Medicare Program; End-Stage Renal Disease Prospective Payment System
Federal RegisterAug 12, 2010
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 413 and 414
[CMS-1418-F]
RIN 0938-AP57
Medicare Program; End-Stage Renal Disease Prospective Payment System
AGENCY:
Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION:
Final rule.
SUMMARY:
This final rule implements a case-mix adjusted bundled prospective payment system (PPS) for Medicare outpatient end-stage renal disease (ESRD) dialysis facilities beginning January 1, 2011 (ESRD PPS), in compliance with the statutory requirement of the Medicare Improvements for Patients and Providers Act (MIPPA), enacted July 15, 2008. This ESRD PPS also replaces the current basic case-mix adjusted composite payment system and the methodologies for the reimbursement of separately billable outpatient ESRD services.
DATES:
Effective Date:
These regulations are effective on January 1, 2011, except for § 413.174(f)(6), which will be effective on January 1, 2014 and § 413.232(f) and § 413.239(b), which will be effective November 1, 2010.
FOR FURTHER INFORMATION CONTACT:
William Cymer, (410) 786-4533. Lynn Riley, (410) 786-1286, (ESRD Quality Incentive Program).
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
A. Overview of the Proposed ESRD PPS
B. Legislative History and Statutory Authority for the ESRD Prospective Payment System
C. Existing Basic Case-Mix Adjustments
II. Summary of the Proposed Provisions and Responses to Comments on the Proposed Rule
A. The Proposed ESRD PPS Bundle
1. Composite Rate Services
2. ESAs and Their Oral Forms
3. Other Drugs and Biologicals and Their Oral Forms
a. Oral-Only ESRD-Related Drugs
b. Other Drugs and Biologicals
4. Diagnostic Laboratory Tests and Other Items and Services
5. Physicians' Services
6. Other Services
7. Home Dialysis Patients (Method I and II) and Self
Dialysis Training
a. Payment for Home Dialysis (Method I and Method II)
i. Method I—The Composite Rate
ii. Method II—Dealing Directly with Suppliers
b. Self-Dialysis Training
B. Unit of Payment
C. Data Sources
1. Patient Claims Data
2. Medicare Cost Reports
3. Patient Claim and Cost Report Summary Data 2006-2008
4. Data for the Case-Mix Analyses, 2006-2008
5. Prescription Drug Event Data, CY 2007, CY 2008, Jan-Sept 2009
D. Analytical Approach
E. Development of ESRD PPS Base Rate
1. Calculation of the CY 2007 Unadjusted Rate per Treatment
a. Composite Rate Services
b. Part B Drugs and Biologicals
c. Laboratory Tests
d. Durable Medical Equipment (DME) and Supplies
e. Dialysis Support Services
f. Supplies and Other Services Billed by Dialysis Facilities
g. Former Part D Drugs
h. Total Medicare Hemodialysis (HD)-Equivalent Sessions
i. Average MAP per Treatment
2. Determining the Update Factors for the Budget-Neutrality Calculation
a. Composite Rate Services
b. Self-Dialysis Support Services for Method II Patients
c. Part B Drugs And Biologicals
d. Laboratory Tests
e. DME Supplies and Equipment
f. Supplies and Other Services
g. Former Part D Drugs
3. Standardization Adjustment
4. Calculation of the Budget-Neutrality Adjustments
a. Outlier Adjustment
b. 98 Percent Budget-Neutrality Adjustment
5. Calculation of the Transition Budget-Neutrality Adjustment
F. Regression Model Used To Develop Final Payment Adjustment Factors
1. Regression Analysis
a. Dependent Variables
i. Average Cost per Treatment for Composite Rate Services
ii. Average Medicare Allowable Payment (MAP) for Separately Billable Services
b. Independent Variables
i. Control Variables
ii. Case-Mix Adjustment Variables
2. Choosing Between a Separately Billable Model Based on Patient-Year or Patient-Month Data
3. Patient-Level Adjustments
a. Patient Age
b. Patient Sex
c. Body Surface Area and Body Mass Index
d. Onset of Dialysis (New Patient Adjustment)
e. Co-Morbidities
f. ICD-9-CM Coding
g. Race/Ethnicity
h. Modality
4. Proposed Facility-Level Adjustments
a. Wage Index
b. Low-Volume Adjustment
i. Defining a Low-Volume facility
ii. Defining the Percent of Increase
c. Alaska/Hawaii Facilities
d. Rural
e. Site Neutral ESRD PPS Rate
5. Determination of ESRD PPS Payment Adjusters
G. Pediatric Patients
1. The Revised Payment Methodology for the Pediatric Payment Adjustments
2. Composite Rate Payments for Pediatric Patients
3. Separately Billable Services
4. No Caps Applied to the Separately Billable MAP per Treatment
5. A Combined Composite Rate and Separately Billable Payment Model for Pediatric Patients
6. Adult Payment Adjustments That Do Not Apply to Pediatric Patients
H. Outlier Policy
1. Eligibility for Outlier Payment
a. ESRD Outlier Services
b. Predicted ESRD Outlier Services MAP Amounts
c. Estimating the Imputed ESRD Outlier Services MAP Amounts
i. Data Used To Estimate Imputed ESRD Outlier Services MAP Amounts
ii. Determining Imputed Per Treatment ESRD Outlier Services MAP Amount
d. Outlier Percentage and Fixed Dollar Loss Amounts
2. Outlier Payments
3. Hypothetical Outlier Payment Examples
4. Application of Outlier Policy During the Transition and in Relation to the ESA Monitoring Policy, Other Claims Processing Tools, and Other CMS Policies
I. Comprehensive Payment Model Examples
J. ESRD Bundled Market Basket
K. Implementation
1. Transition Period
a. New ESRD Facilities
b. Limitation on Beneficiary Charges Under the ESRD PPS and Beneficiary Deductible and Co-Insurance Obligations
2. Claims Processing
a. Consolidated Billing Rules and Edits
i. Laboratory Tests
ii. Drugs and Biologicals
iii. Home Dialysis
b. Expansion of the Data Elements Reported on Claims
3. Miscellaneous Comments
4. Comments Regarding Monitoring
5. Comments Beyond the Scope of This Final Rule
L. Evaluation of Existing ESRD Policies and Other Issues
1. Exceptions Under the Case-Mix Adjusted Composite Payment System
2. Erythropoiesis Stimulating Agent (ESA) Claims Monitoring Policy
3. ESRD Facility Network Deduction
4. Bad Debt
5. Limitation on Review
6. 50 Percent Rule Utilized in Laboratory Payments
7. Medicare as a Secondary Payer
8. Conforming Regulation Changes
M. Anemia Management and Dialysis Adequacy Measures
1. Anemia Management Measures: Hemoglobin Less Than 10 g/dL and Hemoglobin Greater Than 12 g/dL
2. Hemodialysis Adequacy Measure: Urea Reduction Ratio (URR)
3. Additional Comments
III. Collection of Information Requirements
A. ICRs Regarding a Low-Volume Adjustment (§ 413.232(f))
B. ICRs Regarding Transition Period (§ 413.239)
IV. Regulatory Impact Analysis
A. Overall Impact
B. Anticipated Effects
1. Effects on ESRD Facilities
2. Effects on Other Providers
3. Effects on the Medicare and Medicaid Programs
4. Effects on Medicare Beneficiaries
C. Alternatives Considered
D. Accounting Statement and Table
E. Conclusion
Regulations Text
Appendix
Acronym List
Because of the many terms to which we refer by acronym in this proposed rule, we are listing the acronyms used and their corresponding meanings in alphabetical order below:
Act The Social Security Act
ASC Ambulatory surgical center
AV Arteriovenous
BIPA Medicare, Medicaid, and SCHIP (State Children's Health Insurance Program) Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554)
BMI Body mass index
BSA Body surface area
BLS Bureau of Labor Statistics
CAH Critical assess hospitals
CAPD Continuous ambulatory peritoneal dialysis
CBC Complete blood count
CBSA Core-Based Statistical Area
CCPD Continuous cycling peritoneal dialysis
CDC Centers for Disease Control and Prevention
CFC Conditions for Coverage
CFR Code of Federal Regulations
CKD Chronic kidney disease
CMS Centers for Medicare & Medicaid Services
COLA Cost of living allowance
CPM Clinical performance measure
CR Composite rate
CROWN Consolidated Renal Operations in a Web-Enabled Network
CY Calendar year
DFC Dialysis facility compare
DME Durable medical equipment
EDB Enrollment Data Base
EPO Epoetin alfa
ESA Erythropoiesis stimulating agent
ESRD End-stage renal disease
FI Fiscal intermediary
FY Fiscal year
GAO Government Accountability Office
GI Gastrointestinal
HD Hemodialysis
IDPN Intradialytic parenteral nutrition
IEF Isolated essential facility
IHS Indian Health Service
IPD Intermittent peritoneal dialysis
IPN Intraperitoneal parenteral nutrition
IPPS Inpatient prospective payment system
IQR Interquartile range
Kt/V A measure of dialysis adequacy where K is dialyzer clearance, t is dialysis time, and V is total body water volume
LDO Large dialysis organization
LPN Licensed practical nurse
LTC Long term care
MAC Medicare Administrative Contractor
MAP Medicare allowable payment
MBR Master beneficiary record
MCP Monthly capitation payment
MCR Medical cost reports
MedPAC Medicare Payment Advisory Commission
MIPPA Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275)
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173)
MRSA Methylcyline resistance staphylococcus aurues
MSA Metropolitan Statistical Area
MUE Medically unbelievable edit
NAICS North American Industry Classification Systems
NIH National Institutes of Health
NKF-KDOQI National Kidney Foundation's Kidney Disease Quality Initiative Clinical Practice Guidelines
NOS Not otherwise specified
NQF National Quality Forum
OMB Office of Management and Budget
OPPS Outpatient prospective payment system
OSCAR Online State Certification and Reporting System
PD Peritoneal dialysis
PDE Prescription drug event
PFS Physician fee schedule
PPI Producer price index
PPS Prospective payment system
PRS Practice-related risk score
PVD Peripheral vascular disease
QIP Quality Incentive Program
REMIS Renal Management Information System
RN Registered nurse
RRB Railroad Retirement Board
RRT Renal replacement therapy
SAF Standard analytical file
SB Separately billable
SDO Small dialysis organization
SIMS ESRD Standard Information Management System
SSA Social Security Administration
UM-KECC University of Michigan, Kidney Epidemiology & Cost Center
URR Urea reduction ratio
USRDS United States Renal Data System
WAC Wholesale acquisition cost
I. Background
A. Overview of the Proposed ESRD PPS
On September 29, 2009, we published in the
Federal Register
a proposed rule entitled “End-Stage Renal Disease Prospective Payment System” (74 FR 49922). In that rule, we proposed that the ESRD PPS would combine payments for composite rate and separately billable services into a single base rate of $198.64 developed from CY 2007 claims data (74 FR 49944). Under the proposed rule, the base rate would be adjusted using patient-specific case-mix adjustment factors developed from separate equations for composite rate and separately billable services (74 FR 49949). The case-mix adjusters would include variables for age, body surface area (BSA), low body mass index (BMI), patient sex, eleven co-morbidity categories, and the onset of renal dialysis. The proposed adjustment factors were developed using standard techniques of multiple regression analysis to yield case-mix adjusted payments per treatment. The per treatment payment amounts would also be adjusted to reflect urban and rural differences in area wage levels using an area wage index developed from Core Based Statistical Area (CBSA) definitions (74 FR 49968). The proposed rule also provided that ESRD facilities treating patients with unusually high resource requirements as measured through their utilization of identified services beyond a specified threshold would be entitled to outlier payments, that is, additional payments beyond the otherwise applicable case-mix adjusted prospective payment amount (74 FR 49988). The proposed ESRD PPS also provided for special adjustments for pediatric patients (74 FR 49981) and for facilities treating a low-volume of ESRD patients) 74 FR 49969), as well as a 4-year transition (phase-in) period under which facilities would receive a blend of payments under the prior case-mix adjusted composite payment system and the new ESRD PPS (74 FR 50003). This final rule will implement a case-mix adjusted bundled PPS for Medicare outpatient ESRD dialysis patients beginning January 1, 2011, in accordance with the statutory provisions set forth in section 153(b) of MIPPA.
B. Legislative History and Statutory Authority for the ESRD Prospective Payment System
Section 299I of the Social Security Amendments of 1972, Public Law 92-603, established the ESRD program under Medicare. That law extended Medicare coverage to individuals regardless of age who have permanent kidney failure, requiring either dialysis or kidney transplantation to maintain life, and meet certain other eligibility criteria.
The enactment of the Omnibus Budget Reconciliation Act of 1981, Public Law 97-35, resulted in changes to the ESRD payment system. Section 2145 of Public Law 97-35 amended section 1881 of the Act by requiring the Secretary to provide by regulation a method for determining prospectively
the amounts of payments for dialysis services furnished by providers of services and renal dialysis facilities to individuals in a facility, and to such individuals at home. In particular, the law required that such method be based on a single composite weighted formula (“composite rate”) (which takes into account the mix of patients who receive services at a facility or at home and the relative costs for furnishing such services) for hospital-based facilities and such a single composite rate for other renal dialysis facilities, or that payment be based on such other method or combination of methods which differentiate between hospital-based and other renal dialysis facilities, and which would more effectively encourage more efficient delivery of dialysis services and would provide greater incentives for increased use of home dialysis.
As a result of these statutory requirements, on February 12, 1982, we published a proposed rule on reimbursement for outpatient dialysis services (47 FR 6556) to implement section 1881 of the Act, as amended by section 2145 of Public Law 97-35. The regulations provided that each facility would receive a payment rate per dialysis treatment (“composite rate”), that is adjusted for geographic differences in area wage levels for the treatment furnished in the facility or at home. We refer to the methodology for payment of outpatient maintenance dialysis services on a per-treatment basis as the “composite payment system”.
Final regulations implementing the composite payment system were published on May 11, 1983 (48 FR 21254). The initial payment rates, which were developed from Medicare cost reports for fiscal years ending in 1977, 1978, and 1979, were established at $127 per treatment for independent facilities and $131 for hospital-based facilities. The composite payment system was effective August 1, 1983. It was limited to payments for the costs incurred by dialysis facilities furnishing outpatient maintenance dialysis, including some routinely provided drugs, laboratory tests, and supplies, whether furnished by hospital-based and independent facilities in a facility or at home. We established separate rates for hospital-based and independent dialysis facilities, and provided a process under which facilities with costs in excess of their payment rates could seek exceptions to those rates under specified circumstances.
With regard to home dialysis, this system was the basis for reimbursing home dialysis furnished by hospital-based and independent facilities (Method I). (The other is Method II, under which the beneficiary works directly with a durable medical equipment (DME) supplier to obtain the supplies and equipment needed.) For further information on the distinctions between Method I and Method II,
see
section II.A.7. of this final rule.
The composite payment system implemented in 1983 was relatively comprehensive with respect to the renal dialysis services included as part of the composite payment bundle. However, over time a substantial portion of expenditures for renal dialysis services became excluded from the composite payment system and reimbursed in accordance with the respective fee schedules or other payment methodologies. For example, payments for erythropoiesis stimulating agents (ESAs) such as epoetin alfa (EPO, for example, Epogen®) and darbepoetin alfa (ARANESP®) used to treat anemia, and vitamin D analogues (paracalcitol, doxercalciferol, calcitriol), are made outside of the composite payment system as separately billable services. These separately billable services currently comprise about 40 percent of total spending for outpatient maintenance dialysis. Thus, the current payment for outpatient maintenance dialysis under Medicare represents a mix of prospective payment, fee-for-service, and other payment rules.
Subsequent inflation increases to the composite payment system occurred only in response to specific statutory directives. For example, between 1983 and 2001, the payment rates were increased only three times. A $1.00 increase per treatment was effective January 1, 1991 as a result of the enactment of the Omnibus Budget Reconciliation Act of 1990, Public Law 101-508. The rates were not revised again until the enactment of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, Public Law 106-113, which increased the payments by 1.2 percent effective January 1, 2000 and January 1, 2001, respectively.
During the last few years, policymakers and other interested parties, including the Medicare Payment Advisory Commission (MedPac) and the Government Accountability Office (GAO), have examined the Medicare outpatient maintenance dialysis payment system and suggested a bundled prospective payment approach.
See Medicare Payment Advisory Commission (MedPAC): Report to the Congress: Medicare Payment Policy,
March 2001, March 2005, and March 2007, and GAO Report GAO-07-77,
End Stage Renal Disease: Bundling Medicare's Payment for Drugs with Payment for All ESRD Services Would Promote Efficiency and Clinical Flexibility,
November 2006. The ESRD PPS would combine composite rate dialysis services with separately billable services under a single payment, adjusted to reflect patient differences in resource needs or case-mix. As in any PPS, dialysis facilities would keep the difference if Medicare payments exceeded costs for the bundled services, and would be liable for the difference if costs exceeded Medicare payments.
Aside from resulting in a single comprehensive payment for all services included in the bundle, we believe the ESRD PPS would meet several objectives. These include reducing incentives to overuse profitable separately billable drugs, particularly EPO, the targeting of greater payments to ESRD facilities with more costly patients to promote both equitable payment and access to services, and the promotion of operational efficiency. Because of the increased flexibility a bundled PPS would provide in the delivery of outpatient maintenance dialysis services, we believe that it could also increase desirable clinical outcomes, resulting in an enhanced quality of care.
The Congress has twice required studies on the bundling of additional services into the composite payment system. In section 422(c)(2) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), Pub. L. 106-554, the Congress required the Secretary to issue a report on a bundled system that would include separately billable drugs and clinical laboratory services routinely used in furnishing dialysis. The Secretary submitted this report,
Toward a Bundled Outpatient Medicare End Stage Renal Disease Prospective Payment System,
to Congress in May 2003. That report contained three major findings that would form the basis for the subsequent development of the ESRD PPS:
1. Currently available administrative data are adequate for proceeding with the development of an expanded outpatient ESRD PPS.
2. Case-mix adjustment is potentially feasible based on available clinical information for ESRD patients in order to pay facilities appropriately for treating more costly resource intensive patients.
3. Current quality review initiatives provide a basis for monitoring the impact of a bundled ESRD PPS after implementation, to ensure quality of
care does not deteriorate in response to the system's efficiency incentives.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Public Law 108-173, also required the Secretary to submit to the Congress a report detailing the elements and features for the design and implementation of a bundled ESRD PPS. Section 623(f)(1) of the MMA specified that such a system should include the bundling of separately billed drugs, clinical laboratory tests, and other items “to the maximum extent feasible”. That section also required the report to include a description of the methodology to be used to establish payment rates and that the report, detailing the design of an appropriate bundled payment system, be submitted to the Congress by October 1, 2005. Section 623(e) of the MMA also required a demonstration project testing the feasibility of using a fully bundled case-mix adjusted ESRD PPS.
In addition to requiring a report on a bundled ESRD PPS, section 623 of the MMA amended section 1881(b) of the Act, by requiring significant revisions to the composite payment system. Specifically, section 623 of the MMA required:
• An increase of 1.6 percent to the composite payment rates effective January 1, 2005.
• An add-on to composite rate payments to account for the difference in payments for separately billable drugs based on a revised drug pricing methodology compared to the previous method.
• A “basic” case-mix adjustment to an ESRD facility's composite payment rate reflecting a “limited number of patient characteristics.”
• That total payments under the basic case-mix adjusted composite payment system be budget neutral.
• An annual increase to the basic case mix adjusted payment amounts based on projected growth in expenditures for separately billed drugs (the “growth update”).
• That payment rates be adjusted by a geographic index, as determined appropriate by the Secretary (and phased-in to the extent such index differed from the previous payment system).
• Reinstatement of the composite rate exceptions process, eliminated for most dialysis facilities beginning December 31, 2000 under BIPA, for ESRD pediatric facilities, effective October 1, 2002.
On August 5, 2004 and November 15, 2004, we published a proposed rule and final rule (69 FR 47487 through 47730 and 69 FR 66235 through 66915), respectively, implementing the provisions affecting the composite payment system effective January 1, 2005, as set forth in section 623 of the MMA. We refer to the modified composite payment system as the “basic case-mix adjusted composite payment system”. The development and application of the basic case-mix adjustments, using regression based adjustment factors for the patient variables of age, BMI, and low BMI, are explained in each of those rules. (For more information, we refer readers to 69 FR 47529 and 69 FR 66323, respectively.) The product of the specific adjusters for each patient, multiplied by the otherwise applicable composite payment rate, yielded the basic case-mix adjustment required by the MMA. The basic case-mix adjusted composite payment system was effective April 1, 2005, and was developed from research conducted by the University of Michigan Kidney Epidemiology and Cost Center (UM-KECC) and summarized in its report,
Methodology for Developing a Basic Case-Mix Adjustment for the Medicare ESRD Prospective Payment System
(May 19, 2004 report and April 1, 2005 addendum).
Subsequent to our implementation of the MMA requirements discussed above, UM-KECC continued its research to develop a case-mix adjusted ESRD PPS that would combine composite rate and separately billable services. UM-KECC reported its findings and recommendations in a final report submitted to CMS in February 2008,
End Stage Renal Disease Payment System: Results of Research on Case-Mix Adjustment for an Expanded Bundle.
That report is available on the internet at:
http://www.sph.umich.edu/kecc/assets/documents/UM-KECC%20ESRD%20Bundle%20Report.pdf.
UM-KECC's final report formed the basis for the Secretary's February 2008 Report to Congress,
A Design for a Bundled End Stage Renal Disease Prospective Payment System,
mandated under section 623(f)(1) of the MMA.
The aspects of the basic case-mix adjusted composite payment system implemented as a result of section 1881(b)(12) of the Act are important because they provide a foundation for the development of the case-mix adjusted bundled ESRD PPS required under Public Law 110-275, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The basic case-mix adjustment mandated under the MMA is described in detail in the next section and only affects the composite rate. It does not reflect costs associated with separately billable services. Separately billable services, particularly injectable drugs, are a significant component of the total dialysis resources used for each patient.
The implementation of the basic case-mix adjustments to the composite payment system effective April 1, 2005, and the Secretary's February 2008 Report to Congress, suggested that a bundled ESRD PPS which combined composite rate and separately billable services to yield case-mix adjusted payments was technically feasible. The report defined a payment bundle of dialysis-related services, described the methodology used to develop the regression based case-mix adjusters and the base period payment rates to which the case-mix adjusters would be applied, and discussed numerous other issues relevant to the bundling of outpatient dialysis services under a system of prospective payments.
As a result of the July 15, 2008 enactment of MIPPA, section 153(b) of MIPPA amended section 1881(b) of the Act to require the implementation of an ESRD bundled payment system effective January 1, 2011 (herein referred to as the “ESRD PPS”). Consistent with the language under the statute, we will refer to hospital-based and independent renal dialysis facilities as “providers” and “facilities”, respectively, and when addressing both types of facilities, we will collectively refer to such entities as “ESRD facilities”, as set forth in § 413.171. Section 153(b) of MIPPA specifies the following:
• The Secretary must implement a payment system under which a single payment is made to a provider of services or a renal dialysis facility for “renal dialysis services” in lieu of any other payment, and for such services and items furnished for home dialysis and self-care home dialysis support services.
• A definition for the “renal dialysis services” that are included in the payment bundle.
• The estimated amount of total payments under the ESRD PPS for 2011 must be equal to 98 percent of the estimated total amount of payments for renal dialysis services paid under Medicare, including payments for drugs, that would have been made with regard to services in 2011 if the new system was not implemented. Such estimate must be made based on per patient utilization data from 2007, 2008, or 2009, whichever year has the lowest per patient utilization.
• The ESRD PPS must include adjustments for case-mix variables, high cost outlier payments, and low-volume facilities and provide for a four-year transition (phase-in) period, with all facilities transitioned into the ESRD PPS
on January 1, 2014. ESRD facilities may make a one-time election before January 1, 2011, to be paid under the ESRD PPS and not go through the transition period.
• The ESRD PPS may include other payment adjustments, as the Secretary determines appropriate, including the use of a geographic index, and potential adjustments for pediatric patients and rural ESRD facilities, and may provide for a unit of payment as the Secretary specifies (for example, per treatment or per unit of time).
• The ESRD PPS payment amounts must be annually increased by an ESRD bundled market basket beginning in 2012, and during the transition.
• Section 623(e) of the MMA, which requires a demonstration project of the use of a case-mix adjusted bundled ESRD PPS, was repealed.
Section 153(a)(1) of MIPPA also requires that the composite payment rates be increased by 1.0 percent effective for services furnished on or after January 1, 2009, and before January 1, 2010, and increased by 1.0 percent for services furnished on or after January 1, 2010. In addition, section 153(a)(2) of MIPPA requires that the payment rate for dialysis services furnished on or after January 1, 2009, by ESRD providers of services, be the same as the payment rate for such services furnished by renal dialysis facilities. On November 19, 2008, we published the CY 2009 Physician Fee Schedule final rule (73 FR 69754), implementing the site neutral composite rate for ESRD facilities and the CY 2009 1.0 percent increase to the composite rate. On November 25, 2009, we published in the
Federal Register
the CY 2010 1.0 percent increase to the composite rate in the CY 2010 Physician Fee Schedule final rule (74 FR 61901).
In the following sections of this final rule, we describe the ESRD PPS we are implementing effective January 1, 2011, in compliance with the statutory requirements of MIPPA, and in response to the comments received in connection with the proposed rule published September 29, 2009.
C. Existing Basic Case-Mix Adjustments
Resources required to furnish routine dialysis such as staff and equipment time vary by patient. Because of the variation in resources required to furnish routine dialysis to individuals with varying patient characteristics, facilities that treat a greater than average proportion of resource-intensive patients could be economically disadvantaged if they are paid a rate based on average resources. In addition, patients who are costlier than average to dialyze may face difficulties gaining access to care because a fixed composite payment rate could create a disincentive to treat such patients. The purpose of a case-mix adjustment based on patient characteristics is to make higher payments to ESRD facilities treating more resource-intensive patients, according to objective quantifiable criteria.
The costs of providing the routine maintenance dialysis services that are paid under the composite rate are reported on the Medicare cost reports for hospital-based and independent ESRD facilities (Forms CMS 2552-96 and CMS 265-94, respectively). In order to determine a basic case-mix adjustment that could be applied to each ESRD facility's composite rate, UM-KECC further examined the relationship between facility-level costs for composite rate services based on the Medicare cost reports for hospital-based and independent facilities, and the average characteristics of patients treated by the facility. The research used data from Medicare cost reports for 3,254 ESRD facilities for 2000 to 2002, patient characteristics/co-morbidity data from CMS's Medical Evidence Form 2728 (Form 2728) for 1995 through 2002, and Medicare claims for approximately 360,000 ESRD patients. Based on standard techniques of multiple regression analysis, UM-KECC found that age and body size had significant relationships to composite rate costs. The body size variables were BSA and low BMI, calculated based on a patient's height and weight which is reported on Medicare claims.
A BMI less than 18.5 kg/m
2
is considered a clinical measure of underweight status and is an indicator of patients who are malnourished or suffering from co-morbidities such as wasting syndrome. BSA is closely associated with the duration and intensity of dialysis required to achieve targets for dialysis adequacy. Facilities with a larger proportion of patients with a greater than average BSA, or with a BMI lower than 18.5, were found to have greater composite rate costs. The research also revealed a U-shaped relationship between age and composite rate costs, with the youngest and oldest age groups incurring greater costs for composite rate services due to resource needs.
The outcome of UM-KECC's research was a set of basic case-mix adjusters or multipliers for ESRD patients based on three variables. These variables were: (1) The patient's age (five groups), (2) BSA (a patient-specific value based on incremental differences from the national patient average), and (3) BMI category (two groups, value either less than, or equal to/greater than 18.5 kg/m
2
). CMS also developed a special adjuster for pediatric patients outside of UM-KECC's research methodology based on analysis of a sample of Medicare cost reports. The adjuster for each of these three variables is multiplied by the facility's composite rate to yield the current “basic” case-mix adjustment for each ESRD patient according to the specified patient characteristics.
These adjusters are as follows:
ER12AU10.008
The above multipliers were derived from the coefficients of the regression model used to predict facility differences in composite rate costs based on UM-KECC's research. For example, the case-mix adjuster for a 47 year old ESRD patient who is underweight (BMI < 18.5 kg/m
2
) and has a BSA of 2.0 m
2
would be calculated as follows:
Age Adjuster 1.055
BSA Adjuster 1.037
(2.0−1.84)/0.1
= 1.060
Low BMI Adjuster 1.112
Case-Mix Adjuster 1.055 × 1.060 × 1.112 = 1.244
The resulting case-mix adjustment factor of 1.244 for this patient would be multiplied by the facility's otherwise applicable wage adjusted composite payment rate.
The basic case-mix adjustment mandated under the MMA only affects the composite rate. It does not reflect costs associated with separately billable services. Separately billable services, particularly injectable drugs, are a significant component of the total dialysis resources used for each patient. Prior to the enactment of MIPPA on July 15, 2008, however, CMS did not have authority to bundle those services into a case-mix adjusted PPS.
II. Summary of the Proposed Provisions and Responses to Comments on the Proposed Rule
The proposed rule was published in the
Federal Register
on September 29, 2009 with a comment period that ended on November 16, 2009 (74 FR 49922). We received approximately 1475 public comments, including comments resulting from a large write-in campaign regarding oral Part D drugs. Interested parties that submitted comments included numerous dialysis facilities, the national organizations representing dialysis facilities, nephrologists, and patients, the major chain facilities, clinical laboratories, pharmaceutical manufacturers, hospitals and their representatives, individual dialysis patients, and MedPAC. Following publication of the proposed rule, we received several requests to extend the comment period to allow time for stakeholders to understand the proposed ESRD payment changes and to formulate comments that would be meaningful to CMS. On November 4, 2009 we published a notice (74 FR 57127) in the
Federal Register
extending the public comment period an additional 30 days to December 16, 2009, to provide additional time for the public to examine the proposed rule and provide meaningful comments on its provisions. In this final rule we provide a summary of each proposed provision, a summary of the public comments received, our responses to them, and any changes to the proposed ESRD PPS we are implementing in this final rule as a result of comments received. Below we address general comments received regarding the proposed rule.
Comment:
Clinicians, health systems, medical supply companies, patients, and hospital-based and independent ESRD facilities from small, medium, and large dialysis organizations requested that rather than proceeding by issuing a final rule, CMS issue its next public notice as an interim final rule with an additional opportunity for public comment prior to the implementation deadline. Commenters provided several reasons for this position including:
• A lack of clarity and specificity with regard to the proposals in the proposed rule will make implementation difficult and compromise ESRD facilities' viability. Specifically, operational questions remain unanswered such as the way in which billing for laboratory tests would occur during the transition, the way in which medical history would be retrieved for purposes of the co-morbidity adjustments, and the way in which ESRD facilities would provide patients with oral drugs. Commenters noted that absent additional clarification in these areas it would be difficult to implement the provisions of the ESRD PPS in the short timeframe between the expected publication of a final rule and its implementation on January 1, 2011.
• A lack of transparency with regard to the data used in developing the proposed rule. Specifically, some commenters noted that they did not have access to Part D data or CMS' rate setting data file that would have facilitated their ability to fully analyze the impact of the ESRD PPS.
• The absence of administrative or judicial reviews, a feature mandated by MIPPA, would mean there would be an inability to challenge payment making it
even more important that the provisions of the final ESRD PPS rule are correct.
• The additional time associated with issuing an interim final rule would help bring to light inequities between ESRD provider types and the level of owned service lines including laboratory, pharmacy, equipment and supplies.
• Concern about the potential for unintended patient and provider consequences that may result from the ESRD PPS and believed that issuing an interim final rule would reduce this risk by allowing additional time to address stakeholder concerns.
Response:
We understand the commenters' interest in ensuring that potential unintended negative consequences associated with the new ESRD PPS are minimized. However, we believe that we have adequately reflected the essential elements of the ESRD PPS in the proposed rule including basic issues associated with implementing the system and have received a comprehensive collection of public comments from a wide array of stakeholders to which we have responded in this rule. Specifically, as noted in section II.K.2. of this final rule, we have clarified the way in which provider billing for laboratory tests would occur during the transition. We have also clarified our position with respect to co-morbidity adjustments and their associated administrative burden in section II.F.3. of this final rule. As noted in section II.K.2. of this final rule, we have addressed implementation issues associated with ESRD facility provision of oral drugs.
With regard to the lack of transparency in sharing the data that was used in developing the ESRD PPS proposed rule, we note that the files to which commenters refer contain patient-specific data. To maintain patient confidentiality and privacy we are unable to share such data. However, we posted detailed information by facility which was used for purposes of assessing facility-level impact.
In addition, we note that following publication of the ESRD PPS proposed rule, we posted the CY 2011 Proposed Rule ESRD PPS Facility Level Impact File to the ESRD Payment Web site (
http://www.cms.hhs.gov/ESRDPayment/PAY/itemdetail.asp?filterType=none&filterByDID=99&sortByDID=4&sortOrder=descending&itemID=CMS1228517&intNumPerPage=10
). This file includes facility level data that was used by CMS to assess the impact of the proposed ESRD PPS.
Given that we have issued a proposed rule containing a detailed proposal for an ESRD PPS, allowed for an extended 90-day public comment period, and carefully considered the comments received, we believe that a final rule is appropriate. In addition, because of the January 1, 2011 implementation deadline mandated by MIPPA, we believe that finalizing the rule now will maximize the amount of time ESRD facilities will have to implement the provisions of this rule prior to the implementation deadline. For these reasons we are issuing this document as a final rule.
A. The Proposed ESRD PPS Bundle
Section 1881(b)(14)(A)(i) of the Act, as added by section 153(b) of MIPPA, specifies that the ESRD PPS must represent a single payment to ESRD facilities for “renal dialysis services” in lieu of any other payment, and home dialysis supplies, equipment, and support services furnished pursuant to section 1881(b)(4) of the Act. Section 1881(b)(14)(B) of the Act, which identifies the renal dialysis services that are to be included in the ESRD PPS payment bundle, provides the following:
* * * the term “renal dialysis services” includes—
(i) Items and services included in the composite rate for renal dialysis services as of December 31, 2010;
(ii) Erythropoiesis stimulating agents and any oral form of such agents that are furnished to individuals for the treatment of end stage renal disease;
(iii) Other drugs and biologicals that are furnished to individuals for the treatment of end stage renal disease and for which payment was(before application of this [new ESRD PPS]) made separately under this title, and any oral equivalent form of such drug or biological; and
(iv) Diagnostic laboratory tests and other items and services not described in clause (i) that are furnished to individuals for the treatment of end stage renal disease.
1. Composite Rate Services
Section 1881(b)(14)(B)(i) of the Act requires that the ESRD PPS payment bundle include composite rate services. As we indicated in the proposed rule, the current case-mix adjusted composite payment system represents a limited PPS for a bundle of outpatient renal dialysis services that includes maintenance dialysis treatments and all associated services including historically defined dialysis-related drugs, laboratory tests, equipment, supplies and staff time (74 FR 49928). Therefore, consistent with the statute, we proposed to include the items and services included in the composite rate for renal dialysis services as of December 31, 2010, (including self-dialysis training services), such as labor, supplies, and equipment.
We proposed to define composite rate services at proposed § 413.171. We also proposed that the composite rate services would not only include payments for the costs of services directly related to dialysis, but would also include payments authorized in accordance with the composite payment rate exception provisions set forth in 42 CFR 413.180 through 413.186 (74 FR 49928). The costs for such composite rate services were included in our computation of the proposed ESRD PPS base rate, as explained in section II.E. of this final rule, as well as in the development of the proposed composite rate regression model used to create the two equation patient specific case-mix adjusters that would be applied to the base rate. We did not receive any public comments on our proposed inclusion of the renal dialysis services currently covered under the composite payment system for inclusion under the bundled ESRD PPS. Therefore, we are finalizing our definition of composite rate services as renal dialysis services as proposed in § 413.171.
2. ESAs and Their Oral Forms
Section 1881(b)(14)(B)(ii) of the Act requires that ESAs and any oral form of such agents that are furnished to individuals for the treatment of ESRD be included in the ESRD PPS payment bundle. We proposed that payments for injectable ESAs, (for example, Epoetin® and ARANESP®) would be included in the calculation of the proposed ESRD PPS base rate, as well as in the separately billable regression model used to create the two equation patient specific case-mix adjusters for the proposed ESRD PPS (74 FR 49928). Therefore, consistent with our interpretation of the statute, we proposed that no additional payment would be provided for ESAs and their oral forms outside of the bundle of renal dialysis services included in the ESRD PPS. We also noted that oral versions of ESAs do not currently exist, but we further proposed that to the extent oral forms are approved after the implementation of the ESRD PPS, those drugs would be paid under the ESRD PPS (74 FR 49928). We set forth provisions regarding the inclusion of ESAs and their oral forms as renal dialysis services in the ESRD PPS payment bundle at proposed § 413.171.
We received a few comments regarding our proposal to bundle ESAs and those comments are addressed below.
Comment:
Some commenters expressed concern that bundling drugs
will restrict nephrologists' ability to prescribe necessary medications. One commenter stated that including medications like EPO and oral medications will limit nephrologists from prescribing what is necessary.
Response:
We believe that the ESRD PPS will establish a bundled payment system based on the average cost of care with adjustments that target more payment to more resource intensive ESRD patients. In situations where costs for treating patients exceed an established threshold, the outlier policy would apply. The outlier policy is discussed in detail in section II.F.4. of this final rule. We expect that ESRD facilities and health care providers will continue to advocate on behalf of patients who require more than the average utilization of ESRD-related items and services. We note that the responsibility for determining the appropriateness of medical care resides with the ESRD facility, physicians, and the interdisciplinary team as stipulated by the ESRD Conditions for Coverage. Under § 494.90, an ESRD facility would be out of compliance if it did not meet the patient's documented needs as shown in the patient plan of care.
Comment:
Several commenters expressed concern that the inclusion of ESAs in the payment bundle will result in dialysis facilities decreasing the amounts of EPO given to patients, resulting in an increase in blood transfusions for anemia management, and increased stress on the nation's blood supply.
Response:
Section 1881(b)(14)(B)(ii) of the Act requires that ESAs be included in the ESRD PPS. While the inclusion of any item or dialysis service in the payment bundle provides an incentive for dialysis facilities to maximize profits by skimping on the provision of that item or service, we point out that an important part of our Quality Incentive Program (QIP) is the monitoring of hemoglobin levels among dialysis patients to ensure that target levels are met, and that anemia management does not deteriorate under the ESRD PPS (see section II.M. of this final rule). We also plan to monitor the incidence of transfusions among dialysis patients subsequent to the implementation of the PPS to ensure that blood transfusions do not replace effective anemia management with ESAs as a result of the system's payment incentives. More information about monitoring efforts planned due to the implementation of the ESRD PPS appears in section II.L. of this final rule and in future issuances.
Comment:
A few commenters opposed the inclusion of EPO or intravenous iron in the bundle, claiming that if included, there will be a decrease in the use of these drugs resulting in decreased hemoglobin levels, necessitating more in-hospital blood transfusions. Another commenter stated that bundling would result in a shift to subcutaneous administration of ESAs with additional needle sticks, decreases in hemoglobin levels, and an increase in transfusions. Several commenters cited the USRDS 2008 Annual Data report as showing a large decrease in the use of red blood cell transfusions since 1992. One commenter questioned how patients will obtain EPO as it is expensive. One commenter referenced National Kidney Foundation (NKF) guidelines to support their statement that “intravenous iron is * * * more efficacious at helping patients maintain adequate iron levels in clinical studies of patients * * * undergoing hemodialysis and therefore is generally the preferred recommended therapy.” Another commenter claimed, based on their analysis of two patients' reimbursement under the proposed ESRD PPS, that their facility would face significant financial loss, especially for those receiving large doses of EPO. Some commenters suggested that we include only intravenous ESAs. One commenter stated that ESRD-related intravenous drugs include those used in the treatment of anemia, and therefore, their oral equivalents should be included in the bundle.
Response:
We have no authority to exclude ESAs from the ESRD PPS bundled payment. As we explained in the proposed rule (74 FR 49928), section 1881(b)(14)(B)(ii) of the Act requires that ESAs and any oral form of such agents that are furnished to individuals for the treatment of ESRD be included in the ESRD PPS payment bundle. We explained that the payments for injectable ESAs (for example Epoetin alfa (Epogen®) and darbepoetin (ARANESP®), which are separately payable outside of the current basic case-mix adjusted composite payment system, would be included in the calculation of the proposed ESRD PPS base rate. We also noted in the proposed rule that while we were currently unaware of any other injectable ESAs or oral forms of such ESAs used for the treatment of ESRD, if any such agents would become available subsequent to the implementation of the ESRD PPS on January 1, 2011, they would be considered renal dialysis services and subject to payment under the ESRD PPS (74 FR 49928). We are not aware that a shift to subcutaneous administration of ESAs from intravenous administration will lead to decreases in hemoglobin levels and increases in transfusions.
Although several commenters suggested that ESRD beneficiaries may be denied appropriate and necessary treatment because of the perceived negative financial impact of the ESRD bundled payment system, we point out that section 1881(b)(14)(B)(ii) is clear in requiring that ESAs and any oral forms of ESAs must be included in the ESRD PPS payment bundle. In addition, as discussed in section II.M. of this final rule, we will monitor anemia management as part of the ESRD QIP.
Comment:
Several commenters expressed concern that the bundling of ESAs poses a financial disincentive for adequate anemia management, and will lead to the maintenance of hemoglobins at the lowest possible level, resulting in worse outcomes for patients.
Response:
Section 1881(b)(14)(B)(ii) of the Act is very clear in requiring that ESAs and any oral equivalent forms of ESAs furnished for the treatment of ESRD must be included in the ESRD PPS payment bundle. We have no discretion with respect to their inclusion or exclusion.
We do not understand the commenters' conclusion that maintaining hemoglobins at the least possible level will result in worse patient outcomes. We expect ESRD facilities to provide the appropriate medications at the appropriate dosage to maintain patient hemoglobins at the required level. We note that we will be closely monitoring the anemia management of ESRD patients subsequent to the implementation of the ESRD PPS as part of CMS's QIP.
Therefore, after considering the public comments and for the reasons stated above, we are not making changes to the proposed Medicare regulation at § 413.171 and are finalizing the inclusion of ESAs and their oral forms as renal dialysis services in the ESRD PPS payment bundle.
3. Other Drugs and Biologicals and Their Oral Forms
Section 1881(b)(14)(B)(iii) of the Act specifies that other drugs and biologicals that were furnished to individuals for the treatment of ESRD and for which payment was made separately under this title, prior to the implementation of the ESRD PPS, and their oral equivalent forms, must be included in the ESRD PPS payment bundle. In the proposed rule, we noted the reference to “this title,” in the statutory language, and we interpreted clause (iii) as requiring the inclusion in the ESRD PPS payment bundle of all drugs and biologicals that were
separately payable under title XVIII of the Act prior to the implementation of MIPPA (74 FR 49928). We proposed at § 413.171 that drugs and biologicals used to treat ESRD that were separately payable prior to January 1, 2011, be included as part of the proposed ESRD PPS payment bundle (74 FR 50022). Accordingly, we proposed to include such drugs and biologicals in the development of the proposed patient-specific case-mix adjusters and in the calculation of the proposed ESRD base rate to which the adjusters would be applied. In the proposed rule, we identified the top eleven injectable drugs furnished to Medicare ESRD beneficiaries which we proposed to include in the payment bundle (
See
Table 8 at 74 FR 49940). Table 8 also contained a category of miscellaneous other injectable drugs, as well as a line item reflecting other services furnished by ESRD facilities. The identification and treatment of these other injectable drugs and services are addressed in later in this section.
We identified specific National Drug Codes (NDCs) for drugs and biologicals previously payable under Part D that we proposed to include in the payment bundle. However, we proposed that the ESRD PPS would apply, regardless of the emergence of new drugs or biologicals or different NDCs for the classes of drugs and biologicals included in the ESRD PPS bundle. Finally, we noted that section 1881(b)(14)(B) of the Act specifically excludes vaccines from the payment bundle and, therefore, we did not include vaccines in the proposed ESRD PPS. We requested comments on our proposals above.
We received numerous public comments related to inclusion of ESRD-related injectable drugs and biologicals; the inclusion of oral equivalents of ESRD injectable drugs; and the inclusion of oral-only ESRD-related drugs (that is, drugs for which there is no injectable equivalent or other form of administration) currently paid under Part D in the payment bundle. Most of the commenters were opposed to the inclusion of all oral drugs and biologicals, claiming that their inclusion would lead to poorer patient outcomes because the proposed amount per treatment of $12.47 reflected in the calculation of the base rate (Table 8 at 74 FR 49940) was claimed to be inadequate to cover the average cost of these drugs. The comments received are summarized below.
a. Oral-Only ESRD-Related Drugs
Comment:
Several commenters agreed with CMS that clause (iii) of section 1881(b)(14)(B) of the Act can be interpreted broadly to encompass all drugs furnished to individuals for the treatment of ESRD, including oral drugs. In particular, the commenters did not interpret the subsequent reference to “any oral equivalent form of such drug or biological” as limiting the scope of oral drugs that may be included. Another commenter stated that one possible interpretation of MIPPA gives CMS authority to broaden the bundle to include former Part D oral drugs. Finally, another commenter strongly endorsed the agency's proposal to include all ESRD-related drugs and concurred with CMS's rationale and statutory interpretation set forth in the proposed rule. In particular, the commenter stated that the plain language of the statute with respect to clauses (iii) and (iv) gave CMS clear authority to include ESRD drugs, regardless of the route of administration, agreeing with the agency's interpretation of the reference to the word “title”, and also noting that the phrase “other drugs and biologicals” included no qualifier that would limit clause (iii) to only separately reimbursable injectable drugs.
Response:
We appreciate the comments on our proposal to bundle oral-only drugs, which support our interpretation of the statute.
Comment:
One commenter suggested that CMS implement an expeditious appeals process for physicians to challenge payment for drugs that may be excluded from dialysis companies' formularies.
Response:
ESRD facility formularies are beyond the scope of this final rule. However, we expect ESRD facilities to provide the appropriate medications, at the appropriate dosage, based upon individual patient needs. We expect the patient's nephrologist and the interdisciplinary team to identify medication needs in accordance with the individual patient's plan of care.
Comment:
Many comments indicated that CMS's decision to include oral drugs with no injectable equivalent (“oral-only” drugs) within the statutory definition of “renal dialysis services” represents a misreading of statutory intent and violates principles of statutory construction. One commenter asserted that CMS's inclusion of oral-only drugs in the ESRD PPS appeared to hinge entirely on the reference to the words “this title” under section 1881(b)(14)(B)(iii) of the Act. The commenter stated that this interpretation represented too narrow a reading of the statute, and was inconsistent with the intended meaning of “this title” set forth elsewhere in section 1881 of the Act. Other commenters stated that CMS's reasoning that the use of “this title” in section 1881(b)(14)(B)(iii) of the Act means that all ESRD drugs payable under title XVIII of the Act must be included in the payment bundle, including drugs payable under Part D, represents a selective reading of the statute, and that the more appropriate approach is to read the language as a whole. The commenters asserted that the entirety of section 1881(b) of the Act focuses on payments to ESRD facilities, and that the four categories of renal dialysis services specified in section 1881(b)(14)(B) of the Act only pertain to services furnished for which payment is made to ESRD facilities.
A few commenters compared references to “this title” in other subparagraphs of section 1881(b) of the Act and argued that our prior implementation of payment to dialysis facilities did not include oral-only drugs when the same reference to “this title” was used, stating that the reference has been interpreted previously to mean separately billable Part B drugs (with separate payment to dialysis facilities). Consequently, commenters claimed that such oral-only products do not fall within clause (iii) because they are not separately billable Part B drugs (which are limited to those products that cannot be self-administered by a patient and must be furnished in the facility by staff), and are not oral equivalents of separately billable drugs. Commenters claimed that because the oral-only drugs (calcimemetics and phosphate binders) proposed for inclusion in the ESRD PPS payment bundle are currently dispensed by a pharmacy for home use, are not furnished by ESRD facilities, and are not the oral equivalent of an injectable drug under clause (iii), such drugs must be excluded from the bundle. Therefore, these commenters maintained that inclusion of such oral-only drugs in the expanded bundle under the proposed ESRD PPS is inappropriate. Although most commenters opposed the inclusion of former Part D drugs, several stated that there appeared to be sufficient statutory support for including them.
Response:
We agree that section 1881(b) of the Act addresses payments to dialysis facilities for dialysis services furnished Medicare ESRD beneficiaries, either directly by the facility, by a supplier (for example, DMEPOS supplier), or under arrangement (for example, clinical laboratory). However, in our view, the intent of section 1881(b)(14)(B) of the Act was not to limit the renal dialysis services included in the ESRD PPS payment bundle to services for which only ESRD
facilities are currently paid. Clause (iii) of that section specifies that drugs and biologicals for which separate payment is made, and their oral equivalents, must be included in the bundle as renal dialysis services. We have interpreted clause (iii) as encompassing not only injectable drugs and biologicals (other than ESAs, which are included under clause (ii)) used for the treatment of ESRD, but also all non-injectable drugs furnished under Title XVIII. Under this interpretation, the “any oral equivalent form of such drug or biological” language pertains to the oral versions of injectable drugs other than ESAs. All other ESRD-related drugs and biologicals, regardless of the route of administration, are addressed by the “other drugs * * * under this title” portion of clause (iii). We disagree with the commenters' argument that we have incorrectly expanded the scope of clause (iii) to include drugs and biologicals based on an inconsistent interpretation of “this title” as used elsewhere in the Act. Accordingly, we continue to believe that the entirety of clause (iii) gives us sufficient statutory authority to include all ESRD-related drugs and biologicals, regardless of whether they are furnished by a dialysis facility, under the ESRD PPS payment bundle.
Another issue is whether the “other items and services” language in clause (iv) of section 1881(b)(14)(B) of the Act encompasses oral-only drugs furnished for the treatment of ESRD. Commenters argue that oral-only drugs would not be excluded from the definition of renal dialysis services under the reasoning that the scope of the bundle was intended to cover only services for which ESRD facilities currently are being paid, as payments for the oral equivalents of injectables are not made to ESRD facilities.
We do not believe that construing the “other items and services” language in clause (iv) as applying to oral-only drugs violates a principle of statutory construction, by making clauses (ii) and (iii) otherwise redundant. The language in clause (iv) does not mean all drugs currently available to Medicare beneficiaries for the treatment of ESRD as the commenters suggest. Rather, we believe that it can be interpreted as a residual or catch all category for drugs which do not fall under the scope of those specified renal dialysis services identified in clauses (ii) and (iii). Medicare regulation under § 400.202 defines “services” as follows in pertinent part:
Services means medical care or services and items, such as medical diagnosis and treatment, drugs and biologicals, * * *
Thus, we are interpreting the use of the word services in clause (iv) consistent with how we interpret and define services under Medicare which supports including other oral-only drugs not specified in the preceding clauses in the bundle, not the exclusion of those drugs from the payment bundle. We believe that this interpretation of clause (iv) neither represents a selective reading of the statute, nor an overly expansive definition of the scope of the renal dialysis services intended to be included in the payment bundle.
Comment:
Another commenter stated that the reference to “separate payment” under section 1881(b)(14)(B)(iii) of the Act would exclude Part D drugs because under Part D, Medicare is not making separate payment for drugs. The commenter reasoned that the Medicare program makes per beneficiary payments to plans, and plans use such payments to reimburse pharmacies that fill prescriptions for covered Part D drugs. The commenter argued that the focus of section 1881(b) of the Act is on payments to dialysis facilities for services furnished to beneficiaries. Therefore, the first part of clause (iii) pertains to Medicare payments separately made to dialysis facilities for separately payable Part B drugs and biologicals, and does not include Part D products.
Response:
We disagree with the commenter with regard to the meaning of the language in clause (iii) of the statutory definition for renal dialysis services under section 1881(b)(14)(B) of the Act. We believe that such language was intended to be broadly interpreted given that all drugs are reimbursable under Medicare by virtue of being authorized for payment under Title XVIII. Therefore, drugs covered under Part B and formerly covered under Part D would be included regardless of whether payment was made directly by us or by a plan.
Comment:
Several commenters agreed with CMS that clause (iv) of section 1881(b)(14)(B) of the Act is a catch all provision that permits inclusion of any additional products and services, including oral drugs furnished to treat individuals with ESRD, and agreed with the agency's interpretation and rationale that the inclusion of oral-only drugs in the bundle is supported by clause (iv). One commenter noted that the term “services” is used in clause (iv) of the definition for renal dialysis services, and that for purposes of Medicare such term is defined under § 400.202 as “medical care or other services and items, such as medical diagnosis and treatment, drugs and biologicals, supplies, appliances, and equipment, medical social services, and the use of hospital, CAH, or SNF facilities [emphasis added].” The commenter noted that services and items encompass drugs and biologicals. The commenter further stated that a plain reading of clause (iv) leads to the conclusion that clause (iv) is inclusive of all other drugs and biologicals not reimbursed under the ESRD composite rate as of December 31, 2010, that are furnished to individuals for the treatment of ESRD.
Other commenters disagreed with our interpretation, stating that clause (iv) should not apply to oral-only drugs, as it would render the other clauses of the definition unnecessary. Those commenters claimed that an interpretation of clause (iv) that includes all drugs and biologicals fails to consider the entire context of the statute, and that this reading would negate clauses (ii) and (iii) of the statutory definition for renal dialysis services. Commenters stated that under rules of statutory construction, a statute should be construed to give meaning to all aspects of it, such that “other items and services” cannot be read to include drugs that are currently used for treatment of chronic renal failure, but are excluded from clauses (ii) and (iii).
Response:
We believe that clause (iv) of the definition for renal dialysis services under section 1881(b)(14)(B) of the Act could include certain other items and services such as “oral-only” drugs. We agree with the commenter that the definition should be viewed as a whole when considering each of the four clauses, and particularly, clause (iv). With regard to the concerns of statutory interpretation that commenters have identified, we believe we have followed them when interpreting the statute. We note, however, that such rules must be taken into context based on the underlying statutory language at issue. In particular, we note that the definition for renal dialysis services has overlapping categories of services, and that certain clauses included arguably are unnecessary. For example, given that several clauses of the definition contain similar types (or categories) of items and services, we find unconvincing the commenter's suggestion that clause (iv) cannot include drugs or biologicals. We note that drugs and biologicals are not limited to clauses (ii) and (iii) of the definition. In particular, clause (i) covers the composite rate, which contains some drugs.
We also agree with the commenter who pointed to the Medicare definition for “services” that such term includes drugs and biologicals. Given that clause (iv) addresses laboratory tests and other items and services not described in clause (i) (that is, non-composite rate labs, items, services, etc.), we believe that a reasonable interpretation of clause (iv) is that certain non-composite drugs and biologicals are included. We agree with commenters, however, that to ensure that meaning is attached to the other clauses, such drugs and biologicals included in clause (iv) would not be the same as those included in clauses (ii) and (iii). Accordingly, if oral-only drugs are not considered to fall within clause (iii) of the statutory definition (or clause (ii) for that matter), we believe that such drugs would appropriately fall under clause (iv), and would constitute other items and services used for the treatment of ESRD that are not described in clause (i).
In addition, as we noted, several of the clauses of the definition could be viewed as superfluous. Therefore, we believe the definition as a whole must be considered when determining whether an item or service constitutes a “renal dialysis service.” In particular, we note that clause (iii) would have been broad enough to include the erythropoiesis stimulating agents (ESAs) identified in clause (ii), given that such agents would constitute “drugs and biologicals that are furnished for the treatment of ESRD and for which payment was made (before the ESRD PPS) separately under this title, and any oral equivalent of such drug or biological.” Hence, clause (ii) arguably is unnecessary. Congress decided, however, to nevertheless specifically identify these agents as a separate category under the definition. Given the structure of the definition, we do not believe Congress' identification of certain “other drugs and biologicals” in clause (iii), limits the definition such that it excludes other types of drugs or biologicals from clause (iv) of the definition, if such drugs otherwise meet that prong (and are not included in clause (iii) or clause (ii)).
Moreover, we believe that when the definition is viewed as a whole, it suggests a comprehensive definition that wraps in all items and services related to outpatient renal dialysis that are furnished to individuals for the treatment of ESRD. Although the definition is perhaps overlapping or redundant, we find clause (iv) to be a catchall category, and one that provides sufficient authority for bundling oral-only drugs (if such drugs do not fall under clause (iii)). For a discussion of the other items and services under clause (iv), please see the next section below.
Comment:
One commenter pointed to recent legislative proposals and an analysis by the Congressional Budget Office as support that oral-only drugs are not included in the statutory definition for renal dialysis services. Another commenter pointed to legislative history by citing floor statements as evidence of Congressional intent behind the creation of a broad payment bundle, including all oral dialysis-related drugs, such as calcimimetics and phosphate binders.
Response:
We are not persuaded by recent legislative proposals. We continue to interpret section 1881(b)(14)(B) of the Act as including in the ESRD PPS, all drugs and biologicals furnished for the treatment of ESRD, and we believe this interpretation reflects the intent of the statute. With regard to recent legislation, we note that the ESRD PPS proposed rule, in which we set forth our interpretation of the statute and our proposal for the scope of the bundle, was specifically noted and acknowledged by Congress in section 10336 of the Affordable Care Act passed on March 23, 2010 (Pub. L. 111-148), which requires a study by the GAO on the impact on Medicare beneficiaries of including oral-only drugs in the bundled ESRD PPS. Significantly, this new legislation imposes no restrictions or additional requirements with regard to our proposal to bundle such products.
Comment:
Some commenters stated that the exclusion of oral-only drugs from the payment bundle would not make the bundle of services less comprehensive, nor would it defeat the purpose of the new payment system as CMS suggests. These commenters claim that the comprehensive bundle of renal dialysis services the Congress envisioned is a bundle of services furnished by ESRD facilities. Therefore, some commenters believed that since calcimimetics and phosphate binders are not furnished by ESRD facilities, their exclusion would not make the bundle less comprehensive than Congress intended. Commenters also stated that no cost shifting would occur between Part B and Part D, because these oral-only drugs have no Part B equivalent.
Response:
We do not agree with the commenters' assertion that the intent of the payment bundle under the ESRD PPS was to include only those services furnished by dialysis facilities. For example, inclusion of diagnostic laboratory tests (which may be performed by laboratories under arrangements with dialysis facilities, for those facilities that do not have their own laboratories), and oral equivalent forms of injectable drugs, which are currently furnished by pharmacies under Part D, belie this interpretation. Therefore, we believe the exclusion of an item or service from the payment bundle solely because it is not furnished (or traditionally furnished) by ESRD facilities is inappropriate. We also disagree with the argument that excluding drugs from the bundle for which there currently is no injectable equivalent is acceptable because there is no issue of cost-shifting between Part B and Part D. Notwithstanding that there may not be injectable equivalents of certain drugs widely used for the treatment of ESRD currently that may not be the case in the future as new drugs and treatments are developed.
We also point out that apart from the goal of avoiding cost-shifting, we believe the purpose of a bundled payment system is to ensure that patient care is not skewed by financial incentives. We believe that access to and compliance with recommended care can be negatively impacted if certain drugs remain outside of the payment bundle. Although many Medicare beneficiaries may have oral-only drug coverage under Medicare Part D, others have private sources, and some lack reliable sources of coverage altogether. We do not wish to continue an uneven payment policy that favors certain types of drugs by permitting them to remain separately payable outside of the payment bundle.
Comment:
Commenters indicated that several of the oral-only drugs which CMS proposes to include in the payment bundle are relatively expensive, and that the associated payment amount per treatment ($12.48 as calculated from Table 8 at 74 FR 49940) for these drugs was inadequate. Commenters stated that this will result in unintended clinical consequences for patients as ESRD facilities seek to maximize profits by resorting to cheaper but less effective alternatives.
Response:
We believe that by including all drugs widely used for the treatment of ESRD in the payment bundle, we will be providing a level playing field that will benefit patient care. The purpose of a bundled payment system is to make available all treatment options under the same payment system. When drugs remain outside of the payment bundle, financial issues can influence both facility and patient behavior, as the over-utilization of EPO to the detriment of patient care in the past has demonstrated. We acknowledge
that the contrary effect can occur whereby drugs included in the payment bundle could also influence behaviors with potential underutilization. However, we expect ESRD facilities and monthly capitation payment (MCP) physicians will evaluate the potential use of less expensive equally effective alternatives for the treatment of conditions associated with ESRD, where those alternatives are available and not contraindicated by the patient's clinical status. Notwithstanding the availability of less expensive alternatives, we expect that patient care regimens will always be selected solely based on patient needs as identified in the patient's plan of care. We believe that we have developed the bundle, with the inclusion of all oral drugs, to account for the costs that ESRD facilities will incur in furnishing these drugs to patients.
Comment:
Several commenters expressed concern that the inclusion of oral-only drugs in the ESRD PPS payment bundle could adversely impact beneficiaries through increased co-payments. Because the cost of these oral-drugs would be included in the payment for all of the renal dialysis services included in the bundle, commenters noted that the beneficiary would be responsible for 20 percent of the total bundled payment amount, and that this has the potential to increase the co-payment amount owed by the beneficiary. In addition, commenters stated that patients, who currently have Part D coverage and qualify for the low income subsidy, would be required to pay coinsurance on these drugs for the first time, as Part D coverage limits their financial responsibility at very low dollar amounts. The commenters believe that this will pose a financial hardship for these low income patients who will be unable to meet their new coinsurance obligation, caused by including these drugs under Part B. In addition, commenters stated that patients who are dually eligible for both Medicare and Medicaid would also see an increase in their coinsurance liability, as minimal prescription drug copayment amounts are replaced with a 20 percent coinsurance requirement under the ESRD PPS.
Response:
It is inherent with the implementation of any PPS that patients who incur costs greater than the amount covered by the average PPS payment will benefit from the ESRD, because their coinsurance liability will be based on that lower average payment amount compared to the actual costs for resources consumed. Patients whose actual costs for services furnished are less than the PPS payment amount will see an increase in their coinsurance liability, because the actual payment exceeds the actual utilization of resources. Table 2 shows total Part D expenditures for drugs for CYs 2007, 2008, and the first nine months of 2009 currently available. The table reveals that the portion of these expenditures for ESRD drugs borne by the beneficiary, or otherwise paid on behalf of the beneficiary, ranges from 38 to 41 percent.
ER12AU10.009
These amounts compare to the 20 percent coinsurance liability under Part B. We believe that this difference in coinsurance liability between Part B drugs and Part D drugs is largely caused by the beneficiary obligation incurred under the Part D “donut hole”, and by various coinsurance amounts imposed by the drug plans because of formulary differences. Based on this comparison, some beneficiaries will be better off with a 20 percent coinsurance obligation under Part B compared to the range of 37.9 to 41.0 percent liability under Part D, particularly if their utilization of Part D drugs is high, and they have no low income subsidy. While there is no equivalent low income
subsidy under Part B for those patients who currently receive this benefit under Part D, we believe our interpretation of the statute is consistent with the statutory intent to bundle all renal dialysis services under Part B.
In addition, ESRD beneficiaries who currently have private market coverage of the ESRD drugs that would be included in the ESRD PPS and minimal copayments will see an increase in their copayments because of the classification of these drugs under Part B as renal dialysis services, for which the 20 percent coinsurance obligation applies. We would expect that the shift in coverage for oral drugs formerly Part D to Part B will result in drug plans and insurers modifying the scope of their drug coverage, formularies, premiums, and benefits to reflect this shift in coverage, in a competitive environment to maintain and attract beneficiaries. With respect to patients dually eligible for Medicare and Medicaid with minimal prescription drug copayment amounts under Part D, we expect that the 20 percent coinsurance for renal dialysis services included in the payment bundle under the ESRD PPS will be covered by the beneficiary's Medicaid benefit, just like other Part B coinsurance obligations. We will conduct outreach efforts to the States to ensure that States understand the changes due to the ESRD PPS, and their responsibility to process Medicare claims and determine their financial obligations under the new payment system.
Comment:
One commenter proposed that oral equivalents of injectable drugs be included in the ESRD PPS effective January 1, 2011, and that CMS clearly indicate that the only currently available oral drugs with an injectable version are oral iron and oral vitamin D. The commenter suggested that if oral drugs without an injectable version are included in the payment bundle, their inclusion should not occur until the transition period expires in 2014, or later. The commenter proposed that the payment rate for oral drugs included in the bundle be set at the price which a small dialysis organization would need to pay to obtain the drug from a pharmacy under arrangements.
Response:
Consistent with section 1881(b)(14)(B)(iii) of the Act, we are including the oral equivalents of ESRD injectable drugs in the payment bundle effective January 1, 2011. These drugs include the oral Vitamin D analogues (calcitriol, doxercalciferol, and paracalcitol) and levocarnitine. Oral iron is generally available over the counter and not covered under Parts B or D. Therefore, it is not included in the payment bundle. There are currently no oral versions of ESAs for inclusion in the ESRD PPS. For reasons set forth in greater detail response to the comment below, we have adopted the commenter's suggestion that the inclusion of oral-only drugs be delayed until after the end of the transition period, or until January 1, 2014.
Comment:
Several commenters expressed concern that the inclusion of certain oral-only drugs and laboratory tests unrelated to dialysis in the payment bundle represented an inappropriate shifting of costs to dialysis facilities for services unrelated to the dialysis treatment.
Response:
Oral-only drugs will not be implemented under the ESRD PPS until January 1, 2014 for reasons set forth in greater detail below. Neither will laboratory tests unrelated to the treatment of ESRD be included in the payment bundle. Laboratory tests ordered by a dialysis patient's MCP, nephrologist, or other practitioner for reasons unrelated to ESRD will be excluded from the ESRD PPS and will continue to be reimbursed separately.
Comment:
One commenter urged CMS to implement its proposed policy to bundle all drugs January 1, 2011, as mandated by Congress, stating that statutory authority, sound public policy, and patient clinical needs support inclusion of such drugs in the bundle. The commenter stated that any delay would potentially create unintended financial incentives, leading to adverse clinical outcomes.
Other commenters stated that CMS lacks pricing data from all payers to accurately determine the payments for the inclusion of oral drugs in the bundle, and recommended that CMS should exercise its authority to delay the inclusion of oral drugs. Some commenters argued that expanding the bundle to include oral-only drugs when it had insufficient data and support would have the potential to hamper future bundling efforts. Many commenters cited various policy and operational reasons in support of a decision to delay the inclusion of oral drugs in the ESRD PPS bundle. In particular, several commenters asserted that if CMS determines that it has sufficient legal authority to include oral-only Part D drugs in the payment bundle, it should nonetheless delay the inclusion of these drugs to a subsequent year in order to permit an orderly implementation of the ESRD PPS. Commenters claimed that a delay would also give CMS the necessary time to ensure that its billing systems and software are appropriately developed and tested to make sure that the conversion of payment for Part D ESRD drugs to renal dialysis services under Part B goes smoothly for beneficiaries, facilities, and pharmacies.
Several commenters stated that CMS has the discretion to defer the inclusion of Part D oral drugs in the payment bundle and asserted various statutory bases. In particular, commenters stated that the requirement to implement the ESRD PPS on or after January 1, 2011, does not specifically state that CMS must include all drugs for which payment is made under Title XVIII prior to implementation of the ESRD PPS. Commenters pointed out that section 1881(b)(14)(B) of the Act does not time limit CMS's discretion to define renal dialysis services for the ESRD PPS, and argued that the definition of “renal dialysis services” under section 1881(b)(14)(B)(iv) provides discretion to the agency about what items and services to include in the ESRD PPS and when to include them, claiming that Congress likely would not have enacted a provision that did not allow new items and services to be added. Some commenters argued that the “breadth of the language in subparagraph (iv)” of the statutory definition suggested broad discretion to the agency in making this determination, such that we may define renal dialysis services to exclude oral drugs in 2011, while maintaining authority to define renal dialysis services as including oral drugs in a subsequent year.
Other commenters cited the 4-year phase-in (section 1881(b)(14)(E) of the Act) as permitting full implementation of that portion of the single payment at any time before January 1, 2014, provided the implementation occurs in equal increments. Commenters argued that implicit in our interpretation of section 1881(b)(14)(E) of the Act is our authority to delay inclusion of oral drugs in the new bundled payment system. Commenters maintained the position that the phase-in over equal increments relates to coverage and payment, and that if CMS interpreted the provision to include oral drugs entirely at the beginning, CMS could implement the inclusion of oral drugs in the ESRD PPS in the fourth year of the transition period and still comply with the statute, including the requirement to implement the payment system in “equal increments”.
Finally, some commenters argued that CMS has a statutory obligation to defer inclusion of oral drugs in the bundle, claiming that there is an obligation to delay under section 1881(b)(14)(ii) of the Act, because it requires CMS to determine the total amount of payments for renal dialysis services. If the agency
cannot do so because of a lack of data, it would be improper to include those items and services in the definition until it is able to do so.
Response:
As we stated above and in the proposed rule, we continue to believe that section 1881(b)(14)(B) of the Act supports our interpretation that ESRD drugs and biologicals, including oral-only ESRD drugs, used for the treatment of ESRD, meet the definition of “renal dialysis services” under section 1881(b)(14)(B) of the Act, and should be included under the ESRD PPS (74 FR 49928 through 49929). For this reason, we have specified that oral ESRD drugs, including oral-only ESRD drugs, are included in the ESRD PPS.
However, we disagree with commenter's claims that this statutory definition is not “time-limited” such that we could delay including under this definition certain items or services that are currently in existence. We believe that the statutory definition dictates what services constitute “renal dialysis services” and does not afford us discretion to postpone such a determination for purposes of implementing the ESRD PPS. This is not to say, as some commenters have suggested, that the definition is static with regard to new items and services. To the extent new renal dialysis items or services come onto the market in the future and meet the definition, such services would be considered “renal dialysis services” and bundled under the ESRD PPS. For example, as we pointed out in the proposed rule, if other types of injectable ESAs or new oral forms of ESAs become available subsequent to the implementation of the ESRD PPS on January 1, 2011, such agents would be considered renal dialysis services and be subject to the ESRD PPS (74 FR 49928). Accordingly, for the reasons we set forth above and in the proposed rule, and after careful consideration of the public comments, we are finalizing the proposed policy decision that ESRD drugs and biologicals, including oral drugs, be identified as renal dialysis services under section 1881(b)(14)(B) of the Act.
With regard to the issue of inadequate data to price for payment oral drugs and biologicals, including oral-only drugs used for the treatment of ESRD, we agree with the commenters in part. We have included the Part B injectable drugs and biologicals used for the treatment of ESRD in the calculation of the base rate. Total payments for these drugs and biologicals were divided by the total number of hemodialysis (HD) equivalent treatments to obtain the amount of the payment per treatment for these drugs and biologicals reflected in the base rate. Injectable drugs are priced at ASP + 6 percent. Oral drugs with an injectable version were included in the payment bundle by taking total payments for these drugs based on Part D claims, and dividing that total by the total number of HD-equivalent treatment for Medicare ESRD beneficiaries enrolled in Part D. As explained in section II.K. of this final rule, prices for these drugs will be based on the national average drug prices developed from the Medicare Prescription Drug Plan Finder. These prices reflect pharmacy dispensing and administration fees and will be applied to only a limited number of drugs (three vitamin D analogues and levocarnitine).
While this pricing mechanism is also available for oral-only ESRD drugs, we believe that before we consider its adoption in connection with pricing these drugs for payment, we should evaluate its potential impact on dialysis facilities, particularly small dialysis facilities who may not be able to obtain drugs and biologicals at prices similar to those of the larger chains with greater purchasing power. Because payments for oral ESRD drugs with an injectable version in 2007 was about $10.7 million, while total payments for all oral ESRD drugs was about $455.7 million, we believe a careful assessment of the use of the Medicare Prescription Drug Plan Finder as a basis for pricing oral-equivalent ESRD drugs is appropriate before extending its application to oral-only drugs. Accordingly, we are delaying the implementation of oral drugs with no injectable equivalent or other form of administration (oral-only drugs), pending this evaluation.
As we discuss in more detail below and in the section II.K.2. of this final rule, we also agree that commenters' concerns about operational and safety issues with regard to furnishing oral-only agents should be further examined. We believe a delay would allow time to examine such issues and address as appropriate. For example, we agree with the commenters that a delay in implementing the inclusion of oral-only drugs under the ESRD PPS would provide sufficient time for ESRD facilities to establish a pharmacy in accordance with state licensure requirements, or establish arrangements with pharmacies to provide oral-only drugs to their patients and ensure a smoother transition to the dispensing of these drugs under Part B.
We disagree with the commenters who have suggested that the 4-year phase-in under section 1881(b)(14)(E)(i) of the Act provides authority to delay inclusion of certain types of renal dialysis services such as oral-only drugs beyond January 1, 2014. We believe that section 1881(b)(14)(E)(i) of the Act requires a phase-in of payments under the new system for facilities that do not opt to go all-in under the new ESRD PPS, allows for a blended payment under the old and new payment systems in equal increments over a 4-year period to allow facilities opportunity to transition to the new payment under the ESRD PPS. It does not, however, authorize a phase-in of renal dialysis services.
We also do not agree that the requirement under section 1881(b)(14)(A)(i) of the Act that the ESRD PPS be implemented by January 1, 2011, affords the agency discretion to delay identification of renal dialysis services to be included in the ESRD PPS. Section 1881(b)(14)(A)(i) of the Act requires implementation of a payment system in which a single payment is made for home dialysis and renal dialysis services which, as we discussed above, represent a specific set of services currently in existence that must be identified as renal dialysis services for the payment bundle.
We agree, however, with commenters with regard to our obligations under section 1881(b)(14)(A)(ii) of the Act, which requires that we make certain estimates about total payments for renal dialysis services based on certain data (that is, per patient utilization data). We agree that we must perform an assessment of the use of the Medicare Prescription Drug Plan Finder as a basis for the pricing of oral equivalent ESRD drugs before that pricing mechanism is potentially extended to oral-only ESRD drugs in order to develop payment rates for those drugs. Therefore, it would not be appropriate to implement oral-only ESRD drugs in the ESRD PPS at this time.
We believe that there are several advantages to delaying the implementation of oral-only drugs. A delay would—
• Provide additional time to determine the propriety of the Medicare Prescription Drug Plan Finder for the pricing of oral-equivalent ESRD drugs, before we consider extending that pricing mechanism to include all oral ESRD drugs and biologicals. CY 2007 data reveal that expenditures for the oral equivalents of injectable ESRD drugs totaled $10,700,083 for Medicare ESRD beneficiaries enrolled in Part D.
See
Table 9. Subtracting this amount from the total figure of $455,683,740, the total payments for all ESRD Part D drugs identified in Table 8 of the proposed rule (74 FR 49940), reveals that the comparable figure for oral-only ESRD drugs was $444,983,657. Given the
potential impact on the oral drug component of the payment bundle, evaluating the Medicare Prescription Drug Plan Finder and other potential alternative data sources for the pricing of oral ESRD drugs is essential.
• Allow ESRD facilities additional time to develop the arrangements or infrastructure necessary to provide oral-only drugs and negotiate prices with drug companies.
• Provide additional time for CMS to thoroughly educate beneficiaries, ESRD facilities, and pharmacies on those aspects of the bundled ESRD PPS involving the furnishing of non-injectable drugs to ensure as smooth a transition as possible.
• Given that oral drugs with an injectable version are included in the payment bundle as of January 1, 2011, provide CMS an opportunity to assess potential problems which may arise in connection with the provision of oral drugs prior to the system's expansion to include oral-only ESRD drugs beginning January 1, 2014.
• Allow time for additional analysis regarding the ability of ESRD facilities to provide oral-only ESRD drugs.
• Provide additional time to evaluate the need for additional clinical indicators applicable to the monitoring of certain patient conditions treated with oral-only drugs, such as bone loss and mineral metabolism associated with the provision of calcimimetics and phosphate binders. This could assist in determining the impact of the fully bundled ESRD PPS, and any unintentional consequences that might ensue, on quality of care.
• Allow Part D plans sufficient time to prepare bids for 2014 that excludes those oral-only drugs identified as “ESRD related”. CMS will specify the oral-only drugs that are for the treatment of ESRD in connection with a proposed rule Beneficiaries will have access to more accurate premium quotes to assist them in making decisions about their Part D coverage.
• Allow Part D plans and pharmacies additional time to establish, test, and modify the infrastructure necessary to identify ESRD patients, as the oral equivalents of injectable drugs are bundled beginning January 1, 2011. Part D sponsors will gain several years of experience in identifying ESRD patients within CMS systems in order to ensure that Part D payments are not made for ESRD related drugs.
Beginning January 1, 2011, 18 oral drugs (as discussed below), will be included in the ESRD PPS base rate. Specifically, facilities will furnish such oral drugs beginning January 1, 2011. Until comprehensive beneficiary protections can be developed in anticipation of the inclusion of all ESRD-related oral-only drugs in the payment bundle under the ESRD PPS beginning January 1, 2014, patients will have access to these drugs under Part D. After considering the public comments and for the reasons we discussed above, we are retaining the definition of renal dialysis services as proposed in § 413.171, including with respect to the inclusion of oral-only drugs and biologicals. However, we are revising the implementation date for oral-only ESRD drugs and biologicals to be January 1, 2014 in § 413.174(f)(2). We believe that the transition period will give us sufficient time to address the data/pricing issues identified above, and to evaluate and correct any potential concerns that may emerge as a result of the inclusion of the oral drugs and biologicals with other forms of administration in the payment bundle effective January 1, 2011.
b. Other Drugs and Biologicals
Below we discuss comments regarding drugs and biologicals other than oral-only drugs and biologicals (for example, injectable drugs, oral drugs with some other form of administration, etc.). Oral-only drugs are separately addressed above.
Comment:
Most commenters who expressed opposition to our proposed inclusion of oral-only Part D drugs in the ESRD PPS payment bundle were careful to distinguish these drugs from oral equivalents of injectable drugs, for which they conceded statutory authority existed for their inclusion under section 1881(b)(14)(B) of the Act. Although the commenters maintained that the inclusion of any oral drugs in the payment bundle would pose administrative burdens on dialysis facilities, they generally did not challenge our authority to include in the payment bundle the oral equivalents of injectable drugs used to treat ESRD in order to prevent the shifting of costs from Medicare Part B to Part D. The commenters, however, stated that if such drugs and biologicals were included in the payment bundle, their inclusion should be adequately funded.
Response:
We agree with the commenters that section 1881(b)(14)(B) of the Act specifically requires that oral equivalents of injectable drugs used in the treatment of ESRD must be considered renal dialysis services for inclusion in the payment bundle. Accordingly, we have included those drugs, as described later in this section of this final rule. We have also revised the methodology for calculating the average amount per treatment for these drugs and biologicals included in the base rate, as described elsewhere in this final rule.
Comment:
One commenter pointed out that dialysis patients take numerous oral medications, many of which are not related to ESRD. The commenter stated that the inclusion of oral equivalent drugs with an injectable version in the payment bundle could result in the patient receiving these drugs from a pharmacy with which the dialysis facility has established a relationship for the dispensing of these drugs to its patients, while the other medications are received from a different pharmacy of the patient's choice. Because multiple pharmacies would be involved, this could result in less attention paid to potential adverse consequences resulting from drug interactions and less coordination of care.
Response:
We agree that under the circumstances which the commenter has described, multiple pharmacies could be involved in the dispensing of drugs to dialysis patients. However, the prescriptions for these drugs are prepared by the patient's nephrologist, primary care physician, or specialist, each of whom should be aware of the patient's medications for potential adverse interactions. The dialysis facility should also be aware of the patient's oral medications as an additional safeguard and therefore, we expect dialysis facilities to collect comprehensive information on patients' oral medications to identify any potential drug interactions that might otherwise occur. Finally, patients can always advise their pharmacist of the oral drugs they take when filling a prescription, and inquire about potential drug interactions as well. Therefore, we believe that there are sufficient safeguards to ensure that the use of several pharmacies to obtain oral drugs does not result in adverse consequences for dialysis patients.
Comment:
Many commenters expressed concern about what they believed would occur if drugs were included in the ESRD PPS. Some commenters were opposed to including oral drugs in the bundled payment, particularly vitamin D used for bone and mineral metabolism. Commenters cited negative effects on patients' health because ESRD facilities may consider cost saving measures such as purchasing less costly and less effective drugs (for example, over-the-counter calcium binders or vitamin D); limiting the use of the more expensive drugs; using oral drugs which they believe are not as effective as intravenous drugs; switching to generic drugs or to drugs used in the past, which the commenters believed are not as effective; and using
lower cost oral drugs instead of intravenous drugs resulting in various complications as vascular calcification, anemia, blood transfusions, and hospitalizations. Some commenters predicted an increase in the number of parathyroidectomies due to poor control of hyperparathyroidism. One commenter expressed concern that cost cutting changes in medication practices at his ESRD facility have already begun to occur in preparation for the implementation of the ESRD PPS.
Some commenters indicated that certain patients would be negatively affected by the inclusion of drugs in the ESRD PPS bundled base rate. The commenters believed that older patients would be discriminated against by being given less expensive and less effective medications. Others believed patients needing more medications than others would be unable to receive the appropriate dose of their medications. One commenter believed that patients receiving dialysis twice weekly or those who miss treatments will be considered financially undesirable because ESRD facilities will be responsible for the entire month for their medications while receiving payment for the dialysis treatments only.
Response:
We are concerned by the issues raised by commenters who believe ESRD facilities would intentionally and knowingly deny medications or provide less effective drugs because of the inclusion of drugs in the ESRD PPS bundle. We do not agree that the inclusion of drugs in the ESRD PPS would result in facilities denying drugs to patients or necessarily using less effective drugs. In particular, we do not agree that the use of alternative less costly drugs necessarily constitutes the use of less effective drugs. We expect that ESRD facilities will continue to provide necessary care to patients with ESRD, and we will be monitoring the implementation of the ESRD PPS very closely.
As with any prospective payment system, there are patients whose medical treatment results in more costly care as well as those with less costly care. As we have discussed in other sections of this final rule, the ESRD PPS bundled base rate reflects Medicare payment for the average ESRD patient. We have incorporated payments under the current composite rate payment system as well as payments for separately billable items and services into the ESRD PPS base rate. As a result, we believe the ESRD PPS payments are sufficient and reflect the average cost of providing care to the average patient with ESRD and therefore, we expect that, on average, high cost patients would be offset by low cost patients. We have provided for higher acuity patients with patient case-mix adjusters as discussed in section II.F. and with outlier payments for high cost patients as discussed in section II.H. of this final rule.
Section 494.80(a)(5)of the regulations requires an ESRD patient's comprehensive assessment include an “[e]valuation of factors associated with renal bone disease.” Section 494.80 outlines other requirements for assessing and reassessing patients, as well as creating and implementing an individual patient plan of care as described in § 494.90. Section 494.90(a)(3) requires all ESRD facilities to “* * * provide the necessary care to manage mineral metabolism and prevent or treat renal bone disease.” Patient rights, including the mechanisms for filing grievances, are established at § 494.70. This means that ESRD facilities are required to provide care necessary to treat patients. We are confident that ESRD facilities will act responsibly to provide appropriate care under the ESRD PPS and oversight activities will identify any ESRD facility that may not do so. Therefore, we plan to monitor utilization of renal dialysis items and services to ensure that quality care is being provided. We will discuss monitoring in the implementation section II.K. of this final rule and in the future.
Comment:
One commenter believed that separating the dispensing of oral renal drugs from oral drugs used for non-renal conditions will cause confusion for patients, their families, and other providers that provide care to ESRD patients.
Response:
We believe the commenter is referring to ESRD-related drugs and biologicals included in the ESRD PPS base rate. We do not agree that the bundling of ESRD-related drugs or biologicals will result in confusion. Currently patients may receive medications or prescriptions from multiple sources especially if they require medical specialists for non-ESRD conditions. We do not see any difference in this process under the ESRD PPS.
Comment:
Some commenters believe patients will be involuntary discharged from ESRD facilities if the patients are noncompliant and drugs are included in the ESRD bundle.
Response:
As discussed earlier in this section of the final rule, the statute requires that renal dialysis services included in the ESRD PPS include specified ESRD-related services including injectable and oral drugs and biologicals. Because ESRD-related drugs and biologicals are in the ESRD PPS bundle, ESRD facilities will be responsible for furnishing ESRD-related drugs and biologicals that their patients require. We appreciate the commenter's concern that patients may be involuntarily discharged. However, § 494.180 of the ESRD Conditions for Coverage explicitly addresses the discharge procedure, the acceptable circumstances for an involuntary discharge or transfer, the required actions that must be completed by the ESRD facility prior to ceasing treatment, as well as the requirement to inform patients of their rights and protections.
Comment:
One commenter stated that because of the ESRD PPS, patients with vascular access dysfunction, who are currently treated in the ESRD facility, would instead be referred to the emergency department in order to be able to receive separate payment for drugs used to maintain vascular access. Other commenters indicated that patients would be referred to other health care settings such as infusion centers or other health care providers to administer medications such as antibiotics and thrombolytic agents, for the purpose of being reimbursed for medications.
Response:
We believe that the commenter is implying that as a result of including anti-thrombolytic drugs and antibiotics in the bundled ESRD PPS base rate, ESRD facilities would refer patients with any difficulties with vascular access to the emergency department or to other settings rather than ensuring that vascular access patency is addressed in the ESRD facility at the time of dialysis (as is currently being done). We believe that maintaining vascular access is a renal dialysis service and therefore, would be included in the ESRD PPS and ESRD facilities would continue to be responsible for furnishing the service. In other words, as ESRD facilities have been maintaining vascular access sites under the current basic case-mix adjusted composite rate system and receiving separate payment for anti-thrombolytic drugs, we will expect that they would continue to maintain vascular access under the ESRD PPS, with payment for anti-thrombolytic agents included in the ESRD PPS base rate. Accordingly, we expect that ESRD facilities would not refer patients to another health care setting for the purpose of maintaining vascular access. We note, we would expect patients to be referred to another setting if medically necessary and we are not implying that ESRD facilities are expected to address any and all vascular access complications, if doing so would be
unsafe for the patient. We merely are indicating that we expect ESRD facilities to perform the same procedures to maintain vascular access that they currently perform, and not refer patients to other settings for the purpose of obtaining additional payment. We will monitor ESRD facilities to determine whether they are continuing to perform the same procedures to maintain vascular access that they currently perform.
Comment:
Some commenters cited patient non-compliance for their opposition to including oral drugs in the bundle. The commenters believed that dialysis facilities could control intravenous drugs and dosing but could not determine patient compliance with pill taking; that inclusion of oral drugs would require patients to take responsibility for their own care; and that patient compliance in inner cities is already poor. Others stated that reverting to oral medications in place of their intravenous forms, would result in an increase in the number of pills patients with ESRD, who are already required to take multiple pills with limited daily fluid allowance, would be required to take. Other commenters were concerned that patients might not receive their medications if they forget to obtain them during their dialysis treatment. Several commenters claimed patient non-compliance would increase due to the bundling of oral drugs. The commenters believed there would be higher spending on hospitalizations and outpatient care because of decreased control of patient's anemia and bone disease.
Response:
We appreciate the concerns about patient compliance and pill burden. We do not understand the commenter's statement indicating that inner city compliance is already poor and therefore, we regret that we are unable to respond to the comment.
We do not agree that including oral drugs in the bundle will result in increased patient compliance difficulties, increased pill burden or poor control of anemia and bone disease because under the ESRD PPS there is no requirement that drugs must be administered in any particular form or by any particular route. It is the responsibility of the ESRD facility, the patient's physician, and the ESRD interdisciplinary team to develop a plan of care that is appropriate and meets each patient's needs. That includes determining the most appropriate route of administration of a drug. Although we believe we are required by statute to include oral drugs and biologicals in the payment bundle, the use of oral equivalents remains a medical decision. Section 494.90 of the ESRD Conditions for Coverage requires the development of an individualized patient plan of care to address the patient's needs. Therefore, we believe ESRD facilities should make medical decisions based on patient needs and not solely on a financial basis.
As we discussed in several responses above, we believe that ESRD facilities will act responsibly to provide appropriate care under the ESRD PPS and that continued monitoring may serve to help identify the ESRD providers who do not. Therefore, we plan to monitor utilization of renal dialysis items and services to ensure the quality care continues to be provided. We will discuss monitoring in the implementation section II.K. of this final rule and in the future.
Comment:
Commenters were divided in expressing their support or opposition to the inclusion of intravenous drugs and their oral equivalents in the ESRD PPS base rate. Some commenters expressed concern that bundling drugs will restrict nephrologists' ability to prescribe necessary medications. One commenter suggested removing all oral drugs from the bundle to allow nephrologists to decide what is in the best clinical interest of the patient without reimbursement concerns. Others expressed concern that physicians would not prescribe drugs that could put a facility at financial disadvantage or would be forced to use the “cheapest available therapy which might be harmful to patients and further increase their cardiovascular mortality.” Another commenter believed that disparities in care will occur when physicians will need to determine which patients are “most deserving or have the greatest need for certain medications” placing physicians in an adversarial position with ESRD facilities. Several commenters believed physicians should have autonomy to prescribe the most appropriate drugs within classes of medications.
Some commenters supported inclusion of all drugs and biologicals used to treat ESRD regardless of the route of administration noting that oral and injectable drugs are routinely given during the course of dialysis treatment. Other commenters indicated that inclusion of all drugs, regardless of route of administration in the bundle was “ * * * critical to achieving optimal patient care.” These commenters believed that allowing certain drugs and biologicals to be unbundled while others are bundled would establish incentives to select treatment options contrary to patient's clinical needs and results in medications from different sources jeopardizing adherence to care regimens and undermining quality of care.
Response:
We thank the commenters for their views of the impact of including ESRD-related drugs and biologicals in the bundle. The general premise of the ESRD PPS is that the ESRD payments reflect the average cost of furnishing renal dialysis items and services to patients. In situations where costs for treating patients exceed an established threshold under the ESRD PPS, the outlier policy would apply. The outlier policy is discussed in detail in section II.H. of this final rule.
We continue to believe that the responsibility for determining the appropriateness of medical care resides with the ESRD facility, physicians, and the interdisciplinary team as stipulated by the ESRD Conditions for Coverage. We also believe that physicians, the interdisciplinary team, and ESRD facilities should make medical decisions based on patient needs and not solely on a financial basis. We plan to monitor utilization of renal dialysis items and services to ensure the quality care continues to be provided. We will discuss monitoring in the implementation section II.K. of this final rule and in the future.
We note that we do not have the discretion to exclude services from the ESRD payment system that meet the statutory definition of a renal dialysis service. We discuss the definition of renal dialysis services earlier in this section and in section II.D. of this final rule. We also discuss the delay in implementation of oral-only drugs earlier in this section.
Comment:
Several commenters expressed concern that there are no quality measures for calcium, phosphorus, and parathyroid control. Others recommended tracking changes in transfusion utilization. One commenter urged that necessary steps be taken to ensure access to drugs appropriate for patients and not the “least costly alternative.” Another commenter suggested that MedPAC and other entities track drug utilization to avoid unintended consequences.
Response:
We agree with the commenters that there needs to be overall monitoring, tracking measures to monitor utilization and measure outcomes, and specifically to eventually track and report patient levels of calcium, phosphorus and parathyroidism prior to implementing the oral-only drugs in the ESRD PPS in 2014. We are currently working to develop measures for the initial year of the QIP and beyond. We note that, as set
forth in section 1881(h)(2)(A) of the Act, additional measures are being considered and developed such as patient satisfaction, iron management, bone mineral metabolism, and vascular access.
We are currently developing a comprehensive monitoring plan which includes tracking drug utilization. We will discuss monitoring in the implementation section II.K. of this final rule and in the future. We also plan to ensure that patients are educated about the ESRD PPS including the mechanisms they can use to report grievances. We believe that other entities such as MedPAC, the GAO, and the OIG will be looking into the effects of the ESRD PPS. We note that quality measures are discussed in section II.M. of this final rule. Additionally, we will include a discussion of future QIP measures forecasting in the ESRD QIP proposed rule.
Comment:
One commenter believed that if the concern is cost shifting from injectable vitamin D to the oral vitamin D analogs, it would be better to address that issue directly.
Response:
We do not understand what the commenter is suggesting with the statement about addressing the issue of injectable versus the oral version of vitamin D directly. However, we believe that the ESRD PPS provides an opportunity for ESRD facilities to make financially sound decisions while providing necessary care recognizing that some patients may utilize less renal dialysis items and services while others may use more. In addition, under the QIP, we are working towards developing quality measures for bone and mineral metabolism. Further discussion on quality measures are found in section II.M. of this final rule.
Comment:
One commenter stated that certain injectable drugs used to treat ESRD may not have oral equivalents. Therefore, the patient would not be able to afford obtaining these drugs outside of the payment bundle, resulting in a lower quality of care.
Response:
We are not clear about the point the commenter was attempting to make, as ESRD-related injectable drugs without oral equivalents would be furnished by the dialysis facility. In addition, all injectable drugs used to treat ESRD are included in the payment bundle as Part B renal dialysis services, regardless of whether they have an oral equivalent.
Comment:
Many commenters indicated that they did not know which drugs were in the bundled base rate. Some commenters questioned whether non-dialysis-related drugs are included, such as those drugs used to treat diabetes, high blood pressure, cardiac drugs, or renal vitamins.
Response:
We thank the commenters for their suggestions on which drugs should be included in the ESRD PPS. We also agree that in the proposed rule, we did not explicitly indicate which drugs would be in the proposed ESRD PPS base rate.
We proposed that payments for all drugs and biologicals furnished to ESRD patients and separately billable prior to January 1, 2011, would be included in the ESRD PPS payment bundle as renal dialysis services (74 FR 49929). Therefore, in the proposed rule, we included all drugs and biologicals on ESRD claims for 2007 for which separate payment was made in computing the proposed ESRD PPS base rate because the presumption was that all drugs and biologicals on ESRD claims were ESRD-related. We explained in the proposed rule (74 FR 49940 through 49941), our methodology of using CY 2007 claims data for determining the Medicare Allowable Amounts (MAPs) for the Part B and former Part D ESRD-related drugs and biologicals components of the ESRD PPS bundle, including the use of NDC codes for purposes of identifying by oral drugs covered under Part D by class.
With regard to the drugs and biologicals we proposed to bundle in the ESRD PPS, we identified in the proposed rule the top 11 Part B drugs and biologicals that accounted for 99.7 percent of total spending for Part B ESRD drugs and biologicals and identified the classes of oral ESRD-related drugs and biologicals currently covered under Part D that would be bundled. When listing the amount of spending for ESRD-related drugs and biologicals, we combined the products that accounted for the remaining 0.3 percent of total spending for Part B ESRD drugs and biologicals in a general category (“Other injectables” Part B drugs and biologicals) included in the proposed base rate (74 FR 49940 through 49941).
With regard to commenters' concerns about the inclusion of certain drugs, including non-ESRD related drugs, in the proposed bundle, in developing the proposed rule, we presumed that all separately billable items were drugs and biologicals on the ESRD claims were ESRD-related and therefore, all separately billable items on ESRD claims were included in the proposed ESRD PPS bundled base rate.
As a result of comments, for this final rule, we performed an extensive analysis of Medicare payments for
Part B drugs and biologicals billed on ESRD claims in 2007, 2008, and 2009 to identify drugs or biologicals that are ESRD-related and therefore meet the definition of renal dialysis services under section 1881(b)(14)(B) of the Act, and would be included in the ESRD bundled base rate. Drugs and biologicals that are generally not ESRD-related (for example drugs and biologicals used to treat diabetes, cardiac conditions and hypertension), would not be renal dialysis services and would be excluded from the ESRD bundled base rate.
We believe that categorizing drugs and biologicals on the basis of drug action would allow us to determine which categories (and therefore, the drugs and biologicals within the categories) would be ESRD-related. We evaluated each drug and biological to identify its category by indication or mode of action. We then analyzed the categories to determine those that would be expected to be utilized for ESRD-related conditions in a dialysis unit (and therefore would be a renal dialysis service).
We note that the current ESRD claims form does not differentiate between drugs and biologicals administered for an ESRD condition from drugs and biologicals administered during dialysis for non-ESRD related conditions. During this extensive analysis, we discovered that our presumption that all drugs and biologicals on the ESRD claims were ESRD-related was incorrect. In fact, there were categories of drugs and biologicals (and therefore specific drugs on ESRD claims for which separate payment had been made) that were not ESRD-related. These non-ESRD-related drugs and biologicals are discussed in detail below. Later in this section, we also discuss in detail the method used to identify ESRD-related drug and biological categories and drugs and biologicals included in the final ESRD PPS base rate below. Table C in the Appendix provides a listing of the specific drugs which were included in the proposed ESRD PPS base rate and how those drugs were treated in the final ESRD PPS base rate.
Specifically, we identified drugs and biologicals on the ESRD claims which are classified as chemotherapeutic drugs, immunosuppressant drugs, and vaccines. These drugs and biologicals, with the exception of hepatitis B and flu vaccines, had been included in the proposed ESRD PPS base rate. As these are not ESRD-related drugs and biologicals because they are not used for ESRD-related conditions and therefore, are not renal dialysis services, we excluded them from the final ESRD bundled base rate. As a result, we excluded the payments from the 2007 ESRD facility claims for these drugs and
biologicals in computing the final ESRD PPS base rate.
In performing our analysis of the ESRD claims for this final rule, we also identified drugs and biologicals that are included in the current composite payment rate but for which ESRD facilities received separate payment in addition to the composite rate payment. Because these composite rate drugs and biologicals were listed separately on the ESRD claims, separate payment was inadvertently made and we included these payments in the proposed ESRD PPS base rate. However, for this final rule, we excluded those inadvertently made payments from the final ESRD PPS base rate calculation.
We note that the Medicare Benefit Policy Manual, Pub. 100-02, chapter 11, section 30.4.1 lists the drugs and fluids included under the current composite payment system as heparin, antiarrythmics, protamine, local anesthetics, apresoline, dopamine, insulin, lidocaine, mannitol, saline, pressors, heparin antidotes, benadryl, hydralazine, lanoxin, solu-cortef, glucose, antihypertensives, antihistamines, dextrose, inderal, levophed, verapamil and antibiotics used at home by patients being treated for catheter site infection or peritonitis associated with peritoneal dialysis. The Medicare Benefit Policy Manual, Pub. 100-02, chapter 11, section 30.4.1 also explicitly states, “* * * drugs used in the dialysis procedure are covered under the facility's composite rate and may not be billed separately. Drugs that are used as a substitute for any of these items, or are used to accomplish the same effect, are also covered under the composite rate.” The manual further provides that “Administration of these items (both staff time and supplies) is covered under the current composite rate and may not be billed separately.”
Also, in our analysis of drugs and biologicals for this final rule, we identified ESRD claims that included payments for drugs and biologicals, but did not include any dialysis treatments. Because ESRD facilities receive a payment under the current basic case-mix adjusted composite payment system which is treatment based (that is, based on the provision of a dialysis treatment) and separate payment is made for any items or services provided that are not considered part of the composite rate, payment for claims without treatments should not be paid. Therefore, for this final rule, payments for drugs and biologicals listed separately on the ESRD claim where there was no dialysis treatment included on the claim were excluded from the computation of the base rate.
In the analysis conducted for this final rule, we also identified drugs and biologicals on ESRD claims that were not identifiable because they were billed using unspecified or unclassified HCPCS codes. These codes are used when a HCPCS code has not yet been assigned. As a result, we were unable to determine the name of the drug or biological or if they were ESRD-related or administered for non-ESRD-related conditions. Because ESRD-related drugs and biologicals have HCPCS codes, we considered any drug or biological billed using an unclassified or unspecified HCPCS code as being non-ESRD-related. Therefore, any payments attributed to these unspecified codes were not included in computing the final ESRD base rate. We note that ESRD facilities should be using valid HCPCS codes for the drugs that they administer and should only use the unclassified codes for those drugs that do not have codes.
During our analysis for this final rule, we also identified drugs and biologicals as well as procedures which would not be considered renal dialysis services. For example, low molecular weight contrast administered for radiological purposes; pharmacy and administrative pharmacy code for administration of oral anti-emetics for cancer treatment; chemotherapy; and chest x-rays were reported on the ESRD claims. Because these procedures are not renal dialysis services (that is, they are not procedures that are used for the treatment of ESRD), we excluded the payments associated with these procedures from the final ESRD PPS base rate.
We also identified drugs, biologicals and procedures reported on ESRD claims which are unlikely to be performed or provided in an ESRD facility. For example, there were claims that included paralytic agents used to intubate patients. Because we do not believe that these drugs would be used to treat ESRD-related conditions, they would not be considered to be renal dialysis services. As a result, we excluded the payments made for these drugs in computing the final ESRD PPS bundled base rate.
We list the categories of drugs and biologicals that we would not consider ESRD-related and therefore would not be renal dialysis services included in the ESRD PPS base rate in Table 3 below. We note that the drugs, biologicals, and procedures that were excluded from the final ESRD PPS base rate represent a very small dollar amount accounting for less than one cent per dialysis treatment and represent less than 0.2 percent of payments made for separately billable drugs and biologicals. Table C in the Appendix identifies the Part B injectable drugs that were included in the proposed base rate and in the final base rate.
BILLING CODE P
ER12AU10.010
BILLING CODE C
Comment:
Commenters noted that CMS needs to clearly delineate what is covered in the bundle. One commenter suggested differentiating between medications used for acute rather than chronic complications. One commenter recommended that a list of specific ESRD-only related drugs for inclusion in the bundle and that these be periodically updated to account for new technology and innovation. Some commenters suggested that we include only intravenous ESAs, iron, and vitamin D. One commenter stated that ESRD facilities separately bill and are reimbursed for ESAs, iron, vitamin D, alteplase and antibiotics for the treatment of access-related infections and peritonitis. Other commenters suggested that we include only intravenous ESAs, iron and vitamin D. One commenter believed that ESRD-related drugs used in the treatment of anemia, bone disease and iron deficiency should be included in the bundle. Some commenters suggested that only oral drugs that have “equivalent injectables” or other “equivalent non-oral forms” should be in the bundle. One commenter suggested that only ESRD intravenous drugs and their oral equivalents that are well known and most manageable be included.
Response:
As we discussed in the previous response, we identified categories of drugs and biologicals which were not ESRD-related and
therefore, we excluded the payments for drugs in those categories from the final ESRD PPS base rate. We agree with the commenters that drug categories used for the treatment of anemia and iron deficiency (which includes ESAs and intravenous iron), access management (which includes alteplase), and bone and mineral metabolism (which includes vitamin D) would be renal dialysis services under the ESRD PPS. We also agree that antibiotics used for the treatment of venous access infections and peritonitis (specifically, vancomycin and daptomycin) and cellular management (specifically, levocarnitine) are renal dialysis services under the ESRD PPS. Therefore, payments for drugs in these categories in injectable forms (covered under Part B) and oral or other forms of administration (covered under Part D), were included in computing the final ESRD PPS base rate. We note one exception. We understand that the oral versions of vancomycin are not used for ESRD-related conditions and therefore, would not be a renal dialysis service. It is also our understanding that daptomycin does not have an oral equivalent. The categories and drugs which are renal dialysis services under the ESRD PPS are shown in Table 4 below.
ER12AU10.011
With regard to the suggestion that there be a differentiation between acute and chronic complications, we do not believe that such a differentiation is required as the definition of renal dialysis services does not distinguish between renal dialysis services provided for acute or for chronic conditions. For example, anemia management is a chronic condition and access management is more acute and the drugs and biologicals used for both are considered renal dialysis services.
With regard to the commenter's request to provide a list of specific ESRD-only drugs, we recognize that drugs and biologicals used for ESRD-related conditions may change over time based upon many factors including new developments, evidence-based medicine, and patient outcomes. By categorizing drugs and biologicals based on mechanism of action, we will account for other drugs and biologicals that may be used for those actions in the future under the ESRD PPS. In other words, while we have included drugs and biologicals used in 2007 in the final ESRD base rate, we recognize that these may change. Because there are many drugs and biologicals that have many uses and because new drugs and biologicals are being developed, we do not believe that a drug-specific list of drugs would be beneficial. We have provided a list of the specific drugs that were included in the ESRD PPS base rate in Table C in the Appendix. However, any drug or biological furnished for the purpose of access management, anemia management, vascular access or peritonitis, cellular management and bone and mineral metabolism will be considered renal dialysis services under the ESRD PPS.
We note that any ESRD drugs developed in the future that are administered by a route of administration other than injection or oral would be considered renal dialysis services and would be in the ESRD bundled base rate. Any drug or biological used as a substitute for a drug or biological that was included in the ESRD PPS bundled base rate would also be a renal dialysis service and would not be eligible for separate payment.
We believe that categories of drugs and biological used for access management, anemia management, bone and mineral metabolism, and cellular management would always be considered ESRD-related when furnished to an ESRD patient unless the ESRD facility indicates a drug or biological is non-ESRD-related through the use of a modifier. However, because anti-infectives are routinely furnished for ESRD-related reasons related to access infections and peritonitis, we included vancomycin and daptomycin and all other antibiotics on the 2007 ESRD claims in computing the final ESRD PPS base rate. Therefore, if any other anti-infective (including oral or other forms used as a substitute for an injectable anti-infective) is used for vascular access infections or peritonitis, the drug would be a renal dialysis service and separate payment would not be made.
Under this approach, we are presuming these drugs and biologicals are renal dialysis services because they were included on the ESRD facility claims and furnished in conjunction with a dialysis treatment. In addition, these drugs represent 99.8 percent of payments for separately billable drugs and biologicals furnished to ESRD patients.
In our analysis for this final rule of the drugs and biologicals on the ESRD facility claims, we analyzed the remain 0.2 percent of payments for separately billable drugs and identified drug categories that we believe could be ESRD-related, but are commonly used for non-ESRD-related conditions (for example, antiemetics and pain medications). These are shown in Table 5. Because these drug and biological categories could be ESRD-related, we included the payments made under Part B for these drugs and biologicals in 2007 in the final ESRD bundled base rate. In other words, for the purpose of the ESRD bundle, as of January 1, 2011, these drugs are presumed to be renal dialysis services unless the ESRD facility indicates on the claim (by using
a modifier) that a drug or biological in these categories is not ESRD-related and, separate payment would be made. (We discuss the use of the modifier in section II.K. of this final rule.)
Where these drugs are furnished and billed by ESRD facilities in conjunction with dialysis treatments, we presume these drugs and biologicals in whatever form they are furnished, to be renal dialysis services. As a result, we identified the drugs and biologicals for these categories and included the payments made under Part B for these drugs in computing the final ESRD PPS base rate. As ESRD facilities are required to report all drugs and biologicals they furnish and will be able to designate drugs and biologicals as being ESRD-related or non-ESRD-related through the use of a modifier, we will be able to monitor the drugs and biologicals to identify those that are being used for ESRD-related conditions and those that are not.
However, as the oral (or other form of administration) substitutes for the drugs and biological described above were not furnished or billed by ESRD facilities nor furnished in conjunction with dialysis treatments, we presume that these drugs and biologicals currently paid under Part D were prescribed for non-ESRD-related conditions and are not renal dialysis services. Therefore, we did not include payment for these oral drugs and biologicals with other forms of administration in the ESRD PPS base rate. However, if these drugs and biologicals currently paid under Part D are furnished by an ESRD facility for ESRD-related purposes, they would be considered renal dialysis services.
We will monitor the use of drugs and biologicals in these categories for the treatment of ESRD and may add categories of drugs and biologicals that constitute renal dialysis services (or if applicable, eliminate categories of drugs and biologicals that no longer constitute renal dialysis services) in the future.
ER12AU10.012
Comment:
One commenter questioned whether midodrine used to maintain blood pressure on dialysis was included in the bundle and would the bundle be expanded to include all blood pressure medications. Another commenter noted that the average patient is on 3 to 5 different anti-hypertensive drugs and suggested that if anti-hypertensive drugs were in the bundle, that more focus on optimal fluid management should occur.
Response:
As we discussed above, the separately billable Part B payments made for cardiac drugs (including anti-hypertensive drugs) were not included in the final ESRD PPS base rate because cardiac drugs are included under the current basic case-mix adjusted composite payment rate. In addition, we note that we did not see midodrine reported in the 2007 ESRD claims data. However, to the extent that that any cardiac drug or biological (including anti-hypertensive drugs and biologicals) are furnished by an ESRD facility for ESRD-related conditions, the drug or biological would be considered a renal dialysis service and separate payment will not be made.
Comment:
Some commenters indicated that in cooperation with other physicians and transplant centers and in the patients' interest, they administer medications that are not part of dialysis care, such as immunosuppressants and antibiotics. One commenter indicated that providers will have to undertake an expensive appeals process that could impair access if there is no recognition of non-ESRD-related drugs. The commenter further stated if the ESRD PPS does not consider that non-ESRD-related drugs and biologicals are furnished by ESRD facilities, nephrologists will only be permitted to order medications that are included in the final ESRD PPS base rate, and directly related to dialysis. This outcome would make it impossible for nephrologists to serve as primary care physicians and would force patients to see internists and family practice physicians incurring additional costs to insurers and patients. The commenter believed that this will result in repetition of unnecessary and expensive procedures resulting in higher costs, morbidity, and mortality.
Response:
We are aware that drugs and biologicals may be administered for reasons unrelated to the treatment of ESRD or dialysis and would not be renal dialysis services covered under the ESRD PPS. As discussed above, because the 2007 ESRD claims do not distinguish between ESRD-related and non-ESRD-related drugs and biologicals, we were unable to exclude payments for those drugs and biologicals from the base rate with certainty. To the extent that we were able to presume a drug or biological was not ESRD-related, we excluded the payments. We identify the drugs and biologicals that were included in the base rate in Table C in the Appendix. We have developed a mechanism to be used by ESRD
facilities to identify and be paid separately for non-ESRD-related drugs and biological which is discussed in section II.K. of this final rule.
Comment:
One commenter recommended that we develop a list of specific ESRD-only related drugs for inclusion in the bundle and that the list be periodically updated to account for new technology and innovation.
Response:
As discussed above, rather than specifying the specific ESRD-related drugs and biologicals, we identified categories based on the mechanism of action of these drugs and biologicals. We did not specify all of the drugs and biologicals within these categories because, as we noted above, we did not want to inadvertently exclude drugs that may be substitutes for drugs we identified and we wanted the ability to reflect new drugs and biologicals developed or changes in standards of practice. Therefore, we are not restricting or limiting the tables to specific drugs or biologicals. However, the categories of drugs and biologicals which we identified as renal dialysis services were included in the final ESRD PPS base rate and are shown in Table 5. We will monitor the use of drugs and biologicals for the treatment of ESRD and may add categories of drugs and biologicals that constitute renal dialysis services (or if applicable, eliminate categories of drugs and biologicals that no longer constitute renal dialysis services) in the future.
Comment:
Some commenters suggested that we include levocarnitine in the ESRD bundle.
Response:
We agree that levocarnitine is used in the treatment of ESRD and meets the definition of a renal dialysis service. Levocarnitine is included in the drug categories shown in Table 4.
Comment:
Some commenters indicated that the top 11 ESRD drugs and biologicals account for 99.7 percent of Part B payments for intravenous drugs and biologicals furnished to ESRD patients in 2007. The commenters believed that the Congress intended that only these drugs and their equivalents be included in the bundled rate, as these drugs normally are administered during the course of dialysis treatment.
Response:
We do not agree with the commenters that only the top 11 drugs and biologicals should be included in the ESRD base rate. As we discussed above, the top 11 drugs, which in the analysis conducted for this final rule account for 99.8 percent of ESRD Part B separately billable drug payments, are included in the ESRD bundled base rate.
However, there are drugs and biologicals (and therefore, categories of drugs and biologicals) that were not among the top 11 ESRD drugs and biologicals, but were determined to be renal dialysis services. We discuss these categories of drugs and biologicals (for example, the pain management category), in the discussion above concerning categories of drugs that are ESRD-related but could be used for non-ESRD conditions.
Comment:
A few pediatric dialysis facilities noted that drugs administered to children usually include antibiotics for peritonitis; peritoneal dialysis or hemodialysis central venous catheter infections; hemodialysis catheter related septicemia; alteplase for hemodialysis catheter de-clotting; anti-seizure medications; ESAs; and vitamin D analogs. The commenters indicated that antibiotic and alteplase use was more prevalent in younger children as well as higher ESA dosing per kilogram of body weight. Some of these commenters provided a list of the pediatric drugs and their costs.
Response:
As we discussed above, we concur that drugs and biologicals that are used for anemia management (ESAs), bone and mineral management (vitamin D), access infections and peritonitis (vancomycin and daptomycin), and access management (alteplase) are renal dialysis services and payments for the drugs in these categories have been included in the ESRD PPS base rate. However, we did not include anti-seizure medications in the ESRD PPS base rate because we believed that anti-seizure drugs and biologicals were used for many conditions and were not likely to be renal dialysis services. We are not clear if the commenter was indicating that anti-seizure medications were administered to pediatric patients because of ESRD-related conditions or for other non-ESRD-related conditions.
However, we will monitor the use of anti-seizure drugs and biologicals for the treatment of ESRD and may add this category of drugs and biologicals that constitute renal dialysis services in the future. We expect that ESRD facilities that treat ESRD patients under the age of 18 will report the ESRD-related seizure medications on the ESRD claims. Where an anti-seizure drug or biological is furnished by the ESRD facility and reported without a modifier, separate payment would not be made. Further discussions on pediatric ESRD patients are in section II.G. of this final rule.
Comment:
Many commenters opposed the inclusion of antibiotics in the bundled payment indicating that antibiotics are often administered during dialysis for non-renal reasons such as pneumonia or wound infection and, therefore, should remain separately billable. Others explained that antibiotics are administered when an infection is suspected in patients receiving dialysis treatment, noting that administration of antibiotics decreases hospitalizations, emergency room visits, shortens hospital days, and decreases mortality. These commenters believed that if antibiotics are included in the bundle, it would serve as a disincentive for early infection intervention. Others explained that antibiotics are often not prescribed by nephrologists and, therefore, would not be renal dialysis services. Still others noted that administering antibiotics during dialysis is less expensive to administer because there is vascular access readily available.
Another commenter indicated that antibiotics are administered to severely ill patients prior to transfer to the emergency department. Several commenters explained that dialysis “clears many antibiotics” and indicated that if patients do not receive antibiotics during or at the end of dialysis, there is a likelihood that their blood levels would be subtherapeutic, increasing the risk of recurrent infection and hospitalization. One commenter provided a case example. Some commenters predict that providers will decline to administer medications not directly related to kidney failure, such as antibiotics for infected foot ulcers, or will use less proven oral regimens to complete treatment.
Response:
We acknowledge that antibiotics may be administered in an ESRD facility for purposes other than dialysis or ESRD-related conditions as well as for treatment of vascular access infections. Included in the top 11 drugs and biological are vancomycin and daptomycin. We believe that there are other antibiotics that may be administered for vascular access related infections and peritonitis. Therefore, we included all antibiotics, with the exception of antivirals, that were on the 2007 ESRD claims, into the ESRD bundled base rate. ESRD facilities will be able to identify on the ESRD claims any antibiotic administered for non-ESRD related reasons, and receive payment for those non-ESRD related antibiotics. We note, if an anti-infective (including anti-bacterials and anti-fungals) are administered for the purpose of a vascular access infection or peritonitis, the drug would be considered a renal dialysis service and not eligible for separate payment. This also applies to any drugs or biologicals that may be developed in the future.
Comment:
In general, commenters supported the agency's reading of the
statute with regard to oral drugs with injectable equivalents (or some other form of administration). In particular, several commenters fully supported inclusion of oral drugs that are equivalent, full replacement products for injectable Part B drugs in the ESRD PPS.
Response:
We appreciate these comments and agree that such oral drugs are required to be included in the ESRD PPS because such drugs meet the definition of “renal dialysis services” under section 1881(b)(14)(B) of the Act.
Comment:
One commenter suggested that the bundle include oral drugs with intravenous equivalents, phosphate binders, and calcimimetics essential for bone health and mineral metabolism. A few commenters provided a list of drugs and cost amounts. One commenter believed bundling of intravenous drugs is straightforward with bundling of oral equivalents being less logical. Some commenters believed that oral drugs such as cinacalcet HCL, lanthanum carbonate, calcium acetate, sevelamar HCL, and sevelemar carbonate commonly taken by patients on dialysis and non-dialysis days, should not be in the bundle. One commenter acknowledged that zemplar and other vitamin D products belong in the bundle as they are oral equivalents of intravenous vitamin D. Another commenter believed that vitamin D and oral iron were the only currently available oral drugs with intravenous equivalents and therefore the only oral drugs in the bundle. One commenter stated that oral drugs with injectable equivalents are primarily prescribed for peritoneal dialysis and home hemodialysis patients. Other commenters supported the need to revisit the issue and ensure that the only drugs in the bundle are those that are separately billable by dialysis facilities and have an intravenous equivalent.
Response:
As explained in section II.A.3. of this final rule, oral-only ESRD-related drugs and biologicals currently paid under Part D meet the definition of a renal dialysis service, but implementation of these drugs under the ESRD PPS is delayed until January 1, 2014. We do not agree with the comment that bundling of oral equivalents is less logical than bundling injectable drugs. As we have discussed above, section 1881(b)(14)(B)(iii) of the Act specifies that other drugs and biologicals that were furnished to individuals for the treatment of ESRD, and for which payment was made separately under this title, prior to the implementation of the ESRD PPS, and their oral equivalent forms, must be included in the ESRD PPS payment bundle.
Based upon our determination of the categories of drugs and biologicals that are renal dialysis services, at this time there are oral or other forms of injectable drugs only for the bone and mineral metabolism and cellular management categories. As discussed earlier in this section, we did not include the non-injectable form of vancomycin because we believe that the oral or other forms of these anti-infectives are not used for ESRD-related access infections. In addition, we were not able to identify any oral or other form of administration for iron prescriptions. Therefore, payments related to the oral or other forms of these injectable drugs were not included in the ESRD PPS base rate. As a result, for purposes of calculating the ESRD PPS base rate, we included the payments under Part D for oral vitamin D (calcitrol, doxercalcitrol and paracalcitrol) and oral levocarnitine. To the extent an ESRD facility furnishes an injectable, oral or other form of a drug or biological that is ESRD-related, the facility should report the drug or biological on the ESRD claim without a modifier and no separate payment would be made.
Therefore, we are finalizing the definition of renal dialysis services under § 413.171 as proposed.
4. Diagnostic Laboratory Tests and Other Items and Services
Section 1881(b)(14)(B)(iv) of the Act requires that diagnostic laboratory tests not included under the composite payment rate (that is, currently separately billable laboratory tests) must be included as part of the ESRD PPS payment bundle. We proposed to define such laboratory tests as laboratory tests that are separately billed by ESRD facilities as of December 31, 2010, and laboratory tests ordered by a physician who receives monthly capitation payments (MCPs) for treating ESRD patients that are separately billed by independent laboratories (74 FR 49929). We proposed that payments for these laboratory services would be included in the development of the proposed patient-specific case-mix adjusters and in the proposed ESRD base rate to which the adjusters would be applied.
Section 1881(b)(14)(B)(iv) of the Act also requires that the ESRD PPS payment bundle include “other items and services not described in clause (i).” In the proposed rule, we noted that this language can be reasonably interpreted to include other separately billable items and services used in the treatment of ESRD, such as supplies and other self-dialysis services (74 FR 49929). We noted that examples of such items and services would include, but would not be limited to, items such as syringes, specialized tubing, as well as blood and blood products, which facilities may furnish during the dialysis treatment. We also stated that we believe that the statutory language can be interpreted to include the cost of other self-dialysis training services in the ESRD PPS (for further detail on self-dialysis training (74 FR 49930)). We proposed that such items and services be included in the ESRD PPS bundle and that the inclusion of diagnostic laboratory tests and other items and services as renal dialysis services in the ESRD PPS payment bundle is set forth in proposed § 413.171.
The comments we received on this proposal and our responses are set forth below.
Comment:
We received many comments addressing our methodology for the inclusion of diagnostic laboratory tests in the ESRD PPS payment bundle. Commenters noted that the inclusion of such tests in the bundled ESRD PPS will subject Medicare beneficiaries for the first time to a 20 percent coinsurance payment obligation. The commenters reasoned that our proposal that Medicare pay for 80 percent of diagnostic laboratory tests through their inclusion in the payment bundle violates the statutory requirement that the Secretary ensure that the estimated amount of total payments under title XVIII for renal dialysis services in 2011 equal 98 percent of the amount of payments that would have been made, but for the PPS. Some commenters stated that section 1833(a)(2)(D)(ii) of the Act specifies that for clinical laboratory tests paid under Medicare Part B on the basis of negotiated rates, the payment amount must equal 100 percent of the negotiated rate (incidentally, we note that a few commenters cited to section 1883(a)(2)(D)(ii) of the Act, but we presume those commenters intended to instead reference section 1833(a)(2)(D)(ii) of the Act). Accordingly, the commenters requested that we revise the payment amount for laboratory tests included in the bundle to reflect 100 percent of the allowable amount.
Response:
Cost sharing with respect to laboratory services is addressed in section 1833(a)(2)(D) of the Act. We note that nothing changes in terms of the cost-sharing structure for non-ESRD-related laboratory tests. Under the definition of renal dialysis services under section 1881(b)(14)(B)(iv) of the Act, ESRD-related laboratory tests
would be considered to be renal dialysis services under the new ESRD PPS, subject to the usual coinsurance applied to such Part B services. A few commenters appeared to be under the impression that only 80 percent of payments for laboratory tests were included in the calculation of the base rate. This is incorrect. We included 100 percent of payments for laboratory services in the ESRD PPS base rate. As with all other renal dialysis services included in the payment bundle, these laboratory services will be part of the ESRD PPS payment rate and would be subject to the customary 20 percent Part B coinsurance amount.
Comment:
Many commenters took issue with our proposal to include laboratory tests ordered by MCP physicians for treating ESRD beneficiaries, and that are billed separately by independent laboratories, and our proposal to include all these tests billed by independent laboratories for ESRD patients in the payment bundle. Numerous commenters pointed out that in many instances the MCP physician is the primary care physician for the ESRD patient and often has laboratory tests performed for conditions unrelated to ESRD. The commenters asserted that requiring ESRD facilities to pay for such tests would result in a potentially vast number of tests unrelated to the treatment of ESRD being inappropriately included in the ESRD payment bundle.
Response:
Section 1881(b)(14)(B)(iv) of the Act specifies that the ESRD PPS must include “diagnostic laboratory tests * * * that are furnished to individuals for the treatment of end-stage renal disease.” We interpreted this language to include laboratory tests ordered by MCP physicians for treating ESRD beneficiaries and that are currently billed separately by independent laboratories. We recognize that there is a small subset of laboratory tests that are typically performed in connection with a patient's ESRD, and that are appropriately considered renal dialysis services because they are furnished for the treatment of ESRD, but that can also be done for non-ESRD reasons. For example, a complete blood count (CBC) could be ordered for an ESRD patient in connection with routine testing for hemoglobin or hematocrit to ensure appropriate management of anemia, an ESRD-related purposes. However, a CBC could also be ordered for an ESRD beneficiary to measure the amount of blood loss in response to a suspected lower gastrointestinal bleed, or to measure infection (for example, white blood cell count for a suspected pneumonia), non-ESRD purposes.
The 2007 ESRD facility claims do not distinguish between ESRD-related and non-ESRD-related laboratory services. We included payments for all tests billed by independent laboratories for ESRD patients in calculating the final base rate in order to appropriately account for such tests as renal dialysis services. We presumed that MCP physicians, for the most part, order laboratory tests for ESRD beneficiaries for ESRD-related purposes. However, as we recognize that certain non-ESRD laboratory tests may be ordered in conjunction with ESRD-related laboratory tests, we have developed billing modifiers to provide for separate payment where the testing is not ESRD-related (section II.K.2. of this final rule).
Comment:
Several commenters recommended that we include in the ESRD PPS payment bundle, only those laboratory tests that are generally furnished for the treatment of ESRD, and included lists of approximately 50 tests which they believe account for about 95 percent of the laboratory tests ordered by ESRD facilities for ESRD patients. The commenters pointed out that such specificity would leave no doubt as to whether a particular laboratory test would be included or excluded from the payment bundle, would not create billing rules other than the list of 50 to 60 current procedural technology (CPT) codes that would not be separately billable, and would not result in the attachment of testing frequencies to the included tests. The commenters also stated that there is precedent for their recommendation, pointing out th
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