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

November 16, 2012—The Centers for Medicare and Medicaid Services (CMS) Nov. 2 released a final 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 requirements for the ESRD QIP will affect payment years 2013 and 2014.  Additionally, the final rule will implement changes to bad debt reimbursement for all Medicare providers, suppliers, and other entities eligible to receive bad debt payments. 

In the final rule, CMS updated ESRD payments by an increase factor of 2.3 percent.  This update reflects an inflationary increase of 2.9 percent minus a 0.6 percent multifactor productivity adjustment required by the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152).  Applying the market basket, the productivity adjustment, and the wage index budget neutrality adjustment factor results in a final base payment of $240.36 per dialysis session, up $5.55 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 finalized 10 quality measures for payment year (PY) 2015 payment determination. This includes three new clinical measures and one new reporting measure starting in PY 2015. CMS removed one measure that was previously proposed, and modified other measures that were finalized for PY 2015. CMS will weight equally the clinical measures at 75 percent of the facility’s Total Performance Score (TPS). The reporting measures also would be weighted equally and would comprise the remaining 25 percent of each facility’s TPS. The TPS is used to determine whether a facility receives a payment reduction.

The final rule also 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 also will be reduced by varying amounts.  CMS changed the agency’s regulations to reflect the self-implementing provisions of the extenders law. 


Jennifer Faerberg, MHSA
Director, Clinical Transformation Unit
Telephone: 202-862-6221


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Jason Kleinman
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Telephone: 202-903-0806