Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Bad Debt Reductions for All Medicare Providers

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 413 and 417

[CMS-1352-P]

RIN 0938-AR13

Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Bad Debt Reductions for All Medicare Providers

AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION:

Proposed rule.

SUMMARY:

This rule proposes to update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2013. This rule also proposes to set forth requirements for the ESRD quality incentive program (QIP), including for payment year (PY) 2015 and beyond. This proposed rule will implement changes to bad debt reimbursement for all Medicare providers, suppliers, and other entities eligible to receive bad debt. (See the Table of Contents for a listing of the specific issues addressed in this proposed rule.)

DATES:

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. E.S.T. on August 31, 2012.

ADDRESSES:

In commenting, please refer to file code CMS 1352 P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (please choose only one of the ways listed):

1.

Electronically.

You may submit electronic comments on this regulation to

http://www.regulations.gov.

Follow the “Submit a comment” instructions.

2.

By regular mail.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1352-P, P.O. Box 8010, Baltimore, MD 21244-8010.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3.

By express or overnight mail.

You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1352-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

4.

By hand or courier.

Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses prior to the close of the comment period:

a. For delivery in Washington, DC—Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201.

(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. For delivery in Baltimore, MD—Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, call telephone number (410) 786 9994 in advance to schedule your arrival with one of our staff members.

Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

For information on viewing public comments, see the beginning of the

SUPPLEMENTARY INFORMATION

section.

FOR FURTHER INFORMATION CONTACT:

Michelle Cruse or Terri Deutsch, (410) 786-4533, for issues related to ESRD.

Heidi Oumarou, (410) 786-7942, for issues related to the ESRD market basket.

Teresa Casey, (410) 786-7215, for issues related to the QIP.

Kellie Shannon, (410) 786-0416 for information regarding Medicare bad debt.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments:

All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received:

http://www.regulations.gov.

Follow the search instructions on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.

Electronic Access

This

Federal Register

document is also available from the

Federal Register

online database through

Federal Digital System (FDsys),

a service of the U.S. Government Printing Office. This database can be accessed via the internet at

http://www.gpo.gov/fdsys/

.

Addenda Are Only Available Through the Internet on the CMS Web Site

In the past, a majority of the Addenda referred to throughout the preamble of our proposed and final rules were available in the

Federal Register

. However, the Addenda of the annual proposed and final rules will no longer be available in the

Federal Register

. Instead, these Addenda to the annual proposed and final rules will be available only through the Internet on the CMS Web site. The Addenda to the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) rules are available at:

http://www.cms.gov/ESRDPayment/PAY/list.asp

. Readers who experience any problems accessing any of the Addenda to the proposed and final rules of the ESRD PPS that are posted on the CMS Web site identified above should contact Michelle Cruse at 410-786-7540.

Table of Contents

To assist readers in referencing sections contained in this preamble, we are providing a Table of Contents. Some of the issues discussed in this preamble affect the payment policies, but do not require changes to the regulations in the Code of Federal Regulations (CFR).

I. Executive Summary

A. Purpose

1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)

2. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)

3. Reductions to Bad Debt Payments for all Medicare Providers

B. Summary of the Major provisions

1. ESRD PPS

2. ESRD QIP

3. Reductions to Bad Debt Payments for all Medicare Providers

C. Summary of Cost and Benefits

1. Impacts of the Proposed ESRD PPS

2. Impacts for ESRD QIP

3. Impacts of Bad Debt Provisions

II. Calendar Year (CY) 2013 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)

A. Background on the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)

B. Routine Updates and Proposed Policy Changes to the CY 2013 ESRD PPS

1. Composite Rate Portion of the ESRD PPS Blended Payment

a. Proposed Update to the Drug Add-On to the Composite Rate Portion of the ESRD Blended Payment Rate

i. Estimating Growth in Expenditures for Drugs and Biologicals in CY 2013

ii. Estimating per Patient Growth

iii. Applying the Proposed Growth Update to the Drug Add-On Adjustment

iv. Proposed Update to the Drug Add-On Adjustment for CY 2013

2. ESRD PPS Base Rate

3. ESRD Bundled Market Basket

a. Overview and Background

b. Proposed Market Basket Update Increase Factor and Labor-Related Share for ESRD Facilities for CY 2013

c. Proposed Productivity Adjustment

d. Calculation of the ESRDB Market Basket Update Adjusted for Multifactor Productivity for CY 2013

4. Transition Budget-Neutrality Adjustment for CY 2013

5. Proposed Updates to the Wage Index Values and Wage Index Floor for the Composite Rate Portion of the Blended Payment and the ESRD PPS Payment

a. Reduction to the ESRD Wage Index Floor

b. Policies For Areas With No Wage Data—Segment 1

c. Proposed Wage Index Budget-Neutrality Adjustment

d. ESRD PPS Wage Index Tables

6. Proposed Drug Policy Changes

a. Daptomycin

b. Alteplase and Other Thrombolytics

c. Part B Drug Pricing

7. Proposed Revisions to the Outlier Policy

a. Impact of Proposed Changes to the Outlier Policy

b. Outlier Policy Percentage

C. Clarifications Regarding the ESRD PPS

1. Reporting Composite Rate Items and Services

2. ESRD Facility Responsibilities for ESRD-Related Drugs and Biologicals

3. Use of AY Modifier

III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for Payment Year (PY) 2015

A. Background

B. Considerations in Updating and Expanding Quality Measures under the ESRD QIP for PY 2015 and Subsequent PYs

1. Value-Based Purchasing (VBP) Overview

2. Brief Overview of Proposed PY 2015 Measures

3. PY 2014 Mineral Metabolism Measure

4. Measures Application Partnership Review

C. Proposed Measures for the PY 2015 ESRD QIP and Subsequent PYs of the ESRD QIP

1. PY 2014 Measures Continuing for PY 2015 and Subsequent Payment Years

2. Expansion of Two PY 2014 Measures for PY 2015 and Subsequent Payment Years

a. Proposed Expanded NHSN Dialysis Event Reporting Measure

b. Proposed Expanded Mineral Metabolism Reporting Measure

3. New Measures Proposed for PY 2015 and Subsequent Payment Years of the ESRD QIP

a. Proposed Kt/V Dialysis Adequacy Measure Topic

b. Hypercalcemia

c. Proposed Anemia Management Reporting Measure

4. Measures Under Consideration for Future Payment Years of the ESRD QIP

a. Standardized Hospitalization Ratio (SHR)

b. Standardized Mortality Ratio (SMR)

c. Public Reporting of SHR and SMR Measures

5. Other Potential Future Measures Under Development

a. Thirty-Day Hospital Readmissions

b. Efficiency

c. Population/Community Health

6. Proposed Scoring for the PY 2015 ESRD QIP

7. Proposed Performance Period for the PY 2015 ESRD QIP

8. Proposed Performance Standards for the PY 2015 ESRD QIP

a. Proposed Clinical Measure Performance Standards

b. Estimated Performance Standards

c. Proposed Performance Standards for PY 2015 Reporting Measures

9. Proposed Scoring for the PY 2015 ESRD QIP Proposed Measures

a. Proposals for Scoring Facility Performance on Clinical Measures Based on Achievement

b. Proposals for Scoring Facility Performance on Clinical Measures Based on Improvement

c. Proposals for Calculating the Reporting Measure Scores

10. Proposals for Weighting the PY 2015 ESRD QIP Measures and Calculation of the PY 2015 ESRD QIP Total Performance Score

a. Proposals for Weighting Individual Measures To Compute Measure Topic Scores for the Kt/V Dialysis Adequacy Measure Topic and the Vascular Access Type Measure Topic

b. Proposals for Weighting the Total Performance Score

c. Examples of the Proposed PY 2015 ESRD QIP Scoring Methodology

11. Proposed Minimum Data for Scoring Measures for the PY 2015 ESRD QIP

a. Proposed Minimum Data for Scoring Measures for the PY 2015 ESRD QIP

i. Proposed Case Minimum for Clinical Measures

ii. Proposed Adjustment Methodology

b. Proposed Minimum Data Requirements for Reporting Measures From New Facilities

12. Proposed Payment Reductions for the PY 2015 ESRD QIP

13. Data Validation

14. Proposals for Scoring Facilities Whose Ownership has Changed

15. Proposals for Public Reporting Requirements

IV. Limitation on Payments to All Providers, Suppliers and Other Entities Entitled to Bad Debt

A. Background

B. Section 3201 of The Middle Class Tax Extension and Job Creation Act of 2012 (Pub. L. 112-96)

C. Summary of Provisions of the Proposed Rule

1. Section 3201 of the Middle Class Tax Extension and Job Creation Act of 2012 (Pub. L. 112-96)

2. Remove and Reserve § 413.178

3. Technical Corrections

D. Proposed Changes to Medicare Bad Debt Policy

1. Proposed Changes to 42 CFR 413.89(h)

2. Rationale for Removing 42 CFR 413.178

3. Technical Corrections to 42 CFR 417.536(f)(1)

V. Collection of Information Requirements

A. Legislative Requirement for Solicitation of Comments

B. Requirements in the Regulation Text

C. Additional Information Collection Requirements

1. ESRD PPS

2. QIP

VI. Response to Comments

VII. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction

2. Statement of Need

3. Overall Impact

B. Detailed Economic Analysis

1. CY 2013 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)

a. Effects on ESRD Facilities

b. Effects on Other Providers

c. Effects on the Medicare Program

d. Effects on Medicare Beneficiaries

e. Alternatives Considered

2. QIP

C. Accounting Statement

VIII. Regulatory Flexibility Act Analysis

IX. Unfunded Mandates Reform Act Analysis

X. Federalism Analysis—

XI. Files Available to the Public via the Internet

Regulations Text

Acronyms

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:

AMCC Automated Multi-Channel Chemistry

ASP Average Sales Price

AV Arteriovenous

BLS Bureau of Labor Statistics

BMI Body Mass Index

BSA Body Surface Area

CBSA Core-Based Statistical Area

CCN CMS Certification Number

CDC Centers for Disease Control and Prevention

CLABSI Central Line Access Bloodstream Infections

CFR Code of Federal Regulations

CIP Core Indicators Project

CMS Centers for Medicare & Medicaid Services

CPM Clinical Performance Measure

CPT Current Procedural Terminology

CROWNWeb Consolidated Renal Operations in a Web-Enabled Network

CY Calendar Year

DFC Dialysis Facility Compare

DFR Dialysis Facility Report

DME Durable Medical Equipment

ESA Erythropoiesis Stimulating Agent

ESRD End-Stage Renal Disease

ESRDB End-Stage Renal Disease Bundled

FDA Food and Drug Administration

FI/MAC Fiscal Intermediary/Medicare Administrative Contractor

FY Fiscal Year

GDP Gross Domestic Product

HAI Healthcare-Associated Infections

HCPCS Healthcare Common Procedure Coding System

HD Hemodialysis

HHD Home Hemodialysis

ICD-9-CM International Classification of Diseases, 9th Edition, Clinical Modifications

ICH CAHPS In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems

IGI IHS Global Insight

IPPS Inpatient Prospective Payment System

KDIGO Kidney Disease: Improving Global Outcomes

KDOQI Kidney Disease Outcome Quality Initiative

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

MAP Medicare Allowable Payment

MCP Monthly Capitation Payment

MIPPA Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275)

MMA Medicare Prescription Drug, Improvement and Modernization Act of 2003

MMEA Medicare and Medicaid Extenders Act of 2010 Pub. L. 111-309

MFP Multifactor Productivity

NHSN National Healthcare Safety Network

NQF National Quality Forum

PD Peritoneal Dialysis

PFS Physician Fee Schedule

PPS Prospective Payment System

PSR Performance Score Report

PY Payment Year

QIP Quality Incentive Program

REMIS Renal Management Information System

RFA Regulatory Flexibility Act

RUL Reasonable Useful Lifetime

SBA Small Business Administration

SIMS Standard Information Management System

SHR Standardized Hospitalization Ratio

SSA Social Security Administration

The Act Social Security Act

The Affordable Care Act The Patient Protection and Affordable Care Act

URR Urea Reduction Ratio

VBP Value Based Purchasing

I. Executive Summary

A. Purpose

1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)

This rule proposes to update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2013. In accordance with section 1881(b)(14) of the Social Security Act (the Act), as added by section 153(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), Centers for Medicare & Medicaid Services (CMS) implemented a case-mix adjusted bundled PPS for Medicare outpatient ESRD dialysis services beginning January 1, 2011. The ESRD PPS replaced the basic case-mix adjusted composite payment system and the methodologies for the reimbursement of separately billable outpatient ESRD services.

Also, section 1881(b)(14)(F) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act (Pub. L. 111-148), established that beginning CY 2012, and each subsequent year, the Secretary shall reduce the market basket increase factor by a productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. In addition, the application of the productivity adjustment may result in the increase factor being less than 0.0 percent for a year.

2. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)

This rule also proposes to set forth requirements for the ESRD Quality Incentive Program (QIP), including payment year (PY) 2015. The program is authorized under section 153(c) of MIPPA, which added section 1881(h) to the Social Security Act (the Act). The ESRD QIP is the most recent step in fostering improved patient outcomes by establishing incentives for dialysis facilities to meet performance standards established by CMS.

3. Reductions to Bad Debt Payments for All Medicare Providers

This proposed rule would also implement the changes to the limitations on payments for bad debt reimbursement set forth in section 3201 of The Middle Class Tax Extension and Job Creation Act of 2012 (Pub. L. 112-96) by revising 42 CFR 413.89, Bad debts, charity, and courtesy allowances.

B. Summary of the Major Provisions

1. ESRD PPS

•

Update to the composite and ESRD PPS base rate for CY 2013:

For CY 2013, we propose an ESRD PPS base rate of $240.88. This amount reflects the application of the ESRD bundled (ESRDB) market basket reduced by the productivity adjustment, or 2.5 percent, and the wage index budget-neutrality adjustment factor of 1.000826 to the CY 2012 ESRD PPS base rate of $234.81. The proposed base rate is applicable to both the ESRD PPS portion of the blended payment under the transition and payments under the full PPS. For CY 2013, we propose a composite rate portion of the ESRD PPS blended payment of $145.49. This amount reflects the CY 2012 composite rate of $141.94, increased by the ESRDB market basket reduced by the productivity adjustment.

•

Update to the composite rate drug add-on for CY 2013:

We are not proposing any changes to the methodology used to compute the drug add-on for CY 2013; we are only updating the data used to calculate the drug add-on for CY 2013. Using 6 years of ASP drug expenditure data, and other data, we estimate a 3.0 percent decrease in aggregate drug expenditures and a 4.6 percent increase in enrollment. Using these estimates, we project a 7.3 percent decrease in per patient growth of drug expenditures for CY 2013. Thus, we are projecting that the combined growth in per patient utilization and pricing for CY 2013 would result in a decrease to the drug add-on equal to 1.0 percentage points. We are, however, proposing to apply a zero update to the drug add-on adjustment and maintain the $20.33 per treatment drug add-on amount for CY 2013. Because the market basket minus productivity that is applied to the composite rate increases the composite rate, the add-on adjustment of 14.3 percent is reduced to 14.0 percent to maintain the drug add-on at $20.33.

•

Market basket and productivity adjustment:

Under section 1881(b)(14)(F) of the Act, beginning in CY 2012, ESRD PPS payment amounts and the composite rate portion of the transition blended payment amounts shall be annually increased by an ESRD market basket percentage increase factor reduced by a multi-factor productivity (MFP) adjustment. The proposed CY 2013 ESRDB market basket increase factor is 3.2 percent. The current forecast of the proposed CY 2013 MFP adjustment is 0.7 percent. The resulting proposed CY 2013 MFP-adjusted ESRDB market basket update is equal to 2.5 percent.

•

The transition budget-neutrality adjustment factor:

For CY 2013, we are proposing to apply the transition budget neutrality adjustment methodology established in CY 2011. This results in a 0 percent adjustment. Therefore, for CY 2013 we propose a 0 percent reduction to be applied to both the blended payments made under the transition and payments made under the 100 percent ESRD PPS for renal dialysis services furnished January 1, 2013 through December 31, 2013.

•

Updates to the wage index and wage index floor:

We adjust wage indices on an annual basis using the most current hospital wage data to account for differing wage levels in areas in which ESRD facilities are located. In CY 2013, we are not proposing any changes to the application of the wage index budget-neutrality adjustment factor and will continue to apply the budget-neutrality adjustment to the pre-floor, pre-reclassified wage index values for the composite rate portion of the blended payment and to the base rate for the ESRD PPS. Over the past several years, we have been gradually decreasing the wage index floor by 0.05 in an effort to gradually phase out the floor and in CY 2013 will continue to do so. Therefore, in CY 2013, we are reducing the wage index floor from 0.55 to 0.50. We also applied the wage index budget-neutrality adjustment factor to the wage index floor of 0.500 which results in an adjusted wage index floor of 0.501 (0.500 × 1.001538) for CY 2013.

•

Update to the outlier policy:

We are updating the outlier services fixed dollar loss amounts and Medicare Allowable Payments (MAPs) for CY 2013 using 2011 data. Based on the use of more current data, the fixed-dollar loss amount for pediatric patients would decrease from $71.64 to $50.15 and the MAP amount would decrease from $45.44 to $43.63 as compared to CY 2012 values. For adult patients, the fixed-dollar loss amount drops from $141.21 to $113.35 and the MAP amount drops from $78.00 to $61.06. Because of the decline in utilization associated with the implementation of the expanded bundle, the 1 percent target for outlier payments was not achieved in CY 2011. Use of 2011 data to recalibrate the thresholds, reflecting lower utilization of EPO and other outlier services, is expected to result in aggregate outlier payments close to the 1 percent target in CY 2013. We believe this update to the outlier MAP and fixed dollar loss amounts for CY 2013 will increase payments for ESRD beneficiaries requiring higher resource utilization in accordance with a 1 percent outlier policy.

•

Policy reiteration (composite rate drugs and AY modifier):

Under the composite and basic case-mix adjusted composite rate payment systems, certain drugs were included in the composite rate and were not eligible for separate payment. Our analyses of claims show that ESRD facilities are continuing to report composite rate drugs. In this proposed rule, we are reiterating that any item or service included in the composite rate should not be identified on ESRD claims.

• An AY modifier can be appended to claims for drugs and laboratory tests that are not ESRD-related to allow for separate payment. Our analyses of claims show that there are ESRD facilities and laboratories that are appending the AY modifier to drugs and laboratory tests that we believe are ESRD-related, resulting in separate payment. In this proposed rule, we are reiterating the purpose of the AY modifier and emphasizing that we are continuing our monitoring efforts. We are also indicating that we may consider eliminating the AY modifier in future rulemaking.

2. ESRD QIP

This proposed rule proposes to implement new requirements for the ESRD QIP. It proposes to continue some of the previous ESRD QIP measures, add new measures, and expand the scope of some of the existing measures to cover the measure topics as follows:

• To evaluate anemia management:

○ Hemoglobin Greater Than 12 g/dL, a clinical measure.

○ Anemia Management, a reporting measure.*

• To evaluate dialysis adequacy:

○ A clinical Kt/V measure for adult hemodialysis patients.*

○ A clinical Kt/V measure for adult peritoneal dialysis patients.*

○ A clinical Kt/V measure for pediatric hemodialysis patients.*

• To determine whether patients are treated using the most beneficial type of vascular access:

○ Vascular Access Type, a clinical measure topic comprised of an arteriovenous fistula and catheter measure.

• To address effective bone mineral metabolism management:

○ Hypercalcemia, a clinical measure.*

○ Mineral Metabolism, a reporting measure.

• To address safety:

○ NHSN Dialysis Event reporting measure.

• To assess patient and caregiver experience:

○ ICH CAHPS survey reporting measure.

* Denotes that this measure is new to the ESRD QIP.

It also proposes to establish CY 2013 as the performance period for the PY 2015 ESRD QIP, establish performance standards for each measure, and adopt scoring and payment reduction methodologies that are similar to those finalized for the PY 2014 ESRD QIP.

3. Reductions to Bad Debt Payments for all Medicare Providers

This rule would also implement the statutory changes to the limitations on payments for bad debt reimbursement by revising 42 CFR 413.89, Bad debts, charity, and courtesy allowances. We are also proposing to move 42 CFR 413.178(a) to 42 CFR 413.89(h)(3), and to move 42 CFR 413.178(d)(2) to 42 CFR 413.89(i)(2) and to remove 42 CFR 413.178(b), (c) and (d)(1), as they are duplicated and discussed at 42 CFR 413.89. Additionally, we are making a technical correction to the cross reference in 42 CFR 417.536(f)(1) to Medicare bad debt reimbursement policy.

C. Summary of Costs and Benefits

In section VII of this proposed rule, we set forth a detailed analysis of the impacts that the proposed changes would have on affected entities and beneficiaries. The impacts include the following:

1. Impacts of the Proposed ESRD PPS

The impact chart in section VII.B.1.a of this proposed rule displays the estimated change in payments to ESRD facilities in CY 2013 as compared to estimated payments in CY 2012. The overall impact of the CY 2013 changes is projected to be a 3.1 percent increase in payments. Hospital-based ESRD facilities have an estimated 3.7 percent increase in payments compared with freestanding facilities with an estimated 3.0 percent increase. Urban facilities are expected to receive an estimated payment increase of 3.1 percent compared to an estimated 3.0 percent increase for rural facilities. We expect a 2.4 percent decrease in estimated payments as a result of wage index adjustments for Puerto Rico and the Virgin Islands. However, this is offset by the impact of the outlier policy, resulting in an estimated 0.4 percent increase in payment. The estimated 3.1 percent overall payment increase would result in a $250 million cost to Medicare and a $70 million cost to beneficiaries. In 2013, a 2.5 percent market basket increase would result in a $200 million

cost to Medicare and a $50 million cost to beneficiaries. The outlier fixed dollar loss and MAP adjustments in CY 2013 would result in a $30 million cost to Medicare and a $10 million cost to beneficiaries.

2. Impacts for ESRD QIP

The overall economic impact of the proposed ESRD QIP is an estimated $20.9 million for PY 2015. We expect the total payment reductions to be approximately $8.5 million, and the costs associated with the collection of information requirements for certain measures to be approximately $12.4 million.

The estimated payment reduction will continue to incentivize facilities to provide higher quality care to beneficiaries. The reporting measures that result in costs associated with the collection of information are critical to better understanding the quality of care beneficiaries receive, particularly a patient's experience of care, and will be used to incentivize improvements in the quality of care provided.

3. Impacts of Bad Debt Provisions

We are codifying the provisions of section 3201 of The Middle Class Tax Extension and Job Creation Act of 2012 that requires reductions in bad debt reimbursement to all providers eligible to receive bad debt reimbursement; these provisions are specifically prescribed by statute and thus, are self-implementing. There will be a $10.9 billion savings to the program over 10 years resulting from these self-implementing reductions in bad debt reimbursement.

II. Calendar Year (CY) 2013 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)

A. Background on the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)

On August 12, 2010, we published in the

Federal Register

a final rule (75 FR 49030 through 49214) titled, “End-Stage Renal Disease Prospective Payment System”, hereinafter referred to as the CY 2011 ESRD PPS final rule. In the CY 2011 ESRD PPS final rule, we implemented a case-mix adjusted bundled PPS for Medicare outpatient ESRD dialysis services beginning January 1, 2011, in accordance with section 1881(b)(14) of the Act, as added by section 153(b) of MIPPA.

On November 10, 2011, we published in the

Federal Register

, a final rule (76 FR 70228 through 70316) titled, “Medicare Program; End-Stage Renal Disease Prospective Payment System and Quality Incentive Program; Ambulance Fee Schedule; Durable Medical Equipment; and Competitive Acquisition of Certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (hereinafter referred to as the CY 2012 ESRD PPS final rule). In that final rule, for the ESRD PPS, we made a number of routine updates for CY 2012, implemented the second year of the transition to the ESRD PPS, made several policy changes and clarifications, and made technical changes with regard to the CY 2011 ESRD PPS final rule. In that rule, we finalized the following:

• A composite rate of $141.94 per treatment for renal dialysis services that is used in the composite rate portion of the ESRD PPS payment for ESRD facilities receiving blended payments during the transition. The $141.94 reflected the addition of the CY 2011 Part D per treatment amount ($.49) for oral ESRD drugs with an injectable equivalent to the CY 2011 composite rate of $138.53, and the application of the ESRD Bundled (ESRDB) market basket update of 3.0 percent minus a multifactor productivity adjustment of 0.9 percent, that is, a 2.1 percent increase.

• A zero update to the drug add-on adjustment and maintaining the $20.33 per treatment drug add-on amount for the composite rate portion of the ESRD PPS blended payment. This results in a 14.3 percent drug add-on adjustment to the composite rate portion of the ESRD PPS blended payment.

• An ESRD PPS base rate of $234.81 per treatment for renal dialysis services. The ESRD PPS base rate applies to the ESRD PPS portion of the blended payments during the transition and to the ESRD PPS payments. This amount reflected the CY 2012 ESRDB market basket update of 3.0 percent minus a multifactor productivity adjustment of 0.9 percent, that is, a 2.1 percent increase. This amount also reflected the application of the wage index budget-neutrality adjustment of 1.001520.

• A zero percent transition budget-neutrality adjustment factor for claims for renal dialysis services furnished from April 1, 2011 through December 31, 2011 and for CY 2012.

• The labor-related share of 41.737 percent for the CY 2012 ESRD PPS payment and the labor-related share of 53.711 percent for the CYs 2012 and 2013 ESRD composite rate portion of the blended payment for those ESRD facilities receiving a blended payment during the transition.

• The methodology for CY 2012 and subsequent years for computing the wage index budget-neutrality adjustment factors. For CY 2012, the wage index budget-neutrality adjustment factor for the composite portion of the ESRD PPS blended payment is 1.002830, and is applied to the wage index values. The wage index budget-neutrality adjustment factor for the ESRD PPS portion of the blended payment and for the ESRD PPS is 1.001520, and is applied to the ESRD PPS base rate.

• A 0.05 reduction to the wage index floor for CYs 2012 and 2013 which resulted in a wage index floor of 0.550 and 0.500, respectively. For CY 2012, the wage index floor under the composite rate portion of the blended payment is 0.552 after the wage index budget-neutrality adjustment factor is applied to 0.550. The wage index floor under the ESRD PPS is 0.550.

• The methodologies used for CY 2012 and subsequent years of computing a wage index value for areas without hospital data for urban and rural geographic areas and for Puerto Rico.

• Using the ESRDB market basket forecasts for the ESRD PPS transition payment updates.

• The methodology for calculating and applying the multifactor productivity adjustment to the ESRDB market basket.

• An annual deadline of November 1st for ESRD facilities to submit an attestation if they believe that they are eligible for the low-volume payment adjustment.

• Changes to 42 CFR 413.232(b)(1) and (b)(2) to indicate that in the absence of an ESRD facility's final settled 12-consecutive month cost report, a fiscal intermediary (FI) or A/B Medicare Administrative Contractor (MAC) can review the ESRD facility's as-filed 12-consecutive month cost report when determining if an ESRD facility meets the low-volume criteria.

• Eliminating the restriction on vancomycin to allow ESRD facilities to receive separate payment by appending the AY modifier on the claim for vancomycin when the diagnosis reported on the claim indicates the drug was used to treat a non-ESRD related condition.

• Incorporating the Part B drug overfill policy into our outlier policy and for purposes of the composite rate portion of the blended payment during the transition, that is, ESRD facilities may only report units and charges for drugs and biologicals actually purchased.

• Using a body surface area (BSA) national average of 1.87, which is the latest national average as the reference point for the computation of the BSA

adjustment for both the composite rate portion of the ESRD PPS blended payment and for the ESRD PPS. We will also review the BSA national average on the CY 2012 claims and every 5 years thereafter.

• Changes to the outlier provision which included: (1) Eliminating the issuance of a specific list of eligible outlier service drugs, (2) including antibiotics furnished in the home to treat catheter site infections or peritonitis associated with peritoneal dialysis as an eligible outlier service, (3) excluding thrombolytic drugs and biologicals from the outlier policy, (4) including testosterone and anabolic steroids that are used for anemia management as an eligible outlier service, and (5) excluding the laboratory tests that comprise the Automated Multi-Channel Chemistry panel from the definition of outlier services and revising § 413.237 to indicate this change. Finally, in the CY 2012 ESRD PPS final rule (76 FR 70228), we clarified the following:

• For the low-volume payment adjustment, (1) “payment year” was defined as the period of time that we use for determining payment to ESRD facilities, which is a calendar year; (2) “eligibility” years was defined as the 3 years preceding the payment year and are based on cost reporting years; (3) for the cost reporting years, ESRD facilities must report costs for 12-consectutive months; (4) in the absence of a final-settled cost report, an FI or A/B MAC can review the ESRD facility's as-filed cost report when verifying eligibility; and (5) if the FI or A/B MAC finds that the ESRD facility did not meet low-volume eligibility based on the final settled cost report, they should discontinue application of the low-volume adjustment and recoup the inappropriate payments.

• The ICD-9-CM diagnosis codes that are eligible for the co-morbidity payment adjustments are subject to the annual ICD-9-CM coding changes that occur in the hospital inpatient PPS final rule and effective October 1st of every year.

• Laboratory tests that are performed for Medicare ESRD beneficiaries in an emergency room or emergency department as part of the general work-up of the patient necessary for diagnosis are not considered to be renal dialysis services.

B. Routine Updates and Proposed Policy Changes to the CY 2013 ESRD PPS

1. Composite Rate Portion of the ESRD PPS Blended Payment

Section 1881(b)(14)(E)(i) of the Act requires a 4-year transition under the ESRD PPS. This proposed rule would implement the third year of the transition period for those ESRD facilities going through the transition rather than electing to receive payment based on 100 percent of the payment amount under the ESRD PPS. For CY 2013, under 42 CFR § 413.239(a)(3), facilities that go through the transition will receive a blended rate equal to the sum of 75 percent of the full ESRD PPS amount and 25 percent of the basic case-mix adjusted composite payment amount. Accordingly, as a result of the transition period under the ESRD PPS, we continue to update the composite rate portion of the blended payment during the 4-year transition, (that is, CY 2011 through 2013), which would include updates to the drug add-on adjustment required by section 1881(b)(12)(F) of the Act, as well as the wage index values (which includes a budget-neutrality factor) used to adjust the labor component of the composite rate. The proposed updates to the drug add-on adjustment under the composite rate portion of the blended rate can be found in section II.B.1.a of this proposed rule and the wage index is discussed in section II.B.5 of this proposed rule. For CY 2013, we are also proposing to update the second part of the transition budget-neutrality adjustment to reflect updated data. The transition budget-neutrality adjustment is applied to both the blended payments under the transition and payments under the ESRD PPS. The discussion regarding the proposed transition budget-neutrality adjustment can be found in section II.B.4 of this proposed rule.

As discussed in section II.B.3 of this proposed rule, section 1881(b)(14)(F)(ii) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act, provides that, for years during which the transition applies, the composite rate portion of the blend shall be annually increased by the ESRDB market basket and, for CY 2012 and each subsequent year, the ESRDB market basket shall be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. In sections II.B.3.b and II.B.3.c of this proposed rule, we describe the basis for the proposed CY 2013 ESRDB market basket increase of 3.2 percent, and the productivity offset of 0.7 percent, yielding a proposed forecasted rate of increase in the base rate of 2.5 percent.

For CY 2013, the composite rate portion of the ESRD PPS blended payment would be $145.49. The $145.49 reflects the CY 2012 composite rate of $141.94 increased by the ESRDB market basket reduced by the productivity adjustment (3.2 percent minus 0.7 percent) of 2.5 percent.

a. Proposed Update to the Drug Add-on to the Composite Rate Portion of the ESRD Blended Payment Rate

Section 1881(b)(14)(E)(i) of the Act requires a 4-year transition under the ESRD PPS. Under § 413.239, ESRD facilities were permitted to make a one-time election by November 1, 2010, to be excluded from the transition and receive full payment under the ESRD PPS. Section 413.239(a)(3) provides for ESRD facilities that elected to receive payment under the transition to be paid a blended amount that will consist of 25 percent of the basic case-mix adjusted composite payment system and 75 percent of the ESRD PPS payment in CY 2013. Thus, during the ESRD PPS transition, we must continue to update the composite rate portion of the blended payment amount which includes an update to the drug add-on.

As required under section 1881(b)(12) of the Act, the basic case-mix adjusted composite payment system includes services in the composite rate and an add-on to the composite rate to account for the difference between pre-MMA payments for separately billed drugs and the revised drug pricing specified in the statute. In this proposed rule, we are not proposing any changes to the drug add-on methodology in CY 2013, but are merely updating the data used in computing the drug add-on as described below.

i. Estimating Growth in Expenditures for Drugs and Biologicals in CY 2013

Section 1881(b)(12)(F) of the Act specifies that the drug add-on increase must reflect “the estimated growth in expenditures for drugs and biologicals (including erythropoietin) that are separately billable * * *”. By referring to “expenditures”, we believe the statute contemplates that the update would account for both increases in drug prices, as well as increases in utilization of those drugs.

In order to account for increases in drug prices and utilization, since we now have 6 years of drug expenditure data based on ASP pricing, for CY 2013, we continue estimating growth in drug expenditures based on the trends in available data. We then removed growth in enrollment for the same time period

from the expenditure growth so that the residual reflects the per patient expenditure growth (which includes price and utilization combined).

To estimate drug expenditure growth using trend analysis, for CY 2013, we looked at the average annual growth in total drug expenditures between 2006 and 2011. First, we estimated the total drug expenditures for all ESRD facilities in CY 2011. We used the final CY 2006 through CY 2010 ESRD claims data and the latest available CY 2011 ESRD facility claims, updated through December 31, 2011 (that is, claims with dates of service from January 1 through December 31, 2011, that were received, processed, paid, and passed to the National Claims History File as of December 31, 2011). For the CY 2013 PPS final rule, we intend to use additional updated CY 2011 claims with dates of service for the same timeframe. This updated CY 2011 data file will include claims received, processed, paid, and passed to the National Claims History File as of June 30, 2012. While the CY 2011 claims file used in this proposed rule is the most current available, we recognize that it does not reflect a complete year, as claims with dates of service towards the end of the year have not all been processed. To more accurately estimate the update to the drug add-on, completed aggregate drug expenditures are required.

Next, for CY 2013, based on analysis of the 2010 claims, we inflated the CY 2011 drug expenditures to estimate the June 30, 2012 update of the 2011 claims file. We used the relationship between the December 2010 and the June 2011 versions of 2010 claims to estimate the more complete 2011 claims that will be available in June 2012 and applied that ratio to the 2011 claims data from the December 2011 claims file. The net adjustment to the CY 2011 claims data is an increase of 9.7 percent to the 2011 expenditure data. This adjustment allows us to more accurately compare the 2010 and 2011 drug expenditure data to estimate per patient growth.

Using the completed full-year 2011 drug expenditure figure, we calculated the average annual change in drug expenditures from 2006 through 2011. This average annual change showed a decrease of 3.0 percent in drug expenditures from 2006 through 2011. We used this 3.0 percent decrease to project drug expenditures for both 2012 and 2013.

ii. Estimating per Patient Growth

Once we had the projected growth in drug expenditures from 2012 to 2013, we calculated per patient growth between CYs 2012 and 2013 by removing the estimated growth in enrollment data between CYs 2012 and 2013. We estimate a 4.6 percent growth in fee for service Medicare dialysis beneficiary enrollment between CYs 2012 and 2013. To obtain the per-patient estimated growth in expenditures, we divided the total drug expenditure change of a 3 percent decrease between 2012 and 2013 (0.97) by enrollment growth of 4.6 percent (1.046) for the same timeframe. The result is a per-patient growth factor equal to 0.927 (0.97/1.046 = 0.927). Thus, we are projecting a 7.3 percent decrease (−7.3% = − .073 = 0.927 − 1) in per patient growth in drug expenditures between 2012 and 2013.

iii. Applying the Proposed Growth Update to the Drug Add-On Adjustment

In the CY 2012 ESRD PPS proposed and final rules, we provided an incorrect citation to the CY 2006 PFS final rule with comment in the discussion of the application of the projected growth update percentages. The correct citationto this discussion in the CY 2006 PFS final rule with comment is 70 FR 70166 and 70167. In that rule, we applied the projected growth percentage to the total amount of drug add-on dollars established for CY 2005 to establish a dollar amount for the CY 2006 growth. In addition, we projected the growth in dialysis treatments for CY 2006 based on the projected growth in ESRD enrollment. We divided the projected total dollar amount of the CY 2006 growth by the projected total dialysis treatments to develop the per treatment growth update amount. This growth update amount, combined with the CY 2005 per treatment drug add-on amount, resulted in a 14.7 percent adjustment to the composite rate for CY 2006.

Subsequent to the publication of the CY 2006 PFS final rule with comment, the Deficit Reduction Act (DRA) of 2005 (Pub. L. 109-171) was enacted on February 8, 2006. Section 5106 of the DRA amended section 1881(b)(12) of the Act to require the Secretary to increase the amount of the composite rate component of the basic case-mix adjusted system for dialysis services furnished on or after January 1, 2006 by 1.6 percent above the amount of the composite rate for such services furnished on December 31, 2005. We issued Change Request (CR) 4291, Transmittal 849, entitled, “Update to the ESRD Composite Payment Rates” on February 10, 2006 to instruct contractors to implement this change. We stated in CR 4291 that because the drug add-on adjustment is determined as a percentage of the composite rate, it was necessary to adjust the drug add-on percentage to account for the 1.6 percent increase in the composite payment rate. Therefore, the total drug add-on adjustment to the composite payment rate for 2006 was 14.5 percent instead of 14.7 percent.

In the CY 2007 PFS final rule with comment period (71 FR 69683 and 69684), we revised our update methodology by applying the growth update to the per treatment drug add-on amount. That is, for CY 2007, we applied the growth update factor of 4.03 percent to the $18.88 per treatment drug add-on amount resulting in an updated per treatment drug add-on amount of $19.64 per treatment (71 FR 69684). For CY 2008, the per treatment drug add-on amount was updated to $20.33. In the CYs 2009, 2010, and 2011 PFS final rule with comment period (73 FR 69755 through 69757, 74 FR 61923, 75 FR 73485, respectively) and the CY 2012 ESRD PPS final rule (76 FR 70239), we applied a zero update to the per treatment drug add-on amount resulting in a per treatment drug add-on amount of $20.33. As discussed in detail below, for CY 2013, we are again proposing no update to the per treatment drug add-on amount of $20.33 established in CY 2008.

iv. Proposed Update to the Drug Add-On Adjustment for CY 2013

As discussed above, we estimate a 3.0 percent decrease in drug expenditures between CYs 2012 and CY 2013. Combining this decrease with a 4.6 percent increase in enrollment, as described above, we are projecting a 7.3 percent decrease in per patient growth of drug expenditures between CYs 2012 and CY 2013. Therefore, we are projecting that the combined growth in per patient utilization and pricing for CY 2013 would result in a decrease to the drug add-on equal to 1.0 percentage points (out of the 14.3 percent add-on for 2012). This figure is derived by applying the 7.3 percent decrease to the CY 2012 drug add-on of $20.33. This would result in a revised drug add-on of $18.85, which is 13.0 percent of the proposed CY 2013 base composite rate of $145.49. If we were to apply no decrease to the drug add-on of $20.33, this would result in a 14.0 percent drug add-on. However, similar to last year and as indicated above, we are proposing a zero update to the drug add-on adjustment. We believe this approach is consistent with the language under section 1881(b)(12)(F) of the Act which states in part that “the Secretary shall annually increase” the drug add-on amount based on the growth in expenditures for separately

billed ESRD drugs. Therefore, we propose to apply a zero update and maintain the $20.33 per treatment drug add-on amount for CY 2013. We are seeking comment on our proposed zero update to the drug add-on.

The current $20.33 per treatment drug add-on reflected a 14.3 percent drug add-on adjustment to the composite rate in effect for CY 2012. As discussed in section II.B.3.a. of this proposed rule, section 1881(b)(14)(F) of the Act requires that an ESRDB market basket minus productivity adjustment be used to update the composite rate portion of the ESRD PPS payment (proposed forecast of 2.5 percent in 2013 effective January 1, 2013), resulting in a proposed decrease to the CY 2013 drug add-on adjustment from 14.3 to 14.0 percent, to maintain the drug add-on at $20.33. This decrease occurs because the drug add-on adjustment is a percentage of the composite rate. Since the proposed CY 2013 composite rate is higher than the CY 2012 composite rate, and since the drug add-on remains at $20.33, the percentage decreases. Therefore, we are proposing a drug add-on adjustment to the composite rate for CY 2013 of 14.0 percent.

2. ESRD PPS Base Rate

In the CY 2012 ESRD PPS final rule (76 FR 70231), we discussed the development of the ESRD PPS per treatment base rate that is codified in the Medicare regulations at § 413.220 and § 413.230. We explained that the CY 2011 ESRD PPS final rule (75 FR 49071 through 49082) provides a detailed discussion of the methodology used to calculate the ESRD PPS base rate and the computation of factors used to adjust the ESRD PPS base rate for projected outlier payments and budget-neutrality in accordance with sections 1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) of the Act, respectively. Specifically, the ESRD PPS base rate was developed from CY 2007 claims (that is, the lowest per patient utilization year), updated to CY 2011, and represented the average per treatment Medicare Allowable Payment (MAP) for composite rate and separately billable services. We further explained that in accordance with § 413.230, the ESRD PPS base rate is adjusted for the patient-specific case-mix adjustments, applicable facility adjustments, geographic differences in area wage levels using an area wage index, as well as any outlier payment or training payments (if applicable). For CY 2012, the ESRD PPS base rate was $234.81 (76 FR 70231).

As discussed previously, section 1881(b)(14)(F)(i) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act, provides that, beginning in 2012, the ESRD PPS payment amounts are required to be annually increased by the rate of increase in the ESRD market basket, reduced by the productivity adjustment. Accordingly, for this proposed rule, we applied the 2.5 percent increase to the CY 2012 ESRD PPS base rate of $234.81, which results in a CY 2013 ESRD PPS base rate of $240.68 ($234.81 × 1.025 = $240.68). The proposed CY 2013 ESRD PPS base rate is applicable to both the ESRD PPS portion of the blended payment under the transition and payments under the full ESRD PPS.

In addition, as discussed in section II.B.5.c. of this proposed rule, for CY 2013 we are applying the wage index budget-neutrality adjustment factor of 1.000826 to the CY 2013 ESRD PPS base rate (that is, $240.68), yielding a proposed CY 2013 ESRD PPS wage-index budget-neutrality adjusted base rate of $240.88 ($240.68 × 1.000826 = $240.88).

3. ESRD Bundled Market Basket

a. Overview and Background

In accordance with section 1881(b)(14)(F)(i) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act, beginning in 2012, the ESRD bundled payment amounts are required to be annually increased by an ESRD market basket increase factor that is reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. The application of the productivity adjustment described may result in the increase factor being less than 0.0 for a year and may result in payment rates for a year being less than the payment rates for the preceding year. The statute further provides that the market basket increase factor should reflect the changes over time in the prices of an appropriate mix of goods and services used to furnish renal dialysis services. Under section 1881(b)(14)(F)(ii) of the Act, as added by section 153(b) of MIPPA and amended by section 3401(h) of the Affordable Care Act, the ESRDB rate market basket increase factor will also be used to update the composite rate portion of ESRD payments during the ESRD PPS transition period from CYs 2011 through 2013; though beginning in CY 2012, such market basket increase factor will be reduced by the productivity adjustment. Therefore, a full market basket was applied to the composite rate portion of the blended payment in CY 2011 during the first year of the transition.

b. Proposed Market Basket Update Increase Factor and Labor-Related Share for ESRD Facilities for CY 2013

As required under section 1881(b)(14)(F) of the Act, CMS developed an all-inclusive ESRDB input price index (75 FR 49151 through 49162). Although “market basket” technically describes the mix of goods and services used to produce ESRD care, this term is also commonly used to denote the input price index (that is, cost categories, their respective weights, and price proxies combined) derived from that market basket. Accordingly, the term “ESRDB market basket,” as used in this document, refers to the ESRDB input price index.

For this proposed rule, we are proposing to use the same methodology described in the CY 2011 ESRD PPS final rule (75 FR 49151 through 49162) to compute the CY 2013 ESRDB market basket increase factor and labor-related share based on the best available data (76 FR 40503). Consistent with historical practice, we estimate the ESRDB market basket update based on IHS Global Insight (IGI), Inc.'s forecast using the most recently available data. IGI is a nationally recognized economic and financial forecasting firm that contracts with CMS to forecast the components of the market baskets.

Using this methodology and the IGI forecast for the first quarter of 2012 of the CY 2008-based ESRDB market basket (with historical data through the fourth quarter of 2011), and consistent with our historical practice of estimating market basket increases based on the best available data, the proposed CY 2013 ESRDB market basket increase factor is 3.2 percent. For the CY 2013 ESRD payment update, we will continue to use a labor-related share of 41.737 percent for the ESRD PPS payment and the ESRD PPS portion of the blended payment, which was finalized in the CY 2011 ESRD final rule (75 FR 49161). We will also continue to use a labor-related share of 53.711 percent for the ESRD composite rate portion of the blended payment for all years of the transition. This labor-related share was developed from the labor-related components of the 1997 ESRD composite rate market basket that was finalized in the CY 2006 Physician Fee Schedule (PFS) final rule (70 FR 70168), and is consistent with the mix of labor-related services paid under the composite rate, as well as the method finalized in the CY 2011 ESRD PPS final rule (75 FR 49116).

c. Proposed Productivity Adjustment

The ESRDB market basket must be annually adjusted by changes in economy-wide productivity. Specifically, under section 1881(b)(14)(F)(i) of the Act, as amended by section 3401(h) of the Affordable Care Act, for CY 2012 and each subsequent year, the ESRD market basket percentage increase factor shall be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. The statute defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period) (the “MFP adjustment”). The Bureau of Labor Statistics (BLS) is the agency that publishes the official measure of private nonfarm business MFP. Please see

http://www.bls.gov/mfp

to obtain the BLS historical published MFP data.

CMS notes that the proposed and final methodology for calculating and applying the MFP adjustment to the ESRD payment update is similar to the methodology used in other payment systems, as required by section 3401 of the Affordable Care Act.

The projection of MFP is currently produced by IGI. The details regarding the methodology for forecasting MFP and how it is applied to the market basket was finalized in the CY 2012 ESRD PPS final rule (76 FR 70232 through 70234). Using this method and the IGI forecast for the first quarter of 2012 of the 10-year moving average of MFP, the proposed CY 2013 MFP factor is 0.7 percent.

d. Calculation of the ESRDB Market Basket Update, Adjusted for Multifactor Productivity for CY 2013

Under section 1881(b)(14)(F) of the Act, beginning in CY 2012, ESRD PPS payment amounts and the composite rate portion of the transition blended payment amounts shall be annually increased by an ESRD market basket percentage increase factor reduced by a productivity adjustment. We are proposing to follow the same methodology for calculating the ESRDB market basket updates adjusted for MFP that was finalized in the CY 2012 ESRD PPS final rule (76 FR 70234).

Thus, in accordance with section 1881(b)(14)(F)(i) of the Act, the proposed market basket increase factor for CY 2013 for the ESRDB market basket is based on the 1st quarter 2012 forecast of the CY 2008-based ESRDB market basket update, which is estimated to be 3.2 percent. This market basket percentage is then reduced by the MFP adjustment (the 10-year moving average of MFP for the period ending CY 2013) of 0.7 percent, which is based on IGI's 1st quarter 2012 forecast. The resulting proposed MFP-adjusted ESRDB market basket update for CY 2013 is equal to 2.5 percent, or 3.2 percent less 0.7 percentage point. If more recent data is subsequently available (for example, a more recent estimate of the market basket and MFP adjustment), we will use such data, if appropriate, to determine the CY 2013 market basket update and MFP adjustment in the CY 2013 ESRD PPS final rule.

4. Transition Budget-Neutrality Adjustment for CY 2013

Section 1881(b)(14)(E)(i) of the Act requires the Secretary to provide a 4-year phase-in of the payments under the ESRD PPS for renal dialysis services furnished on or after January 1, 2011, with payments under the ESRD PPS fully implemented for renal dialysis services furnished on or after January 1, 2014. We use the term “transition” rather than “phase-in” to be consistent with other Medicare payment systems.

Section 1881(b)(14)(E)(ii) of the Act permitted ESRD facilities to make a one-time election to be excluded from the transition. An ESRD facility that elected to be excluded from the transition receives payment for renal dialysis services furnished on or after January 1, 2011, based on 100 percent of the payment rate under the ESRD PPS rather than a blended payment based in part on the payment under the basic case-mix adjusted composite payment system and in part on the payment under the ESRD PPS. Section 1881(b)(14)(E)(iii) of the Act also requires that we make an adjustment to payments during the transition so that the estimated total amount of payments under the ESRD PPS, including payments under the transition, equals the estimated total amount of payments that would otherwise occur under the ESRD PPS without such a transition. We refer to this provision as the transition budget-neutrality adjustment.

In the CY 2012 ESRD PPS final rule (76 FR 70235), we discussed the methodology used to develop the transition budget-neutrality adjustment factor. We explained that there were two parts that comprised the adjustment. For the first part, we created a one-time payment adjustment to the composite rate portion of the blended payment during the transition to account for the per treatment costs of ESRD drugs with an injectable equivalent that were paid under Part D. We finalized the one-time addition of the CY 2011 Part D per treatment amount of $0.49 to the composite rate (76 FR 70231). For the second part, we computed a factor that would make the estimated total amount of payments under the ESRD PPS, including payments under the transition, equal to the estimated total amount of payments that would otherwise occur without such a transition. We finalized in the CY 2011 ESRD PPS final rule a transition budget-neutrality adjustment of 3.1 percent based on estimates of ESRD facilities that would elect to be excluded from the transition. On April 6, 2011, we published an interim final rule (76 FR 18930) in which we revised the transition budget-neutrality adjustment from 3.1 to 0.0 percent for treatments furnished from April 1, 2011 through December 31, 2011. For CY 2012, we did not make any changes to our methodology for computing the second part of the transition budget-neutrality adjustment. In the CY 2012 ESRD PPS final rule (76 FR 70236), we finalized a zero percent reduction to all payments made to ESRD facilities for CY 2012 (that is, the zero percent adjustment was applied to both the blended payments under the transition and payments made under the 100 percent ESRD PPS).

Given that the transition budget-neutrality adjustment required under section 1881(b)(14)(E)(iii) of the Act applies in each year of the transition, we must update the transition budget-neutrality adjustment for CY 2013, the third year of the transition. As discussed in detail below, and in accordance with section 1881(b)(14)(E)(iii) of the Act, an adjustment is made to payments so that estimated total payments under the transition equal estimated total payment amounts without such a transition. In this proposed rule, we are not proposing for CY 2013 to change the methodology used to calculate either part of the transition budget-neutrality adjustment factor. We are, however, proposing to use updated data. The first part, which was addressed and finalized in the CY 2012 ESRD PPS final rule, is the Part D payment amount added to the composite rate. Therefore, this amount is updated annually by the ESRDB market basket reduced by the productivity adjustment. The second part is updated as described below.

For CY 2013, we started with 2011 utilization data from claims, as 2011 is the latest complete year of claims data available. For this proposed rule, we used the December claims file. We updated the CY 2011 utilization data to

CYs 2012 and 2013 payments by using the price growth factors for CYs 2012 and 2013, as discussed in the impact analysis in section VII.B.1.a. of this proposed rule. We then took the estimated payments under the full CY 2013 ESRD PPS and the blended payments under the transition based on actual facility election data and compared these estimated payments to the total estimated payments in CY 2013 as if all facilities had elected to receive payment under the ESRD PPS. We then calculated the transition budget-neutrality factor to be 1 minus the ratio of estimated payments under the ESRD PPS if there were no transition to the total estimated payments under the transition, which results in 0 percent reduction factor for CY 2013. Therefore, for CY 2013, we are proposing a 0 percent reduction to all payments made to ESRD facilities (that is, the 0 percent adjustment would be applied to both the blended payments made under the transition and payments made under the 100 percent ESRD PPS) for renal dialysis items and services furnished January 1, 2013 through December 31, 2013. We solicit comments on the proposed second part of CY 2013 transition budget-neutrality adjustment.

5. Proposed Updates to the Wage Index Values and Wage Index Floor for the Composite Rate Portion of the Blended Payment and the ESRD PPS Payment

Section 1881(b)(14)(D)(iv)(II) of the Act provides that the ESRD PPS may include such other payment adjustments as the Secretary determines appropriate, such as a payment adjustment by a geographic wage index, such as the index referred to in section 1881(b)(12)(D) of the Act. In the CY 2011 ESRD PPS final rule (75 FR 49117), we finalized the use of the OMB's CBSA-based geographic area designations to define urban/rural areas and corresponding wage index values. In the CY 2012 ESRD PPS final rule (76 FR 70241), we finalized the wage index policy that is used under the ESRD PPS. Under the ESRD PPS, we have adopted the same method and source of wage index values used previously to compute the wage index values for the basic case-mix adjusted composite payment system. Specifically, we finalized our policies to continue to utilize the methodology established under the composite payment system for updating the wage index values using the OMB's CBSA-based geographic area designations to define urban and rural areas and corresponding wage index value values; the gradual reduction of the wage index floor during the transition; and the policies for areas with no hospital data. For CY 2013, we are not proposing any changes to the methodology finalized in the CY 2012 final rule and will update the wage index values using the FY 2013 IPPS pre-floor, pre-reclassified hospital wage data.

In the CY 2012 ESRD PPS final rule (76 FR 70242), we explained that we would continue to use the labor-related share of 53.711 finalized in the 2005 PFS final rule (70 FR 70168) for the composite rate portion of the blended payment during the transition and continue to use a labor-related share of 41.737 for the ESRD PPS payment for CY 2012. We also discussed that the wage data used to construct the wage index under the ESRD PPS is updated annually, based on the most current data available and based on OMB's urban and rural definitions and corresponding wage index values. Additional discussion on the labor-share can be found in section II.B.3.b. of this proposed rule. For CY 2013, we are not proposing to change the labor-related shares as finalized in the CY 2012 rule and as discussed in section II.B.3.b of this proposed rule.

In the CY 2012 ESRD PPS final rule (76 FR 70240), we discussed that during the transition we would continue to update the composite rate portion of the ESRD PPS blended payment, including adjusting payments for geographic differences in area wage levels, as noted above. We also discussed the application of the wage index budget-neutrality adjustment factor to the area wage index values for the composite rate portion of the ESRD PPS blended payment. In this proposed rule, for CY 2013 we are not proposing any changes to the methodology for the wage index used to adjust the composite rate portion of the ESRD PPS blended payment.

a. Reduction to the ESRD Wage Index Floor

In the CY 2012 ESRD PPS final rule (76 FR 70239 through 70241), we finalized that we will continue to reduce the wage index floor by 0.05 for each of the remaining years of the transition. That is, we finalized the 0.05 reduction to the wage index floor for CYs 2012 and 2013, resulting in a wage index floor of 0.550 and 0.500, respectively. The wage index floor value is used in lieu of wage index values below the floor. In CY 2013, the wage index floor only applies to areas located in Puerto Rico because those are the only areas that have wage index values below the wage index floor value of 0.500 in CY 2013. The wage index floor is applied to both the composite rate portion of the blend and to the ESRD PPS. In this proposed rule, we are not proposing any changes to the wage index floor methodology or reduction.

Consequently for CY 2013, we will continue to reduce the wage index floor by 0.05 which will reduce the wage index value from 0.550 to 0.500. The ESRD wage index floor value of 0.500 would be applied to areas that are below the wage index floor.

In the CY 2012 ESRD PPS final rule (76 FR 70241), we explained that continuing to artificially adjust the wage index values after the transition by substituting a wage index floor is not an appropriate method to address low wages in certain geographic locations. Therefore, we would no longer apply a wage index floor beginning January 1, 2014 because the wage index floor would be lower than areas with low wage index values.

b. Policies for Areas With No Wage Data

In the CY 2012 ESRD PPS final rule (76 FR 70241), we explained that we adopted the CBSA designations for the basic case-mix adjusted composite rate payment system and for the ESRD PPS. We also discussed and finalized the methodologies we use to calculate wage index values for ESRD facilities that are located in urban and rural areas where there are no hospital data. That is, for urban areas with no hospital data we compute the average wage index value of all urban areas within the State and use that value as the wage index. For rural areas with no hospital data, we compute the wage index using the average wage index values from all contiguous CBSAs to represent a reasonable proxy for that rural area. For rural Puerto Rico, we use the wage index floor as the wage index value, since all rural Puerto Rico areas are subject to the floor.

We further explained that for rural Massachusetts, we determined that the borders of Dukes and Nantucket Counties are contiguous with Barnstable and Bristol counties. Under the methodology, the values for these counties are averaged to establish the wage index value for rural Massachusetts. In the CY 2012 ESRD PPS final rule (76 FR 70241), we finalized that for CY 2012 and subsequent years, we will continue to follow these methodologies for computing a wage index value for areas without hospital data for urban and rural geographic areas and for Puerto Rico.

Subsequent to the issuance of the CY 2012 ESRD PPS final rule, we determined that for CY 2012 there was a rural hospital with wage data to base

an area wage index on for rural Massachusetts. We note that the wage index value for rural Massachusetts was correctly identified on the wage index table for CY 2012 based on the wage data for that rural hospital. Consequently, in this proposed rule we are correcting the statement in the CY 2012 final rule that “For rural Massachusetts, we determined that the borders of Dukes and Nantucket Counties are contiguous with Barnstable and Bristol counties. Under the methodology, the values for these counties are averaged to establish the wage index value for rural Massachusetts” (76 FR 70241). Therefore, for CY 2012 and subsequent years, the area wage index value for rural Massachusetts is based on wage index data of the rural hospital.

For CY 2013, we will continue to use the statewide urban average based on the average of all urban areas within the state for urban areas without hospital data. We note that Yuba City, California now has hospital data to calculate a wage index. Therefore, the methodology for computing a wage index for urban areas without hospital data no longer applies to that area. The only urban area without wage index data is Hineville-Fort Stewart, GA.

c. Proposed Wage Index Budget-Neutrality Adjustment

In the CY 2012 ESRD PPS final rule (76 FR 70241 and 70242), we explained that we have broad discretion under section 1881(b)(14)(D)(iv)(II) of the Act to develop a geographic wage index. We explained that in addition to being given broad discretion, the section cites the wage index under the basic case-mix adjusted composite payment system as an example. We have previously interpreted the statutory requirement in section 1881(b)(12)(D) of the Act for the geographic adjustment for the basic case-mix adjusted composite payment system as requiring that the geographic adjustment be made in a budget-neutral manner.

In the CY 2012 ESRD PPS final rule (76 FR 70241 and 70242), we finalized the policy to apply the wage index in a budget-neutral manner under the ESRD PPS using a wage index budget-neutrality adjustment factor. We further explained that in the first year of the ESRD PPS, CY 2011, we did not apply a wage index budget-neutrality adjustment factor under the ESRD PPS because budget-neutrality was achieved through the overall 98 percent budget-neutrality requirement in section 1881(b)(14)(A)(ii) of the Act. In the CY 2012 ESRD PPS final rule (76 FR 70242), we finalized that for CY 2012 and CY 2013 we will apply the wage index budget-neutrality adjustment to the wage index values for the composite rate portion of the blended payment and that for CY 2012 and subsequent years we will apply the wage index budget-neutrality adjustment to the ESRD PPS base rate for purposes of the ESRD PPS portion of the blended payment during the transition and the ESRD PPS payment. We are not proposing any changes to the wage index budget-neutrality adjustment methodology for CY 2013.

In the CY 2012 ESRD PPS final rule (76 FR 70242), we also finalized the methodology for computing the wage index budget-neutrality adjustment factor for CY 2012 and subsequent years. For CY 2013, we are not proposing any changes to the methodology. Consequently, for CY 2013 wage index budget-neutrality adjustment factors, we use the fiscal year (FY) 2013 pre-floor, pre-reclassified, non-occupational mix-adjusted hospital data to compute the wage index values, 2011 outpatient claims (paid and processed as of December 31, 2011), and geographic location information for each facility which may be found through Dialysis Facility Compare. Dialysis Facility Compare can be found at the Dialysis Facility Compare Web page on the CMS Web site at

http://www.cms.hhs.gov/DialysisFacilityCompare/

. The FY 2013 hospital wage index data for each urban and rural locale by CBSA may also be accessed on the CMS Web site at

http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp

. The wage index data are located in the section entitled, “FY 2013 Proposed Rule Occupational Mix Adjusted and Unadjusted Average Hourly Wage and Pre-Reclassified Wage Index by CBSA”.

To compute the CY 2013 wage index budget-neutrality adjustment factor for this proposed rule, using treatment counts from the 2011 claims and facility-specific CY 2012 payment rates, we computed the estimated total dollar amount that each ESRD facility would have received in CY 2012. The total of these payments became the target amount of expenditures for all ESRD facilities for CY 2013. Next, we computed the estimated dollar amount that would have been paid for the same ESRD facilities using the final ESRD wage index for CY 2013. The total of these payments becomes the new CY 2013 amount of wage-adjusted expenditures for all ESRD facilities.

After comparing these two dollar amounts (target amount divided by the new CY 2013 amount), we calculated two wage index budget-neutrality adjustment factors that, when multiplied by the applicable CY 2013 estimated payments, would result in aggregate payments to ESRD facilities that would remain budget-neutral when compared to the target amount of expenditures. The first factor was applied to the ESRD PPS base rate. The second factor would be applied to the wage index values for the composite rate portion of the blended payment. Therefore, we are proposing for CY 2013, a wage index budget-neutrality adjustment factor for the composite portion of the ESRD PPS blended payment of 1.001538, which would be applied directly to the ESRD wage index values. For the ESRD PPS (that is, for the full ESRD PPS payments and the ESRD PPS portion of the blended payments during the transition), we are proposing a wage index budget-neutrality adjustment factor of 1.000826 would be applied to the ESRD PPS base rate.

Because we apply the wage index budget-neutrality adjustment factor to the wage index values to ensure budget-neutrality under the composite rate portion of the blended payment, we also apply the wage index budget-neutrality adjustment factor to the wage index floor. Therefore, for the composite rate portion of the blended payment, for CY 2013, we would apply the wage index budget-neutrality adjustment factor to the wage index floor of 0.500 which results in an adjusted wage index floor of 0.501 (1.001538 × 0.500). Under the ESRD PPS, the wage index floor for CY 2013 is 0.500 because the wage index budget-neutrality adjustment factor is applied to the base rate.

d. ESRD PPS Wage Index Tables

The CY 2013 ESRD proposed wage index tables, referred to as Addendum A (ESRD facilities located in urban areas), and Addendum B (ESRD facilities located in rural areas) are posted on the CMS Web site at

http://www.cms.gov/ESRDPayment/PAY/list.asp

. The wage index tables list two separate columns of wage index values. One column represents the wage index values for the composite rate portion of the blended payment to which the wage index budget-neutrality adjustment factor has been applied. Another column lists the wage index values for the ESRD PPS, which does not reflect the application of the wage index budget-neutrality adjustment factor, because we have finalized for CY 2012 and subsequent years, that we will apply the wage index budget-neutrality adjustment factor to the ESRD PPS base rate.

6. Proposed Drug Policy Changes

a. Daptomycin

In the CY 2011 ESRD PPS final rule (75 FR 49050 through 49052), we stated that antibiotics used for the treatment of venous access infections and peritonitis are renal dialysis services under the ESRD PPS. Payments for anti-infective drugs in injectable forms (covered under Part B) and oral or other forms of administration (formerly covered under Part D) used in the treatment of ESRD, were included in computing the final ESRD PPS base rate and, therefore, would not be separately paid under the ESRD PPS. This policy also applies to any drug or biological that may be developed in the future.

Subsequent to the publication of the CY 2011 ESRD PPS final rule, we received numerous comments indicating that vancomycin is indicated in the treatment of both ESRD and non-ESRD conditions, such as skin infections. In the CY 2012 ESRD PPS final rule (75 FR 70243), we eliminated the restriction on vancomycin to allow ESRD facilities to receive separate payment by placing the AY modifier on the claim for vancomycin when furnished to treat non-ESRD related conditions. We also stipulated that in accordance with ICD-9 guidelines as described in the CY 2011 ESRD PPS final rule (75 FR 49107), an ESRD facility must report the diagnosis code for which vancomycin is indicated. We also reiterated that treatment of any skin infection that is related to renal dialysis access management would be considered a renal dialysis service paid under the ESRD PPS, and that no separate payment would be made. Finally, in response to comments, we stated that we would consider removing the system edit for daptomycin in future rulemaking.

After consultation with our medical experts, we are proposing to eliminate the restriction on daptomycin to allow ESRD facilities to receive separate payment by placing the AY modifier on the claim for daptomycin when furnished to treat non-ESRD related conditions for CY 2013 and subsequent years. In accordance with ICD-9-CM coding guidelines, the ESRD facility would also be required to report the diagnosis code for which the daptomycin is indicated. We solicit public comments on our proposal to eliminate the restriction on daptomycin to allow ESRD facilities to receive separate payment for these drugs when furnished to treat non-ESRD related conditions. We will continue to monitor the use of anti-infectives furnished by ESRD facilities including those that are identified as non-ESRD related.

b. Alteplase and Other Thrombolytics

Medicare regulations at § 413.237(a)(2) through (a)(6), and (b) specify the methodology used to calculate outlier payments. An ESRD facility is eligible for an outlier payment if its actual or imputed Medicare Allowable Payment (MAP) amount per treatment for ESRD outlier services exceeds a threshold. The MAP amount represents the average incurred amount per treatment for services that were or would have been considered separately billable services prior to January 1, 2011. The discussion on the outlier policy is in section II.B.7. of this proposed rule.

In the CY 2012 ESRD PPS final rule (76 FR 70246), we explained that subsequent to the publication of the CY 2011 ESRD PPS final rule, our clinical review of the 2007 ESRD claims used to develop the ESRD PPS revealed that dialysis facilities routinely used alteplase and other thrombolytic drugs for access management purposes. We explained that under the Medicare Benefit Policy Manual, Pub. 100-02, chapter 11, section 30.4.1, drugs used as a substitute for any of the listed items, or used to accomplish the same effect were covered under the composite rate. We further explained that because heparin is a composite rate drug and could be used for access management, any drug or biological used for the same purpose may not be separately paid. Section 413.237(a)(1) provides the definition of ESRD outlier services. Specifically, § 413.237(a)(1)(i) includes “ESRD related drugs and biologicals that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B.”

Because outlier payments are restricted under § 413.237(a) to those items or services that were or would have been considered separately billable prior to January 1, 2011, in the CY 2012 ESRD PPS final rule (76 FR 70249), we excluded thrombolytic drugs from the outlier policy and we recomputed the outlier MAP amounts to reflect this change. However, for CY 2012 we did not propose to exclude separate payment of thrombolytic drugs under the composite rate portion of the blended payment.

For CY 2013, we are proposing that thrombolytic drugs would not be considered eligible for separate payment under the composite rate portion of the blended payment for those ESRD facilities that are receiving a blended payment under the transition. We believe that this proposal is consistent with the changes we made to our outlier policy regarding excluding thrombolytic drugs from outlier eligibility as discussed above. We solicit comment on our proposal to exclude thrombolytic drugs from separate payment under the composite rate portion of the blended payment during the transition.

c. Part B Drug Pricing

In the CY 2011 ESRD PPS proposed rule (74 FR 49991), with respect to estimating the imputed MAP amounts of ESRD outlier services that are separately billable under Part B, we proposed to use Average Sales Price (ASP) data for Part B ESRD-related drugs (which is updated quarterly). We did not make any changes to this proposed methodology in the CY 2011 final rule. In the CY 2012 ESRD PPS final rule (76 FR 70243), we explained that ESRD facilities receiving blended payments under the transition would receive payments based on ASP for separately billable ESRD drugs and biologicals for the composite rate portion of the blend. In the CY 2012 ESRD PPS final rule (76 FR 70244), we stated that under the outlier policy, we use the ASP methodology.

We are proposing for CY 2013 and subsequent years to continue to use the ASP methodology, including any modifications finalized in the Physician Fee Schedule (PFS) final rules, to compute our outlier MAP amounts, the drug add-on, and any other policy that requires the use of payment amounts for drugs and biologicals that would be separately paid absent the ESRD PPS and for the composite rate portion of the blended payment during the transition. We also would use this methodology for payment analyses that CMS may perform. We are seeking comment on our proposal to apply the ASP methodology or any modifications to the ASP for these purposes, as updated from time to time in the PFS rule or in updating the ASP pricing.

7. Proposed Revisions to the Outlier Policy

Section 1881(b)(14)(D)(ii) of the Act requires that the ESRD PPS include a payment adjustment for high cost outliers due to unusual variations in the type or amount of medically necessary care, including variability in the amount of erythropoiesis stimulating agents (ESAs) necessary for anemia management. Our regulations at 42 CFR 413.237(a)(1) provides that ESRD outlier services include: (i) ESRD-related drugs and biologicals that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; (ii) ESRD-related laboratory tests that

were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; (iii) medical/surgical supplies, including syringes used to administer ESRD-related drugs, that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; and (iv) renal dialysis service drugs that were or would have been, prior to January 1, 2011, covered under Medicare Part D, excluding ESRD-related oral-only drugs.

In the CY 2011 ESRD PPS final rule, we stated that for purposes of determining whether an ESRD facility would be eligible for an outlier payment, it would be necessary for the facility to identify the actual ESRD outlier services furnished to the patient by line item on the monthly claim (75 FR 49142).

Drugs, laboratory tests, and medical/surgical supplies that we would recognize as outlier services were specified in Attachment 3 of Change Request 7064, Transmittal 2033 issued August 20, 2010 rescinded and replaced by Transmittal 2094, dated November 17, 2010. With respect to the outlier policy, Transmittal 2094 identified additional drugs and laboratory tests that may be eligible for ESRD outlier payment. Transmittal 2094 was rescinded and replaced by Transmittal 2134, dated January 14, 2011 which was issued to correct the subject on the Transmittal page and made no other changes.

In the CY 2012 ESRD PPS final rule (76 FR 70246), we finalized our proposal to eliminate the issuance of a specific list of eligible outlier service drugs which were or would have been separately billable under Medicare Part B prior to January 1, 2011. We stated in that rule, however, that we planned to use separate guidance to continue to identify renal dialysis service drugs which were or would have been covered under Part D for outlier eligibility purposes in order to provide unit prices for calculating imputed outlier services. We also plan to identify, through our monitoring efforts, items and services that are incorrectly being identified as eligible outlier services. Any updates to the list of renal dialysis items and services that qualify as outlier services will be made through administrative issuances, if necessary.

Our regulations at 42 CFR 413.237(a)(2) through (a)(6), and (b) specify the methodology used to calculate outlier payments. An ESRD facility is eligible for an outlier payment if its actual or imputed Medicare Allowable Payment (MAP) amount per treatment for ESRD outlier services exceeds a threshold. The MAP amount represents the average incurred amount per treatment for services that were or would have been considered separately billable services prior to January 1, 2011. The threshold is equal to the ESRD facility's predicted ESRD outlier services MAP amount per treatment (which is case-mix adjusted) plus the fixed dollar loss amount. In accordance with § 413.237(c) of the regulations, facilities are paid 80 percent of the per treatment amount by which the imputed MAP amount for outlier services (that is, the actual incurred amount) exceeds this threshold. ESRD facilities are eligible to receive outlier payments for treating both adult and pediatric dialysis patients.

In the CY 2011 ESRD PPS final rule, using 2007 data, we established the outlier percentage at 1.0 percent of total payments (75 FR 49142 through 49143). We also established the fixed dollar loss amounts that are added to the predicted outlier services MAP amounts. The outlier services MAP amounts and fixed dollar loss amounts are different for adult and pediatric patients due to differences in the utilization of separately billable services among adult and pediatric patients (75 FR 49140).

As we explained in the CY 2011 ESRD PPS final rule (75 FR 49138 and 49139), the predicted outlier services MAP amounts for a patient would be determined by multiplying the adjusted average outlier services MAP amount by the product of the patient-specific case-mix adjusters applicable using the outlier services payment multipliers developed from the regression analysis to compute the payment adjustments. The average outlier services MAP amount per treatment for CY 2011 was based on payment amounts reported on 2007 claims and adjusted to reflect projected prices for 2011. For CY 2012, the outlier services MAP amounts and fixed dollar loss amounts were based on 2010 data (76 FR 70250). That is, for CYs 2011 and 2012, the MAP and fixed dollar loss amounts were computed based on pre-ESRD PPS claims data and utilization.

a. Impact of Proposed Changes to the Outlier Policy

For CY 2013, we are not proposing any changes to the methodology used to compute the MAP or fixed dollar loss amounts. Rather, in this proposed rule, we are updating the outlier services MAP amounts and fixed dollar loss amounts to reflect the utilization of outlier services reported on the 2011 claims using the December 2011 claims file. That is, for CY 2013, the MAP and fixed dollar loss amounts are based on ESRD PPS claims and utilization. The impact of this update is shown in Table 1 which compares the outlier services MAP amounts and fixed dollar loss amounts used for the outlier policy in CY 2012 with the updated estimates for this proposed rule. The estimates for the proposed outlier CY 2013 outlier policy, which are included in Column III of Table 1, were inflation adjusted to reflect projected 2013 prices for outlier services.

Table 1—Outlier Policy: Impact of Using Updated Data To Define the Outlier Policy

Column I

Outlier policy for CY 2012 (based on 2010

data price inflated to

2012) *

Age <18

Age >=18

Column II

Updated outlier estimates based on 2011

data price inflated to

2012 *

Age <18

Age >=18

Column III

Proposed outlier policy for CY 2013 (based on 2011 data price inflated to 2013) *

Age <18

Age >=18

Average outlier services MAP amount per treatment

1

$46.26

$81.73

$40.20

$60.58

$41.49

$62.95

Adjustments:

Standardization for outlier services

2

1.0024

0.9738

1.0731

0.9898

1.0731

0.9898

MIPPA reduction

0.98

0.98

0.98

0.98

0.98

0.98

Adjusted average outlier services MAP amount

3

$45.44

$78.00

$42.27

$58.76

$43.63

$61.06

Fixed dollar loss amount that is added to the predicted MAP to determine the outlier threshold

4

$71.64

$141.21

$46.70

$105.96

$50.15

$113.35

Patient months qualifying for outlier payment

5.7%

5.4%

7.6%

5.2%

7.4%

5.1%

* The outlier services MAP amounts and fixed dollar loss amounts were inflation adjusted to reflect updated prices for outlier services (that is, 2012 prices in Columns I and II and projected 2013 prices in Column III).

1

Excludes patients for whom not all data were available to calculate projected payments under an expanded bundle. The outlier services MAP amounts are based on 2011 data. The medically unbelievable edits of 400,000 units for EPO and 1,200 mcg for Aranesp that are in place under the ESA claims monitoring policy were applied.

2

Applied to the average outlier MAP per treatment. Standardization for outlier services is based on existing Case Mix Adjusters for adult and pediatric patient groups.

3

This is the amount to which the separately billable (SB) payment multipliers are applied to calculate the predicted outlier services MAP for each patient.

4

The fixed dollar loss amounts were calculated using 2011 data to yield total outlier payments that represent 1% of total projected payments for the ESRD PPS.

As seen in Table 1, the estimated fixed dollar loss amounts that determine the 2013 outlier threshold amounts (Column III) are lower than those used for the 2012 outlier policy (Column I). The main reason for these reductions is the lower utilization of epoetin and other outlier services in the first year of the PPS. This can be seen by comparing the outlier service MAP amounts in Column I (which are based on 2010 data) vs. Column II (which is based on 2011 data).

The fixed dollar loss amounts which are added to the predicted MAP amounts per treatment to determine the outlier thresholds are being updated from $141.21 to $113.35 for adult patients and from $71.64 to $50.15 for pediatric patients compared with CY 2012 values. We estimate that the percentage of patient months qualifying for outlier payments under the current policy will be 5.1 percent and 7.4 percent for adult and pediatric patients, respectively, based on our use of 2011 data. The pediatric outlier MAP and fixed dollar loss amounts continue to be lower for pediatric patients than adults due to the continued lower use of outlier services (primarily reflecting lower use of epoetin and other injectable drugs).

b. Outlier Policy Percentage

Section 413.220(b)(4) stipulates that the per treatment base rate is reduced by 1 percent to account for the proportion of the estimated total payments under the ESRD PPS that are outlier payments. Because of the decline in utilization associated with the implementation of the expanded bundle, the 1 percent target for outlier payments was not achieved in CY 2011. Based on the 2011 claims, outlier payments represented approximately 0.52 percent of total payments. That is, the historical data previously used to set the outlier thresholds for CY 2011 overestimated the use of outlier services under the expanded ESRD PPS, leading to lower outlier payments than expected. Use of 2011 data to recalibrate the thresholds, reflecting lower utilization of EPO and other outlier services, is expected to result in aggregate outlier payments close to the 1 percent target in CY 2013. We believe this update to the outlier MAP and fixed dollar loss amounts for CY 2013 will increase payments for ESRD beneficiaries requiring higher resource utilization in accordance with a 1 percent outlier policy.

We note that recalibration of the fixed dollar loss amounts in this proposed rule for CY 2013 outlier payments results in no change in payments to ESRD facilities for beneficiaries with renal dialysis items and services that are not eligible for outlier payments, but raises payments to providers for beneficiaries with renal dialysis items and services that are eligible for outlier payments. Therefore, beneficiary co-insurance obligations would increase for renal dialysis services eligible for outlier services and would remain unchanged for those not eligible.

C. Clarifications Regarding the ESRD PPS

1. Reporting Composite Rate Items and Services

In the CY 2011 ESRD PPS final rule (75 FR 49036), we explained that section 1881(b)(14)(B)(i) of the Act requires that the ESRD PPS payment bundle include composite rate services. The basic case-mix adjusted composite payment system represented a limited PPS for a bundle of routine outpatient maintenance renal dialysis services. We defined composite rate services at § 413.171 as “items and services used in the provision of outpatient maintenance dialysis for the treatment of ESRD and included in the composite payment system established under section 1881(b)(7) [of the Act] and the basic case-mix adjusted composite payment system established under section 1881(b)(12) of the Act.” In § 413.171 we also defined renal dialysis services as including, “items and services included in the composite rate for renal dialysis services as of December 31, 2010.”

The composite rate included a number of items and services beyond the dialysis treatment itself. In the CY 2011 ESRD PPS final rule (75 FR 49173), we explained that currently services that are billed on the ESRD claim do not provide any detail of the composite rate items and services that are furnished to the patient. As we discussed in the Medicare Claims Processing Manual, Pub. 100-04, chapter 8, sections 50.1 and 50.2., laboratory tests and drugs covered under the facility's composite rate may not be billed separately. As mentioned above, the composite rate represented the routine items and services provided to Medicare beneficiaries for outpatient maintenance dialysis, therefore was full payment for those items and services. It would not have been appropriate for ESRD facilities to bill for items and services in the composite rate because this would result in duplicate payments made by Medicare.

In the CY 2011 ESRD PPS final rule (75 FR 49048), we also explained that in our analysis of the ESRD claims we identified drugs and biologicals that were included in the 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. We further explained that we excluded those payments from the final ESRD PPS base rate calculation. We also noted that the Medicare Benefit Policy Manual, Pub. 100-02, chapter 11, section 30.4.1 lists the drugs and fluids that were included under the 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, and verapamil. 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 the staff time and supplies) is covered under the composite rate and may not be billed separately” (75 FR 49048). In the CY 2012 final rule (76 FR 70243), with regards to antibiotics, we provided for separate payment for vancomycin when furnished to treat non-ESRD related conditions. Also, in section II.B.6.a of this proposed rule, we proposed to provide for separate payment for daptomycin if furnished for non-ESRD-related conditions. We also eliminated the payment distinction for antibiotics furnished in an ESRD facility or in the home used to treat access infections or peritonitis. We finalized that antibiotics furnished in the home to treat access site infections and peritonitis would be eligible for outlier payment (76 FR 70246).

As described at § 413.239, there are ESRD facilities receiving reimbursement under the transition, that is, receiving a blended payment of the basic case-mix adjusted composite rate payment system and the ESRD PPS. If an ESRD facility receives payment under the transition and reports a drug, biological, or laboratory test that was included in the composite rate on the ESRD claim, it could receive separate payment for that item or service within the portion of the blended payment that is based on the basic case-mix adjusted composite payment system.

As mentioned above and defined at § 413.237, ESRD-related drugs, biologicals, and laboratory tests that were or would have been separately payable under the basic case-mix adjusted composite payment system qualify as eligible outlier services. In the CY 2012 ESRD PPS final rule (76 FR 70246), we finalized the elimination of the issuance of a specific list of eligible outlier service drugs which were or would have been separately billable under Medicare Part B prior to January 1, 2011. Therefore, if an ESRD facility reports a drug or biological that was included in the basic case-mix adjusted composite payment system on the ESRD claim, it would inappropriately be applied toward an outlier calculation. This is because all drugs and biologicals with a rate available on the ASP pricing file when the modifier AY is not present are eligible for outlier consideration.

As a result of our monitoring efforts, we continue to see composite rate drugs reported on ESRD claims. Therefore, in this proposed rule we are reiterating that composite rate items and services are not to be reported on the ESRD facility claim. We are instituting measures to ensure that composite rate drugs will be prevented from being applied to the outlier payment. These measures will be discussed through administrative issuances. We are continuing to monitor the reporting of composite rate items and services on ESRD claims and plan to take actions to recoup inappropriate and duplicative payments. If the inclusion of composite rate items and services such as laboratory tests, drugs and supplies on claims will be required, we will discuss this requirement in future rulemaking.

2. ESRD Facility Responsibilities for ESRD-Related Drugs and Biologicals

It has come to our attention that some ESRD facilities are requiring ESRD beneficiaries to purchase renal dialysis drugs and are informing beneficiaries not to use their Part D plan for their purchases.

Section 1866(a)(1)(A) of the Act as codified in regulations at 42 CFR 489.21 prohibits providers from billing beneficiaries for services for which the beneficiary would have been entitled to have payment made under Medicare if the provider appropriately filed claims. Furthermore, section 1881(b)(2)(A) of the Act states that payments shall be made to a renal dialysis facility only if it agrees to accept such payments as payment in full for covered services except for the beneficiary co-insurance and deductible amounts.

In the CY 2011 ESRD PPS final rule (75 FR 49045), we explained that the ESRD PPS bundled base rate reflects Medicare payment for the average ESRD patient. We stated that we had incorporated payments under the basic case-mix adjusted 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. In the CY 2011 ESRD PPS final rule (75 FR 49045), we also explained that we had provided for higher acuity patients with patient case-mix adjusters and outlier payments for high-cost patients. We further cited 42 CFR § 494.90 of the ESRD Conditions for Coverage which requires the development of an individualized patient plan of care to address patient needs and concluded that we believe ESRD facilities should make medical decisions based on patient needs and not solely on a financial basis.

In the CY 2011 ESRD PPS final rule (75 FR 49050), we stipulated that any drug or biological (that is injectable, oral or other forms of administration) furnished for the purpose of access management, anemia management, vascular access or peritonitis, cellular management and bone and mineral metabolism would be considered renal dialysis services under the ESRD PPS. 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. Antiemetics, anti-infectives, antipruritics, anxiolytic, excess fluid management, fluid and electrolyte management and pain management could be used for dialysis purposes and therefore, considered ESRD related. We indicated that we presumed these drugs and biologicals in whatever form they are furnished to be renal dialysis services unless indicated that they are used for non-ESRD related conditions. Drugs and biologicals paid under Part D that are furnished by an ESRD facility for ESRD-related purposes, would be considered renal dialysis services (75 FR 49050 and 49051).

We are reiterating in this proposed rule that ESRD facilities are responsible for furnishing renal dialysis items and services that are required to meet patient needs. This would include oral or other forms of administration of injectable drugs and biologicals that are furnished for ESRD-related conditions. We would also expect that ESRD facilities would not restrict access to necessary drugs for financial purposes, requiring patients to purchase medically necessary drugs and biologicals. We expect that ESRD facilities would furnish drugs and biologicals that had been considered medically necessary

prior to the implementation of the ESRD PPS and not exclude them because the ESRD facility is now financially responsible for these drugs and biologicals. Because of the reasons cited above, ESRD facilities may not require, induce or coerce beneficiaries to purchase any renal dialysis item or service.

3. Use of AY Modifiers

In response to comments received, in the CY 2011 ESRD PPS final rule, we stated that we had developed a mechanism to be used by ESRD facilities to identify and be paid separately for non-ESRD-related drugs and biologicals (75 FR 49052 and 75 FR 49168). We provided this mechanism in order to support a Medicare beneficiary's need for the furnishing of non-ESRD-related items and services (that is, predominantly drugs and laboratory tests) during a dialysis treatment to mitigate the need for the beneficiary to receive additional injections or health care visits. We further stated that in the event that supplies or equipment are not ESRD-related, ESRD facilities would be required to place a modifier for those supplies and equipment signifying that they were used for services that are not ESRD-related and eligible for separate payment (75 FR 49168). Change Request 7064, Transmittal 2033, entitled “End Stage Renal Disease (ESRD) Prospective Payment System (PPS) and Consolidated Billing for Limited Part B Services, issued on August 20, 2010, re-issued November 17, 2010 under Transmittal 2094, and re-issued January 14, 2011 under Transmittal 2134, provided instructions in the use of the modifier. In that Change Request, we indicated that the claim lines for laboratory tests and drugs provided to a beneficiary for reasons other than the treatment of ESRD, must be submitted with the AY modifier to allow for separate payment outside of the ESRD PPS. In the CY 2012 final rule, we provided for the use of the AY modifier with vancomycin, if used for non-ESRD-related conditions with the requirement that the ESRD facilities include the diagnosis code of the condition (76 FR 70243). In this proposed rule, in section II.B.6.a, we are also proposing the use of the AY modifier with daptomycin for non-ESRD related conditions. ESRD facilities will also be required to indicate the ICD-9-CM code on the claim that reflects the condition requiring the use of daptomycin.

Our monitoring activities have identified that there are ESRD facilities and clinical laboratories that are appending the AY modifier for items that we believe are ESRD-related. Additionally, some ESRD facilities and clinical laboratories appear to be appending the AY modifier on many items and services reported on the claims. We are reiterating in this proposed rule that the purpose of the AY modifier is to allow beneficiaries the convenience to receive non-ESRD-related items (that is, drugs and laboratory tests) during their dialysis treatment and to allow the ESRD facility to receive payment for furnishing those items. The AY modifier is also intended to allow separate payment to laboratories in the event an ESRD-related laboratory test was required for non-ESRD conditions. The AY modifier is not intended to be used to receive separate payment for items that are ESRD-related and therefore are included in the ESRD PPS base rate. We are continuing to monitor the use of the AY modifier and intend to take steps to recoup inappropriate payments. In the event that we believe that the AY modifier is not being used for the purpose intended, we may be forced to discontinue the AY modifier and cease to provide separate payment for any non-ESRD-related drug or laboratory test furnished.

III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for Payment Year (PY) 2015

A. Background

For over 30 years, monitoring the quality of care provided to end-stage renal disease (ESRD) patients by dialysis providers or facilities (hereinafter referred to collectively as “facility” or “facilities”) has been an important component of the Medicare ESRD payment system. The ESRD quality incentive program (QIP) is the most recent step in fostering improved patient outcomes by establishing incentives for dialysis facilities to meet or exceed performance standards established by CMS. The ESRD QIP is authorized by section 153(c) of MIPPA, which added section 1881(h) to the Act. CMS established the ESRD QIP for PY 2012, the initial year of the program in which payment reductions are being made, in two rules published in the

Federal Register

on August 12, 2010 and January 5, 2011 (75 FR 49030 and 76 FR 628, respectively). On November 10, 2011, CMS published a rule in the

Federal Register

outlining the PY 2013 and PY 2014 ESRD QIP (76 FR 70228).

Section 1881(h) of the Act requires the Secretary to establish an ESRD QIP by (i) selecting measures; (ii) establishing the performance standards that apply to the individual measures; (iii) specifying a performance period with respect to a year; (iv) developing a methodology for assessing the total performance of each facility based on the performance standards with respect to the measures for a performance period; and (v) applying an appropriate payment reduction to facilities that do not meet or exceed the established Total Performance Score. This proposed rule discusses each of these elements and our proposals for their application to PY 2015 and future years of the ESRD QIP.

B. Considerations in Updating and Expanding Quality Measures Under the ESRD QIP for PY 2015 and Subsequent PYs

1. Value-Based Purchasing (VBP) Overview

Throughout the past decade, Medicare has been transitioning from a program that pays for healthcare based solely on the number of services furnished to a beneficiary to a program that ties portions of payments to providers and suppliers to the quality of services they deliver. By paying for the quality of care, rather than merely the quantity of care, we believe we are strengthening the healthcare system while also advancing the National Quality Strategy and the three part aim which promote (i) better care for the individual thereby (ii) advancing the health of the entire population while also (iii) reducing costs. CMS specifies the domains and specific measures of quality for our value-based purchasing (VBP) programs and we are working to link the aims of the National Quality Strategy with our payment policies on a national scale.

There are currently six domains of measurement for our VBP programs, based on the six priorities of the National Quality Strategy: (i) Care coordination; (ii) population/community health; (iii) efficiency and cost reduction; (iv) safety; (v) patient- and caregiver-centered experience and outcomes; and (vi) clinical care. Together these domains not only encourage better care at the facility level, but also encourage different care settings to interface to comprehensively improve healthcare. Although currently none of the VBP programs measure quality across all of the six domains, we are working to ensure that each program considers measures supporting the six national priorities where feasible. Furthermore, we are working in partnership with facilities, beneficiaries, the National Quality Forum (NQF), the Measures Application Partnership, sister agencies in the Department of Health and Human Services (HHS), and other stakeholders to develop new

measures where gaps exist, refine measures requiring adjustment, and remove measures when appropriate. We are also working with stakeholders to ensure that the ESRD QIP serves the needs of our beneficiaries and also advances the goals of the National Quality Strategy.

We believe that the development of an ESRD QIP that is successful in promoting the delivery of high quality healthcare services in dialysis facilities is paramount. We seek to adopt measures for the ESRD QIP that promote better, safer, and more efficient care. Our measure development and selection activities for the ESRD QIP take into account national priorities, such as those established by the National Priorities Partnership (

http://www.nationalprioritiespartnership.org/

), HHS Strategic Plan (

http://www.hhs.gov/secretary/about/priorities/priorities.html

), the National Strategy for Quality Improvement in Healthcare (

http://www.healthcare.gov/center/reports/quality03212011a.html

), and the HHS National Action Plan to Prevent Healthcare Associated Infections (HAIs) (

http://www.hhs.gov/ash/initiatives/hai/esrd.html

). To the extent practicable, we have sought to adopt measures that have been endorsed by a national consensus organization, recommended by multi-stakeholder organizations, and developed with the input of facilities, purchasers/payers, beneficiaries, and other stakeholders.

2. Brief Overview of Proposed PY 2015 Measures

Thus far, we have adopted measures for the ESRD QIP that fall under three of the six National Quality Strategy measure priority domains:

•

Safety:

National Healthcare Safety Network (NHSN) Dialysis Event reporting;

•

Patient- and Caregiver-Centered Experience:

In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) survey reporting; and

•

Clinical Quality of Care:

(i) Hemoglobin Greater Than 12 g/dL; (ii) Hemodialysis Adequacy (Urea Reduction Ratio (URR)); (iii) Vascular Access Type; (iv) and Mineral Metabolism reporting (76 FR 70228).

For PY 2015, we are proposing to add new measures in the clinical quality of care domain and to expand the scope of the NHSN Dialysis Event reporting measure (safety domain) and the Mineral Metabolism reporting measure (clinical quality of care domain). We believe that the PY 2015 ESRD QIP not only further promotes the health of ESRD patients, but also strengthens the goals of the National Quality Strategy. To that end, and as proposed and further discussed below, we are proposing to include 11 measures in the PY 2015 ESRD QIP. We also propose to include these measures and measure topics in subsequent payment years. The following measures seek to evaluate facilities on the clinical quality of care which they deliver.

• For purposes of evaluating anemia management:

○ Hemoglobin Greater Than 12 g/dL, a clinical measure.

○ Anemia Management, a reporting measure.*

• To evaluate dialysis adequacy:

○ A clinical Kt/V measure for adult hemodialysis patients.*

○ A clinical Kt/V measure for adult peritoneal dialysis patients.*

○ A clinical Kt/V measure for pediatric hemodialysis patients.*

• To determine whether patients are treated using the most beneficial type of vascular access:

○ An arteriovenous fistula measure.

○ A catheter measure.

• To address effective bone mineral metabolism management:

○ Hypercalcemia, a clinical measure.*

○ Mineral Metabolism, a reporting measure (expansion proposed).

Additionally, we are proposing to expand a previously adopted reporting measure addressing safety:

• NHSN Dialysis Event reporting measure.

We are also proposing to continue using a previously adopted reporting measure assessing patient- and caregiver-centered experience:

• ICH CAHPS survey reporting measure.

* Indicates that the measure is new to the ESRD QIP.

Although, at this time, we are not proposing to adopt measures that address care coordination, population/community health, or efficiency and cost of care, we are soliciting comments in this proposed rule on potential measures that would fall into each of these areas. We also discuss below the following measures that are under consideration for future adoption: a 30-Day Hospital Readmission measure to address care coordination; an access to care measure to address population/community health; and an efficiency measure. We also discuss below the Standardized Hospitalization Ratio Admissions (SHR) measure and the Standardized Mortality Ratio (SMR) measure that we are considering for program adoption in future years. We welcome further comments on these and the other potential measures for future program years.

3. PY 2014 Mineral Metabolism Measure

As noted above, in the CY 2012 ESRD PPS final rule, we adopted the Mineral Metabolism reporting measure which requires each facility to attest that it monitored serum calcium and serum phosphorus at least once a month for each Medicare ESRD patient (76 FR 70271). We have since realized, however, that it may be difficult for some facilities to make this attestation if, for example, a patient is seen at the beginning of the month, his or her blood is not drawn, and then he or she is hospitalized or transient for the remainder of the month. While it is our intention to encourage facilities to put systems and processes into place to ensure at least monthly serum calcium and phosphorus monitoring, we believe it is reasonable to give consideration to situations where the monthly blood draw does not happen within the dialysis facility given these scenarios. Therefore, for PY 2014, we propose to change the Mineral Metabolism reporting requirement.

We considered proposing to require facilities to report the required information for less than 100 percent of their patients. Specifically, we considered lowering the threshold to require that a facility attest that it monitored on a monthly basis the serum calcium and serum phosphorus levels for 98 percent of its patients. We ultimately decided that a facility should be required to take and report these values for every patient at least once per month so that each beneficiary receives the highest standard of care. We realize, however, that there are circumstances beyond a facility's control wherein it may not be able to draw a sample for this patient. Therefore, for purposes of scoring the measure, we propose to now require that, in order for a facility to receive 10 points on the PY 2014 Mineral Metabolism measure, it must attest that it monitored on a monthly basis the serum calcium and serum phosphorus levels for every Medicare ESRD patient provided that: (i) The patient is alive for the entirety of the applicable month; (ii) if the patient is treated in-center, that patient was treated at that facility at least twice during the claim month; and (iii) if the patient receives dialysis at home, a facility must report this information regardless of the number of treatments, provided that a claim is submitted for that patient. Additionally, we propose that if a patient is hospitalized or transient during a claim month, the facility may monitor the serum calcium

and serum phosphorus readings for that patient for the month if a patient has labs drawn by another provider/facility, those labs are evaluated by an accredited laboratory (a laboratory that is accredited by, for example, Joint Commission, College of American Pathologists, AAB (American Association of Bioanalysts), or State or Federal agency), and the dialysis facility reviews the serum calcium and serum phosphorus readings. We believe that these proposals will provide more flexibility for facilities and will also prevent facilities from drawing blood, even when not necessary, each time a patient visits for fear that he or she will fail to come to the facility again during that month. We request comment on this proposal. We also request comment on our consideration to lower the attestation to monthly monitoring of 98 percent of Medicare ESRD patients. We chose 98 percent in order to encourage improvement, and to ensure that we do not undermine the current level of high-reporting (based on the CrownWeb pilot data). We recognize that 100 percent might not be appropriate due to some individual cases that may not fit specified criteria.

Additionally, for purposes of clarification, we note that the PY 2014 attestations for both the Mineral Metabolism and ICH CAHPS measures will become available in CROWNWeb in December. As noted in the CY 2011 ESRD PPS final rule, these attestations must be made before January 31, 2013 (76 FR 70269, 70271).

4. Measures Application Partnership Review

In addition to the considerations discussed above, in selecting measures for the PY 2015 ESRD QIP, we considered input from the multi-stakeholder group, the Measures Application Partnership (

http://www.qualityforum.org.map/

). Section 1890A(a)(1) of the Act, as added by section 3014(b) of the Affordable Care Act, requires the entity with a contract under section 1890(a) of the Act, currently NQF, to convene multi-stakeholder groups to provide input to the Secretary on the selection of quality and efficiency measures for use in certain programs. Section 1890A(a)(2) of the Act requires the Secretary, not later than December 1 of each year, to make available to the public a list of quality and efficiency measures that are under consideration for use in certain programs. Section 1890A(a)(3) of the Act requires the entity with a contract under section 1890(a) of the Act to transmit the input of the multi-stakeholder groups to the Secretary not later than February 1 of each year, beginning in 2012. Section 1890A(a)(4) of the Act requires the Secretary to take into consideration the input of the multi-stakeholder groups in selecting quality and efficiency measures. The Measures Application Partnership is the public-private partnership comprised of multi-stakeholder groups convened by NQF for the primary purpose of providing input on measures as required by sections 1890A(a)(1) and (3) of the Act. The Measures Application Partnership's input on the quality and efficiency measures under consideration for adoption in CY 2012 was transmitted to the Secretary on February 1, 2012 and is available at (

http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=69885

). As required by section 1890A(a)(4) of the Act, we considered these recommendations in selecting quality and efficiency measures for the ESRD QIP.

Four proposed measures for the PY 2015 ESRD QIP (that is, three for dialysis adequacy and one for hypercalcemia) were made publicly available in accordance with section 1890A(a)(2) of the Act and were reviewed by the Measures Application Partnership. The Measures Application Partnership gave support to two of the proposed measures, NQF #1454: Proportion of patients with hypercalcemia and NQF #1423: Minimum spKt/V for Pediatric Hemodialysis Patients. The Measures Application Partnership supported the direction of a proposed composite measure comprised of two NQF-endorsed measures, NQF #0249: Hemodialysis Adequacy Clinical Performance Measure III: Hemodialysis Adequacy—HD Adequacy—Minimum Delivered Hemodialysis Dose and NQF #0318: Peritoneal Dialysis Adequacy Clinical Performance Measure III—Delivered Dose of Peritoneal Dialysis Above Minimum. The Measures Application Partnership recommended that the composite measure comprised of the two NQF dialysis adequacy measures be tested to ensure feasibility. We have taken these comments into consideration for the PY 2015 ESRD QIP. We will further discuss these considerations and our proposals for the PY 2015 ESRD QIP measures in the section below.

C. Proposed Measures for the PY 2015 ESRD QIP and Subsequent PYs of the ESRD QIP

Similar to our other quality reporting and pay for performance programs, we are proposing that once a quality measure is selected and finalized for the ESRD QIP through rulemaking, the measure would continue to remain part of the program for all future years, unless we remove or replace it through rulemaking or notification. We believe that this will streamline the rulemaking process, provide continuity of quality measurement, and allow ESRD facilities to plan both quality reporting and quality improvement activities. In general, we anticipate considering quality measures for removal or replacement if: (1) Measure performance among the majority of ESRD facilities is so high and unvarying that meaningful distinctions in improvements or performance can no longer be made; (2) performance or improvement on a measure does not result in better or the intended patient outcomes; (3) a measure no longer aligns with current clinical guidelines or practice; (4) a more broadly applicable (across settings, populations, or conditions) measure for the topic becomes available; (5) a measure that is more proximal in time to desired patient outcomes for the particular topic becomes available; (6) a measure that is more strongly associated with desired patient outcomes for the particular topic becomes available; or (7) collection or public reporting of a measure leads to negative unintended consequences. If there is reason to believe that a measure raises potential safety concerns, we are proposing that we would take immediate action to remove the measure from the ESRD QIP and not wait for the annual rulemaking cycle. Such measures would be promptly removed from the measure set, and we would confirm the removal in the next ESRD QIP rulemaking cycle. ESRD facilities and the public would be immediately notified of our decision to remove a measure that raises potential safety concerns through the usual ESRD program communication channels, including memos, email notification, and web postings.

Many of the quality measures used in different Medicare and Medicaid reporting programs are endorsed by NQF. As part of its regular maintenance process for endorsed performance measures, the NQF requires measure stewards to submit annual measure maintenance updates and undergo maintenance of endorsement review every 3 years. Under the measure maintenance process, the measure steward (owner/developer) is responsible for updating and maintaining the currency and relevance of the measure and confirming specification changes to NQF on an annual basis. NQF solicits information from measure stewards for annual reviews in order to review measures for

continued endorsement in a specific 3-year cycle. Non-NQF-endorsed measures may also go through similar maintenance by their measure stewards; such maintenance includes reviewing and updating measures.

Through the measure maintenance process, measures are sometimes updated to incorporate changes that we believe do not substantially change the nature of the measures. Examples could be changes to exclusions to the patient population, changes to definitions, or extension of the measure endorsement to apply to other settings. We believe these types of maintenance changes are distinct from more substantive changes to measures that result in what are considered new or different measures, and that they do not trigger the same agency obligations under the Administrative Procedure Act.

In this proposed rule, we are proposing that if a measure that we have adopted for the ESRD QIP is updated in a manner that we consider to not substantially change the nature of the measure, we would use a subregulatory process to incorporate those updates to the measure specifications that apply to the program. Specifically, we would revise our previously adopted measure specifications to clearly identify the updates made by the NQF or other measure steward and either post the updates directly on the CMS Web site or provide links to where the updates can be found. We would also provide sufficient lead time for facilities to implement the changes where changes to the data collection systems would be necessary.

We would continue to use the rulemaking process to adopt changes to a measure that we consider to substantially change the nature of the measure. We believe that this proposal adequately balances our need to incorporate updates to ESRD QIP measures in the most expeditious manner possible, while preserving the public's ability to comment on updates that so fundamentally change an endorsed measure that it is no longer the same measure that we originally adopted. We invite public comment on this proposal and on our proposal that once a quality measure is adopted, it is retained for use in the subsequent ESRD QIP payment years unless we remove or replace it as discussed above.

Consistent with these goals and policies, we previously finalized six measures (including one measure with two measure sub-components) (Table 2) for the PY 2014 ESRD QIP (76 FR 70228). We propose to continue to use five of these measures for the PY 2015 ESRD QIP; however, we propose to augment two (NHSN Dialysis Event reporting and Mineral Metabolism reporting) of these five measures used in PY 2014 to continue to promote improvement in the PY 2015 ESRD QIP. We are proposing to remove the PY 2014 URR Dialysis Adequacy measure. In addition, we are proposing to add three new measures of dialysis adequacy, an anemia management reporting measure, and a hypercalcemia clinical measure.

Table 2—Measures Adopted for the PY 2014 ESRD QIP

NQF No.

Measure title

N/A

Percent of Patients with Hemoglobin Greater Than 12 g/dL*

N/A

URR Hemodialysis Adequacy

N/A for composite measure

Vascular Access Type

Hemodialysis Vascular Access- Maximizing Placement of Arterial Venous Fistula (AVF)* (NQF#0257).

Hemodialysis Vascular Access- Minimizing use of Catheters as Chronic Dialysis Access* (NQF#0256).

N/A

1

NHSN Dialysis Event Reporting*

+

Enroll and report 3 months of dialysis event data.

N/A

2

In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) Survey Reporting*

Facilities are required to attest that they administered the ICH CAHPS survey via a third party during the performance period.

N/A

3

Mineral Metabolism Reporting.

Facilities are required to attest that they have monitored each of their Medicare patient's phosphorus and calcium levels monthly throughout the performance period.*

+

1

We note that an NQF-endorsed bloodstream infection measure (NQF#1460) exists, and data for this measure is collected as part of dialysis event reporting in NHSN. It is our intention to use this measure in future years of the ESRD QIP. We believe that a reporting measure is a necessary step in reaching our goal to use NQF#1460.

2

We note that a related measure utilizing the results of this survey has been NQF-endorsed (#0258), and it is our intention to use this measure in future years of the ESRD QIP. We believe that a reporting measure is a necessary step in reaching our goal to use NQF#0258.

3

We note that the NQF has previously endorsed phosphorus and calcium monitoring measures (#0261 and #0255) upon which this measure is based.

*

Indicates a measure we are proposing for PY 2015 and future years of the ESRD QIP.

+

Indicates a measure we are proposing to augment for PY 2015 and future years of the ESRD QIP.

Along with the measures that have been previously adopted and which we propose to continue for use in the PY 2015 ESRD QIP as well as subsequent years of the program, Table 3, below, lists the new measures that are being proposed for the PY 2015 ESRD QIP and subsequent years of the program. Table 4 lists the measures we are considering for future years of the ESRD QIP.

Table 3—New Measures Proposed for the ESRD QIP PY 2015 and Future Years of the Program

NQF No.

Measure title

N/A

Anemia Management Reporting.

0249

Hemodialysis Adequacy Clinical Performance Measure III: Hemodialysis Adequacy—HD Adequacy—Minimum Delivered Hemodialysis Dose.

0318

Peritoneal Dialysis Adequacy Clinical Performance Measure III—Delivered Dose of Peritoneal Dialysis Above Minimum.

1423

Minimum spKt/V for Pediatric Hemodialysis Patients.

1454

Proportion of Patients with Hypercalcemia.

Table 4—Measures Under Consideration for Future Years of the ESRD QIP

NQF No.

Measure title

1463

Standardized Hospitalization Ratio for Admissions (SHR).

0369

Dialysis Facility Risk-Adjusted Standardized Mortality Ratio (SMR).

1. PY 2014 Measures Continuing for PY 2015 and Subsequent Payment Years

We are proposing to continue using two measures and one measure topic adopted in PY 2014 for the PY 2015 ESRD QIP and future years of the program. Proposals for scoring these measures are discussed below. For the reasons stated in the CY 2012 ESRD PPS final rule (76 FR 70262, 70264 through 65, 70269), we propose to continue using: (i) The Hemoglobin Greater than 12 g/dL measure; (ii) the Vascular Access Type measure topic comprised of two measures, (a) the Hemodialysis Vascular Access-Maximizing Placement of AVF (NQF #0257) measure, and (b) the Hemodialysis Vascular Access- Minimizing use of Catheters as Chronic Dialysis Access (NQF #0256) measure; and (iii) the ICH CAHPS survey reporting measure. The technical specifications for these measures can be found at

http://www.dialysisreports.org/pdf/esrd/public-measures/AnemiaManagement-HGB-2015-NPRM.pdf

;

http://www.dialysisreports.org/pdf/esrd/public-measures/VascularAccess-Catheter-2015-NPRM.pdf

;

http://www.dialysisreports.org/pdf/esrd/public-measures/VascularAccess-Fistula-2015-NPRM.pdf

; and

http://www.dialysisreports.org/pdf/esrd/public-measures/ICHCAHPS-2015-NPRM.pdf

. We request comment on the proposed continuation of these measures.

2. Expansion of Two PY 2014 Measures for PY 2015 and Subsequent Payment Years

As stated earlier, we believe it is important to continue using measures from one payment year to the next payment year of the program to encourage continued improvements in patient care. Since we believe that continued improvement in patient care is important, we are proposing to expand the requirements under two reporting measures that we adopted for the PY 2014 ESRD QIP. These proposed expanded requirements would apply to the measures for PY 2015 and future payment years of the ESRD QIP.

a. Proposed Expanded NHSN Dialysis Event Reporting Measure

HAIs are a leading cause of preventable mortality and morbidity across different settings in the healthcare sector, including dialysis facilities. In a national effort to reduce this outcome, HHS agencies, including CMS, are partnering with the Centers for Disease Control and Prevention (CDC) to encourage facilities to report to the NHSN as a way to track and facilitate action intended to reduce HAIs. The NHSN is currently a secure, internet-based surveillance system that integrates patient and healthcare personnel safety surveillance systems managed by the Division of Healthcare Quality Promotion at the CDC. NHSN has been operational since 2006 and tracks data from acute care hospitals, long-term care hospitals, psychiatric hospitals, rehabilitation hospitals, outpatient dialysis centers, ambulatory surgery centers, and long term care facilities. We believe that reporting dialysis events to the NHSN by all facilities supports national goals for patient safety, particularly goals for the reduction of HAIs.

For the reasons stated above, we are proposing to retain the NHSN Dialysis Event reporting measure that we adopted for the PY 2014 ESRD QIP (76 FR 70268 through 70269), but with an expanded reporting period. For PY 2014, ESRD QIP facilities were required to: (i) Enroll in the NHSN and complete any training required by the CDC related to reporting dialysis events via the NHSN system; and (ii) submit three or more consecutive months of dialysis event data to the NHSN. For the PY 2015 ESRD QIP and future payment years, we propose to retain the NHSN measure and expand the reporting period to a full 12 months of dialysis event data. Although we expect most facilities to have enrolled and trained in the NHSN dialysis event system by the end of CY 2012, we note that facilities that have not done so by January 1, 2013 or facilities that receive a CMS certification number (CCN) during 2013 must enroll and complete this training before reporting the data in order to fulfill the requirements of this reporting measure. The information reported to NHSN would be provided by the CDC to CMS for use in the ESRD QIP.

As discussed in more detail below, we are proposing that the performance period for the PY 2015 ESRD QIP would be CY 2013. We propose that facilities must report dialysis event data monthly to the NHSN. We also propose that facilities be granted a “grace period” of one month to report this data. For example, a facility's dialysis event data for January 2013 must be reported on or before February 28, 2013. The final month of data from the performance period would be reported on or before January 31, 2014. For further information regarding the NHSN's dialysis event reporting protocols, please see

http://www.cdc.gov/nhsn/psc_da_de.html

. This link provides general information and links to more detailed, specialized information.

We note that this proposed measure only applies to facilities treating in-center patients. For purposes of the NHSN Dialysis Event reporting measure, we determine whether a facility treats in-center patients by referencing the facility's information in CMS data sources (that is, SIMS and CROWNWeb). Facilities report the types of patients that they serve in these data sources. If a facility lists in-center

services, we are proposing that the facility would be required to comply with the NHSN dialysis event reporting measure.

Section 1881(h)(2)(B)(i) of the Act requires that, unless the exception set forth in section 1881(h)(2)(B)(ii) of the Act applies, the measures specified for the ESRD QIP under section 1881(h)(2)(A)(iii) of the Act must have been endorsed by the entity with a contract under section 1890(a) of the Act (which is currently NQF). Under the exception set forth in 1881(h)(2)(B)(ii) of the Act, in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed so long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.

An NQF-endorsed bloodstream infection measure (NQF#1460) exists and is collected by the CDC as part of dialysis event reporting in NHSN. This measure assesses the number of hemodialysis patients with positive blood cultures. This measure differs from the dialysis event reporting measure that we adopted for the PY 2014 ESRD QIP and are proposing to expand beginning with the PY 2015 program because it evaluates the number of hemodialysis outpatients with positive blood cultures over a specified time period. By contrast, the proposed NHSN Dialysis Event reporting measure assesses facilities based on whether they enroll and report dialysis event data to the NHSN, not based on what the data reported are. We intend to propose to adopt NQF #1460 once facilities have reported enough data to enable us to compute performance standards, achievement thresholds, improvement thresholds, and benchmarks for the measure.

For the reasons stated in the CY 2012 ESRD PPS final rule (76 FR 70268 through 69), we propose to retain the measure and expand the reporting period for PY 2015 and future years of the program. We request comment on this proposal. The technical specifications for this measure are located at

http://www.dialysisreports.org/pdf/esrd/public-measures/NHSNDialysisReporting-2015-NPRM.pdf

.

b. Proposed Expanded Mineral Metabolism Reporting Measure

Undertreatment of bone mineral metabolism disease can cause severe consequences for ESRD patients. For PY 2014, it was not yet feasible to adopt a clinical measure evaluating facilities based on their patients' bone mineral metabolism rates because facilities did not report serum phosphorus and serum calcium values during the baseline and performance periods that we finalized with respect to that year. Instead, for PY 2014, we finalized a measure assessing whether facilities routinely monitored the serum calcium and serum phosphorus levels in their patients. For PY 2015, we propose to expand this measure by requiring facilities to report a serum calcium and serum phosphorus level for each qualifying patient each month according to the requirements in CROWNWeb. Facilities would be required to enter these values into CROWNWeb on a monthly basis. Facilities would be granted a “grace period” of one month to enter the data. For example, we would require a facility to report serum calcium and serum phosphorus data for January 2013 on or before February 28, 2013. The final month of data from the performance period would be reported on or before January 31, 2014.

We do not intend for this proposed measure to encourage unnecessary testing or unduly burden a facility. Consequently, for purposes of scoring the measure, we considered proposing to require facilities to report the required information for less than 100 percent of their patients. Specifically, we considered lowering the threshold to reporting 98 percent of patients for a month in order to receive credit for that month. We chose 98 percent in order to encourage improvement, and to ensure that we do not undermine the current level of high-reporting (based on the CrownWeb pilot data). We recognize that 100 percent might not be appropriate due to some individual cases that may not fit specified criteria. We ultimately decided that a facility should be required to take and report these values for every patient at least once per month so that each beneficiary receives the highest standard of care. We realize, however, that there are circumstances beyond a facility's control wherein it may not be able to draw a sample for this patient. Therefore, we are not proposing that the facility itself must draw the serum phosphorus and serum calcium levels. If, for example, a patient is hospitalized or transient during a claim month, the facility may report the serum calcium and serum phosphorus readings for the patient for a month if a patient has labs drawn by another provider/facility and those labs are evaluated by an accredited laboratory (a laboratories that is accredited by, for example, the Joint Commission, the College of American Pathologists, the AAB (American Association of Bioanalysts), or State or Federal agency), and the dialysis facility obtains the serum calcium and serum phosphorus readings. Additionally, we propose to only consider a patient qualified for this measure (i) if the patient is alive at the end of the month; (ii) if the patient is treated in-center, that patient was treated at that facility at least twice during the claim month; and (iii) if the patient receives dialysis at home, a claim is submitted for that patient. We believe that these proposals will provide more flexibility for facilities and will also discourage facilities from drawing blood, even when not necessary, for fear that the patient will fail to come to the facility again during that month. We request comment on this proposal. We also request comment on whether facilities should only have to report data for 98 percent of their patients.

Section 1881(h)(2)(B)(i) of the Act requires that, unless the exception set forth in section 1881(h)(2)(B)(ii) applies, the measures specified for the ESRD QIP under section 1881(h)(2)(A)(iii) of the Act must have been endorsed by the entity with a contract under section 1890(a) of the Act (which is currently NQF). Under the exception set forth in 1881(h)(2)(B)(ii) of the Act, in the case of a specified area or medical topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the entity with a contract under section 1890(a) of the Act, the Secretary may specify a measure that is not so endorsed so long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary.

An NQF-endorsed measure assessing hypercalcemia exists (NQF #1454) and we are proposing to adopt this measure for the PY 2015 ESRD QIP and subsequent payment years, as further discussed below. The NQF-endorsed hypercalcemia measure, however, does not score facilities based only on whether or not that facility reported serum calcium values. The Mineral Metabolism reporting measure, unlike the Hypercalcemia measure, would assess only whether facilities report serum calcium and serum phosphorus values. It would not score facilities based on the actual values that they report. We believe it is important to continue to encourage reporting independent of a measure that scores based on the actual values reported because we need such values to monitor

aspects of bone mineral metabolism, for example phosphorus management, independent of hypercalcemia; this information will allow us to develop comprehensive bone mineral metabolism measures for use in future years of the ESRD QIP.

In the CY 2012 ESRD PPS final rule, we discussed the basis for the Mineral Metabolism reporting measure (76 FR 70270 through 71). We stated that “the NQF has previously endorsed phosphorus and calcium monitoring measures (NQF #0261 and NQF #0255) and, in 2008, we adopted serum calcium and serum phosphorus monitoring as Clinical Performance Measures (

http://www.dialysisreports.org/ESRDMeasures.aspx

).” The NQF measures referenced above call for monitoring these serum calcium and serum phosphorus values, but they do not require actual reporting of these values, as is the intent of the Mineral Metabolism reporting measure.

For these reasons, we propose to expand the Mineral Metabolism reporting measure for PY 2015 and subsequent payment years under 1881(h)(2)(B)(ii) of the Act. The technical specifications for this measure can be found at

http://www.dialysisreports.org/pdf/esrd/public-measures/MineralMetabolism-Reporting-2015-NPRM.pdf

. We further note that requiring the reporting of serum calcium and serum phosphorus levels for the PY 2015 ESRD QIP will allow us to develop mineral metabolism measures based on clinical data in the future. We request comment on this proposal to expand the Mineral Metabolism reporting measure.

3. New Measures Proposed for PY 2015 and Subsequent Payment Years of the ESRD QIP

As the program evolves, we believe it is important to continue to evaluate and expand the measures selected for the ESRD QIP. Therefore, for the PY 2015 ESRD QIP and subsequent payment years, we are proposing to adopt five new measures. The proposed new measures include: three measures of dialysis adequacy (together comprising one dialysis adequacy measure topic); one measure of hypercalcemia, and one reporting measure involving hemoglobin and ESA dosages for all patients.

a. Proposed Kt/V Dialysis Adequacy Measure Topic

Section 1881(h)(2)(A)(i) states that the ESRD QIP must evaluate facilities based on measures of “dialysis adequacy”. For PYs 2012-2014, the ESRD QIP included a hemodialysis adequacy measure evaluating the number of patients with a URR of at least 65 percent. For the PY 2015 ESRD QIP, and future payment years, we are proposing to remove the URR Hemodialysis Adequacy measure. In its place, we are proposing to adopt three measures of dialysis adequacy (together comprising one dialysis adequacy measure topic) based on Kt/V (K = clearance, t = dialysis time, and V = volume of distribution) for the PY 2015 ESRD QIP and future payment years of the program. Kt/V is a widely accepted measure of dialysis adequacy in the ESRD community because it takes into account the amount of urea removed with excess fluid. Further, while the URR Hemodialysis Adequacy measure only applies to in-center hemodialysis patients, the proposed Kt/V measures will allow us to evaluate dialysis adequacy in adult hemodialysis (HD) patients (in-center and home hemodialysis (HHD)) receiving three treatments weekly, adult peritoneal dialysis (PD) patients, and pediatric HD patients receiving three to four treatments weekly. We are proposing to adopt the following NQF-endorsed Kt/V measures of dialysis adequacy, each one applicable to a different patient population:

(i) NQF #0249: Hemodialysis Adequacy Clinical Performance Measure III: Hemodialysis Adequacy—HD Adequacy—Minimum Delivered Hemodialysis Dose;

(ii) NQF #0318: Peritoneal Dialysis Adequacy Clinical Performance Measure III—Delivered Dose of Peritoneal Dialysis Above Minimum; and

(iii) NQF #1423: Minimum spKt/V for Pediatric Hemodialysis Patients.

The proposed measures assess whether Medicare dialysis patients (PD, HD, and pediatric hemodialysis) meeting the modality specific Kt/V threshold. Performance on the measures are expressed as a proportion of patient-months meeting the measure threshold.

For the reasons stated above, we are proposing to use Kt/V as the measure of dialysis adequacy for the PY 2015 ESRD QIP and future payment years of the program. Kt/V would be measured for adult HD patients using NQF #0249, adult PD patients using NQF #0318, and pediatric hemodialysis patients using NQF #1423. Additionally, we are proposing to remove the URR Hemodialysis Adequacy measure; we request comments on these proposals. The technical specifications for this measure can be found at

http://www.dialysisreports.org/pdf/esrd/public-measures/PediatricHemodialysisAdequacy-ktv-2015-NPRM.pdf

;

http://www.dialysisreports.org/pdf/esrd/public-measures/PeritonealDialysisAdequacy-ktv-2015-NPRM.pdf

; and

http://www.dialysisreports.org/pdf/esrd/public-measures/HemodialysisAdequacy-ktv-2015-NPRM.pdf

. We request comment on these proposals. The proposed scoring and weighting of the Kt/V Dialysis Adequacy measure topic is discussed below.

b. Hypercalcemia

Section 1881(h)(2)(A)(iii) of the Act states that the measures specified for the ESRD QIP shall include other measures as the Secretary specifies, including, to the extent feasible, measures of bone mineral metabolism. Abnormalities of bone mineral metabolism are exceedingly common and contribute significantly to morbidity and mortality in patients with advanced Chronic Kidney Disease (CKD). Numerous studies have associated disorders of mineral metabolism with morbidity, including fractures, cardiovascular disease, and mortality. Therefore, we believe it is necessary to adopt a clinical measure that encourages proper bone mineral metabolism management.

One indicator of bone mineral metabolism management is hypercalcemia. We are, therefore, proposing to use the NQF-endorsed measure, NQF #1454: Proportion of patients with hypercalcemia, to evaluate ESRD facilities for the PY 2015 and future payment years of the ESRD QIP. This measure assesses the number of patients with uncorrected serum calcium greater than 10.2 mg/dL for a 3-month rolling average. “Uncorrected” means not corrected for serum albumin concentration. Performance on this measure is expressed as a proportion of patient-months for which the 3-month rolling average exceeds the measure threshold. Because the NQF-endorsed measure calls for a 3-month rolling average, we are proposing that the first measure rate for this measure would be calculated using the first 3 months of data collected during the proposed performance period (that is, there would be no measure rate for the first 2 months of the performance period; we would calculate the first measure rate for the performance period using the first 3 months of data and would then calculate a rate each successive month, dropping the oldest month and adding the newest month). Because we are proposing to adopt this measure not only for PY 2015, but also subsequent payment years, we also propose that, beginning with the PY 2016 program, we would measure hypercalcemia beginning in January of the applicable

performance period. This will allow us to have a 3-month rolling average for all months in the performance period. We propose that the 3-month rolling average rate for January would be calculated using the rates from November and December of the previous year as well as January of that year. Likewise, we propose that the rate for February would be calculated using the rates from December, January and February to calculate the 3-month rolling average, and so on. Technical specifications for this measure can be found at

http://www.dialysisreports.org/pdf/esrd/public-measures/MineralMetabolism-Hypercalcemia-2015-NPRM.pdf

. We welcome comments on these proposals.

c. Proposed Anemia Management Reporting Measure

Section 1881(h)(2)(A)(i) requires “measures on anemia management that reflect the labeling approved by the Food and Drug Administration (FDA) for such management.” Although the current FDA-approved label for Erythropoiesis-Stimulating Agents (ESAs) only specifically addresses hemoglobin levels greater than 11 g/dL, previous FDA-approved labels suggested patients on ESAs maintain a hemoglobin level of 10-12 g/dL. As we noted in the CY 2012 ESRD PPS final rule, upon further research, the FDA determined that there is no evidence suggesting a lower target level at which hemoglobin does not cause increased risks of death, serious adverse cardiovascular reactions, and stroke and, therefore, changed its approved label on June 24, 2011 (76 FR 70257).

As a result of the changes in the FDA approved-label and the implementation of the ESRD QIP, we are monitoring trends and indicators of anemia management for the Medicare ESRD population. We have found that the average monthly blood transfusion rate increased from 2.7 percent in 2010 to 3.2 percent in 2011. We are working through our ESRD QIP monitoring and evaluation program to further assess this issue. We believe that it is important that we continue monitoring hemoglobin levels in patients to ensure that anemia is properly treated, and we are proposing to adopt a measure for PY 2015, and future payment years, which requires facilities to report ESA dosage (if applicable) and hemoglobin and/or hematocrit levels for patients on at least one monthly claim. In addition to this measure, proposed below, we plan to continue to monitor the rate of transfusions and may consider the adoption of relevant quality measures through future rulemaking if necessary.

Since January 1, 2012, facilities have been required to report hemoglobin or hematocrit

1

levels for each patient on every claim (CR 7640). Beginning April 1, 2012, if a hemoglobin or hematocrit value is not included in the claim, the claim is returned to the facility (CR 7593). If a hemoglobin or hematocrit value is not available for a patient, a facility can enter a default value of 99.99 on the claim and the claim will not be returned, provided the facility is not billing for an ESA. The default value is not acceptable when the claim includes an ESA, in such a case, the claim will be returned to the provider.

1

Hematocrit values are used to calculate hemoglobin levels by taking the hematocrit value and dividing by three.

We are concerned that our current policy of paying claims that include a default hemoglobin or hematocrit value of 99.99 could lead to the under-reporting of patients' hemoglobin or hematocrit levels and ESA dosage by facilities; we are specifically concerned that we will not receive complete and accurate hemoglobin/hematocrit readings for those patients not receiving ESAs because a default value of 99.99 can be reported on claims, and these claims will be paid, if no ESA is administered to the patient. Additionally, we believe that facilities might choose to strategically not report certain patients' hemoglobin or hematocrit levels on certain claims—those where the patient's hemoglobin levels are greater than 12 g/dL—in order to make the performance rate of their Hemoglobin Greater Than 12 g/dL measure seem better and reduce the likelihood of a payment reduction under the ESRD QIP.

Because it is possible that facilities could under-report hemoglobin or hematocrit levels, we are proposing to adopt an Anemia Management reporting measure for the PY 2015 ESRD QIP, and future payment years of the program. For this measure, we propose to require facilities to report a hemoglobin or hematocrit value and, as applicable, an ESA dosage for all Medicare patients at least once per month via claims. We propose to consider claims with 99.99 values as not meeting the requirements of this measure (that is, claims reporting 99.99 will be counted as if the hemoglobin or hematocrit value were left blank).

We do not intend for this proposed measure to encourage unnecessary testing or unduly burden a facility. Consequently, for purposes of scoring the measure, we considered proposing to require facilities to report the required information for less than 100 percent of their patients. Specifically, we considered lowering the threshold to reporting 98 percent of patients for a month in order to receive credit for that month. We ultimately decided that a facility should be required to take and report these values for every patient at least once per month so that each beneficiary receives the highest standard of care. We realize, however, that there are circumstances beyond a facility's control wherein it may not be able to draw a sample for this patient. Therefore, we are not proposing that the facility itself must draw blood for each patient. If, for example, a patient is hospitalized or transient during a claim month, the facility may report the hemoglobin/hematocrit readings and ESA dosage (if applicable) for the patient for a month if a patient has labs drawn by another provider/facility and those labs are evaluated by an accredited laboratory (a laboratories that is accredited by, for example, the Joint Commission, the College of American Pathologists, the AAB (American Association of Bioanalysts), or State or Federal agency), and the dialysis facility obtains the hemoglobin/hematocrit readings and ESA dosage. Additionally, we propose to only consider a patient qualified for this measure (i) if the patient is alive at the end of the month; (ii) if the patient is treated in-center, that patient was treated at that facility at least twice during the claim month; and (iii) if the patient receives dialysis

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