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Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

CMS Proposes ESRD Payment and Quality Incentive Program Changes for 2013, Bad Debt Reductions

July 6, 2012—The Centers for Medicare and Medicaid Services (CMS) July 2 released a proposed rule that contains changes to the calendar year (CY) 2012 end stage renal disease (ESRD) prospective payment system (PPS) and the ESRD quality incentive program (QIP).  CMS will implement final changes to the ESRD payment system Jan. 1, 2013, and proposed requirements for the ESRD QIP would affect payment years 2013 and 2014.  Additionally, the proposed rule will implement changes to bad debt reimbursement for all Medicare providers, suppliers, and other entities eligible to receive bad debt.  Comments on the proposed rule are due Aug. 31.

CMS proposes to update ESRD payments by an increase factor of 2.5 percent.  This update reflects an inflationary increase of 3.2 percent minus a 0.7 percent multifactor productivity adjustment required by the health reform law.  Applying the market basket, the productivity adjustment, and the wage index budget neutrality adjustment factor results in a proposed base payment of $240.88 per dialysis session, up $6.07 from $234.81 in CY 2012.

This proposed rule represents the third year of a four year phase-in to the ESRD PPS.  Facilities that have not elected to be paid entirely under the new system will receive transition blended payments, under which 75 percent of the payment is based on the previous composite payment system and items and services paid separately under Medicare Part B, and 25 percent of the payment is based on the ESRD PPS payment amount.

For the ESRD Quality Incentive Program (QIP), CMS proposes to include 11 quality measures for payment year (PY) 2015 payment determination. This includes four new clinical measures and one new reporting measure starting in PY 2015. CMS also proposes to remove one measure that was previously adopted for PY 2014. CMS proposes to weight equally the clinical measures at 80 percent of the facility’s Total Performance Score (TPS). The reporting measures would also be weighted equally and would comprise the remaining 20 percent of each facility’s TPS. The TPS is used to determine whether a facility receives a payment reduction.

Finally, the proposed rule contains changes to provider bad debt reimbursement, required by Congress under Section 3021 of the Middle Class Tax Extension and Job Creation Act of 2012 (P.L. 112-96).  Under Section 3021, hospital allowable bad debt amounts will be reduced by 35 percent for fiscal year 2013 and all subsequent fiscal years.  Allowable bad debt payments to other providers and suppliers will also be reduced by varying amounts.  CMS proposes to change the agency’s regulations to reflect the self-implementing provisions of the extenders law. 

Contact:

Jennifer Faerberg, MHSA
Director, Clinical Transformation Unit
Telephone: 202-862-6221
Email: jfaerberg@aamc.org

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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org