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ESRD PPS Proposed Rules – CY2017

From: Federal Register – CMS-1651-P – 6/30/16

Excerpt of CMS Fact Sheet


ESRD PPS Background:  Section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) amended the Social Security Act to require CMS to implement a bundled PPS for renal dialysis services furnished to Medicare beneficiaries for the treatment of ESRD effective January 1, 2011.  The bundled payment under the ESRD PPS includes all renal dialysis services furnished for outpatient maintenance dialysis, including drugs and biologicals (with the exception of oral-only ESRD drugs until 2025) and other renal dialysis items and services that were formerly separately payable under the previous payment methodologies.  The bundled payment rate is case-mix adjusted for a number of factors relating to patient characteristics.  There are also facility-level adjustments for ESRD facilities that have a low patient volume or rural locality, and for wage index.  An ESRD facility may be eligible for outlier payments for high-cost patients.  Under the ESRD PPS for CY 2017, Medicare expects to pay approximately $9.0 billion to approximately 6,000 ESRD facilities for the costs associated with furnishing chronic maintenance dialysis services.

Update to the ESRD PPS Base Rate:  The proposed CY 2017 ESRD PPS base rate is $231.04. This amount reflects a reduced market basket increase as required by section 1881(b)(14)(F)(i)(I) of the Act (0.35 percent), application of the wage index budget-neutrality adjustment factor (0.999552), as well as the application of the home and self-dialysis training budget-neutrality adjustment factor (0.999729). The proposed CY 2017 ESRD PPS base rate is an increase of $0.65 from the CY 2016 base rate of $230.39 x 1.0035 = $231.20; $231.20 x 0.999552 = $231.10; $231.10 x 0.999729 = $231.04.

Annual Update to the Wage Index and Wage Index Floor:  The ESRD wage indices are adjusted on an annual basis using the most current hospital wage data and the latest Core-Based Statistical Area (CBSA) delineations to account for differing wage levels in areas in which ESRD facilities are located.  For CY 2017, CMS is not proposing any changes to the application of the wage index floor, and we propose to continue to apply the current wage index floor (0.4000) to areas with wage index values below the floor.

Update to the Outlier Policy:  Consistent with the proposal to annually update the outlier policy using the most current data, CMS is proposing to update the outlier services fixed dollar loss amounts for adult and pediatric patients and Medicare Allowable Payments (MAP) for adult patients for CY 2017 using 2015 claims data.  Based on the use of more current data, the fixed-dollar loss amount for pediatric beneficiaries would increase from $62.19 to $67.44 and the MAP amount would increase from $39.20 to $39.92, as compared to CY 2016 values.  For adult beneficiaries, the fixed-dollar loss amount would decrease from $86.97 to $83.00 and the MAP amount would decrease from $50.81 to $47.26.  In CY 2015, outlier payments were 0.9 percent of total ESRD PPS payment, that is, slightly less than the 1.0 percent target for outlier payments.  Using CY 2015 claims data to update the outlier MAP and fixed dollar loss amounts for CY 2017 will increase outlier payments for ESRD beneficiaries requiring higher resource utilization.

Impact Analysis:  CMS projects that the updates for CY 2017 will increase the total payments to all ESRD facilities by 0.5 percent compared with CY 2016.  For hospital-based ESRD facilities, CMS projects an increase in total payments of 0.7 percent, while for freestanding facilities, the projected increase in total payments will be 0.5 percent

Home and Self-Dialysis Training Add-on Payment Adjustment: CMS is proposing to increase the total number of hours of training by a registered nurse for peritoneal dialysis (PD) and hemodialysis (HD) that is accounted for by the home and self-dialysis training add-on payment adjustment.  The current home and self-dialysis training add-on is $50.16, which reflects 1.5 hours of nurse training.  CMS is proposing to calculate the increase based on the average treatment times and weights for each modality. We propose to use these as proxies for the total time spent by nurses training beneficiaries for home or self-dialysis, with the assumed hourly wage for a nurse providing dialysis training for 2017 being $35.93.  Under this proposal, CMS would increase the hours of nurse training time to 2.66 hours, which would result in a home and self-dialysis training add-on payment adjustment of $95.57.

Payment for Hemodialysis When More than Three Treatments are Furnished per Week:  CMS is proposing an equivalency payment for HD when more than three treatments are furnished per week, similar to what is applied to PD.  Specifically, to calculate the total weekly amount that would be paid for three HD treatments per week and divide that weekly number by the number of treatments furnished in a week when more than three treatments per week are furnished.


In accordance with sections 1861(s)(2)(F) and 1834(r) of the Act, as amended by sections 808(a) and 808(b), respectively, of the Trade Preferences Extension Act (TPEA), CMS will provide coverage and payment for renal dialysis services furnished on or after January 1, 2017 by an ESRD facility to an individual with AKI.  Under the law, payment will be in the amount of the ESRD PPS base rate, as adjusted by the wage index.  The Secretary has discretion to apply other adjustment factors utilized under the ESRD PPS, however CMS is not proposing any other adjustments at this time. CMS is proposing that drugs, biologicals, laboratory services, and supplies furnished to beneficiaries with AKI that are not considered to be renal dialysis services but that are that are related to the dialysis as a result of their AKI would be separately payable.

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End Stage Renal Disease (ESRD) Cost Audits

From: CMS Transmittal – Transmittal1640 – 4/1/16


Section 2991 of the Social Security Amendments of 1972 established the ESRD program under Medicare. The law extended Medicare coverage to individuals regardless of age who have permanent kidney failure, requiring dialysis or kidney transplantation to maintain life, and meet certain other eligibility criteria.

Section 217 (e) of The Protecting Access to Medicare Act of 2014 (PAMA) authorized CMS to conduct audits of Medicare ESRD cost reports, beginning during 2012, for a representative sample of providers to determine if the reported costs are supported by facilities’ accounting records, reasonable and related to patient care, and to also assess the appropriateness of transactions with related organizations.

The CMS awarded the ESRD Cost Audit Contract to Figliozzi & Company CPA PC (Figliozzi) on September 16, 2015. This change request is to document CMS’ expectations and requirements for the Medicare Administrative Contractors (MACs) and Figliozzi in completing the ESRD cost reports selected for the cost audits.

End Stage Renal Disease (ESRD) Cost Audits

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