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CMS Phases in Cuts to ESRD Payments

December 6, 2013— The Centers for Medicare and Medicaid Services (CMS) Nov. 22 released a final rule that contains changes to the calendar year (CY) 2014 end stage renal disease (ESRD) prospective payment system (PPS) and the ESRD quality incentive program (QIP). CMS final changes to the ESRD payment system take effect Jan. 1, 2014, and proposed requirements for the ESRD QIP affect the 2016 payment year (PY).  Additionally, the final rule contains changes related to durable medical equipment.

Under the final rule, CMS will phase in cuts to dialysis facilities required by the American Taxpayer Relief Act (ATRA, P.L. 112-240) over a three- to four-year period.  Section 632(a) of the ATRA requires the secretary to make reductions to the ESRD PPS base rate to reflect the secretary’s estimate of the change in the utilization of ESRD-related drugs and biologicals by comparing per patient utilization data from 2007 with data from 2012.

In the aggregate, payments to all ESRD facilities under the final rule would remain unchanged from 2013, and payments to hospital-based ESRD facilities would increase by 0.8 percent.  This is a dramatic change from the proposed rule, in which all ESRD facilities would have faced a 9.4 percent cut [see Washington Highlights, July. 12].

The final rule calculations reflect an inflationary update of 2.8 percent, a -0.4 percent multifactor productivity adjustment required by the health reform law, a ‑3.3 percent adjustment that reflects the first year of the ATRA reduction transition, and several policy adjustments. Applying these adjustments results in a proposed base payment of $239.02 per dialysis session, down $1.34 from $240.36 in CY 2013.

This final rule also represents the final year of a four-year phase-in to the ESRD PPS. All payments will now be based on 100 percent of the ESRD PPS payment amount, and facilities no longer will have the option to be paid in part under the previous composite payment system.

Regarding the ESRD QIP, CMS finalized 11 measures for payment year (PY) 2016.  These 11 measures include nine that were finalized previously, and two new clinical measures: the proportion of patients with hypercalcemia and the National Healthcare Safety Network (NHSN) bloodstream infection in hemodialysis outpatients.

CMS also finalized the agency’s proposal to weight the clinical measures at 75 percent and the reporting measures at 25 percent of the total performance score, which is used to determine whether a facility receives a payment reduction.  The ESRD QIP will reduce payments to ESRD facilities that do not meet or exceed certain performance standards. 

Scott Wetzel, M.P.P.
Lead, Quality Reporting
Telephone: 202-828-0495


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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806