On November 2, 2020, the Centers for Medicare & Medicaid Services (CMS) released the final rule that updates the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for calendar year (CY) 2021. This rule finalizes changes related to the ESRD PPS, the ESRD Quality Incentive Program (ESRD-QIP), payment for acute kidney injury (AKI), and other policies:

• Updates CY 2021 ESRD base rate to $253.13, an increase of $13.80 (5.7 percent);
• Incorporates calcimimetics into the ESRD PPS and adjusts adult outlier thresholds;
• Holds harmless those facilities that would be eligible for low-volume payment adjustment;
• Changes the eligibility criteria and determination process for the transitional add-on payment adjustment for new and innovative equipment and supplies (TPNIES); and
• Expands eligibility for TPNIES to include new and innovative home dialysis machines;

The proposed rule is expected to be published on November 9, 2020 and unless otherwise specified, the effective date of provisions in this final rule is January 1, 2021.

ESRD Base Rate Increased by $13.80, Including Market Basket Update and Addition of Calcimimetics into PPS

The ESRD PPS provides a patient-level and facility-level adjusted per treatment payment to ESRD facilities for renal dialysis services provided in an ESRD facility or in a beneficiary’s home. The bundled per treatment payment includes drugs (except for oral-only ESRD drugs that are included beginning in 2025), laboratory services, supplies, and capital-related costs related to furnishing maintenance dialysis. The base rate serves as the basis upon which ESRD PPS payments are made and this rate is adjusted annually to reflect changes in policy, productivity, and input costs. The final ESRD base rate for CY 2021 is $253.13, which is an increase of $13.80 (5.7 percent) over CY 2020.

This increase reflects a 1.6 percent payment rate update, a 0.999845 wage index budget-neutrality factor, and the addition of $9.93 to include calcimimetics into the PPS. The payment rate update of 1.6 percent reflects the CY 2021 ESRD market basket percentage increase factor of 1.9 percent minus the 0.3 percentage point multifactor productivity (MFP) adjustment.

OMB Delineations Finalized for Wage Index

CMS adjusts wage indices using the most current hospital wage data and core-based statistical area (CBSA) delineations to account for differences in local wage levels. Consistent with other providers, CMS is adopting the Office of Management and Budget (OMB) delineations and a 5 percent cap on any decrease in an ESRD facility’s wage index for CY 2021. In the rule, CMS also finalizes the proposed CY 2021 labor-related share of 52.3 percent.

For Outlier Payments, CMS Increases Adult MAP and FDL Amounts to Account for Calcimimetics

The ESRD PPS includes a payment adjustment for high-cost outliers due to unusual variations in the type or amount of medically necessary care. An ESRD facility is eligible for an outlier payment if its actual or imputed Medicare allowable payment (MAP) amount per treatment for ESRD outlier services exceeds a threshold. CMS notes that the utilization of outlier services has continued to decline under the ESRD PPS and that they have lowered the MAP and fixed dollar loss (FDL) amounts every year. However, the Agency is increasing them for adults in CY 2021 as a result of their proposal to incorporate oral and injectable calcimimetics into the outlier policy.

Medicare Allowable Payment (MAP)	CY 2021	CY2020	Fixed Dollar Loss (FDL)	CY 2021	CY2020
Adult	$50.92	$35.78	Adult	$122.49	$48.33
Pediatric	$30.88	$32.32	Pediatric	$44.78	$41.04

 

CMS Ends Transitional Drug Add-on Payment for Calcimemetics

CMS provides a transitional drug add-on payment adjustment (TDAPA) for new ESRD drugs that are not in one of eleven ESRD functional categories and for branded injectable and intravenous dialysis drugs, including biosimilars, that are in one of those categories. In 2018, CMS added a TDAPA for calcimimetics because of the FDA’s 2017 approval of Amgen’s PARSABIV™ (etelcalcetide) injection. In 2020, CMS reduced the TDAPA amount from 106 to 100 percent of the Average Sales Price for injectable and intravenous drugs.

CMS will now end the TDAPA for calcimimetics, including Parsabiv, effective January 1, 2021 and include reimbursement for those drugs in the ESRD base rate. CMS expects this policy change to result in an $10 million decrease in total ESRD PPS expenditures. CMS’ process sets precedent for how they will transition any future TDAPA payments into the ESRD base rate.

TPNIES Changes Finalized to Accommodate More Frequent Coding Application Cycles for DMEPOS HCPCS

In the 2020 ESRD PPS final rule, CMS established a transitional add-on payment adjustment for certain new and innovative renal dialysis equipment and supplies (TPNIES). CMS is finalizing changes to the TPNIES eligibility criteria to accommodate the more frequent coding application cycles for Healthcare Common Procedure Coding System (HCPCS) codes for durable medical equipment, orthotics, prosthetics and supplies (DMEPOS).  For TPNIES, CMS is finalizing that a complete HCPCS code application must be submitted by the application deadline for bi-annual Coding Cycle 2 for DMEPOS items. In addition, the FDA marketing authorization must be submitted to CMS by that deadline for the equipment or supply to be eligible for TPNIES the following year. CMS adopts the definition of “new” for purposes of TPNIES policy as within 3 years beginning on the date of the FDA marketing authorization.

TPNIES Now Includes Certain Home Dialysis Machines

In general, capital-related assets are excluded from eligibility for TPNIES. However, CMS is expanding eligibility for TPNIES to include certain capital-related assets that are home dialysis machines when used in the home for a single patient. CMS will evaluate any TPNIES applications to determine whether the home dialysis machine represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries. CMS will pay 65 percent of the MAC-determined pre-adjusted per treatment amount reduced by an off-set for two calendar years.  After the two-year TPNIES period ends, the home dialysis machines would not become outlier services and no change would be made to the ESRD PPS base rate to reflect their use.

Hold-Harmless and Other Flexibility in Low-Volume Payment Adjustment (LVPA) Due to COVID-19

CMS makes an adjustment to payments for facilities that furnish a low volume of dialysis treatments. To receive the LVPA, the facility must submit an attestation prior to the calendar year in which the adjustment would be effective. In this rule, CMS finalizes their policy to hold ESRD facilities harmless that would otherwise qualify for the LVPA but for COVID-19.

For purposes of determining LVPA eligibility for payment years 2021, 2022, and 2023, CMS will only consider total dialysis treatments furnished for any six self-selected months of a facility’s cost-reporting period ending in 2020. ESRD facilities will attest that their total dialysis treatments during these six months were less than 2,000 and CMS will assume any excess were due to temporary patient shifting resulting from the COVID-19 PHE.

CMS Finalizes Minor Changes to ESRD QIP

Under the ESRD-QIP, CMS assesses the total performance of each facility on measures specified for a payment year and applies an appropriate payment reduction to each facility that does not meet a minimum total performance score (TPS). For PY 2023, CMS estimates that a facility must meet or exceed a TPS of 57 to avoid a payment reduction.

Finalized Payment Reduction Scale for PY 2023 Based on the Most Recently Available Data

Total Performance Score	Reduction (%)
100-57	0%
56-47	-0.5%
46-37	-1.0%
36-27	-1.5%
26-0	-2.0%

 

CMS finalizes certain changes to the ESRD-QIP:

• Update the scoring methodology for Ultrafiltration Rate (UFR) Reporting Measure to score facilities based on the number of eligible patient-months as opposed to facility-months.
• Update the National Healthcare Safety Network (NHSN) validation study to reduce the number of required records from 20 records across each of the first two quarters (40 records total) to 20 total records across any two quarters.