CMS Proposes Payment Increase for ESRD Facilities in CY 2025

On June 27, the Centers for Medicare & Medicaid Services (CMS) issued the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) proposed rule for calendar year (CY) 2025. See the fact sheet here. This rule proposes to:

increase ESRD payment rates by 2.2 percent,
implement a new ESRD PPS-specific wage index,
modify the low-volume payment adjustment (LVPA) policy to create a two-tiered LVPA,
include oral-only drugs in the ESRD PPS bundled payment,
extend the home dialysis benefit to patients with Acute Kidney Injury (AKI),
update ESRD facility Conditions for Coverage (CfCs),
make changes to the ESRD Quality Incentive Program (QIP), and
make additional changes to the ESRD Treatment Choices (ETC) Model.

This proposed rule is scheduled to be published in the Federal Register on July 5, 2024, and comments are due on August 26, 2024.

CMS PROPOSES 2.2 PERCENT PAYMENT INCREASE TO ESRD FACILITIES IN CY 2025

The ESRD Prospective Payment System (PPS) provides a single case-mix adjusted payment to ESRD facilities for renal dialysis services provided in an ESRD facility or in a Medicare beneficiary’s home. This bundled payment includes most drugs, services, supplies, and capital-related costs related to maintenance dialysis services. CMS adjusts ESRD PPS facility rates for geographic, low-volume service delivery, and other factors. CMS also provides additional ESRD PPS payment adjustments for the following:[1]

training add-on for home and self-dialysis modalities,
outlier payments for high-cost cases due to differences in the type or amount of medically necessary care,
Transitional Drug Add-on Payment Adjustment (TDAPA) for certain new renal dialysis drugs and biological products,
TDAPA for New and Innovative Equipment and Supplies (TPNIES) for certain new and innovative renal dialysis supplies and equipment,
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, and
Post-TDAPA add-on payment adjustment for certain new renal dialysis drugs and biological products after the end of the TDAPA period.

CMS proposes a 2.2 percent increase in payments to ESRD facilities in CY 2025, relative to CY 2024. For hospital-based facilities, CMS estimates a 3.9 percent increase relative to CY 2024, while for freestanding facilities, CMS projects an increase in total payments of 2.1 percent. CMS estimates that the Medicare program will pay $7.2 billion to ESRD facilities for furnishing renal dialysis services in CY 2025. This reflects a projected 2.1 percent decrease in Medicare fee-for-service ESRD enrollment.

For CY 2025, CMS proposes a base rate of $ 273.20, which is a $2.18 increase to the CY 2024 finalized base rate of $271.02. This reflects CMS’s proposed wage index budget neutrality adjustment (0.990228), and a productivity-adjusted market basket increase of 1.8 percent.

CMS proposes a new ESRD PPS-specific wage index, which combines data from the Bureau of Labor Statistics Occupation Employment Wage & Statistics and freestanding ESRD facility cost reports to adjust payments for geographic differences in wages. Previously, CMS has used the hospital wage index values for each geographic area derived from hospital cost reports. CMS also proposes to update wage index values to reflect the latest core-based statistical area (CBSA) delineations by the Office of Management and Budget (OMB). CMS proposes to continue to apply a wage index floor (0.6000) and a five percent cap on wage index decreases from the prior year.

CMS also proposes updates to the methodology for calculating the outlier services fixed-dollar loss (FDL) and Medicare allowable payment (MAP) amounts and proposes expansion of the list of ESRD outlier services. CMS proposes to update the MAP amounts using CY 2023 claims data, update the outlier services FDL amount for pediatric patients using CY 2023 claims data, and update the FDL amount for adult patients using CY 2021, CY 2022, and CY 2023 claims data.

CMS proposes updates to outlier payment amounts for CY 2025, as outlined in Tables 1 and 2 below.[2] CMS notes that the proposed inclusion of composite rate drugs and biological products is the reason for the significant increase in the proposed FDL and MAP amounts for pediatric patients due to high-cost composite rate drugs furnished to pediatric beneficiaries.

Table 1. Outlier Payment Changes for Pediatric Beneficiaries in CY 2025

	Proposed 2025 Amount	Final 2024 Amount
FDL	$223.44	$11.32
MAP	$58.39	$23.36

Table 2. Outlier Payment Changes for Adult Beneficiaries in CY 2025

	Proposed 2025 Amount	Final 2024 Amount
FDL	$49.46	$71.76
MAP	$33.57	$36.28

CMS’s Proposed AKI Payment Rate Mirrors ESRD Base Rate

Since CY 2017, Medicare provides coverage for renal dialysis services provided to individuals with acute kidney injury (AKI). CMS proposes an updated payment rate of $273.20 for AKI payment in CY 2025, which mirrors the proposed base rate for the ESRD PPS. For CY 2025, CMS estimates a 1.9 percent increase in payments to ESRD facilities for services provided to patients with AKI, relative to CY 2024. For hospital-based facilities, CMS estimates a 2.6 percent increase relative to CY 2024.CMS estimates that aggregate payments to ESRD facilities for renal dialysis services provided to AKI patients are expected to increase by $1 million in CY 2025, relative to CY 2024.

CMS CONSIDERS TWO-TIERED APPROACH FOR THE LOW-VOLUME PAYMENT ADJUSTMENT

A low-volume facility is an ESRD facility that has furnished less than 4,000 treatments in each of the three previous cost reporting years. These facilities receive an additional payment, called the low-volume payment adjustment (LVPA). Noting that parties such as the Medicare Payment Advisory Commission (MedPAC) and Government Accountability Office (GAO) have recommended the LVPA be refined to target ESRD facilities critical to beneficiary access, CMS proposes to modify the LVPA into two tiers. Under this proposal, ESRD facilities furnishing less than 3,000 treatments per cost reporting year would receive a 28.4 percent upward adjustment to the ESRD PPS base rate, and ESRD facilities furnishing 3,000 to 3,999 treatments per year would receive an 18.1 percent adjustment. Tier determination for eligible facilities would be based on the median treatment count over the three previous cost reporting years. CMS believes these changes will support LVPA goals, better aligning payment with resource use by increasing payment to the lowest volume facilities. These changes are also intended to mitigate the “cliff effect,” where a facility might be incentivized to remain below 4,000 services to receive the LVPA.

CMS also requests feedback through a Request for Information (RFI) on potential modifications to the LVPA methodology, with a focus on new ESRD facilities. Key areas CMS seeks feedback on include ways a new ESRD facility could appropriately demonstrate it expects to be low volume, the role of a reconciliation process for new ESRDs, and whether the LVPA could be changed to better support ESRD facilities opening in underserved areas.

CMS PROPOSES TO INCLUDE ORAL-ONLY DRUGS IN THE ESRD PPS BUNDLED PAYMENT

CMS initially excluded oral-only drugs from the single, bundled payments made under the ESRD payment system because of a lack of pricing and utilization data for these drugs. Despite certain laws prohibiting payment for oral-only renal dialysis drugs to be made under the bundled payment system prior to January 1, 2025, CMS finalized a mechanism for including oral-only renal dialysis drugs in the ESRD PPS bundled payments in the CY 2016 ESRD final rule effective January 1, 2025.[3] Therefore, in this proposed rule, CMS describes how it will operationalize this policy. CMS expects this will increase access to these drugs based on the inclusion of Medicare Part D drugs into the ESRD PPS and resulting improved access for beneficiaries without Part D coverage.

CMS PROPOSES TO EXTEND THE HOME DIALYSIS BENEFIT TO PATIENTS WITH ACUTE KIDNEY INJURY

Recent feedback from stakeholders has highlighted a need for beneficiaries to have the option for home dialysis, especially those who began peritoneal dialysis (PD) in the hospital and wish to continue at home. In recent years, CMS has gathered data and feedback on acute kidney injury (AKI) home dialysis from technical experts and the public, which has consistently suggested extending home dialysis benefits to AKI patients. The feedback highlighted the potential benefits of home dialysis, such as more frequent and gentler dialysis, better fluid management, and reduced need for central venous catheters.

Based on the gathered evidence and positive outcomes from the COVID-19 public health emergency, CMS proposes extending the home dialysis benefit to AKI patients. This proposal offers payment parity for home dialysis for AKI patients to match the in-center dialysis rate, adjusted for geographic area. Additionally, CMS proposes to apply the wage-adjusted add-on payment for home and self-dialysis training for AKI patients, similar to ESRD patients. Finally, CMS proposes to make amendment to § 410.52 and § 413.374(a) to ensure Medicare payment includes home dialysis services for AKI patients, encompassing home services, supplies, and self-dialysis.

This proposal aims to improve individualized treatment plans, reduce disparities in care, and ensure that AKI patients receive the necessary support for recovery and quality of life.

CMS PROPOSES CHANGES TO ESRD FACILITIY CONDITIONS FOR COVERAGE

The ESRD conditions for coverage (CfCs) are health and safety standards that Medicare-participating dialysis facilities must meet.[4] CMS proposes revisions to the CfCs given the proposed extension of home dialysis coverage to beneficiaries with AKI. Proposals are largely conforming changes in 42 CFR part 494 to clarify that home dialysis services are available to all patients. CMS requests feedback on whether proposed revisions are sufficient to support access to home dialysis for individuals with AKI. Approximately 12,000 patients with AKI are expected to be eligible for this service.

CMS PROPOSES UPDATES TO ESRD QUALITY INCENTIVE PROGRAM FOR PY 2027: INTRODUCING INDIVIDUAL KT/V MEASURES AND STREAMLINING REPORTING REQUIREMENTS

The End-Stage Renal Disease Quality Incentive Program (ESRD QIP) is designed to evaluate and improve the quality of care provided to patients with ESRD. In this proposed rule, CMS offers several proposed updates for payment year (PY) 2027 (performance period 2025), which aim to enhance the accuracy and relevance of performance assessments within the ESRD QIP. CMS welcomes public comment on these proposals.

Measure Set Updates

CMS proposes to replace the comprehensive Kt/V Dialysis Adequacy measure with a set of four individual Kt/V measures: adult hemodialysis (HD) Kt/V, adult peritoneal dialysis (PD) Kt/V, pediatric HD Kt/V, and pediatric PD Kt/V. This change aims to provide more accurate assessments of dialysis adequacy based on patient age and treatment modality.

Additionally, the National Healthcare Safety Network (NHSN) Dialysis Event reporting measure will be removed from the ESRD QIP measure set starting in PY 2027. This decision is based on the high and consistent reporting performance of facilities, indicating that the measure no longer drives improvements in care.

CMS Proposes Introduction of Kt/V Dialysis Adequacy Measure Topic

CMS introduces a new measure topic to score facilities based on performance standards for each individual Kt/V measure. Specifically, facilities treating at least 11 eligible patients for a specific Kt/V measure will be scored on that measure. The total weight of the Kt/V Dialysis Adequacy Measure Topic will be 11 percent of the Total Performance Score (TPS), consistent with the weight of the current comprehensive measure.

CMS Proposes to Remove the NHSN Dialysis Event Reporting Measure

The NHSN Dialysis Event reporting measure is proposed for removal because facilities have consistently reported data, and the measure no longer contributes to meaningful improvements. However, facilities will still be required to comply with NHSN protocols and report dialysis event data for the NHSN Bloodstream Infection (BSI) Clinical Measure.

Proposed Revisions to Measure Domains and Weights

CMS proposes to update the Clinical Care Domain to reflect the replacement of the comprehensive Kt/V measure with the Kt/V Measure Topic. Additionally, the Reporting Measure Domain will be adjusted to accommodate the removal of the NHSN Dialysis Event reporting measure. CMS further proposes that weights of individual measures in this domain be adjusted to ensure each measure is weighted equally, while maintaining the overall weight of the domain.

PROPOSED UPDATES TO PERFORMANCE STANDARDS FOR THE PY 2027 ESRD QIP

The ESRD QIP requires the establishment of performance standards for selected measures each performance year, in accordance with sections 1881(h)(4)(A), (B), and (C) of the Act. These standards include levels of achievement and improvement and must be set before the performance period begins. The performance period for PY 2027 is CY 2025, with the baseline period set as CY 2023. Facilities must meet minimum data requirements, and specific conditions apply based on the measure and facility size.[5]

CMS invites comments on the following proposals, including updates to performance standards, reporting requirements, eligibility criteria, and payment reduction scales.

Proposed Performance Standards for Clinical Measures to be Based on CY 2022 Data

For PY 2027, CMS proposes that the estimated performance standards for clinical measures be based on data from CY 2022, the most recent available. CMS proposes to update these standards using CY 2023 data in the CY 2025 ESRD PPS final rule. For a complete list of performance standards for PY 2027 Clinical Measures, refer to Table 14 of the unpublished proposed rule.[6]

Proposed Requirements for Reporting Measures

Table 15 of the unpublished proposed rule[7] outlines the frequency and data elements required for successful reporting of the ESRD QIP reporting measures for PY 2027. These include:

MedRec: Monthly reporting of medication reconciliation data.
Hypercalcemia: Monthly reporting of total uncorrected serum or plasma calcium lab values.
COVID-19 Vaccination Coverage Among HCP: Quarterly reporting of vaccination coverage data.
Facility Commitment to Health Equity: Annual attestation to five domains of health equity.
Screening for Social Drivers of Health: Annual reporting of the number of patients screened for five health-related social needs.
Screen Positive Rate for Social Drivers of Health: Annual reporting of patients screening positive for these needs.

Proposed Payment Reduction Scale

For PY 2027, facilities must achieve a Total Performance Score (TPS) of at least 51 to avoid a payment reduction. Payment reductions will be implemented on a sliding scale, with a maximum reduction of 2 percent for facilities with the lowest performance scores. These estimates are based on CY 2022 data and will be updated with CY 2023 data in the CY 2025 ESRD PPS final rule.

CMS ISSUES TWO REQUESTS FOR INFORMATION (RFIS) ON TOPICS RELEVANT TO ESRD QIP

Modifying Scoring Methodology to Reward Facilities Treating Dually Eligible Patients

The first RFI seeks feedback on potential changes to the ESRD QIP scoring methodology to reward facilities based on their performance and the proportion of patients who are dually eligible for Medicare and Medicaid. This initiative aligns with CMS’s commitment to health equity, aiming to reduce disparities and enhance care quality for underserved populations. CMS is considering adding Health Equity Adjustment bonus points to a facility’s Total Performance Score (TPS) based on its performance and the proportion of dually eligible patients. CMS requests comments on the value and structure of such an adjustment and other possible approaches to address healthcare disparities within the ESRD QIP.

Updating Data Validation Policy for ESRD QIP

The second RFI requests input on improving the data validation policy to ensure accurate and comprehensive reporting for the ESRD QIP. Currently, the program includes EQRS and NHSN data validations, with penalties for non-compliance. CMS is exploring ways to enhance this policy, such as introducing penalties for failing to meet accuracy thresholds, providing bonuses for high performance, developing targeted educational initiatives, or mandating re-selection for validation in subsequent years for facilities that do not meet standards. Public comments are sought on these and other potential strategies to encourage precise data reporting.

CMS PROPOSES CHANGES TO THE ESRD TREATMENT CHOICES MODEL

The ESRD Treatment Choices (ETC) Model^[8] is an alternate payment model for the care of patients with chronic kidney disease (CKD), finalized in 2020 as part of the final rule “Medicare Program; Specialty Care Models to Improve Quality of Care and Reduce Expenditures” published on September 29, 2020 (85 FR 61114). The model tests the use of payment adjustments to encourage kidney transplants and home hemodialysis. The aim of this model is to encourage providers to invest in care coordination programs that will increase patient choice, reduce Medicare expenditures, and improve outcomes. The ETC Model went into effect on January 1, 2021, and is mandatory for dialysis facilities and managing clinicians in randomly selected geographic areas across all 50 states and D.C.

The ETC Model includes two payment adjustments:

Home Dialysis Payment Adjustment (HDPA) – an upward adjustment on certain payments made to participating ESRD facilities under the ESRD Prospective Payment System (PPS) on home dialysis claims, and an upward adjustment to the Monthly Capitation Payment (MCP) paid to participating Managing Clinicians on home dialysis-related claims.
Performance Payment Adjustment (PPA) – a positive or negative adjustment on dialysis and dialysis-related Medicare payments, for both home dialysis and in-center dialysis. This adjustment is based on ESRD facilities’ and Managing Clinicians’ home dialysis rate and transplant rate, among attributed beneficiaries during the applicable measurement year (MY).

These adjustments are made to the adjusted ESRD PPS base rate for selected facilities and to the MCP for selected managing clinicians. Greater positive and negative adjustments for model participants are phased in over the duration of the model.

CMS proposes changes to the methodology CMS uses to identify transplant failure for the purposes of defining an ESRD beneficiary and attributing an ESRD beneficiary to the ETC Model, to decrease the likelihood that CMS is overestimating the true number of transplant failures for model purposes. Currently, beneficiaries are attributed to the ETC Model after they meet several criteria, including having a kidney transplant failure less than 12 months after the transplant date. Regulations define an ESRD Beneficiary as a beneficiary meeting either of the below criteria:

The beneficiary is receiving dialysis or other services for ESRD up to and including the month when the beneficiary receives a kidney transplant; or
The beneficiary has received a kidney transplant and has a non-acute kidney injury (AKI) dialysis or MCP claim at least 12 months after the beneficiary’s latest transplant date; or less than 12 months after the beneficiary’s latest transplant date and has a documented kidney transplant failure diagnosis code on a Medicare claim.

CMS proposes to modify the second criterion to specify that the beneficiary’s latest transplant date must be identified by 1) two or more MCP claims in the 190 days following the date following kidney transplant receipt, 2) 24 or more maintenance dialysis treatments at any time after 180 days following the transplant date, or 3) indication of a transplant failure after the transplant data based on Scientific Registry of Transplant Recipients (SRTR) data. If one or more of these criteria is met, the beneficiary will be considered an ESRD Beneficiary for ETC Model purposes.

CMS also requests feedback through an RFI on topics related to increasing equitable access to home dialysis and kidney transplantation, noting barriers to home dialysis such as the need for home care support, a lack of clinical confidence in prescribing home dialysis, financial costs to patients, and storage limitations in patients’ homes. Interested parties have spoken with CMS regarding challenges associated with increasing home dialysis access, especially for beneficiaries with lower socioeconomic status. The ETC Model was intended to address these barriers.

Performance accountability in the ETC Model is set to end on June 30, 2026, leading to CMS concern that the end of this performance accountability may diminish incentives for dialysis organizations to invest in home dialysis access. CMS solicits feedback on policies that could be incorporated into a successor model or more generally regarding ways to improve beneficiary access to home dialysis. In particular, CMS is interested in policies that may encourage Medicare Advantage Organizations (MAOs) to focus on these efforts. Key questions and topics CMS seeks feedback on are:

What future Innovation Center models that include home dialysis should incorporate lessons learned from the ETC Model.
Specific barriers to home dialysis and how they could be addressed through the ESRD PPS.
Approaches CMS should consider to increase MA beneficiary access to home dialysis.
How nephrologist payment for traditional FFS, Medicare and MAOs should account for clinician-level barriers to prescribing and retaining patients on home dialysis.

Feedback on this RFI will inform CMS’s thinking on opportunities and challenges the Innovation Center may address in ETC Model successors.

CMS RECEIVES NO APPLICATION FOR TPNIES FOR CY 2025, UPDATES TPNIES FOR CAPITAL-RELATED ASSETS

In the CY 2020 ESRD PPS final rule, CMS introduced a transitional add-on payment adjustment for new and innovative equipment and supplies (TPNIES) under the ESRD PPS. This adjustment was established to support the use of beneficiary access to these new technologies in ESRD facilities. When applications for the TPNIES are received, CMS includes a summary of each application and its analysis of eligibility criteria for each application in the proposed rule. However, no applications were submitted for CY 2025.

The proposed average per treatment offset amount for TPNIES for capital-related assets that are dialysis machines is $10.18, though there are no capital-related assets set to receive TPNIES for CY 2025.

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This Applied Policy® Summary was prepared by April Gutmann with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at agutmann@appliedpolicy.com or at (202) 558-5272.

NOTE: This summary was updated from the original to reflect CMS’s update to their Fact Sheet to reflect the accurate budget-neutrality adjustment factor (0.990228). Additionally, the LVPA percentages have been corrected (originally 28.3% and 18.0%; changed to 28.4% and 18.1%).

[1] See page 18 of the unpublished rule.

[2] See page 10 of the unpublished rule.

[3] 80 FR 68968

[4] 42 CFR Part 494 outlines these standards.

[5] For complete proposed eligibility requirements for scoring on ESRD QIP measures beginning with PY 2027, see Table 16 on page 170 of the unpublished rule.

[6] Page 169 of the unpublished rule.

[7] Ibid.

[8] https://innovation.cms.gov/innovation-models/esrd-treatment-choices-model

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