This evening, the Centers for Medicare and Medicaid Services (CMS) released the CY 2019 final payment rule for the End-Stage Renal Disease (ESRD) program. The rule contains a payment update for the ESRD Prospective Payment System, changes to the ESRD quality program, and an expansion of the ESRD Transitional Drug Add-on Payment Adjustment (TDAPA). Additionally, the rule finalizes proposals related to Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS), which are addressed in a separate summary.

ESRD Facilities to See Payment Increase of Approximately 1.6 Percent

For CY 2019, CMS is finalizing a base rate of $235.27 (very slightly lower than the proposed $235.82) for the End-Stage Renal Disease Prospective Payment System (ESRD PPS). This reflects a 1.3 percent productivity-adjustment market basket increase as required by law and application of the wage index budget-neutrality adjustment factor. The payment rate for acute kidney injury (AKI) in CY 2019 is the same as the base rate proposed for the ESRD PPS.

Payments to facilities under the ESRD PPS are expected to increase by about $210 million in CY 2019 compared to CY 2018 levels (down from $220 million in the proposed rule). CMS is projecting a 1.6 increase in payments for ESRD facilities in CY 2019 as compared to CY 2018. For payments related to individuals with AKI, a 1.3 percent increase in payments is projected, translating to an increase of less than $1 million in CY 2019 when compared to CY 2018. CMS is also projecting an increase of 1.6 percent in beneficiary co-insurance payments, representing approximately $50 million.

CMS is finalizing a change to its requirements so that ESRD facilities no longer need to collect certain diagnostic test results and codes in order to qualify for a comorbidity payment adjustment. This comes in response to comments received following the RFI in the CY2018 ESRD PPS proposed rule that stated that current requirements are too arduous. CMS will rely on the ICD guidelines moving forward.

Final Rule Allows For Expanded Add-On Payments for New ESRD Drugs in 2020

Since January 2011, CMS has paid dialysis centers for renal dialysis drugs in the ESRD PPS base rate based on the functional categories of the drug itself. Under current policy, a new drug is not eligible for an additional payment (the transitional drug add-on payment adjustment, or TDAPA) if the drug fits into an existing “functional category” of treatments commonly used by ESRD patients (e.g. anemia management, excess fluid management), but is eligible for payment as an outlier service. The annual PPS base rate is updated annually using a market basket that includes the prices of bundled drugs and outlier drugs and reflects those in the base rate.

Stakeholders have raised concerns that the current policy discouraged the development of new drugs that fit into an existing functional category, especially since the functional categories were very comprehensive and captured practically every known condition related to ESRD. In response, CMS is finalizing its proposal to update the drug designation process to reflect that the process applies for all new renal dialysis drugs and biological products (called simply “biologicals” in the proposal) that are approved regardless of the form or route of administration, or dosage form, approved by the FDA on or after January 1, 2020. Oral-only drugs will continue to be excluded (by law) until CY 2025.

The new definition is intended to address prior concerns that the drug designation process primarily addressed “new” drugs that fell outside of the functional categories for purposes of being newly categorized and eligible for the TDAPA. One other notable change is the requirement only that a HCPCS application has been filed, not approved, before a drug can be eligible for TDAPA.

Under the finalized rules, TDAPA would only apply for two years (similar to the pass-through payments available in the hospital outpatient department). Once a product’s TDAPA expires, the product would still be eligible for payment under outlier services, if applicable.

CMS also notes that this policy would increase Medicare expenditures and beneficiary cost-sharing. CMS is delaying the implementation of this portion of the rule until January 1, 2020 to mitigate the impact of the change on CMS, Medicaid programs, and other stakeholders.

Composite Rate Drugs Also Eligible for TDAPA

Prior to the implementation of the ESRD PPS, certain drugs used in outpatient dialysis treatments were considered “composite rate drugs” and were not eligible for separate billing. Examples include: heparin, antiarrythmics, protamine, and local anesthetics. Similar to non-composite rate drugs, CMS assigns composite rate drugs to functional categories.

CMS is extending the broadened TDAPA payment eligibility to drugs that are considered composite rate drugs or biologicals and fall within an ESRD PPS functional category, beginning on January 1, 2020.

Add-On Drug Payment Rate Will be Lowered to 100% of ASP in 2019

CMS is finalizing its proposal to reduce the add-on payments under TDAPA to 100% of average sales price (ASP), a reduction from the current payment rate of 106% of ASP. Noting that there are concerns surrounding the ASP methodology and that Congress has provided no clear guidance on why 106% of ASP was selected as the payment basis for Medicare Part B drugs (and indeed will not be under the contemplated International Pricing Index demonstration), and that the new expanded policy would mean more drugs are eligible for the TDAPA payment, CMS is finalizing the reduction. If ASP is unavailable, CMS would use 100% of wholesale acquisition cost (WAC).

This change in policy will apply to any drugs awarded TDAPA after January 1, 2020. Calcimimetics, which are currently eligible for TDAPA, would continue to be paid at 106% of ASP since the TDAPA was awarded prior to the policy adoption.

CMS Updates ESRD Quality Incentive Program to Align with Agency-wide Meaningful Measures Initiative

In order to more closely align the program to the Meaningful Measures Initiative, CMS is finalizing multiple changes to the End-Stage Renal Disease Quality Incentive Program (ESRD QIP) that would be updated in varying years from 2021 to 2024.

CMS is updating the measure removal criteria, which will now be referred to as “factors” to align with Meaningful Measures. Two existing factors will be combined and a new one will be added. The new measure removal factor is whether the costs associated with a measure outweigh the benefit of its continued use. This factor will be used beginning with PY 2021.

Additionally, CMS is removing the following measures beginning with the 2021 ESRD QIP:

• Healthcare Personnel Influenza Vaccination
• Pain Assessment and Follow-Up
• Anemia Management
• Serum Phosphorus

CMS is finalizing its proposal to remove the Reporting Measure domain beginning with the PY2021 program and divide the Clinical domain into 3 distinct domains: Patient & Family Engagement Domain, Care Coordination Domain, and Clinical Care Domain. They will maintain use of the Patient Safety Measure domain for a new total of 4 domains. As proposed, the Clinical Care domain will be weighted highest because it contains the largest number of measures.

Effective for PY 2021 and beyond, newly opened facilities will begin reporting ESRD QIP data starting with the month that is 4 months after the effective date of their CMS Certification number (CCN). As proposed, CMS will convert the current Consolidated Renal Operations in a Web-Enabled Network (CROWNWeb) data validation study into a permanent program requirement.

CMS is adopting two new ESRD measures in 2022 and one in 2024. In 2022, CMS is will adopt the Percentage of Prevalent Patients Waitlisted (PPPW) clinical measure which assesses the percentage of patients at each dialysis facility who were on the kidney or kidney-pancreas transplant waitlist. Additionally, in 2022, CMS is adopting the New Medication Reconciliation for Patients Receiving Care at Dialysis Facilities (MedRec) reporting measure, which measures whether an ESRD facility has appropriately evaluated a patient’s medications. Unlike the proposed rule which included only RNs, eligible professionals under this finalized measure will include all nurses.

Although proposed to be adopted in 2024, CMS will not adopt the New Standardized First Kidney Transplant Waitlist Ratio (SWR) for Incident Dialysis Patients clinical measure.  CMS agrees with commenters that this would measure whether patients receive unnecessary transplants, and not whether they are appropriately waitlisted.