.S. English and in Spanish. Scoring for the D-PaLS
PRO-PM is based on responses to the six individual Likert-type items
that are used to generate a patient-level t-score. Response options for
each item are scored from 1 to 5, with higher scores indicating greater
patient agreement that the dialysis care team engages in discussions
about the patient's life goals and treatment planning. For each patient
at a given facility, the t-score represents a patient's perceptions of
their satisfaction with their dialysis care team discussions about life
goals, with t-scores greater than 40 indicating average or above
average satisfaction with those discussions. The overall D-PaLS PRO-PM
is calculated as the percentage of patients at a facility with a t-
score greater than 40 (the facility level quality score).
The D-PaLS PRO-PM is not designed to evaluate individual life goals
or whether patients achieve those goals; rather, the measure reflects
the percentage of patients at a facility who report at least average
satisfaction with discussions about life goals with their dialysis care
team and the incorporation of those discussions into treatment
planning. The intent of the D-PaLS PRO-PM is for the survey tool to be
offered to patients for self-administration, with de-identified results
and feedback provided to dialysis facilities. For additional details on
the measure specifications, please refer to https://p4qm.org/prmr-measures/muc2025-011.
3. Solicitation for Public Comment
We are seeking public comment on the proposed inclusion of the D-
PaLS PRO-PM in the ESRD QIP and on the following considerations:
Would inclusion of the D-PaLS PRO-PM provide valuable
information on the extent to which facilities are asking about life
goals and incorporating those discussions into treatment planning?
What concrete approaches could dialysis facilities use to
operationalize life-goal discussions on a regular basis into care
planning, addressing barriers to care, modality selection including
kidney transplantation, vascular access decisions, and other ESRD
treatment decisions?
To what extent can survey burden be minimized for patients
while maintaining meaningful patient-reported outcomes around patient
life goals discussions?
What factors may affect patient participation or survey
completion rates, and what strategies could CMS consider to encourage
meaningful participation and high response rates across patients?
What strategies could mitigate potential barriers to
regular discussions of patient life goals (such as resource
constraints, workflow integration, patient engagement and education)
and support meaningful integration of these discussions into treatment
planning?
In addition to electronic delivery via email/text directly
to patients, are there additional methods of delivery CMS should
consider, for example for patients who may not access a computer or
cell phone?
What strategies could CMS use to capture information on
patients who may be cognitively impaired or need a proxy to complete
the survey?
V. Requests for Information on Advancing Alternative Dialysis Care in
Accordance With Executive Order 13879
A. Background and Overview
On July 10, 2019, President Trump issued Executive Order (E.O.)
13879, Advancing American Kidney Health, directing Federal agencies to
advance policies that increase patient choice through affordable
alternative treatments for ESRD. Despite having a wide range of
individual needs and preferences, most dialysis patients in the United
States continue to receive their care three times per week in an
outpatient dialysis facility. E.O. 13879 specifically identifies that
greater rates of home dialysis will improve quality of life and care
for patients with ESRD.
[[Page 38848]]
The ESRD PPS, implemented on January 1, 2011, established a bundled
per-treatment payment for outpatient renal dialysis services furnished
by ESRD facilities. While this system has served as the foundation of
Medicare's ESRD payment framework for over a decade, the landscape of
ESRD care delivery has evolved considerably. Advances in clinical
practice, such as home dialysis technology, increased attention to the
needs of beneficiaries approaching end-of-life, and growing clinical
evidence supporting more flexible dialysis schedules, create
opportunities to consider fundamental changes to Medicare's payment and
coverage frameworks for ESRD and AKI care that could better support
high-quality, patient-centered care across all dialysis modalities,
settings, and patient populations.
In this section, we solicit public comment on several interrelated
areas where potential payment and coverage policy changes could better
align the ESRD PPS and AKI payment frameworks with the goals of E.O.
13879 and the evolving needs of ESRD beneficiaries. Specifically, we
seek input on the following: (1) policies to promote greater use of
home dialysis among Medicare beneficiaries; (2) approaches to
strengthen care continuity and expand beneficiary choice of renal
dialysis services that could be considered palliative in nature for
beneficiaries approaching end-of-life; and (3) changes to the ESRD PPS
to support greater flexibility for patients and nephrologists to use
alternative dialysis schedules.
We note that these RFIs are intended solely to gather information
and are not proposals for specific regulatory changes. Information
received in response to these RFIs will be considered as CMS develops
future rulemaking and policy initiatives in furtherance of E.O. 13879
and CMS's broader strategic priorities of aligning payment with value
and advancing patient-centered care for Medicare beneficiaries with
kidney disease. We note that the proposals in other sections of this
proposed rule are not final policy and responders should not consider
them as such when responding to the RFIs in this section.
B. Request for Information on Increasing Home Dialysis Uptake
1. Background
CMS has statutory authority under section 1881(b)(14) of the Social
Security Act (the Act) to implement a PPS for renal dialysis services
furnished to individuals with ESRD. Under this authority, CMS
established the ESRD PPS, which provides a bundled, per-treatment
payment to ESRD facilities for renal dialysis services, as defined at
Sec. 413.171, furnished in outpatient settings.
The ESRD PPS base rate is adjusted to account for patient-level
characteristics through case-mix adjustments, as well as for geographic
differences in area wage levels through the wage index. The payment
system also includes additional adjustments and policies, such as
outlier payments for high-cost cases and a training add-on payment
under Sec. 413.235(c) for home dialysis modalities. CMS's implementing
regulations for the ESRD PPS are codified at 42 CFR part 413, subpart
H.
Home dialysis modalities, including PD and home HD, furnish
clinically appropriate beneficiaries with the opportunity to receive
renal replacement therapy in the home setting. The ESRD Conditions for
Coverage at 42 CFR part 494 include requirements related to modality
education and patient rights.
According to the most recent United States Renal Data System
(USRDS) Annual Data Report, approximately 14 to 15 percent of prevalent
(all people currently on dialysis in the U.S., not just new starters)
dialysis patients nationally are treated with home modalities, with PD
accounting for most home treatments and home HD comprising a smaller
proportion. CMS ESRD PPS claims and dashboard data for Medicare Fee-
For-Service (FFS) beneficiaries reflect similar utilization rates among
the FFS population.
Although home dialysis utilization increased between 2019 and 2021,
more recent data indicate that growth has moderated. Technique failure,
modality switching, workforce constraints, geographic variation, and
beneficiary-level factors (lack of education, limited caregiver
support, fear of treatment complexity, housing constraints, and
insufficient transitional support following hospitalization) may
contribute to the observed plateau in prevalence rates. Based on recent
Medicare FFS data, approximately 14.5 percent of prevalent FFS dialysis
beneficiaries receive dialysis via home modalities. Interested parties
have emphasized that increasing home dialysis requires more than
provider-facing financial incentives and must address patient
experience, education, support systems, operational barriers and
infrastructure. They have stated that absent additional policy changes,
current growth trends would not significantly increase.
Accordingly, we are soliciting comment on potential approaches,
consistent with our statutory authority under section 1881 of the Act
and implementing regulations at 42 CFR part 413, subpart H, that could
increase home dialysis utilization among Medicare FFS beneficiaries. We
are seeking public comment on policy, payment, operational, and
regulatory changes within the ESRD PPS, and in coordination with other
Medicare payment systems, when relevant, that could increase the
percentage of incident, non-pediatric, non-MA ESRD beneficiaries
initiating dialysis on a home modality and remaining on that modality.
For purposes of this RFI, we use the term ``incident ESRD
beneficiaries'' to refer to OM beneficiaries who newly initiate
maintenance dialysis for ESRD during a given period, consistent with
CMS ESRD PPS and United States Renal Data System (USRDS) conventions.
For purposes of this RFI, we are considering measuring home
dialysis uptake among Medicare FFS ESRD beneficiaries defined as those
initiating home dialysis and remaining on that modality for at least 60
days, excluding pediatric ESRD patients, as defined in Sec. 413.171.
This continuation threshold is intended to ensure sustained modality
selection and prevent short-term initiation from inflating performance
measurements.
We note that increasing overall home dialysis prevalence depends
largely on influencing modality selection at initiation. Therefore, we
are particularly interested in policies that would affect modality
choice at or before the start of dialysis.
We are not proposing a specific numeric benchmark for the share of
Medicare FFS ESRD beneficiaries who receive home dialysis. Instead, we
seek comment on actionable policy changes that could measurably
increase the number of incidences ESRD PPS beneficiaries select and
sustain home dialysis. Commenters may wish to address how incremental
increases in initiation rates would translate into additional incident
beneficiaries selecting home modalities annually.
CMS emphasizes that modality selection must remain clinically
appropriate and consistent with patient choice protections under Sec.
494.70.
2. Medicare FFS Baseline and Illustrative Modeling Framework
For purposes of informing public comment, CMS provides the
following illustrative Medicare FFS baseline:
Approximately 220,000 chronic ESRD patients captured under the ESRD
PPS
[[Page 38849]]
receive renal dialysis services annually. At a home dialysis prevalence
rate of approximately 14.5 percent, roughly 31,900 Medicare FFS
beneficiaries with ESRD currently receive home dialysis.
We seek comment on the feasibility of achieving a significant
increase in utilization of the home dialysis modality for ESRD PPS
patients.
3. Request for Information
a. Patient-Level Barriers to Home Dialysis
Interested parties have identified multiple patient-level barriers
affecting home dialysis initiation and retention, including limited
education, fear of treatment complexity, inadequate in-home support,
insufficient space for equipment and supplies, caregiver burden, and
financial strain related to utilities and home modifications.
We seek comment on the following:
What patient-level barriers directly prevent incident ESRD
beneficiaries from selecting home dialysis?
What payment or regulatory mechanisms would effectively
mitigate these patient-level barriers within existing authority?
What temporary or ongoing support would effectively enable
beneficiaries to initiate and sustain home dialysis?
How can CMS structure payment under the ESRD PPS to
support beneficiaries who lack adequate care partner support?
What policies could mitigate caregiver burnout and improve
retention of home modalities?
What approaches could reduce patients' fear of abandonment
or lack of real-time support in the home setting?
What approaches, including dialysis in a home setting,
would improve ESRD beneficiaries' abilities to meet their life goals,
as discussed in section IV.D. of this proposed rule?
b. Kidney Disease Education and Upstream Modality Preparation
Multiple interested parties have emphasized the importance of early
and comprehensive modality education in increasing home dialysis
selection.
We seek comment on the following:
How can CMS improve access to and utilization of Kidney
Disease Education (KDE) services prior to dialysis initiation?
Whether CMS should consider revisions to payment amounts
for HCPCS codes G0420 and G0421 to better support comprehensive
modality education.
Whether ESRD facilities should be permitted to furnish and
bill for KDE services with appropriate safeguards.
What policies would encourage earlier nephrology referral
and shared decision-making prior to ESRD onset?
What approaches can CMS use to ensure that beneficiaries
who initiate dialysis emergently receive timely modality education and
an opportunity to transition to home dialysis when clinically
appropriate?
To what extent should CMS consider if IPPS or Outpatient
Prospective Payment System (OPPS) payment adjustments could incentivize
urgent start PD programs?
c. Home Dialysis Training and Workforce Capacity
Current home dialysis training payments have not been substantively
updated for years. Interested parties have identified payment
limitations and workforce constraints as barriers to expansion. While
CMS is proposing to update the home and self-dialysis training add-on
amount in section II.B.10. of this proposed rule, CMS seeks further
comment on opportunities to expand access to home dialysis training
while maintaining patient safety and quality of care. Specifically:
Whether CMS should revise payments outside of the ESRD PPS
to promote home dialysis, such as for CPT [supreg] codes 90989 and
90993 to reflect current training intensity and costs.
Whether CMS should redefine a completed course of home
dialysis training to reflect demonstrated independent treatment over a
defined period.
Whether any ESRD CfCs related to patient training (for
example, requirements for individualized training or staff
competencies) may inadvertently limit the ability of facilities to
scale home dialysis training capacity; and if so, what modifications,
if any, CMS should consider.
Whether aspects of the ESRD PPS payment structure for home
dialysis training (including payment tied to individual training
sessions) create incentives or operational constraints that limit the
use of alternative training models (such as group-based or hybrid
approaches).
What safeguards and best practices would be necessary to
ensure that alternative training approaches (e.g., group training,
remote modalities, or use of multidisciplinary training staff) continue
to meet the individualized needs of patients and maintain patient
safety.
What, if any, workforce development strategies would
increase availability of trained home dialysis nurses, particularly in
rural and underserved areas?
To what extent can the patient education requirements
regarding patient treatment modalities and setting (Sec. 494.70) be
revised to ensure patients receive quality information through a
process that is active, individualized, and iterative over time rather
than a passive delivery of education materials?
How frequently should this information (that is, regarding
patient treatment modalities and setting) be offered to the patient?
Should CMS specify format and delivery methods?
How should education delivery and patient response be
monitored and documented? What information should be captured and
recorded? How should this be incorporated into the patient assessment
and plan of care to address barriers to home dialysis to ensure it is
acted upon?
Should CMS revise minimum staff qualification requirements
for those who may deliver home dialysis education? What education,
qualification, and experience would be most appropriate?
d. Temporary and Staff-Assisted Home Dialysis
Interested parties have proposed other approaches for using payment
policy to directly encourage home dialysis, for example temporary
staff-assisted home dialysis to support beneficiaries during
initiation, following hospitalization, or during periods of caregiver
strain.
We seek comment on the following:
Whether CMS should create new payment mechanisms to
promote home dialysis and what timing or clinical considerations would
be relevant?
Whether patients returning home following in-patient
hospitalization, outpatient surgery, or serious injury should be
eligible for temporary staff assistance to prevent modality failure.
Modality failure, commonly used in nephrology, refers to the transition
from a chosen dialysis treatment (such as PD) to another form (such as
HD) due to technical problems, complications, or inadequate clearance.
It signifies the failure of a specific treatment method to sustain a
patient's health.
Whether CMS should permit limited annual respite support
to mitigate caregiver burnout?
What eligibility criteria, staffing qualifications, and
supervision requirements should be present within the CfCs for staff-
assisted home dialysis to ensure patient safety and high-quality care?
What clinical safeguards should be in place?
What clinical, behavioral, or medical characteristics
would make staff-assisted home dialysis inappropriate or unsafe?
[[Page 38850]]
What safeguards should CMS consider to mitigate risks of
overutilization or inappropriate use of staff-assisted home dialysis
services, while preserving appropriate access for beneficiaries?
How should such staff-assisted dialysis payments be
structured within the ESRD PPS to support initiation and retention?
e. Payment Alignment, Incentives Within the ESRD PPS and ESRD PPS Cost
Report
Interested parties have identified structural payment issues that
may unintentionally favor in-center dialysis, including capital
investment requirements and differential procedure reimbursement.
We seek comment on whether the following policies, if implemented,
would meaningfully increase home dialysis utilization:
(1) ESRD PPS Payment Structure
Whether CMS should consider adjustments to the ESRD PPS
base rate or related payment components under Sec. 413.220 to better
recognize infrastructure and support costs associated with home
dialysis programs.
Whether CMS should consider a redistribution within the
ESRD PPS base rate structure under Sec. 413.220 to facilitate home
dialysis uptake.
Whether CMS should consider a refinement of case-mix
adjustments under Sec. 413.235 to facilitate home dialysis uptake.
Whether CMS should consider establishing a temporary add-
on payment adjustment for beneficiaries initiating home dialysis, such
as during the first 90 or 120 days of treatment, and how such a payment
should be structured to ensure clinical appropriateness.
Whether CMS should consider restructuring the ESRD PPS
onset add-on payment adjustment under Sec. 413.236(a)(2) to
incorporate an education component tied to successful home dialysis
initiation.
Whether CMS should consider additional payment for
supportive services, such as remote monitoring or enhanced clinical
oversight, consistent with statutory authority.
What costs for ESRD facilities are higher for home
dialysis which are not currently accounted for by ESRD PPS payment
mechanisms?
What costs for ESRD beneficiaries are higher for home
dialysis compared to in-center modalities?
(2) Home Dialysis Training Add-On Payment Adjustment
Whether CMS should revise the home dialysis training add-
on payment adjustment under Sec. 413.235(c) to reflect actual hours
required for training.
Whether modifications to the home dialysis training add-on
payment adjustment under Sec. 413.178(b) would materially affect
uptake.
Whether payment for CPT[supreg] code 90989 should be
updated to reflect current inflation and training intensity.
Whether CMS should redefine a ``completed course'' of
training to reflect a patient's ability to complete a full month of
home dialysis treatments independently, with the date of service
defined as the last treatment date of the first full month of
independent home dialysis.
Whether CMS should increase payment for CPT[supreg] code
90993 to better reflect the resources associated with partial or
interrupted training.
Whether revised training payments would influence incident
home dialysis uptake within the first 60 days of treatment.
(3) ESRD PPS Onset Adjustment
Whether CMS should consider restructuring the ESRD PPS
onset add-on payment adjustment under Sec. 413.236(a)(2) to
incorporate a modality education component.
Whether CMS should consider if the onset add-on payment
should be divided into a care portion and an education portion.
Whether CMS should consider if a potential education
portion of the onset adjustment should be paid in a later month
contingent upon successful home dialysis utilization for at least one
month without assistance.
Whether CMS should consider if restructuring the onset
add-on adjustment could increase incident home dialysis selection and
retention beyond 60 days.
(4) ESRD PPS QIP Measures and Conditions for Coverage Requirements
Whether CMS should consider enhanced public reporting of
facility-level home dialysis rates prior to any modifications to QIP
scoring methodologies to emphasize home dialysis utilization or
improvement.
Whether CMS should consider a home dialysis performance-
based payment adjustment under the ESRD Quality Incentive Program (QIP)
established under section 1881(h) of the Act.
Whether CMS should consider clarifications to CfC
requirements related to modality education under Sec. 494.70. What
specific changes would be needed to better clarify the information
related to treatment modality, treatment setting, and services not
offered by the facility that would support increased use of home
dialysis?
Whether factors such as current payment policy,
operational practices, or other considerations may limit the use of
alternative home dialysis training approaches (for example, group-based
or hybrid models), and whether CMS should consider changes to support
greater flexibility while maintaining individualized, patient-centered
training and ensuring patient safety.
Whether CMS should consider technical skills and patient
evaluation to expand the types of licensed dialysis staff eligible to
conduct training while maintaining patient safety.
To what extent are workforce shortages limiting incident
home dialysis uptake?
What additional ESRD PPS modifications would most directly
influence incident modality selection?
Whether CMS should CMS encourages submission of
quantitative analyses, actuarial estimates, and operational
assessments.
What modifications should CMS consider making to the CfCs
to align with currently permissible certification action or
determination by creating within the CfCs a designation of a ``home-
only'' ESRD facility which would not provide any in-center dialysis? Is
there evidence and data that under the current certification action
that such a designation requires less physical infrastructure to
provide care?
What would be the impact of updating the CfCs to create a
designation of a ``self-dialysis-only'' ESRD facility which would not
provide any in-center dialysis other than self-dialysis (patients
perform dialysis on themselves in-center)? Would such a designation
require less staffing to provide care? What other CfC requirements
would be necessary or need to be modified for this type of facility to
ensure patient health and safety?
(5) ESRD Cost Report Modifications
Consideration as to whether modifications to the ESRD
freestanding and hospital-based cost reports to capture more granular
home dialysis costs will assist in aligning payment with value and
encourage ESRD facilities to promote home dialysis modalities.
Whether CMS should consider collecting separate data on
travel costs
[[Page 38851]]
for ESRD facility staff for home HD visits.
Whether CMS should consider collecting more precise data
on nursing hours per home training session.
Whether CMS should collect data on hidden costs such as
internet connectivity, equipment installation, shipping, and remote
monitoring devices.
Whether the advantages of collecting additional data on
the ESRD cost reports would outweigh the administrative burdensome.
(6) Information-Sharing and Cross Component Coordination With
Accountable Care Organization and Medicare Shared Savings Program
CMS recognizes that certain Medicare FFS beneficiaries
with advanced chronic kidney disease (CKD) or ESRD may be aligned with
Accountable Care Organizations (ACOs) under the Medicare Shared Savings
Program (Shared Savings Program) or CMS Innovation Center models, like
the Kidney Care Choices (KCC) Model, that incorporate accountability
for Medicare Parts A and B spending and quality. We seek comments to
inform potential future rulemakings on whether care coordination
structures, data sharing practices, or operational alignment between
ESRD facilities and ACO participants could support clinically
appropriate modality education around home dialysis and treatment
planning at or prior to dialysis initiation, while preserving patient
choice and avoiding duplicative or conflicting incentives across
programs.
f. Home Dialysis Machine Installation. Home Modifications and Supply
Chain Issues
We are interested in whether changes in home dialysis technology
since implementation of the ESRD PPS in 2011 have affected equipment
installation requirements, as well as issues related to the delivery
and storage of supplies.
We seek comment on the following:
Has installation of home dialysis machines since 2011
changed significantly?
Does the cost of any of the post-2011 required additional
small home modifications affect patient's willingness to initiate home
dialysis?
Whether CMS should consider engaging with the home
dialysis industry to improve supply ordering and delivery processes.
Do excess supply delivery and storage requirements deter
patients from selecting home dialysis?
Whether CMS should consider providing time-limited
additional payments to ESRD facilities that establish and implement in-
center self-dialysis training and support programs, including patient
education, supervised self-cannulation, and progressive independence in
treatment tasks, designed to prepare beneficiaries to independently
perform dialysis and transition to home dialysis modalities.
g. Incentives for In-Center Self-Dialysis Programs
This includes consideration of whether temporary payment
adjustments could support ESRD facilities developing in-center self-
dialysis programs as transitional pathways to home dialysis.
We seek comment on the following:
Whether CMS should consider, to the extent permitted under
section 1881 of the Act and existing ESRD PPS authority, providing
time-limited additional payments to ESRD facilities that establish and
implement in-center self-dialysis training and support programs
designed to prepare beneficiaries to independently perform dialysis and
transition to home dialysis modalities.
Whether an in-center self-dialysis program would
measurably increase transition to home dialysis among incident
beneficiaries.
What staff qualifications and supervision should be
required within the in-center facility during this time of transitional
dialysis when the patient is progressing toward self-dialysis?
How should CfC requirements be structured to better
support patients in successfully transitioning to home dialysis? What
requirements could be implemented to assist patients in reaching this
goal?
h. Increasing the Number of Facilities Offering Home Dialysis
Approximately half of ESRD facilities offer home dialysis programs.
We seek comment on the following:
What levers CMS can employ to encourage additional
facilities to establish home dialysis programs?
To what extent CMS should consider infrastructure payments
or time-limited adjustments to potentially increase geographic access.
Are there changes that could be made to the requirements
for home dialysis monitoring and/or support services that would reduce
burden on dialysis facilities without negatively impacting patient
health and safety?
i. Payment Incentives Within Physician Fee Schedule (PFS) and OPPS:
Access Placement, Referral and for Physician Participation in Home
Dialysis Training
This includes consideration of collaborative efforts within the PFS
and OPPS to revise payment structures to recognize physician time and
effort associated with referral to home dialysis and participation in
home dialysis training.
We seek comment on the following:
Whether CMS should test equalizing payments between PD
catheter placement and vascular access placement to remove potential
financial disincentives and whether demonstration authority should be
used to test such alignment.
Whether CMS should establish an additional payment
recognizing the time physicians spend referring patients to home
dialysis and coordinating training.
Whether payment should be provided to physicians who
actively participate in home dialysis training and care planning.
Whether CMS should provide payment recognition for
physicians supporting in-center self-dialysis programs that may serve
as a transition pathway to home dialysis.
j. Monthly Capitation Payment (MCP) Structure for Home Dialysis
Patients
Consideration of collaborative efforts within the PFS to revise the
MCP payment structure for physicians treating home dialysis patients.
We seek comment on the following:
Whether CMS should consider payment variations for home
dialysis patients under the MCP framework. Should we establish
additional coding and payment for home dialysis MCP services for
different numbers of visits?
Whether MCP payment amounts for home dialysis patients
should be higher than in-center MCP payments to reflect increased care
coordination and oversight demands.
Acknowledging that section 1881(b)(3)(B)(ii)(I) of the Act
requires that patients receiving home dialysis have face-to-face
(without the use of telehealth) clinical assessments with the physician
at least monthly during the initial 3 months, how would greater
telehealth flexibility for home dialysis patients improve retention and
quality of care, including infection rates, within the first 60 days?
k. Skilled Nursing Facilities and Transitional Settings
Patients often discontinue home dialysis following hospitalization
or skilled nursing facility (SNF) admission.
[[Page 38852]]
We seek comment on the following:
What policies would encourage continued use of PD in SNFs
when clinically appropriate?
Whether CMS should consider payment adjustments or
demonstrations to incentivize SNFs to support home dialysis modalities.
What additional health and safety requirements should be
considered for ESRD facilities or nursing facilities to support
continuity of modalities and ensure the safe delivery of home dialysis
in this setting?
What recommendations would improve the transition of
dialysis patients between different care settings (hospital,
institutional, and home)?
Are ESRD facilities receiving electronic admission,
transfer, and discharge notices as patients transition through
hospitals so that they can monitor and track their patients? If not,
why?
l. Measuring Success
As noted previously, we are considering whether to focus on
incident home dialysis initiation with a minimum duration threshold.
We seek comment on the following:
Is a 60-day continuation threshold appropriate to ensure
sustained initiation?
To what extent CMS should consider a longer duration
threshold for quality measurement purposes.
How should CMS account for clinical contraindications or
patient choice in assessing uptake?
C. Request for Information To Advance Palliative Care for Dialysis
Patients
1. Background
a. Statutory and Regulatory Framework
Section 1881 of the Act establishes Medicare coverage and payment
for renal dialysis services furnished to individuals with ESRD. CMS
implemented the ESRD PPS beginning January 1, 2011 (75 FR 49030), which
provides a bundled, per-treatment payment for renal dialysis services,
including certain drugs, biologicals, laboratory services, and
supplies.
The hospice benefit, established under section 1814(i) of the Act,
provides a per diem payment to hospice providers for all items and
services related to the palliation and management of the terminal
illness and related conditions. Under current policy, services related
to the terminal condition are not separately payable outside the
hospice benefit.
b. ESRD PPS and Current Payment Policy
Under the ESRD PPS, Medicare pays a single bundled amount for
dialysis treatments furnished in-center or at home. This payment is
intended to cover all renal dialysis services as defined in regulation
at Sec. 413.171.
Dialysis is life-sustaining but not curative. While it may be
furnished consistent with palliative goals of care, current Medicare
policy does not distinguish between maintenance dialysis and dialysis
furnished in a comfort-focused context. As a result, payment policy
does not explicitly account for palliative care objectives within ESRD
treatment.
c. Interaction With the Hospice Benefit
When ESRD is the terminal condition, hospice providers are
responsible for furnishing dialysis services within the hospice per
diem payment. Because dialysis is a high-cost service, it is rarely
furnished under the hospice benefit in practice.\92\ As a result,
beneficiaries with ESRD often delay or forgo hospice services to
continue receiving dialysis under the ESRD PPS.
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\92\ Schell JO, Johnson DS. Challenges with Providing Hospice
Care for Patients Undergoing Long-Term Dialysis. Clin J Am Soc
Nephrol. 2021 Mar 8;16(3):473-475. doi: 10.2215/CJN.10710720. Epub
2020 Oct 9. PMID: 33037019; PMCID: PMC8011021.
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MedPAC reported relatively low rates of hospice utilization among
ESRD beneficiaries and noted that dialysis costs may represent a
substantial share of hospice payments if furnished within the hospice
benefit.\93\ MedPAC also highlighted the potential for improved care
coordination and reduced end-of-life spending when beneficiaries
receive hospice services.
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\93\ https://www.medpac.gov/wp-content/uploads/2025/09/Tab-F-Hospice-ESRD-cancer-Sept-2025-SEC.pdf.
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d. Home Dialysis and Structural Barriers
Current policy requires that home dialysis be performed
independently by the beneficiary or with the assistance of an unpaid
caregiver. Medicare does not routinely pay for ongoing staff assistance
in the home for dialysis treatments. This may create access barriers
for beneficiaries with functional impairments, frailty, or lack of
caregiver support.
These barriers may be particularly relevant for beneficiaries with
palliative care goals who may benefit from receiving dialysis in a
home-based, lower-burden setting.
e. Policy Considerations and Prior Rulemaking Context
In prior ESRD PPS rulemaking (see, for example, 84 FR 60648 through
60652), CMS emphasized goals of promoting home dialysis, improving
patient experience, and supporting high-quality, patient-centered care.
CMS also sought to maintain the integrity of prospective payment
systems and avoid duplicative payment.
Consistent with these goals, CMS is exploring whether refinements
to payment policy could improve access to palliative dialysis while
maintaining the following: ESRD PPS bundled payment integrity; Hospice
per diem integrity; and appropriate safeguards against duplicative
payment and program integrity risks.
3. Request for Information
We are soliciting public comment on the following topics:
a. Definition of Palliative Dialysis
How should CMS define ``palliative dialysis'' for purposes
of Medicare policy?
What clinical characteristics distinguish palliative
dialysis from maintenance dialysis?
Are there specific modalities or treatment patterns that
are more consistent with palliative care?
b. Beneficiary Eligibility and Targeting
What objective and auditable criteria should be used to
identify beneficiaries appropriate for palliative dialysis?
Should eligibility be limited based on indicators such as
serious illness, frailty, functional impairment, or limited prognosis?
What role should existing constructs (for example,
homebound status or hospice eligibility) play in defining the target
population?
Should CMS consider hybrid eligibility approaches that
combine functional and prognostic criteria?
c. Care Delivery and Settings
What are the primary barriers to delivering palliative
dialysis in home or community-based settings?
Could access to staff-assisted home dialysis improve
beneficiary experience for those receiving palliative dialysis?
What services are necessary to support safe and effective
home-based dialysis (for example, equipment setup, cannulation
assistance, and monitoring)?
How should CMS delineate responsibilities across ESRD
facilities, home health agencies, and hospice providers? CMS also seeks
comment on
[[Page 38853]]
the potential future interaction between hospice and home health
services for beneficiaries receiving dialysis.
To what extent do current Medicare coverage and payment
policies affect the ability of beneficiaries to receive home health and
hospice services concurrently for different conditions, and how might
these policies impact access to and coordination of dialysis services,
including in the home setting?
What operational or payment-related challenges do
providers face in coordinating services across ESRD facilities, hospice
providers, and home health agencies, and are there opportunities to
improve alignment while maintaining program integrity and patient
protections? CMS also seeks comment on the coordination of renal
dialysis services with hospice care, including in the context of
palliative dialysis:
What are the operational, clinical, and financial barriers
to coordination between ESRD facilities and hospice providers in
furnishing palliative dialysis?
What factors affect the feasibility of integrating hospice
and dialysis services, including care planning, payment, and provider
roles?
Are there aspects of the ESRD CfCs or Hospice Conditions
of Participation (CoPs) that may create challenges for coordination or
alignment of patient goals for care?
What best practices or models exist for integrating
dialysis and hospice services while supporting patient-centered, goal-
concordant care?
What considerations should CMS take regarding staff
training, care planning, and interdisciplinary coordination when
dialysis is furnished in conjunction with hospice services?
d. Payment Policy Considerations
To what extent are palliative renal dialysis services
currently encompassed within the ESRD PPS bundled payment?
Are there services or supports that are not adequately
reflected in current payment?
What approaches could support palliative dialysis without
creating duplicative payment across the ESRD PPS, Hospice PPS, and Home
Health PPS?
Should CMS consider time-limited or narrowly targeted
payment adjustments?
e. Program Integrity and Safeguards
What safeguards are necessary to ensure appropriate
targeting and prevent overutilization?
How should CMS ensure that any policy remains focused on
comfort-oriented care?
What documentation, certification, or care planning
requirements would be appropriate?
f. Potential Models and Policy Approaches
We are interested in feedback on potential approaches, including
the following: Targeted refinements within the ESRD PPS; time-limited
supports for home-based dialysis; Models testing staff-assisted home
dialysis for narrowly defined populations; approaches to improve
coordination between ESRD care and hospice services while preserving
hospice bundle integrity; and model testing under section 1115A of the
Act (CMS Innovation Center), including demonstrations designed to
assess quality improvement and cost impacts.
D. Requests for Information on Potential Payment Changes To Support
Alternative Dialysis Schedules
1. Background
Section 1881(b)(14)(C) of the Social Security Act (the Act)
authorizes payment under the ESRD PPS based on renal dialysis services
furnished during a week, or month, or such other appropriate unit of
payment as the Secretary specifies. When we implemented the ESRD PPS
beginning January 1, 2011, we established payment on a per-treatment
basis (75 FR 49064). In developing that policy, we considered other
units of payment, including a monthly ESRD PPS, which would provide
ESRD facilities more flexibility in alternative treatment requirements,
such as increased frequency nocturnal dialysis, home HD using compact
portable dialysis machines, and shorter but more frequent dialysis
services. However, given the difficulties of implementing a monthly
ESRD PPS during the transition period in which a per-treatment
methodology applied, we chose to continue the per-treatment payment
methodology that had been in effect under the composite rate system
prior to the ESRD PPS (75 FR 49064). That transition period concluded
on December 31, 2013.
In the CY 2011 ESRD PPS final rule, we noted that MedPAC
recommended that we reconsider the unit of payment once a strengthened
dialysis quality monitoring system is implemented, to ensure that
quality of care does not decline (75 FR 49064). In its comments on the
CY 2011 ESRD PPS proposed rule, MedPAC noted that a larger unit of
payment would be consistent with several aspects of dialysis care,
pointing out that a weekly unit of payment corresponds to the typical
weekly interval for PD. MedPAC also noted that Medicare pays
nephrologists a monthly capitated payment for caring for dialysis
beneficiaries (75 FR 49064). Since that time, the ESRD Quality
Incentive Program (QIP) and the Five-Star Quality Rating System for
dialysis facilities have been established and are well-functioning,
addressing the quality monitoring concern MedPAC identified.
2. Current ESRD PPS Payment Methodology and Considerations for
Potential Changes to the ESRD PPS Unit of Payment
Although the ESRD PPS unit of payment is a treatment, renal
dialysis services are billed monthly. In addition, the ESRD PPS
currently makes a daily rate payment, which is effectively a prorated
monthly payment, for certain renal dialysis services. Specifically,
home Continuous Ambulatory PD (CAPD) and Continuous Cycling PD (CCPD)
are paid daily for the number of PD days billed in the month, following
the payment approach for this modality that has been in place since the
inception of the composite rate payment system in 1983. For home
patients undergoing PD, the number of days of PD, regardless of the
number of dialysate exchanges performed each day, is converted to home
HD-equivalent sessions by dividing the number of days of PD by 7 and
multiplying the result by 3 (see Medicare Benefit Policy Manual,
Chapter 11). For example, a patient receiving 30 days of home CAPD
would be paid an amount equal to 12.857 home HD-equivalent treatments
(30 / 7 x 3 = 12.857). This approach creates a per-treatment amount
that is paid for each day of PD treatment and that complies with the
monthly treatment payment limit of 13 treatments in a 30-day month and
14 treatments in a 31-day month (81 FR 42809).
This existing methodology demonstrates that a daily rate structure
is operationally feasible within the current ESRD PPS framework and has
been successfully administered by MACs for over four decades. When
thinking about alternative units of payment for the ESRD PPS, a daily
payment rate is effectively the same as a prorated monthly payment
rate, which functions identically to a monthly payment rate in the case
that an ESRD facility bills for a full month, but also offers
additional flexibility. Importantly, the daily rate payment allows for
more flexible payment for renal dialysis services during service
interruptions such as hospitalizations. A daily rate payment could also
provide flexibility when a patient temporarily receives
[[Page 38854]]
dialysis at a different ESRD facility than their usual ESRD facility.
In recent public comments, interested parties have further noted
that some renal dialysis services do not directly correspond to a
dialysis treatment. For example, oral phosphate binders, which were
incorporated into the ESRD PPS bundled payment beginning January 1,
2025, through the TDAPA, and which we are proposing to incorporate into
the ESRD PPS base rate beginning in CY 2027, are typically taken daily
with meals and often follow irregular dosing schedules. Other oral
drugs, as well as clinical interventions such as patient education,
access management, and nutrition management, may occur outside the
boundaries of a dialysis session. Furthermore, alternative treatment
options--such as in-center self-dialysis, nocturnal dialysis, and more
frequent home HD, or more conservative approaches for renal care which
may not focus on dialysis--may involve treatment schedules that align
more naturally with a monthly unit of payment than with the current
per-treatment payment structure.
These considerations lead us to examine whether a change to the
unit of payment for the ESRD PPS could more appropriately recognize
patient-specific needs and better align payment with overall resource
use, while continuing to advance the principles of prospective payment
and the goals of Executive Order 13879, Advancing American Kidney
Health. A monthly (or daily rate) unit of payment could offer
meaningful administrative simplification for ESRD facilities. Under the
current system, facilities must obtain and document additional medical
justification when a patient's clinical needs require more than 3
treatments per week. These requirements impose administrative burden on
facilities of all sizes, and may be particularly challenging for
smaller, independent providers with limited billing infrastructure. A
daily rate structure would eliminate the need for the 3/7 conversion,
reduce the complexity of tracking monthly treatment limits (13 or 14
per month depending on month length), and simplify billing for patients
who receive care at multiple facilities or experience service
interruptions. Facilities would bill for actual days of service
provided, creating a more direct and transparent relationship between
care delivery and payment.
Beyond administrative simplification, a daily rate structure could
better support patient-centered care by reducing financial
disincentives associated with alternative dialysis schedules. Under the
current per-treatment payment structure, the ESRD PPS was designed
around a conventional thrice-weekly home HD schedule. As noted in the
CY 2011 ESRD PPS final rule, CMS recognized that a monthly unit of
payment would provide ESRD facilities with more flexibility in
alternative treatment requirements, such as increased frequency
nocturnal dialysis, home HD using compact portable dialysis machines,
and shorter but more frequent dialysis services (75 FR 49064). A daily
rate structure could reduce the rigidity of the current payment
framework and better support individualized treatment plans developed
collaboratively by patients and their nephrologists, without creating
financial incentives to adhere to a fixed treatment schedule when a
patient's clinical needs call for a different approach. For patients
who would benefit from more frequent dialysis--such as those with fluid
management challenges, cardiovascular comorbidities, or a preference
for shorter, more frequent sessions--a daily payment structure could
remove a structural barrier to accessing those options.
At the same time, we recognize that such a change would represent a
significant operational shift for ESRD facilities, MACs, and CMS
systems, and would require careful consideration of how to maintain
budget neutrality, preserve payment equity across modalities, protect
beneficiary access to care, and ensure that payment incentives continue
to support high-quality, appropriate care. We are mindful that any
change to the unit of payment must be designed to ensure that patients
receive all medically necessary services and that providers are not
inadvertently incentivized to reduce the frequency or intensity of
care. We seek public input on how a daily payment structure could be
designed and monitored to achieve these goals.
4. Request for Information
We are soliciting public comment on the potential advantages,
challenges, and operational considerations associated with changing the
ESRD PPS unit of payment from a per-treatment to a monthly (daily rate)
structure. We are not proposing any specific changes; rather, we are
seeking information to inform potential future rulemaking.
Specifically, we request comments on the following questions:
Would it be appropriate for the ESRD PPS to adopt a daily
payment rate following the methodology currently applied for home CAPD
and CCPD (that is, a daily rate equal to three-sevenths (3/7) of the
per-treatment base rate)? What are the advantages and disadvantages of
this approach compared to the current per-treatment payment structure?
Should a daily rate apply to all dialysis modalities, or
are there specific modalities or circumstances for which we should
consider a hybrid approach? If we should consider a hybrid approach,
please explain why and describe how such an approach should be
structured.
What specific administrative burden associated with the
current per-treatment payment structure would be reduced or eliminated
under a daily rate? Conversely, what new administrative requirements
might a daily rate introduce, and how could those be minimized? We are
particularly interested in the perspectives of smaller, independent
ESRD facilities.
To what extent would a daily payment rate reduce barriers
to alternative dialysis schedules, such as nocturnal dialysis, short
daily home HD, or more frequent home HD? Are there specific treatment
modalities or patient populations for which a daily rate would most
meaningfully expand access to individualized care?
How would a daily payment structure affect patients who
receive care at multiple facilities or experience interruptions in
service during a month? What billing and claims processing safeguards
would be needed to prevent duplicate payment and ensure accurate
reimbursement when a patient transfers between facilities?
How should the daily rate be calibrated to maintain budget
neutrality while accounting for differences in resource intensity
between home HD and PD? Are there specific cost components or patient
populations that would require special consideration in establishing a
budget-neutral daily rate?
Should CMS consider changes to the patient-level
adjustment factors under the ESRD PPS to account for conditions
associated with differences in the number of medically necessary
treatments each month? If so, which patient conditions are the primary
drivers of patient-level cost variation, and how should those
conditions be reflected in a daily payment framework?
What processes or frameworks could CMS consider to
appropriately recognize changes in patient-level cost variation that
may occur over time due to developments in clinical practice such as
the introduction of new drugs, technologies, or other therapies that
would be considered renal dialysis services?
[[Page 38855]]
What, if any changes should CMS consider making to the
ESRD PPS outlier policy to account for unusual variations in the type
or amount of medically necessary care in the context of a monthly or
daily payment rate? How should the outlier threshold and payment cap be
structured under a daily payment system? We note that under the current
payment system for CAPD and CCPD, we calculate outlier spending per
home HD-equivalent treatment, which is compared to the standard outlier
threshold values to determine the applicable outlier amount. We note
that we could apply a similar methodology for daily rate outlier
calculations in the future, or we could consider changes to our
methodology.
How should CMS design quality monitoring and oversight
mechanisms to ensure that a shift to a daily payment rate would not
create incentives for providers to reduce the frequency, duration, or
intensity of dialysis services below what is clinically appropriate for
individual patients? What quality measures, data reporting
requirements, or audit mechanisms would be most effective in detecting
and deterring underutilization of care under a daily payment structure?
We seek comment on whether the current quality monitoring
infrastructure, including the ESRD QIP and the Five-Star Quality Rating
System, is sufficient to support a transition to a daily payment rate,
and whether any enhancements to those programs would be needed.
What steps could CMS take toward advancing value-based
purchasing in ESRD and AKI care? How does the provision of high-quality
ESRD and AKI care for Medicare beneficiaries impact costs for ESRD
facilities providing renal dialysis services and how does it impact
beneficiaries' total cost of care across settings?
Which patient populations would be best served by a daily
payment rate? Would any patient populations--such as pediatric
patients, patients with AKI, or patients receiving palliative
dialysis--be better served by maintaining a per-treatment payment
amount? If so, please explain why and describe how CMS should structure
payment for those populations.
What necessary changes, if any, would ESRD facilities need
to make to their billing systems, internal tracking processes, and
operational workflows to accommodate a change to the unit of payment?
How long do ESRD facilities anticipate they would need to implement
these changes? Are there specific MAC system changes or claims
processing edits that would be required?
How does the current ESRD PPS unit of payment, and
conversely how would a daily unit of payment, compare to payment
structures that other payors use to pay for renal dialysis services?
VI. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501-
3520, we are required to provide 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, 44 U.S.C. 3506(c)(2)(A) requires that we
solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
A. ESRD QIP--Wage Estimates
We refer readers to the CY 2026 ESRD PPS final rule for information
regarding previously used wage estimates and resulting information
collection burden calculations used in this proposed rule (90 FR 53121
through 53122). To derive wage estimates, we used data from the United
States Bureau of Labor Statistics' May 2025 National Occupational
Employment and Wage Estimates for Medical Records 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. When
this analysis was conducted, the most recently available median hourly
wage of a Medical Records Specialist (SOC 29-2072) was $24.59 per
hour.\94\ 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, we
estimated an hourly labor cost of $49.18 as the basis of the wage
estimates for all collections of information calculations in the ESRD
QIP.
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\94\ Bureau of Labor Statistics. (May 2026). U.S. Department of
Labor, Occupational Outlook Handbook, Medical Records Specialists.
Available at https://www.bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm.
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We used this wage estimate, along with updated facility and patient
counts, to update our estimates for the total information collection
burden in the ESRD QIP for PY 2029. We will update the information
collection burden to reflect updated facility and patient counts in the
CY 2027 ESRD PPS final rule.
B. Estimated Burden Associated With the Data Validation Requirements
for PY 2029
We refer readers to the CY 2026 ESRD PPS final rule for information
regarding the estimated burden associated with data validation
requirements for PY 2028 (90 FR 53122).
1. Estimated Burden Associated With EQRS Data Validation Requirements
for PY 2029
In this proposed rule, using the most recently available data, we
estimate that the aggregate cost of the EQRS data validation for PY
2029 will be approximately $36,885 (750 hours x $49.18), or an annual
total of approximately $122.95 ($36,885/300 facilities) per facility in
the sample. We will update the aggregate cost of EQRS data validation
to reflect updated wage estimates in the CY 2027 ESRD PPS final rule.
The burden cost increase associated with these requirements will be
submitted to OMB in the revised information collection request (OMB
control number 0938-1340).
2. Estimated Burden Associated With NHSN Data Validation Requirements
for PY 2029
In this proposed rule, we estimate that the aggregate cost of the
NHSN data validation for PY 2029 will be approximately $73,770 (1,500
hours x $49.18), or a total of approximately $245.90 ($73,770/300
facilities) per facility in the sample. We will update the aggregate
cost of NHSN data validation to reflect updated wage estimates in the
CY 2027 ESRD PPS final rule. While the burden hours estimate will not
change, the burden cost updates associated with these requirements will
be submitted to OMB as a revision of the information collection request
currently approved under OMB control number 0938-1340.
[[Page 38856]]
C. Estimated EQRS Reporting Requirements for PY 2029
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 will 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 2026 ESRD PPS
final rule, we estimated that the burden associated with EQRS reporting
requirements for the PY 2028 ESRD QIP was approximately $125 million
for approximately 2,588,770 total burden hours (90 FR 53122).
We are proposing measure updates in this proposed rule that would
affect the burden associated with EQRS reporting requirements beginning
with PY 2029. We are proposing two measure removals and one measure
adoption that would affect the burden associated with EQRS reporting
requirements beginning with PY 2029. We provide the burden estimate for
PY 2029 in this proposed rule to reflect the impact of these proposals
if finalized and will update the information collection burden to
reflect updated facility and patient counts in the CY 2027 ESRD PPS
final rule. In this 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. There are 109 data elements for
513,475 patients across 7,582 facilities, for a total of 55,968,775
elements across all patients (109 data elements x 513,475 patients). If
the two measure removals and one measure adoption are finalized as
proposed, the total number of data elements would decrease to
49,807,075 data elements based on current patient and facility counts.
At 2.5 minutes per element, the changes would yield approximately 274
hours per facility. Therefore, the PY 2029 burden would be 2,075,295
hours (approximately 274 hours x 7,582 facilities). Using the Medical
Records Specialist wage estimates available at this time, we estimate
that the PY 2029 total burden cost will be approximately $102.1 million
(2,075,295 hours x $49.18). The estimated reduction in burden
associated with the measure updates is described in Table 25.
[GRAPHIC] [TIFF OMITTED] TP26JN26.041
The information collection request currently approved under the OMB
control number 0938-1340 will be revised and submitted to OMB for
approval.
If you comment on these information collections, that is,
reporting, recordkeeping, or third-party disclosure requirements,
please submit your comments electronically as specified in the
ADDRESSES section of this proposed rule.
Comments must be received by the date and time specified in the
DATES section of this rule.
VII. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
VIII. Regulatory Impact Analysis
A. Statement of Need
1. ESRD PPS
On January 1, 2011, we implemented the ESRD PPS, a case-mix
adjusted, bundled PPS for renal dialysis services furnished by ESRD
facilities as required by section 1881(b)(14) of the 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 ESRDB market basket percentage
increase, reduced by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act. This rule proposes routine updates to
the payment rate for renal dialysis services furnished by ESRD
facilities and proposes to rebase and revise the ESRDB market basket
and labor-related share. This rule also proposes policy changes to the
ESRD PPS for CY 2027, including updates to our ESRD PPS wage index,
outlier threshold, TPNIES offset amount, and post-TDAPA add-on payment
adjustment amounts to reflect the latest available data for
Korsuva[supreg], DefenCath[supreg], and Vafseo[supreg]. We are also
[[Page 38857]]
proposing changes to increase the ESRD PPS base rate to account for the
addition of phosphate binders into the ESRD PPS bundled payment,
changes to payment for pediatric ESRD patients, changes to the LVPA,
changes to the home and self-dialysis training add-on, and changes to
our ASP policy for the TDAPA and post-TDAPA payment adjustment. Failure
to publish this proposed rule would result in ESRD facilities not
receiving appropriate payments in CY 2027 for renal dialysis services
furnished to ESRD beneficiaries.
2. AKI
This rule proposes updates to the payment rate for renal dialysis
services furnished by ESRD facilities to individuals with AKI. Failure
to publish this proposed rule would result in ESRD facilities not
receiving appropriate payments in CY 2027 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 2
percent if the facility does not satisfy the requirements of the ESRD
QIP for that year. This rule proposes updates for the ESRD QIP, which
would replace the Hypercalcemia reporting measure with the Facility
Level Percentage of Chronic Hyperphosphatemia clinical measure. This
rule also proposes updates to the NHSN BSI clinical measure.
Additionally, this rule proposes to remove the MedRec reporting measure
and the COVID-19 Vaccination Coverage Among HCP reporting measure from
the ESRD QIP measure set beginning with PY 2029.
4. Requests for Information (RFIs) on Advancing Dialysis Care
This proposed rule includes several RFIs related to potential
policies to (1) increase home dialysis utilization among incident ESRD
PPS beneficiaries, (2) improve access to palliative care for ESRD
beneficiaries, and (3) promoting efficiency in dialysis service
delivery by reevaluating the unit of payment under the ESRD PPS and AKI
dialysis payment system. This section constitutes RFIs only. CMS is not
proposing specific policy changes related to the RFIs at this time.
B. Overall Impact Analysis
We have examined the impacts of this rule as required by Executive
Order 12866, ``Regulatory Planning and Review''; Executive Order 13132,
``Federalism''; Executive Order 13563, ``Improving Regulation and
Regulatory Review''; Executive Order 14192, ``Unleashing Prosperity
Through Deregulation''; the Regulatory Flexibility Act (RFA) (Pub. L.
96-354); section 1102(b) of the Social Security Act; and section 202 of
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; and distributive
impacts). Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as any regulatory action that is likely to result
in a rule that may: (1) have an annual effect on the economy of $100
million or more 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, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, or the President's priorities.
A regulatory impact analysis (RIA) must be prepared for a
regulatory action that is significant under section 3(f)(1) of
Executive Order 12866. Based on our analysis, OMB's Office of
Information and Regulatory Affairs (OIRA) has determined this
rulemaking is significant pursuant to section 3(f)(1) of Executive
Order 12866. Accordingly, we have prepared a Regulatory Impact Analysis
that presents, to the best of our ability, the estimated costs and
benefits associated with this rulemaking.
1. ESRD PPS
We estimate that the proposed revisions to the ESRD PPS would
result in an increase of approximately $90 million in ESRD PPS payments
to ESRD facilities in CY 2027. This includes the estimated impact of
the proposed ESRD PPS market basket update of 1.6 percent ($130
million), as well as the estimated changes in payments associated with
several changes that are expected between CYs 2026 and 2027. The net
effect of the offsetting increases and decreases to payments, as
discussed in the following paragraph, results in the estimated $90
million overall increase in ESRD PPS payments to ESRD facilities in CY
2027.
First, as discussed in section II.B.3.b. of this proposed rule, we
estimate that outlier payments in CY 2026 will be approximately 3.0
percent of total ESRD PPS payments. Accordingly, the proposed increases
to the FDL and MAP amounts for CY 2027 are projected to reduce ESRD PPS
payments by approximately 1.9 percent ($150 million). At the same time,
we estimate that approximately $430 million will be paid through the
TDAPA for DefenCath[supreg], Vafseo[supreg], and phosphate binders in
CY 2026. The end of the TDAPA periods for these drugs is projected to
result in a corresponding decrease to CY 2027 payments of $430 million
(5.5 percent), which is offset by the proposed 5.3 percent increase to
the ESRD PPS base rate for phosphate binders and the estimated 2.0
percent increase in payments under the post-TDAPA add-on payment
adjustment in CY 2027. The net difference between estimated CY 2026
TDAPA payments and estimated CY 2027 payments under the post-TDAPA add-
on payment adjustment and the ESRD PPS base rate, including the
proposed incorporation of phosphate binders, is a 1.5 percent increase
in payments to ESRD facilities. In addition, this amount includes, but
is not impacted by, any budget neutral proposals for CY 2027 such as
the routine updates to the ESRD PPS wage index, labor-related share,
and the changes to the LVPA. In addition, for public awareness, we
estimate that the updated CY 2027 post-TDAPA add-on payment adjustments
will total approximately $170 million, an increase from around $34
million in CY 2026. These amounts are included in the estimated $90
million overall increase in ESRD PPS payments for CY 2027, because as
we previously noted the net effect of the offsetting increases and
decreases to payments, as discussed in the prior paragraph, results in
the estimated $90 million overall increase in ESRD PPS payments to ESRD
facilities in CY 2027.
2. AKI
We estimate that the proposed updates to the AKI dialysis payment
rate would result in an increase of approximately $5 million in
Medicare payments to ESRD facilities in CY 2027.
3. ESRD QIP
We estimate that, as a result of our previously finalized policies
and the policies we are proposing in this proposed rule, the updated
ESRD QIP will result in $23.3 million in estimated
[[Page 38858]]
payment reductions across all facilities for PY 2029.
4. RFIs on Advancing Dialysis Care
These RFIs solicit comments on increasing home dialysis uptake,
improving palliative care under the ESRD PPS, and promoting efficiency
in dialysis service delivery. These RFIs do not propose any policy
changes and therefore do not have a direct economic impact under
Executive Order 12866.
5. Summary of Impacts
We estimate that the combined impact of the policies proposed in
this rule on payments for CY 2027 is approximately $90 million based on
the combined estimates of the updated ESRD PPS and the AKI dialysis
payment rates.\95\ We estimate the impacts of the ESRD QIP for PY 2029
to be $102.1 million in information collection burden and $23.3 million
in estimated payment reductions across all facilities.
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\95\ Note: The combined estimated payment increase for the rule
may not align with the sum of ESRD PPS and AKI payment estimates due
to rounding.
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C. Detailed Economic Analysis
In this section, we discuss the anticipated benefits, costs, and
transfers associated with the changes in this proposed rule.
Additionally, we estimate the total regulatory review costs associated
with reading and interpreting this proposed rule.
1. Benefits
Under the proposed CY 2027 ESRD PPS and AKI dialysis payment, ESRD
facilities would continue to receive payment for renal dialysis
services furnished to Medicare beneficiaries under a case-mix adjusted
PPS. We continue to expect that making prospective Medicare payments to
ESRD facilities will enhance the efficiency of the Medicare program.
Additionally, we expect that updating the Medicare ESRD PPS base rate
and rate for AKI dialysis treatments furnished by ESRD facilities by
6.3 percent based on the proposed CY 2027 ESRDB market basket
percentage increase of 2.6 percent reduced by the proposed CY 2027
productivity adjustment of 1.0 percentage point, as well as the
proposed increase to the ESRD PPS base rate from the inclusion of
phosphate binders into the base rate, would improve or maintain
beneficiary access to high quality care by ensuring that payment rates
reflect the best available data on the resources involved in delivering
renal dialysis services. We estimate that overall payments under the
ESRD PPS would increase by 1.1 percent and payments under the AKI
payment system would increase by 6.0 percent because of the proposed
policies in this rule.
2. Costs
a. ESRD PPS and AKI
We do not anticipate the provisions of this proposed 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
proposals in this proposed rule regarding ESRD QIP will create
additional cost or burden to ESRD facilities for PY 2029, we intend to
update the estimated costs associated with the information collection
requirements under the ESRD QIP in the CY 2027 ESRD PPS final rule,
with updated estimates of the total number of ESRD facilities, the
total number of patients nationally, and a refined estimate of the
number of hours needed to complete data entry for EQRS reporting.
3. Transfers
We estimate that the proposed updates to the ESRD PPS and AKI
dialysis payment rates would result in a total increase of
approximately $90 million in Medicare payments to ESRD facilities in CY
2027, which includes the amount associated with the proposed inclusion
of phosphate binders to the base rate, the proposed updates to the
outlier threshold amounts, and proposed updates to the ESRD wage index.
This estimate includes an increase of approximately $5 million in
Medicare payments to ESRD facilities in CY 2027 due to the proposed
updates to the AKI dialysis payment rate, of which approximately 20
percent is increased beneficiary coinsurance payments. We estimate
approximately $70 million in transfers from the Federal Government to
ESRD facilities due to increased Medicare program payments and
approximately $20 million in transfers from beneficiaries to ESRD
facilities due to increased beneficiary coinsurance payments because of
this proposed rule.
4. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this ESRD PPS proposed
rule, we should estimate the cost associated with regulatory review.
Due to the uncertainty involved with accurately quantifying the number
of entities that will review the ESRD PPS proposed rule, we assume that
the total number of unique commenters on last year's ESRD PPS proposed
rule, which was 208 for the CY 2026 ESRD PPS proposed rule, is equal to
the number of individual reviewers of this proposed rule. We
acknowledge that this assumption may understate or overstate the costs
of reviewing this proposed rule. It is possible that not all commenters
reviewed last year's proposed rule in detail, and it is also possible
that some reviewers chose not to comment on the CY 2026 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
proposed rule. We used a similar methodology for calculating the
regulatory review costs in the CY 2026 ESRD PPS proposed and final
rules. We solicit comments on this approach.
We also recognized that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule,
and therefore for the purposes of our estimate we assumed that each
reviewer reads approximately 50 percent of this proposed rule. We seek
comments on this assumption.
Using the BLS OEWS May 2025 National, cross-industry median hourly
wage information for medical and health service managers (SOC 11-9111),
we estimate that the cost of reviewing this rule is $119.10 ($59.55 *
2) per hour, including overhead and fringe benefits \96\ (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
320 minutes (5.33 hours) for the staff to review half of this proposed
rule, which has a total of approximately 80,000 words. For each entity
that reviews the rule, the estimated cost is $634.80 (5.33 hours x
$119.10). Therefore, we estimate that the total cost of reviewing this
regulation is $132,038.40 ($634.80 x 208 reviewers).
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\96\ Calculated by multiplying the mean hourly wage for medical
and health service managers (SOC 11-9111) by 2 to account for
overhead and fringe benefits.
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[[Page 38859]]
5. Impact Statement and Table
a. CY 2027 End-Stage Renal Disease Prospective Payment System
(1) Effects on ESRD Facilities
To understand the impact of the proposed changes affecting Medicare
payments to different categories of ESRD facilities, it is necessary to
compare estimated payments in CY 2026 to estimated payments in CY 2027.
To estimate the impact among various types of ESRD facilities, it is
imperative that the estimates of Medicare payments in CY 2026 and CY
2027 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 proposed rule, we use CY 2025 data from the Medicare Part
A and Part B Common Working Files as of February 13, 2026, as a basis
for Medicare dialysis treatments and payments under the ESRD PPS. We
updated the 2025 claims to 2026 and 2027 using various updates. The
proposed updates to the ESRD PPS base rate are described in section
II.B.4. of this proposed rule. Table 26 shows the impact of the
estimated CY 2027 ESRD PPS payments compared to estimated ESRD PPS
payments to ESRD facilities in CY 2026.
BILLING CODE 4910-13-P
[[Page 38860]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.042
[[Page 38861]]
[GRAPHIC] [TIFF OMITTED] TP26JN26.043
BILLING CODE 4910-13-C
[[Page 38862]]
Column A of the impact table indicates the number of ESRD
facilities for each impact category.
Column B indicates the number of dialysis treatments (in millions).
Column C represents the change in payment to each ESRD facility
type based on the changes to the outlier FDL and MAP amounts proposed
in section II.B.3. of this proposed rule. As we previously discussed,
we estimate a 1.9 percent reduction in ESRD PPS payments to reduce
outlier payments to better align with the 1.0 percent outlier target in
CY 2027. The largest projected decrease would be approximately 4.8
percent for hospital-based ESRD facilities.
Column D represents the changes in simulated payments between CY
2026 and CY 2027 due to routine changes in TDAPA eligibility for
Vafseo[supreg], which will become outlier eligible and be included in
the post-TDAPA add-on payment adjustment calculation beginning January
1, 2027, at the end of its TDAPA period, and DefenCath[supreg], which
is paid for through the TDAPA until July 1, 2026 and is included in the
post-TDAPA add-on payment adjustment calculation for the third and
fourth quarters of CY 2026. DefenCath[supreg] will continue to be
outlier eligible and included in the post-TDAPA add-on payment
adjustment in CY 2027. This column also represents the difference
between simulated TDAPA payments for phosphate binders in CY 2026 and
simulated payments under the ESRD PPS base rate for these drugs in CY
2027.
Column E represents the impact of proposed budget neutral changes
to payments for pediatric ESRD patients, including the proposed
revisions to the pediatric case-mix adjusters as well as the proposed
expansion of the LVPA to treatments for pediatric ESRD patients. Table
26 shows that these proposed policies would increase payments by 2.0
percent to ESRD facilities with 50 percent or more pediatric patients,
while the largest decrease would be 0.3 percent for ESRD facilities
with between 2 and 49 percent pediatric patients.
Column F represents the impact of proposed budget neutral changes
to the LVPA. The largest estimated increase would be 6.7 percent for
ESRD facilities furnishing between 4,000 and 4,999 treatments per year.
Conversely, we estimate that payments to ESRD facilities furnishing
more than 8,000 treatments per year would decrease approximately 1.1
percent.
Column G represents the impact of proposed budget neutral changes
to the home and self-dialysis training add-on, which we estimate would
have distributional impacts of 0.1 percentage point or less for nearly
all categories of ESRD facilities.
Column H represents the effect of the proposed updates to the ESRD
PPS wage index for CY 2027, including the continued application of the
5 percent cap on wage index decreases. This column also shows the
effect of the proposal to update the LRS from 55.2 percent to 63.5
percent in CY 2027. These proposed updates would be budget neutral, so
the total impact of these proposed policy changes is 0.0 percent.
However, we estimate there would be distributional impacts because of
these proposed updates. The largest increase would be to ESRD
facilities in the Pacific region, which would receive 1.8 percent
higher payments because of the updated ESRD PPS wage index and LRS. The
largest decrease would be for ESRD facilities in the East South Central
region, which would receive 1.5 percent lower payments because of the
updated ESRD PPS wage index and LRS.
Column I reflects the overall impact of the policies discussed in
this proposed rule, including the routine updates to the wage index,
outlier thresholds, and post-TDAPA add-on payment adjustment amounts as
well as the proposed inclusion of phosphate binders into the base rate,
the proposed changes to payments for pediatric ESRD patients, the
proposed LVPA changes, and the proposed changes to the home and self-
dialysis training add-on. This column also reflects the proposed ESRD
PPS payment rate update for CY 2027 of 1.6 percent, which reflects the
proposed ESRDB market basket percentage increase for CY 2027 of 2.6
percent reduced by the proposed productivity adjustment of 1.0
percentage point. We expect that overall ESRD facilities would
experience a 1.1 percent increase in estimated Medicare payments in CY
2027. The categories of types of ESRD facilities in the impact table
show impacts ranging from a 5.6 percent decrease in CY 2027 estimated
Medicare payments for regional chains to a 5.6 percent increase in
estimated payments for independent facilities.
(2) Effects on Other Providers
Under the ESRD PPS, Medicare pays ESRD facilities a single bundled
payment for renal dialysis services, which may have been separately
paid to other providers or suppliers (for example, laboratories, and
durable medical equipment suppliers) by Medicare prior to the
implementation of the ESRD PPS. Therefore, in CY 2027, we estimate that
the ESRD PPS will 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 2027 would be approximately $6.2 billion.
This estimate considers a projected decrease in FFS Medicare ESRD
beneficiary enrollment of 1.5 percent in CY 2027.
(4) Effects on Medicare Beneficiaries
Under the ESRD PPS, beneficiaries are responsible for paying 20
percent of the ESRD PPS payment amount. As a result of the projected
1.1 percent overall increase in the CY 2027 ESRD PPS payment amounts,
we estimate that there would be an increase in beneficiary coinsurance
payments of 1.1 percent in CY 2027, which translates to approximately
$20 million.
(5) Alternatives Considered
(a) Proposal To Incorporate Phosphate Binders Into the ESRD PPS Base
Rate
In section II.B.7. of this proposed rule, we discuss our proposal
to incorporate phosphate binders into the ESRD PPS base rate. We
considered, but did not propose, delaying the incorporation of
phosphate binders and continuing TDAPA for another year. We did not
propose to continue TDAPA for a third year after we evaluated
utilization data during the first year of TDAPA and met with several
interested parties through public meetings where they recommended
incorporation this year.
We also considered alternative ways to account for operational
costs when proposing the incorporation of phosphate binders. We
considered basing the increased amount on the $36.41 paid during TDAPA.
We also considered not including an increased amount as some
operational costs associated with furnishing oral drugs is already
included in the ESRD PPS base rate. As discussed in section II.B.7. of
this proposed rule, we are proposing to recalculate the operational
increase based on more recent utilization and price data. We believe
that this proposed policy strikes the appropriate balance by capturing
the operational costs not already included in the ESRD PPS base rate
while accounting for the efficiency of the ESRD PPS.
We note that our proposed base rate modification would cause a
relatively uniform and significant increase in payments across all
provider types, including small entities. As we have previously
discussed, this increase in payments is partially offset by the
projected decrease in TDAPA payments from CY 2026 to CY 2027. For small
entities, including independent ESRD facilities, hospital-based ESRD
facilities,
[[Page 38863]]
and ESRD facilities furnishing fewer than 3,000 treatments per year, we
estimate a net increase of more than 3.0 percent in payments as a
result of these changes. We believe this proposed significant increase
would appropriately align payment with resource use for these small
entities and therefore, we did not consider alternatives to minimize
this proposed increase.
(b) Proposed Modifications to the LVPA
As discussed in section II.B.8. of this proposed rule, we are
proposing to extend the LVPA beyond the current treatment volume
threshold of 4,000 treatments per year in a budget neutral manner. We
considered proposing this policy non-budget neutrally but did not do so
because budget neutrality for this proposal is more consistent with our
well-established methodologies. We also considered alternative tier
structures, for example an 8-tiered structure that includes separate
tiers for facilities that furnish fewer than 1,000 and 1,000 to 2,000
treatments or a 4-tier structure that stops at 6,000 treatments. As
discussed in section II.B.8. of this proposed rule, we proposed the 6-
tier methodology based on our analysis of cost report data and
consideration of responses to comments on our CY 2024 RFI on the LVPA.
We note that this proposed policy would have a positive impact on
smaller ESRD facilities that furnish fewer than 8,000 treatments per
year. For the smallest ESRD facilities that furnish fewer than 3,000
treatments per year, this increase is estimated to be approximately 1.6
percent. For independent and hospital-based ESRD facilities, we
estimate an impact of 0.1 percentage point or less. We believe this
proposed change to the LVPA would appropriately align payment with
resource use for small entities and therefore, we did not consider
alternatives to minimize the impact of the proposed increases for those
categories of small entities that would be significantly impacted.
(c) Proposed Payment for Pediatric ESRD Patients
As discussed in section II.B.9. of this proposed rule, we are
proposing to recalculate the case-mix adjustment factors for pediatric
ESRD patients. We considered, but did not propose, to extend the TPEAPA
rather than establish permanently increased adjustment factors. We
considered this so that we could have more time to collect and evaluate
pediatric specific cost report data. However, as noted in the section,
we believe that we have enough information to establish permanent
adjusters for CY 2027, and our evaluation of cost report data indicates
that the proposed adjusters are appropriate.
For small entities, including independent ESRD facilities,
hospital-based ESRD facilities, and ESRD facilities furnishing fewer
than 3,000 treatments per year, we note that the impact of these
proposed policies is estimated to be 0.2 percentage point or less and
therefore, we did not consider alternatives to mitigate the impact of
this proposed increase on small entities.
(d) Proposed Modifications to the Home and Self-Dialysis Training Add-
On
As discussed in section II.B.10. of this proposed rule, we propose
increasing the home dialysis training add-on amount based on updated
wage data using the methodology established in the CY 2017 ESRD PPS
final rule. We considered, but did not propose, to base this add-on
amount directly on cost report data. We also considered proposing
separate training add-on amounts for HD and PD. As discussed in section
II.B.10. of this proposed rule, we propose the single training add-on
based on the established methodology because it is most consistent with
the established principles of the PPS. Basing payment directly on cost
report data is not something we have historically done, and we
generally maintained payment parity between HD and PD to promote
efficiency.
For small entities, including independent ESRD facilities,
hospital-based ESRD facilities, and ESRD facilities furnishing fewer
than 3,000 treatments per year, we note that the impact of these
proposed policies is estimated to be 0.1 percentage point or less and
therefore, we did not consider alternatives to mitigate the impact of
this proposed change on small entities.
c. Payment for Renal Dialysis Services Furnished to Individuals With
AKI
(1) Effects on ESRD Facilities
To understand the impact of the proposed changes affecting Medicare
payments to different categories of ESRD facilities for renal dialysis
services furnished to individuals with AKI, it is necessary to compare
estimated Medicare payments in CY 2026 to estimated Medicare payments
in CY 2027. 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 2026
and CY 2027 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 proposed rule, we used CY 2025 data from the Medicare Part
A and Part B Common Working Files as of February 13, 2026, as a basis
for Medicare for renal dialysis services furnished to individuals with
AKI. We updated the 2025 claims to 2026 and 2027 using various updates.
The proposed updates to the AKI dialysis payment amount are described
in section III.C. of this proposed rule. Table 27 shows the impact of
the estimated CY 2027 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 2026.
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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 proposal to increase the ESRD PPS base rate to incorporate payment
for phosphate binders, which directly increases the AKI dialysis
payment rate by approximately 5.7 percent. Column D shows the combined
budget neutral impact associated with the proposed pediatric adjustment
and LVPA changes, which do not apply to AKI dialysis payments, but
which reduce the ESRD PPS base rate and by extension the AKI dialysis
payment rate by approximately 1.1 percent. The main driver of this
estimated decrease is the application of the proposed budget neutrality
factor of 0.98898 associated with the proposed changes to the LVPA. As
we noted earlier in this rule, the proposed changes to pediatric
payments result in a budget neutrality factor of 0.99999.
Column E shows the impact from the proposed changes to the home
dialysis training add-on, which have a 0.1 percentage point reduction
to total payments and have small distributional impacts for the small
number of AKI dialysis claims that include home dialysis training
sessions. Column F shows the effect of the proposed CY 2027 wage index
described in section II.B.2. of this proposed rule as well as the
proposed increase to the LRS for CY 2027.
Column G shows the overall impact of all policies discussed in this
proposed rule, including the 1.6 percent increase to the ESRD PPS base
rate, which reflects the proposed ESRDB market basket percentage
increase for CY 2027 of 2.6 percent reduced by the proposed
productivity adjustment of 1.0 percentage point as well as the proposed
incorporation of phosphate binders into the ESRD PPS base rate. We
expect that overall ESRD facilities would experience a 6.0 percent
increase in estimated Medicare payments in CY 2027 for treatment of AKI
beneficiaries. The categories of types of ESRD facilities in the impact
table show impacts ranging from an increase of 1.8 percent for the
Puerto Rico and the US Virgin Islands to an increase of 8.5 percent for
the Pacific region in CY 2027 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 proposing updates to 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 proposed change will have zero impact on other Medicare
providers.
(3) Effects on the Medicare Program
We estimate that approximately $90 million in total payments would
be paid to ESRD facilities in CY 2027 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 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 dialysis 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. Similarly, we considered
proposing applying other facility-level or case-mix adjustment factors,
for
[[Page 38866]]
example the LVPA with the changes proposed in this rule. As with past
adjustments, we ultimately determined that treatment for AKI is
substantially different from treatment for ESRD, and the case-mix and
facility-level adjustments applied to ESRD patients may not be
applicable to AKI patients, and as such, including those policies and
adjustments is inappropriate. We continue to monitor utilization and
trends of items and services furnished to individuals with AKI for
purposes of refining the payment rate in the future. This monitoring
will assist us in developing knowledgeable, data-driven proposals.
d. ESRD QIP
(1) Effects of the PY 2029 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 Total Performance
Score (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 2029 ESRD QIP will apply to the ESRD PPS
payments made to the facility for services furnished in CY 2029,
consistent with our regulations at Sec. 413.177.
For the PY 2029 ESRD QIP, we estimate that, of the 7,582 facilities
(including those not receiving a TPS) enrolled in Medicare,
approximately 45.6 percent or 3,458 of the facilities that have
sufficient data to calculate a TPS would receive a payment reduction
for PY 2029. Among an estimated 3,458 facilities that will receive a
payment reduction, approximately 53.1 percent or 1,835 facilities will
receive the smallest payment reduction of 0.5 percent. Based on our
proposals, the total estimated payment reductions for all the 3,458
facilities expected to receive a payment reduction in PY 2029 will be
approximately $23,324,157. Facilities that do not receive a TPS do not
receive a payment reduction.
Table 28 shows the overall estimated distribution of payment
reductions resulting from the PY 2029 ESRD QIP.
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To estimate whether a facility will receive a payment reduction for
PY 2029, 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 28) in accordance
with the proposals in this proposed rule. Measures used for the
simulation are shown in Table 29.
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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 proposed
policies outlined in section IV.C. of this proposed rule. 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 2029 for each
facility resulting from this proposed rule, we multiplied the total
Medicare payments to the facility during the 1-year period between
January 2024 and December 2024 by the facility's estimated payment
reduction percentage expected under the ESRD QIP, yielding a total
payment reduction amount for each facility.
Table 30 shows the estimated impact of the ESRD QIP payment
reductions to all ESRD facilities for PY 2029. 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 2029 ESRD QIP, the actual
impact of the PY 2029 ESRD QIP may vary significantly from the values
provided here.
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(2) Effects on the Medicare Program
For PY 2029, we estimate that the ESRD QIP will contribute
approximately $23,324,157 in Medicare savings. For comparison, Table 31
shows the payment reductions that we estimate will be applied by the
ESRD QIP from PY 2018 through PY 2029.
[[Page 38869]]
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(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 proposed rule, we are proposing to
replace the Hypercalcemia reporting measure with the Facility Level
Percentage of Chronic Hyperphosphatemia clinical measure beginning with
PY 2029. We considered retaining the Hypercalcemia measure in the ESRD
QIP. However, we believe removal is appropriate because the proposed
Hyperphosphatemia clinical measure captures a related clinical concept
while reducing reporting burden and improving alignment with clinical
care priorities. We believe adoption of the Hyperphosphatemia measure
in its place is appropriate because it addresses an important clinical
outcome associated with dialysis care and aligns the ESRD QIP with
current clinical priorities related to mineral and bone disease
management among dialysis patients.
D. Accounting Statement
Consistent with OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf), we have
prepared an accounting statement in Table 32 showing the classification
of the impact associated with the provisions of this proposed rule.
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[[Page 38870]]
E. Regulatory Flexibility Act (RFA)
The RFA requires agencies to evaluate alternatives that may reduce
regulatory burden on small entities when a proposed rule is expected to
have a significant impact on a substantial number of small entities.
This section presents a detailed analysis of the anticipated effects of
this proposed rule on small entities. Overall, this proposed rule
includes proposed updates to the ESRD QIP, as well as proposed
revisions to payment rates and policies applicable to the ESRD PPS and
AKI dialysis payment. These proposed changes are expected to have a
significant positive impact on small entities. The anticipated benefits
are primarily attributable to projected cost savings and increases in
payments, as discussed in the sections that follow.
For purposes of the RFA, small entities include small businesses,
nonprofit organizations, and small governmental jurisdictions. This
proposed rule would likely impact ESRD facilities, which are classified
under NAICS category 621492, Kidney Dialysis Centers. There could also
be impacts to hospitals that operate a hospital-based ESRD facility,
which would include NAICS category 622110, hospitals, and NAICS
category 622310, specialty hospitals (which can include children's
hospitals). We focus our analysis on Kidney Dialysis Centers (NAICS
category 621492), because we generally believe that hospital-based ESRD
facilities make up only a portion of a hospital's revenues and
therefore payment updates proposed in this rule would not have
significant impact on hospitals overall. Furthermore, as shown in Table
26, we estimate that payments to hospital-based ESRD facilities would
increase by approximately 2.0 percent overall, and payments to ESRD
facilities with more than 50 percent pediatric patients, which are more
likely to be owned by children's hospitals, would increase by
approximately 6.2 percent.
We also 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) March 2023
size standards, an ESRD facility (NAICS code 621492) is classified as a
small business if it has average revenues of less than $47 million
across the past 5 years.\97\ The U.S. Census Statistics of U.S.
Businesses (SUSB) data shows there are 459 firms below this threshold.
---------------------------------------------------------------------------
\97\ http://www.sba.gov/content/small-business-size-standards.
---------------------------------------------------------------------------
As shown in Table 33, approximately 459 ESRD facilities, at the
firm level, can be considered small according to the SBA. As we stated
earlier, the SBA defines small ESRD facilities (firms) as businesses
having less than $47 million in total annual revenue. According to the
U.S. Census, a firm is a legal entity or parent company that owns and
operates the business, or ESRD facility, in this case. Therefore, Table
G8 only reflects data at the firm level and not at the establishment
level, where multiple establishments could be owned by a firm.
HHS uses a change in revenue of more than 3 to 5 percent as its
measure of significant economic impact on small entities. The agency
considers the rule to have a significant impact on a substantial number
of small businesses when more than 5 percent of impacted small entities
meet the significant impact threshold defined above. As shown in Table
G8, the impact of the proposed QIP measure changes in this rule would
result in a cost savings impact of 3.5 percent for the smallest
category of ESRD facilities, which comprise approximately 7.8 percent
of small firms. For all other categories the proposed changes have an
impact that falls below the 3 to 5 percent threshold.
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We also considered the impacts of changes in transfers due to
proposed payment policy changes in this proposed rule. For the purposes
of this analysis, we exclude the ESRD facilities that are owned and
operated by large dialysis organizations (LDOs) and regional chains,
which will 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 applied a different analytic framework to identify ESRD
facilities that are likely small businesses and to assess the impact of
payment policy changes on those entities. Accordingly, we consider the
484 ESRD facilities that are independent and 326 ESRD facilities that
are hospital-based, as shown in the ownership category in Table 26, to
be small businesses. These ESRD facilities represent approximately 11
percent of all ESRD facilities in our data set.
Additionally, we identified in our analytic file that there are 753
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 342 nonprofit ESRD facilities that are also
considered small businesses, there are 1,216 ESRD facilities that are
either small businesses or nonprofit organizations, which is
approximately 16 percent of all ESRD facilities in our data set.
[[Page 38872]]
As we noted earlier in this proposed rule, 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. As shown in Table 26, we
estimate that the overall revenue impact of this proposed rule on all
ESRD facilities is a positive increase to Medicare FFS payments by
approximately 1.1 percent. For the ESRD PPS updates proposed in this
rule, a hospital-based ESRD facility (as defined by type of ownership,
not by type of ESRD facility) is estimated to receive a 2.0 percent
increase in Medicare FFS payments for CY 2027. An independent facility
(as defined by ownership type) is likewise estimated to receive a 5.6
percent increase in Medicare FFS payments for CY 2027. Although not
displayed in Table 26, we have found that among the 810 ESRD facilities
that are small businesses, approximately 29.4 percent (238 out of 810)
furnish fewer than 3,000 treatments per year. These ESRD facilities are
estimated to receive a 6.7 percent increase in Medicare FFS payments.
By contrast, those furnishing 3,000 or more treatments per year are
estimated to receive a 4.1 percent increase in Medicare FFS payments.
Additionally, among the 753 nonprofit ESRD facilities, approximately
19.1 percent (144 out of 753) furnish fewer than 3,000 treatments per
year. These ESRD facilities are estimated to receive a 7.7 percent
increase in Medicare FFS payments. By contrast, those furnishing 3,000
or more treatments per year are estimated to receive a 1.4 percent
increase in Medicare FFS payments.
For AKI dialysis, we are unable to estimate whether patients will
go to certain types of ESRD facilities, however, we have estimated
there is a potential for $90 million in total CY 2027 payments for AKI
dialysis treatments that could potentially be furnished in ESRD
facilities that are small businesses or nonprofits.
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 proposed rule. This analysis is based on the
assumptions described earlier in section VIII.C of this proposed rule,
which includes a discussion of data sources, general assumptions, and
alternatives considered.
For the ESRD QIP, we estimate that of the 3,458 ESRD facilities
expected to receive a payment reduction as a result of their
performance on the PY 2029 ESRD QIP, 410 are ESRD small entity
facilities. The overall payment reduction for small entities would be
approximately 0.59 percent of total ESRD payments, which is below the 3
to 5 percent threshold HHS uses to assess significant economic impact.
We present these findings in Table 28 (``Estimated Distribution of PY
2029 ESRD QIP Payment Reductions'') and Table 30 (``Estimated Impact of
ESRD QIP Payment Reductions to ESRD Facilities for PY 2029''). Table 28
shows the overall estimated distribution of payment reductions
resulting from the PY 2029 ESRD QIP. Table 30 shows the updated
estimated impact of the ESRD QIP payment reductions to all ESRD
facilities for PY 2029 and also details the distribution of ESRD
facilities by size, geography, and facility type.
Therefore, the Secretary has determined that the proposed policies
in this rule are expected to have a significant positive economic
impact on a substantial number of small entities, primarily through
increased revenues associated with the proposed ESRD PPS base rate
increase. In addition, the proposed updates to the ESRD QIP are
expected to generate cost savings for small entities. As discussed in
section VIII.C.5.a.(5) of this CY 2027 ESRD PPS proposed rule, CMS
considered alternative policy approaches to minimize the impact of this
proposed rule on small entities. However, CMS did not propose these
alternatives, because the proposed policies are expected to more
appropriately align payments with resource utilization in CY 2027. This
RFA section, together with the RIA, constitutes our Initial Regulatory
Flexibility Analysis.
In addition, section 1102(b) of the Act requires the preparation of
a regulatory impact analysis for any rule that may have a significant
impact on the operations of a substantial number of small rural
hospitals. This analysis must conform to the provisions of section 603
of the RFA. For purposes of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is located outside of a
metropolitan statistical area and has fewer than 100 beds. We do not
anticipate that this proposed rule will have a significant adverse
impact on a substantial number of small rural hospitals, as the
majority of dialysis facilities operate as freestanding entities.
Although there are 111 rural hospital-based ESRD facilities, we do not
have sufficient information to determine how many of these ESRD
facilities are affiliated with hospitals that have fewer than 100 beds.
Nevertheless the 111 rural hospital-based ESRD facilities are projected
to experience an average payment increase of 3.7 percent under this
proposed rule. Accordingly, the Secretary has determined that the
proposed rule is expected to have a significant positive 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 2026, that
threshold is approximately $193 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 proposed 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 proposed rule under the threshold
criteria of Executive Order 13132, Federalism, and have determined that
it will not have substantial direct effects on the rights, roles, and
responsibilities of State, local, or Tribal government.
H. Executive Order 14192, ``Unleashing Prosperity Through
Deregulation''
Executive Order 14192, entitled ``Unleashing Prosperity Through
Deregulation'' was issued on January 31, 2025, and requires that ``any
new incremental costs associated with new regulations shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least 10 prior regulations.'' This proposed rule, if
finalized as proposed, is expected to be an Executive Order 14192
regulatory action, generating annualized costs of approximately $0.1
billion.
IX. Files Available to the Public
The Addenda for the annual ESRD PPS proposed and final rule will no
[[Page 38873]]
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-1846-P, at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ESRDpayment/End-Stage-Renal-Disease-ESRD-Payment-Regulations-and-Notices. In addition to the
Addenda, limited data set files (LDS) are available for purchase at
https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/EndStageRenalDiseaseSystemFile. Readers who
experience any problems accessing the Addenda or LDS files, should
contact CMS by sending an email to CMS at the following mailbox:
[email protected].
Mehmet Oz, Administrator of the Centers for Medicare & Medicaid
Services, approved this document on June 5, 2026.
List of Subjects in Part 413
Diseases, Health facilities, Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR part 413 as set forth
below:
PART 413-PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT
RATES FOR SKILLED NURSING FACILITIES; PAYMENT FOR ACUTE KIDNEY
INJURY DIALYSIS
0
1. The authority citation for part 413 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a),
(i), and (n), 1395m, 1395x(v), 1395x(kkk), 1395hh, 1395rr, 1395tt,
and 1395ww.
0
2. Section 413.232 is amended by--
0
a. Revising paragraphs (b)(1), (c) introductory text, (f), (g)(5), and
(g)(6)(i), (ii), and (iv); and
0
b. Adding paragraph (g)(7).
The revisions and addition read as follows:
Sec. 413.232 Low-volume adjustment.
* * * * *
(b) * * *
(1) Furnished fewer than 8,000 total treatments in each of the 3
cost reporting years (based on as-filed or final settled 12-consecutive
month cost reports, whichever is most recent, except as specified in
paragraphs (g)(4) and (5) of this section) preceding the payment year;
and
* * * * *
(c) For the purpose of determining the number of treatments under
paragraph (b)(1) of this section, except as specified at paragraph
(g)(7) of this section, the number of treatments considered furnished
by the ESRD facility shall equal the aggregate number of treatments
furnished by the ESRD facility and the number of treatments furnished
by other ESRD facilities that are both:
* * * * *
(f) The low-volume adjustment applies for dialysis treatments
provided to all ESRD patients.
(g) * * *
(5) For payment year 2024 and subsequent payment years, an ESRD
facility may attest in the attestation specified in paragraph (e) of
this section that it would have met the requirements of paragraph
(b)(1) of this section, except that for one or more of the most recent
3 cost reporting years the facility furnished 8,000 or more treatments
because of temporary patient-shifting as a result of the closure or
operational disruption of another ESRD facility due to a disaster or
other emergency. For the purposes of the exception in this paragraph
(g)(5), temporary patient-shifting is defined as providing renal
dialysis services to one or more displaced patient(s) at any time
through the end of the CY following the 12-month period beginning when
an ESRD facility first begins providing renal dialysis services to one
or more displaced patients. For any facility that so attests--
(i) The facility must also attest that it furnished treatments
equal to or in excess of 8,000 in the cost reporting year due to
temporary patient-shifting as a result of the closure or operational
disruption of an ESRD facility resulting from a disaster or other
emergency;
(ii) The facility must request an exception under this paragraph
(g)(5) from CMS, in the form and manner specified by CMS, no later than
the attestation deadline specified in paragraph (e) of this section or
30 calendar days after the end of the cost reporting year, whichever is
later, for each cost reporting year that the facility furnishes
treatments equal to or in excess of 8,000 due to temporary patient-
shifting as a result of the closure or operational disruption of an
ESRD facility resulting from a disaster or other emergency;
(iii) Within 30 calendar days of CMS's receipt of the facility's
request, CMS will review the request and either approve the request
based on a determination that the ESRD facility furnished treatments
equal to or in excess of 8,000 in the cost reporting year due to
temporary patient-shifting as a result of the closure or operational
disruption of an ESRD facility resulting from a disaster or other
emergency, or deny the request, and will notify the facility and the
MAC of its decision;
(iv) If CMS approves the request, the ESRD facility is paid the
low-volume adjustment on claims for Medicare beneficiaries, on the
basis of the exception in this paragraph (g)(5), during the payment
year in which the temporary patient-shifting occurred, so long as all
other requirements for the low-volume adjustment are met. For any
future payment year, the ESRD facility would not be prevented from
receiving the low-volume adjustment if the ESRD facility meets or
exceeds the 8,000 treatment threshold in a cost reporting year due to
temporary patient-shifting as a result of the disaster or other
emergency that resulted in another ESRD facility's closure or
operational disruption, so long as all other requirements for the low-
volume adjustment are met; and
(v) The facility must maintain documentation of the number of
displaced patients treated and information about the ESRD facility or
facilities that closed or experienced operational disruptions due to a
disaster or other emergency and previously treated those patients, and
must provide such supporting documentation to CMS and the MAC upon
request.
(6) * * *
(i) The ESRD facility would need to request such an exception from
CMS, in the form and manner specified by CMS, within 60 calendar days
of the facility's closure, and the ESRD facility must inform the MAC of
this request in writing;
(ii) Within 30 calendar days of CMS's receipt of the facility's
request, CMS will review the request and either approve the request
based on a determination that the ESRD facility closed due to a
disaster or other emergency, or deny the request, and will inform both
the facility and the MAC of its decision; and
* * * * *
(iv) The ESRD facility that attests under this paragraph (g)(6) to
have closed due to a disaster or other emergency would need to notify
CMS and the MAC, in the form and manner specified by CMS, within 30
calendar days of reopening and providing renal dialysis services.
Within 30 calendar days of CMS's receipt of the facility's
[[Page 38874]]
notification, CMS will confirm receipt to the facility and the MAC of
the facility's notification and the ESRD facility will be able to
receive the low-volume adjustment as of the date of reopening, so long
as all other requirements for the low-volume adjustment are met.
* * * * *
(7) ESRD facilities that are children's hospitals, as defined at
Sec. 412.23(d), or that furnish more than 50 percent of treatments
(Medicare and non-Medicare) to Pediatric ESRD Patients may request an
exception to the aggregation of number of treatments in paragraph (c)
of this section.
(i) The ESRD facility must attest that it is either owned and
operated by a Medicare-certified children's hospital, as defined at
Sec. 412.23(d), or the ESRD facility provides at least 50 percent of
its total treatments (Medicare and non-Medicare) to Pediatric ESRD
Patients and that it is under common ownership, as defined in paragraph
(d) of this section, with one or more ESRD facilities that do not
furnish at least 50 percent of its total treatments to Pediatric ESRD
Patients;
(ii) The facility must request an exception under this paragraph
(g)(7) from CMS, in the form and manner specified by CMS, no later than
the attestation deadline specified in paragraph (e) of this section or
30 calendar days after the end of the cost reporting year, whichever is
later;
(iii) Within 60 calendar days of CMS's receipt of the facility's
request, CMS will review the request and either approve or deny the
request based on a determination of whether the ESRD facility meets the
requirements of paragraph (g)(7)(i) of this section, and will notify
the facility and the MAC of its decision;
(iv) If CMS approves the request, the ESRD facility's number of
treatments, for the purposes of the low-volume adjustment, would not be
aggregated with the number of treatments of the commonly-owned facility
for which the exception has been granted, on the basis of the exception
in this paragraph (g)(7), for all future payment years, so long as the
ESRD facility remains a children's hospital or furnishes more than 50
percent of treatments to Pediatric ESRD Patients. To receive the low-
volume adjustment the ESRD facility must continue to satisfy all other
requirements. Approval of an exception under this paragraph (g)(7)
applies only to the ESRD facility for which the exception is granted
and does not affect the aggregation of treatment volume for any other
commonly-owned ESRD facility; and
(v) The facility must maintain documentation of the number of total
treatments and pediatric treatments which it provides and must provide
such supporting documentation to CMS and the MAC upon request.
* * * * *
0
3. Section 413.234 is amended by--
0
a. Revising paragraphs (c) introductory text, (c)(3), and (g)(1) and
(2); and
0
b. Adding paragraph (h).
The revisions and addition 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 the wholesale acquisition
cost (WAC) and, when WAC is not available, the payment is based on the
drug manufacturer's invoice. If CMS receives negative or zero ASP data
for a new renal dialysis drug or biological product after receiving
positive ASP data in a previous quarter, the transitional drug add-on
payment adjustment would be based on the most recent positive ASP
amount carried forward from a previous quarter. 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
paragraphs (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.
* * * * *
(3) For any new renal dialysis drug or biological product that is
eligible for payment using the transitional drug add-on payment
adjustment described in paragraphs (b)(1)(iii) and (c)(1) of this
section, CMS applies a post-TDAPA add-on payment adjustment to all ESRD
PPS claims that is calculated using the methodology set forth in
paragraph (g) of this section. CMS will apply the post-TDAPA add-on
payment adjustment beginning 8 calendar quarters after the first
calendar quarter in which the transitional drug add-on payment
adjustment is paid for the applicable product and ending 12 calendar
quarters after the end of the last calendar quarter in which the
transitional drug add-on payment adjustment is paid for the applicable
product. If CMS stops receiving the latest full calendar quarter of ASP
data for the applicable renal dialysis drug or biological product
during the applicable time period specified in paragraph (c)(1) of this
section or during the 3-year period following such applicable time
period, CMS will not pay any post-TDAPA add-on payment adjustment for
such product in any future quarter.
* * * * *
(g) * * *
(1) CMS bases the calculation on the most recent 12-month period of
utilization for the new renal dialysis drug or biological product and
the most recent available full calendar quarter of ASP data. If the
most recent full calendar quarter of ASP data reflects zero or negative
sales, then the calculation is based on 100 percent of the most recent
positive ASP amount from a previous quarter; if there is no previous
quarter of positive ASP data, then the calculation is based on 100
percent of WAC; and, if WAC is not available, the payment is based on
the drug manufacturer's invoice.
(2) CMS calculates the post-TDAPA add-on payment adjustment
quarterly as the expenditure for the new renal dialysis drug or
biological product divided by the total number of ESRD PPS treatments
during the same period.
* * * * *
(h) Methodology for modifying the ESRD PPS base rate to account for
the costs of phosphate binders in the ESRD PPS bundled payment. For
dates of service on or after January 1, 2027, payment for phosphate
binders is included in the ESRD PPS base rate using the following data
sources and methodology:
(1) The methodology specified in paragraph (h)(2) of this section
for determining the average per treatment payment amount for phosphate
binders that is added to the ESRD PPS base rate uses the following data
sources:
[[Page 38875]]
(i) Total units of phosphate binders and total number of paid
hemodialysis-equivalent dialysis treatments furnished, as derived from
Medicare ESRD facility claims (the 837-institutional form with bill
type 072X) for the second, third, and fourth quarters of calendar year
2025 and for the first and second quarters of calendar year 2026.
(ii) The weighted average ASP based on the most recent
determinations by CMS.
(2) CMS uses the following methodology to calculate the average per
treatment payment amount for phosphate binders that is added to the
ESRD PPS base rate:
(i) Determines utilization of each phosphate binder by aggregating
the total units of phosphate binders from the claims data described in
paragraph (h)(1)(i) of this section.
(ii) Determines a price for each phosphate binder by calculating
100 percent of the value from the most recent calendar quarter ASP
calculations available to the public for each HCPCS code describing
phosphate binders.
(iii) Calculates the total phosphate binder expenditure amount by
multiplying the utilization of each phosphate binder determined in
paragraph (h)(2)(i) of this section by their respective prices
determined in paragraph (h)(2)(ii) of this section and summing the
expenditure amounts across all phosphate binder products.
(iv) Calculates an adjusted phosphate binder expenditure amount
that accounts for operational cost expenditures associated with
furnishing phosphate binders, based on the additional amount added to
the transitional drug add-on payment adjustment amount for phosphate
binders under paragraph (c)(4) of this section.
(v) Calculates the average per treatment payment amount by dividing
the adjusted phosphate binder expenditure amount determined in
paragraph (h)(2)(iv) of this section by the total number of paid
hemodialysis-equivalent dialysis treatments during the same period
described in paragraph (h)(1)(i) of this section.
(vi) Calculates the amount added to the ESRD PPS base rate by
reducing the average per treatment payment amount determined in
paragraph (h)(2)(v) of this section by 1 percent to account for the
outlier policy under Sec. 413.237.
(3) Phosphate binders will be eligible ESRD outlier services under
Sec. 413.237 beginning January 1, 2027.
Robert F. Kennedy, Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2026-12925 Filed 6-24-26; 4:15 pm]
BILLING CODE 4120-01-P