Healio Special Report: Health Care and Politics
Healio Special Report: Health Care and Politics
November 01, 2019
3 min read

CMS finalizes payment rules, changes to ESRD Quality Incentive Program for outpatient dialysis

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CMS has finalized changes to the Medicare rules for the ESRD Prospective Payment System and the ESRD Quality Incentive Program, which will become effective on Jan. 1.

These changes “support the development and use of innovative technologies, provide greater access to new treatments in kidney care and modernize our program integrity methods to better combat waste, fraud and abuse in the Medicare program,” CMS said in a press release.

Under the ESRD prospective payment system (PPS) for calendar year (CY) 2020, Medicare expects to pay around $10.3 billion to approximately 7,000 ESRD facilities for the costs associated with furnishing renal dialysis services. On average, Medicare spends seven-times more on beneficiaries with ESRD than the average beneficiary.

“In order to ensure that ESRD patients receive the best possible care and to maximize how we use taxpayer dollars, the policies in the final rule will help to better recognize costs for new therapies under the ESRD PPS that will spur more innovation in kidney care,” CMS wrote.

The updates for 2020 include the following:

  • a $4.06 increase for the ESRD PPS base rate, bringing the total Medicare payment to $239.33 per treatment;
  • an update of outlier services fixed-dollar loss amounts for adult and pediatric patients and Medicare allowable payment amounts for adult and pediatric patients for CY 2020 using 2018 claims data;
  • a revision of the drug designation process regulation for new renal dialysis drugs and biological products that will focus eligibility on those drugs that are innovative; and
  • offer an add-on payment to the composite rate when dialysis providers use new technology.

Medicare agreed in the final rule to continue payment for calcimimetics outside the bundled rate for a third year in 2020 in order to collect sufficient claims data for rate setting analysis. However, CMS is finalizing a change to the basis of payment from the average sales price (ASP) plus 6% methodology to 100% of ASP.

Increase in payment for use of innovative products

The incentive payment for new technology, called the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES), covers equipment or supplies that represent “an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries,” the agency wrote.

The add-on payment itself will be based on 65% of the price of the product established by the Medicare Administrative Contractors using the information from the invoice and other relevant sources of information. CMS will pay the TPNIES for 2 calendar years, after which the equipment or supply will qualify as an outlier service.

CMS projects the updates for CY 2020 will increase the total payments to all ESRD facilities by 1.6% compared with CY 2019. For hospital-based ESRD facilities, CMS projects an increase in total payments of 2.1%, while for freestanding facilities, the projected increase in total payments is 1.6%.

CMS is also updating the acute kidney injury dialysis payment rate for CY 2020 to equal the CY 2020 ESRD PPS base rate and to apply the CY 2020 wage index. For CY 2020, the AKI dialysis payment rate is $239.33.

Updates to the QIP

The ESRD Quality Incentive Program has several programmatic updates beginning with payment year 2022 that impacts dialysis facility performance next year. An updated scoring methodology for the National Healthcare Safety Network Dialysis Event reporting measure is included in the final rule that will allow new facilities and facilities that are eligible to report data on the measure for less than 12 months to receive a score on the measure. Also, the conversion of the Standardized Transfusion Ratio clinical measure (NQF #2979) to a reporting measure has been delayed while CMS continues to examine concerns raised by stakeholders about the validity of the measure.

CMS is not finalizing its proposal to revise the scoring methodology for the medication reconciliation reporting measure and will continue to score that measure using the methodology it previously adopted.

Finally, CMS is updating its regulation text for the program so that it better informs the public of the program’s requirements. The updates include a new policy that allows facilities to reject an extraordinary circumstances exception granted by CMS under certain circumstances.

“For too long, Medicare beneficiaries suffering from kidney disease have also suffered under outdated government regulations that stand in the way of the care they need. This final rule — as well as President Trump’s executive orders issued earlier this year — signals that those days are waning,” CMS Administrator Seema Verma said in comments on the final rule. “We are modernizing payment for durable medical equipment and advancing innovative solutions to deliver necessary treatment to those with kidney disease. This rule marks the beginning of a new era for kidney care.”