On July 6, 2020, the Centers for Medicare & Medicaid Services (CMS) released its proposed rule that updates and revises its End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for calendar year 2021 (CMS-1732-P). This rule makes regular annual updates to the ESRD PPS and proposes certain changes to the ESRD Quality Improvement Program (QIP).

In addition to the annual technical updates for the ESRD PPS, the rule proposes:

• Incorporation of calcimimetics into the ESRD PPS;
• Updating the ESRD PPS wage index consistent with other providers/suppliers;
• Changing the eligibility criteria and determination process for the transitional add-on payment adjustment for new and innovative equipment and supplies (TPNIES);
• Expanding the TPNIES to include new and innovative home dialysis machines;
• Changing the low-volume adjustment eligibility criteria and attestation requirement;
• Changing the scoring methodology for the ultrafiltration rate reporting measure; and
• Updating the National Healthcare Safety Network validation study.

The proposed rule is expected to be published on July 13, 2020 and comments must be received by CMS no later than 5 p.m. on September 4, 2020.

ESRD Base Rate Increased by $16.26, Including Market Basket and Addition of Calcimimetics into the PPS)

The ESRD bundled payment was CMS’ first prospective payment system when it was instituted in 1983. CMS updated the ESRD PPS in 2011 to include case-mix adjustment and an expanded bundle of products and services. 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. For 2021, CMS proposes to raise the ESRD base rate from $239.33 to $255.59, an increase of $16.26. This increase reflects a 1.8 percent market basket adjustment, a 0.998652 wage index budget-neutrality factor, and incorporation of calcimimetics into the PPS. CMS also proposes to maintain the acute kidney injury dialysis payment rate at the base rate of $255.59.

OMB Delineations Proposed 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 proposes to adopt 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. The proposed CY 2021 labor-related share is 52.3 percent.

CMS increases outlier services MAP and FDL amounts to account for calcimimetics

In the ESRD PPS, CMS 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 FDL amounts every year. But the Agency proposes increasing them in CY 2021 as a result of their proposal to incorporate oral and injectable calcimimetics into the outlier policy.

CMS Proposes to End Transitional Drug Add-On Payment for Parsabiv™ and Other 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 is now proposing to 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 $80 million decrease in ESRD PPS payments. The final methodology CMS adopts will be a precedent for how CMS transitions TDAPA payments into the ESRD base rate for items and classes that are incorporated into the ESRD PPS.

TPNIES changes to accommodate the 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 proposing 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 proposing that a complete HCPCS code application must be submitted by the application deadline for biannual 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 proposes to define “new” for purposes of TPNIES policy as within 3 years beginning on the date of the FDA marketing authorization.

ExpanSION of TPNIES to include new and innovative home dialysis machines

In general, capital-related assets are excluded from eligibility for TPNIES. However, CMS is proposing to provide an exception and allow new and innovative capital-related assets that are home dialysis machines when used in the home for a single patient. As with other renal dialysis equipment and supplies potentially eligible for the TPNIES, CMS would evaluate the application to determine whether the home dialysis machine represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries. CMS is proposing to pay 65 percent of a per-treatment amount determined by Medicare Administrative Contractors for two calendar years.

CMS proposes that after the two-year TPNIES period ends, the home dialysis machines would not become eligible outlier services and no change would be made to the ESRD PPS base rate.   CMS says it was unable to estimate any increases or decreases in its expenditures based on its proposal to expand the TPNIES to include home dialysis machines because the new and innovative home dialysis machines and their costs are not yet identified.

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. CMS proposes to hold harmless ESRD facilities that would otherwise qualify for the LVPA but for a temporary increase in dialysis treatments due to COVID-19. CMS is also proposing to allow more time for ESRD facilities to submit attestations by moving the deadline from November 1, 2020 to December 31, 2020.

ESRD Quality Incentive Program (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.

TABLE 9: 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 proposes 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.