Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Bad Debt Reductions for All Medicare Providers
Federal RegisterNov 9, 2012
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 413 and 417
[CMS-1352-F]
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:
Final rule.
SUMMARY:
This final rule updates and makes revisions to the end-stage renal disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2013. This rule also sets forth requirements for the ESRD quality incentive program (QIP), including for payment year (PY) 2015 and beyond. In addition, this rule implements changes to bad debt reimbursement for all Medicare providers, suppliers, and other entities eligible to receive Medicare payment for bad debt and removes the cap on bad debt reimbursement to ESRD facilities. (See the Table of Contents for a listing of the specific issues addressed in this final rule.)
DATES:
Effective Date:
These regulations are effective on January 1, 2013.
Applicability Date:
The regulations setting forth the reductions in Medicare bad debt pursuant to section 3201 of the Middle Class Tax Extension and Job Creation Act of 2012 (Pub. L. 112-96) are applicable for cost reporting periods beginning October 1, 2012.
FOR FURTHER INFORMATION CONTACT:
Michelle Cruse, (410) 786-4533, for issues related to ESRD.
Heidi Oumarou, (410) 786-7942, for issues related to the ESRD market basket.
Anita Segar, (410) 786-4614, for issues related to the QIP.
Kellie Shannon, (410) 786-0416 for information regarding Medicare bad debt.
SUPPLEMENTARY INFORMATION:
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. ESRD QIP
3. Reductions to Bad Debt Payments for All Medicare Providers and Elimination of the Cap on Bad Debt Reimbursement to ESRD Facilities
B. Summary of Major Provisions
1. ESRD PPS
2. ESRD QIP
3. Reductions to Bad Debt Payments for All Medicare Providers and Elimination of the Cap on Bad Debt Reimbursement to ESRD Facilities
C. Summary of Cost and Benefits
1. Impacts of the Final ESRD PPS
2. 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. Summary of the Proposed Provisions and Responses to Comments on the CY 2013 ESRD PPS
C. Routine Updates and Proposed Policy Changes to the CY 2013 ESRD PPS
1. Composite Rate Portion of the ESRD PPS Blended Payment
a. 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 Growth Update to the Drug Add-On Adjustment
iv. 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. Market Basket Update Increase Factor and Labor-Related Share for ESRD Facilities for CY 2013
c. 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. 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
c. Wage Index Budget-Neutrality Adjustment
d. ESRD PPS Wage Index Tables
6. Drug Policy Changes
a. Daptomycin
b. Alteplase and Other Thrombolytics
c. Part B Drug Pricing
7. Revisions to the Outlier Policy
a. Impact of Changes to the Outlier Policy
b. Outlier Policy Percentage
D. 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
E. Miscellaneous Comments
III. End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for Payment Year (PY) 2015
A. Background
B. Summary of the Proposed Provisions and Responses to Comments on the ESRD QIP for PY 2015
C. 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 Proposals
3. Measures Application Partnership Review
4. PY 2014 Mineral Metabolism Measure
D. 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 PYs
a. Hemoglobin Greater Than 12 g/dL
b. Vascular Access Type (VAT) Measure Topic
c. In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS)
2. Expansion of Two PY 2014 Measures for PY 2015 and Subsequent PYs
a. Expanded National Healthcare Safety Network (NHSN) Dialysis Event Reporting Measure
b. Expanded Mineral Metabolism Reporting Measure
3. New Measures for PY 2015 and Subsequent PYs of the ESRD QIP
a. Kt/V Dialysis Adequacy Measure Topic
i. Adult Hemodialysis Adequacy
ii. Peritoneal Dialysis Adequacy
iii. Pediatric, In-center Hemodialysis Adequacy
b. Hypercalcemia
c. Anemia Management Reporting Measure
4. Measures Under Consideration for Future PYs 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. Scoring Background and General Considerations for the PY 2015 ESRD QIP
7. Performance Period for the PY 2015 ESRD QIP
8. Performance Standards for the PY 2015 ESRD QIP
a. Clinical Measure Performance Standards
b. Performance Standards
c. Performance Standards for the PY 2015 Reporting Measures
9. Scoring for the PY 2015 ESRD QIP Measures
a. Scoring Facility Performance on Clinical Measures Based on Achievement
b. Scoring Facility Performance on Clinical Measures Based on Improvement
c. Calculating the Reporting Measure Scores
10. Weighting the PY 2015 ESRD QIP Measures and Calculation of the PY 2015 ESRD QIP Total Performance Score
a. Weighting Individual Measures To Compute Measure Topic Scores for the Kt/V Dialysis Adequacy Measure Topic and the Vascular Access Type Measure Topic
b. Weighting the Total Performance Score
c. Examples of the PY 2015 ESRD QIP Scoring Methodology
11. Minimum Data for Scoring Measures for the PY 2015 ESRD QIP
a. Minimum Data for Scoring Clinical Measures for the PY 2015 ESRD QIP
b. Minimum Data Requirements for Reporting Measures by New Facilities
12. Payment Reductions for the PY 2015 ESRD QIP
13. Data Validation
14. Scoring Facilities Whose Ownership has Changed
15. 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. No. 112-96)
C. Summary of Provisions of This Final Rule
1. Section 3201 of The Middle Class Tax Extension and Job Creation Act of 2012 (Pub. L. No. 112-96)
2. ESRD Bad Debt Cap and Remove and Reserve § 413.178
3. Technical Corrections
D. Changes to Medicare Bad Debt Policy
1. 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 QIP
a. Display of Certificates for the PY 2015 ESRD QIP
b. NHSN Dialysis Event Reporting Requirement for the PY 2015 ESRD QIP
c. ICH CAHPS Survey Attestation Requirement for the PY 2015 ESRD QIP
d. Data Validation Requirements
2. Reductions to Bad Debt Payments for All Medicare Providers
VI. 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. ESRD QIP
a. Effects of the PY 2015 ESRD QIP
b. Alternatives Considered for the PY 2015 ESRD QIP
3. Reductions to Bad Debt Payments for All Medicare Providers
C. Accounting Statement
VII. Regulatory Flexibility Act Analysis
VIII. Unfunded Mandates Reform Act Analysis
IX. Federalism Analysis
X. Files Available to the Public via the Internet
Regulations Text
Acronyms
Because of the many terms to which we refer by acronym in this final 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
CAH Critical Access Hospital
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
CMHC Community Mental Health Center
CMP Competitive Medical Plans
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
FQHC Federally Qualified Health Center
FY Fiscal Year
GDP Gross Domestic Product
HAI Healthcare-associated Infections
HCPCS Healthcare Common Procedure Coding System
HCPP Health Care Prepayment Plan
HD Hemodialysis
HHD Home Hemodialysis
HMO Health Maintenance Organization
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
RHC Rural Health Clinic
RRF Residual Renal Function
RUL Reasonable Useful Lifetime
SBA Small Business Administration
SHR Standardized Hospitalization Ratio
SIMS Standard Information Management System
SMR Standardized Mortality Ratio
SNF Skilled Nursing Facility
SSA Social Security Administration
TEP Technical Expert Panel
The Act Social Security Act
The Affordable Care Act The Patient Protection and Affordable Care Act
URR Urea Reduction Ratio
VAT Vascular Access Type
VBP Value Based Purchasing
I. Executive Summary
A. Purpose
1. End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)
This final rule updates and makes 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), the 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 final rule also sets forth requirements for the ESRD quality incentive program (QIP), including for 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 and Elimination of the Cap on Bad Debt Reimbursement to ESRD Facilities
This final rule also implements 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. Additionally, this rule will remove the cap on bad debt reimbursement to ESRD facilities.
B. Summary of the Major Provisions
1. ESRD PPS
•
Update to the composite and ESRD PPS base rate for CY 2013:
For CY 2013, the ESRD PPS base rate is $240.36. This amount reflects the application of the ESRD bundled (ESRDB) market basket reduced by the productivity adjustment, or 2.3 percent, and the wage index budget-neutrality adjustment factor of 1.000613 to the CY 2012 ESRD PPS base rate of $234.81. The base rate is applicable to both the ESRD PPS portion of the blended payment under the transition and payments under the full PPS. During the transition, we are required to update the composite rate for ESRD facilities receiving a blended payment. For CY 2013, the composite base rate is $145.20. 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:
There are no 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 average sales price (ASP) drug expenditure data and other data, we estimate a 2.9 percent decrease in aggregate drug expenditures and a 4.0 percent increase in enrollment. Using these estimates, we project a 6.6 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 will result in a decrease to the drug add-on equal to 0.9 percentage points. We will 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 CY 2013 ESRDB market basket increase factor is 2.9 percent. The current forecast of the CY 2013 MFP adjustment is 0.6 percent. The resulting final CY 2013 MFP-adjusted ESRDB market basket update is equal to 2.3 percent.
•
The transition budget-neutrality adjustment factor:
For CY 2013, we are applying the transition budget-neutrality adjustment methodology established in CY 2011. This results in a 0.1 percent adjustment. Therefore, for CY 2013, a 0.1 percent increase will be applied to both the blended payments made under the transition and payments made under the full 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 making 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 we will continue to do so. Therefore, in CY 2013, we are reducing the wage index floor from 0.550 to 0.500. 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 × 1.001141) 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 will decrease from $71.64 to $47.32 and the MAP amount will decrease from $45.44 to $41.39 as compared to CY 2012 values. For adult patients, the fixed-dollar loss amount drops from $141.21 to $110.22 and the MAP amount drops from $78.00 to $59.42. 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 epoetin 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 MAPs 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 on ESRD claims. In this 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 rule, we reiterate the purpose of the AY modifier and emphasize that we are continuing our monitoring efforts. We also indicate that we may consider eliminating the AY modifier in future rulemaking if we believe that the AY modifier is not being used for the purpose intended.
2. ESRD QIP
This final rule also implements new requirements for the ESRD QIP. It will 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 in-center 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 a catheter measure.
• To address effective bone mineral metabolism management:
○ Mineral Metabolism, a reporting measure.
• To address safety:
○ National Healthcare Safety Network (NHSN) Dialysis Event reporting measure.
• To assess patient and caregiver experience:
○ In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) survey reporting measure.
* Denotes that this measure is new to the ESRD QIP.
This final rule also establishes CY 2013 as the performance period for the PY 2015 ESRD QIP. It also establishes performance standards for each measure and adopts 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 and Elimination of the Cap on Bad Debt Reimbursement to ESRD Facilities
This rule also implements 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 moving 42 CFR 413.178(a) to 42 CFR 413.89(h)(3), and moving 42 CFR 413.178(d)(2) to 42 CFR 413.89(i)(2) and removing and reserving the remainder of 42 CFR 413.178. Additionally, we are making a technical correction to the cross reference in 42 CFR 417.536(f)(1) to Medicare bad debt reimbursement policy. Finally, this final rule will eliminate the cap on bad debt reimbursement to an ESRD facility at its unrecovered costs.
C. Summary of Costs and Benefits
In section VI.B of this final rule, we set forth a detailed analysis of the impacts that the changes will have on affected entities and beneficiaries. The impacts include the following:
1. Impacts of the Final ESRD PPS
The impact chart in section VI.B of this final 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 3.0 percent increase in payments. Hospital-based ESRD facilities have an estimated 3.6 percent increase in payments compared with freestanding facilities with an estimated 2.9 percent increase. Urban facilities are expected to receive an estimated payment increase of 3.0 percent compared to an estimated 2.9 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 decrease is offset primarily by the impact of the market basket increase, resulting in an estimated 0.6 percent increase in payment. The estimated 3.0 percent overall payment increase will result in a $250 million cost to Medicare and a $60 million cost to beneficiaries. In 2013, a 2.3 percent market basket increase will result in a $190 million cost to Medicare and a $50 million cost to beneficiaries. The outlier fixed dollar loss and MAP adjustments in CY 2013 will result in a $30 million cost to Medicare and a $10 million cost to beneficiaries. The difference in cost to Medicare is due to the effects of changing the blend of payments from 50/50 to 25/75 and the 0.1 percent transition budget-neutrality adjustment.
2. Impacts for ESRD QIP
The overall economic impact of the ESRD QIP is an estimated $24.6 million for PY 2015. We expect the total payment reductions to be approximately $12.1 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 generally self-implementing. There will be a $10.92 billion savings to the program over 10 years resulting from these self-implementing reductions in bad debt reimbursement. We are also removing the cap on reimbursement for bad debt to ESRD facilities for cost reporting periods beginning on or after January 1, 2013, which will result in a cost to the Medicare program of $170 million over 10 years.
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 (75 FR 49030) 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 April 6, 2011, we published in the
Federal Register
an interim final rule with comment period (76 FR 18930) titled, “Changes in the End-Stage Renal Disease Prospective Payment System Transition Budget-Neutrality Adjustment”, which revised the ESRD transition budget-neutrality adjustment for CY 2011. In the interim final rule, we revised the 3.1 percent transition budget-neutrality adjustment reduction to a zero percent transition budget-neutrality adjustment for renal dialysis services furnished on April 1, 2011 through December 31, 2011 (76 FR 18933). 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, clarifications, and technical changes. In the CY 2013 ESRD PPS proposed rule (77 FR 40956), we summarize the updates, changes, and clarifications that were finalized in the CY 2012 ESRD PPS final rule (76 FR 70228).
B. Summary of the Proposed Provisions and Responses to Comments on the CY 2013 ESRD PPS
The proposed rule, titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Bad Debt Reductions for All Medicare Providers” (77 FR 40952), hereinafter referred to as the CY 2013 ESRD PPS proposed rule appeared in the
Federal Register
on July 11, 2012, with a comment period that ended on August 31, 2012. In that proposed rule, for the ESRD PPS, we proposed to (1) make a number of routine updates for CY 2013, (2) implement the third year of the transition, and (3) make several policy changes and clarifications. We received approximately 40 public comments on the ESRD PPS proposals, including comments from ESRD facilities; national renal, nephrologist and patient organizations; patients; manufacturers; health care systems; and nurses. In this final rule, we provide a summary of each proposed provision, a summary of the public comments received and our responses to them, and the policies we are finalizing for the CY 2013 ESRD PPS.
C. 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 final rule implements the third year of the transition for those ESRD facilities that did not elect to receive 100 percent of the payment amount under the ESRD PPS. For CY 2013, under 42 CFR 413.239(a)(3), facilities that are transitioning 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, we continue to update the composite rate portion of the blended payment during the transition, (that is, CY 2011 through 2013), which includes updates to the drug add-on adjustment required by section 1881(b)(12)(F) of the Act, discussed in section II.C.1.a of this final rule, as well as the wage index values (which includes a budget-neutrality factor) used to adjust the labor component of the composite rate discussed in section II.C.5 of this final rule. For CY 2013, we proposed 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 transition budget-neutrality adjustment can be found in section II.C.4 of this final rule.
As discussed in the CY 2013 ESRD PPS proposed rule (76 FR 40957), section II.C.3 of this final rule, and in 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, for the years in which the transition applies, the composite base rate 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 the CY 2013 ESRD PPS proposed rule (77 FR 40957), we proposed for CY 2013 a composite rate of $145.49, which reflected the CY 2012 composite rate of $141.94 increased by an ESRDB market basket of 3.2 reduced by the productivity adjustment of 0.7 percent, resulting in an update of 2.5 percent, based on the first quarter 2012 IGI forecast of the ESRDB market basket.
We received four public comments supporting our proposal to increase the composite base rate by 2.5 percent for ESRD services furnished in CY 2013 and paid under the blended payment methodology during the transition period.
In section II.C.3.b of this final rule, we finalize the CY 2013 ESRDB market basket update of 2.9 percent, and the MFP adjustment of 0.6 percent, which results in a forecasted rate of increase to the base rate of 2.3 percent. This final update is based on the third quarter 2012 IGI forecast of the ESRDB market basket. Consequently for CY 2013, we are finalizing the composite base rate under the ESRD PPS payment of $145.20 for ESRD services furnished during CY 2013 and paid under the blended payment methodology. This amount reflects the CY 2012 composite rate of $141.94 increased by the CY 2013 ESRD market basket increase factor of 2.9 percent reduced by the productivity adjustment of 0.6 percent. The resulting CY 2013 MFP-adjusted ESRD market basket update is 2.3 percent ($141.94 × 1.023 = $ 145.20).
a. 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 42 CFR 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. Under § 413.239(a)(3), in CY 2013, ESRD facilities that elected to receive payment under the transition will be paid a blended amount consisting of 25 percent of the basic case-mix adjusted composite payment system payment and 75 percent of the ESRD PPS payment. Thus, we must continue to update the composite rate portion of the blended payment amount during the ESRD PPS transition (CY 2011 through 2013), 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 the services in the composite rate and an add-on to the composite rate portion of the blended payment to account for the difference between pre-Medicare Modernization Act payments for separately billed drugs and the revised drug pricing specified in the statute. For the drug add-on for CY 2013 (77 FR 40957 through 40959), we did not propose any changes to the drug add-on methodology, but merely updated 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.
As we indicated in the CY 2013 ESRD PPS proposed rule (77 FR 40957), we continue to estimate growth in drug expenditures based on the trends in available data. To account for increases in drug prices and utilization for CY 2013 we used the 6 years of available drug expenditure data based on ASP pricing. 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). We indicated in the CY 2013 ESRD PPS proposed rule (77 FR 40958) that for the CY 2013 PPS final rule, we would use additional updated CY 2011 claims with dates of service for the same timeframe. This updated CY 2011 data file would include claims received, processed, paid, and passed to the National Claims History File as of June 30, 2012. We further stated that while the CY 2011 claims file used in the proposed rule was 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.
In the CY 2013 ESRD PPS proposed rule (77 FR 40958), 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 were 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 was 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.
We further stated in the CY 2013 ESRD PPS proposed rule (77 FR 40958), that 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.
For this CY 2013 final rule, using the full year 2011 drug expenditure figure based on the June 2012 update of the CY 2011 National Claims History File, we calculated the average annual change in drug expenditure from 2006 through 2011. This average annual change showed a decrease of 2.9 percent in drug expenditures from 2006 through 2011. We used this 2.9 decrease to project drug expenditures for both 2012 and 2013. We note that the decrease in the drug expenditures percentage is a result of our use of updated data.
ii. Estimating Per Patient Growth
In the CY 2013 ESRD PPS proposed rule (77 FR 40958), we explained that 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 had estimated 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 was 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 CYs 2012 and 2013.
For this final rule, we estimate a 4.0 percent estimated growth in enrollment between CYs 2012 and 2013. To obtain the per-patient estimated growth in expenditures, we divided the total drug expenditure change of a 2.9 percent decrease between CYs 2012 and 2013 (0.971) by enrollment growth of 4.0 percent (1.04) for the same timeframe. The result is a per-patient growth factor equal to 0.934 (.971/1.04=.934). Thus, in this final rule, for CY 2013 we are projecting a 6.6 percent decrease (−6.6% percent =−.063=.934−1) in per patient growth in drug expenditures between CYs 2012 and 2013.
iii. Applying the Proposed Growth Update to the Drug Add-On Adjustment
We explained in the CY 2013 ESRD PPS proposed rule (77 FR 40958), that 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 citation to this discussion in the CY 2006 PFS final rule with comment is 70 FR 70166 and 70167. In the CY 2006 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.
We further explained in the CY 2013 ESRD PPS proposed rule (77 FR 40958), that 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 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 Change Request 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.
Finally, we explained in the CY 2013 ESRD PPS proposed rule (77 FR 40958) that 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, and 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. For CY 2013, we did not make any update to the per treatment drug add-on amount of $20.33 established in CY 2008.
As discussed in detail below, in this final rule, for CY 2013, we are finalizing a zero update to the per treatment drug add-on amount of $20.33 established in CY 2008.
iv. Update to the Drug Add-On Adjustment for CY 2013
As discussed above, in the CY 2013 ESRD PPS proposed rule (77 FR 40958), we estimated a 3.0 percent decrease in drug expenditures between CYs 2012 and 2013. Combining this decrease with a 4.6 percent increase in enrollment, as described above, we projected a 7.3 percent decrease in per patient growth of drug expenditures between CYs 2012 and CY 2013. Therefore, in the CY 2013 ESRD PPS proposed rule, we projected 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 revised 14.0 percent add-on for 2013). This figure was derived by applying the 7.3 percent decrease to the CY 2012 drug add-on of $20.33. This resulted 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. We indicated that 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 proposed 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 proposed to apply a zero update and maintain the $20.33 per treatment drug add-on amount for CY 2013. We sought comment on our proposed zero update to the drug add-on.
We further stated in the CY 2013 ESRD PPS proposed rule (77 FR 40959), that 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.3.a of the CY 2013 ESRD PPS 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 resulting in a 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 proposed a drug add-on adjustment to the composite rate for CY 2013 of 14.0 percent.
We did not receive any comments on our proposals to use a zero update to the drug add-on or on the proposed drug-add on adjustment to the composite rate for CY 2013 of 14.0 percent.
In this final rule, for CY 2013, we estimate a 2.9 percent decrease in drug expenditures between CYs 2012 and 2013. Combining this increase with a 4.0 percent increase in enrollment, we project a 6.6 percent decrease in per patient growth of drug expenditures between CYs 2012 and 2013. Therefore, we project that the combined growth in per patient utilization and pricing for CY 2013 results in a decrease to the drug add-on equal to 0.9 percentage points. This figure is derived by applying the 6.6 percent decrease to the CY 2012 drug add-on of $20.33. This results in a revised drug add-on of $18.98, which is 13.1 percent of the final CY 2013 base composite rate of $145.20. Applying no decrease to the drug add-on of $20.33 results in a 14.0 percent drug add-on. Similar to last year and as discussed above, for CY 2013, we are finalizing a zero update to the drug add-on and maintaining the $20.33 per treatment drug add-on amount.
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. Using the latest ESRDB market basket minus productivity adjustments to update the composite rate portion of the ESRD PPS payment (forecast of 2.3 percent in CY 2013 effective January 1, 2013, as discussed in section II.C.3 of this final rule), results in a decrease to the CY 2013 drug add-on adjustment from 14.3 to 14.0 percent in order to maintain the drug add-on amount of $20.33. This decrease occurs because the drug add-on adjustment is a percentage of the composite rate. Because the final CY 2013 composite rate is higher than CY 2012 composite rate, and since the drug add-on remains at $20.33, the percentage decreases. Therefore, we are finalizing for CY 2013 the drug add-on adjustment of 14.0 to the composite rate.
2. ESRD PPS Base Rate
In the CY 2013 ESRD PPS proposed rule (77 FR 40959) and 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 42 CFR 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 42 CFR 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).
We also indicated in the CY 2013 ESRD PPS proposed rule (77 FR 40959) that 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 adjusted by the rate of increase in the ESRD market basket, reduced by the productivity adjustment. Accordingly, in the CY 2013 ESRD PPS proposed rule, we applied the 2.5 percent increase to the CY 2012 ESRD PPS base rate of $234.81, which resulted in a proposed CY 2013 ESRD PPS base rate of $240.68 ($234.81 × 1.025 = $240.68). The 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, for CY 2013, we proposed a wage index budget-neutrality adjustment factor of 1.000826 to be applied to the CY 2013 ESRD PPS base rate (that is, $240.68), which yielded a proposed CY 2013 ESRD PPS wage index budget-neutrality adjusted base rate of $240.88 ($240.68 × 1.000826 = $240.88).
Comment:
All commenters supported our CY 2013 ESRD PPS wage index budget-neutrality adjusted base rate. Two commenters thanked CMS for providing an update to the base rate, and one commenter specifically appreciated the base rate increase at a time when the Medicare ESRD program is undergoing significant changes and noted that it is important to retain savings where applicable.
Response:
We thank the commenters for their support. In this final rule, using updated data for CY 2013, we applied the 2.3 percent increase (ESRDB market basket update less productivity) to the CY 2012 ESRD PPS base rate of $234.81, which results in an ESRD PPS base rate for CY 2013 of $240.21 ($234.81 × 1.023 = $240.21). In addition, we applied the wage index budget-neutrality adjustment factor of 1.000613 to the updated base rate of $240.21, yielding an ESRD PPS wage index budget-neutrality adjusted base rate for CY 2013 of $240.36 ($240.21 × 1.000613 = $240.36).
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 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. 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.
We proposed 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 estimated 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 third quarter of 2012 of the CY 2008-based ESRDB market basket (with historical data through the second quarter of 2012), and consistent with our historical practice of estimating market basket increases based on the best available data, the CY 2013 ESRDB market basket increase factor is 2.9 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. 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 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 third quarter of 2012 of the 10-year moving average of MFP, the CY 2013 MFP factor is 0.6 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 proposed 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 market basket increase factor for CY 2013 for the ESRDB market basket is based on the 3rd quarter 2012 forecast of the CY 2008-based ESRDB market basket
update, which is estimated to be 2.9 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 0.6 percent, which is based on IGI's 3rd quarter 2012 forecast. The resulting MFP-adjusted ESRDB market basket update for CY 2013 is equal to 2.3 percent, or 2.9 percent less 0.6 percentage point.
We received two comments in support of the market basket update. We are finalizing the update to the ESRDB market basket of 2.3 percent for CY 2013.
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. Although the statute uses the term “phase-in,” we use the term “transition” in our discussions in order 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 two parts that comprise the transition budget-neutrality adjustment factor. 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 explained that 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.
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 the CY 2013 ESRD PPS proposed rule, we did not propose to change the methodology used to calculate either part of the transition budget-neutrality adjustment factor. We did, however, propose to use updated data to calculate the second part of the transition budget-neutrality adjustment factor. The first part, which is the Part D payment amount added to the composite rate, 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. In the CY 2013 ESRD PPS proposed rule, we used the December 2011 claims file. In this final rule, we used the June 2012 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 VI.C of this final 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 as if there were no transition to the total estimated payments under the transition, which results in a zero percent reduction factor for CY 2013. In the CY 2013 ESRD PPS proposed rule, we proposed a zero percent reduction to all payments made to ESRD facilities (that is, the zero 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 (77 FR 40957). We solicited comments on the proposed second part of the CY 2013 transition budget-neutrality adjustment.
We received three comments as set forth below.
Comment:
All of the commenters supported using updated data and maintaining a zero percent budget-neutrality transition adjustment for CY 2013.
Response:
We thank the commenters for their support of our proposed use of updated data and a transition budget-neutrality factor of zero percent for renal dialysis services furnished during January 1, 2013 through December 31, 2013. As we indicated above, for the proposed rule, we used the December 2011 claims file to compute the transition budget-neutrality adjustment factor. For this final rule, we used the June 2012 claims file. As a result of using the June 2012 claims file, we calculated the transition budget-neutrality factor to be a reduction of 1 minus the ratio of estimated payments under the ESRD PPS as if there were no transition to the total estimated payments under the transition, which results in a 0.1 percent increase factor for CY 2013. We believe the claims data we used to perform our analysis resulted in the change in the transition budget-neutrality adjustment factor from the zero factor used in previous years to the 0.1 percent increase factor for CY 2013. We note that in past years, the transition budget-neutrality factor has not always been an absolute zero, but was rounded to zero percent. The June 2012 claims file represents 2011 data, the first year of the PPS. In 2011, the utilization for separately billable drugs, laboratory tests and other items dropped significantly. For ESRD facilities that are paid under the transition, the decrease in utilization contributed to the payment for the composite rate portion of the blended payment being lower than the payment for the ESRD PPS portion of the blended payment. Therefore, total payments for all facilities under the transition were lower than what payments would have been under the ESRD PPS, if there were no transition. This widening difference resulted in the transition budget-neutrality adjustment rounding to 0.1 for CY 2013. We are finalizing for CY 2013 a transition budget-neutrality adjustment of 0.1 percent.
5. 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 core-based statistical area (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 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 did not propose any changes to the methodology finalized in the CY 2012 final rule and will update the wage index values using the FY 2013 Inpatient Prospective Payment System (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 the Office of Management and Budget's (OMB's) urban and rural definitions and corresponding wage index values. Additional discussion on the labor-related share can be found in section II.c.3 of this final rule. For CY 2013, we did not propose to change the labor-related shares, as finalized in the CY 2012 rule, as discussed in section II.C.3 of this final 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 the proposed rule, for CY 2013 we did not propose 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. The wage index floor is applied to both the composite rate portion of the blend and to the ESRD PPS. In the CY 2013 ESRD PPS proposed rule, we did not propose any changes to the wage index floor methodology or reduction. Consequently, for CY 2013 we indicated in the proposed rule that we would continue to reduce the wage index floor by 0.05, which will reduce the wage index value for the wage index floor from 0.550 to 0.500. For CY 2013, the wage index floor of 0.500 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 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.
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 below 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.
After the CY 2012 ESRD PPS final rule was published, we determined that for CY 2012 there was a rural hospital with wage data on which to base an area wage index 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 the CY 2013 ESRD PPS proposed rule we corrected 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 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 Hinesville-Fort Stewart, GA.
c. 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 CYs 2012 and 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 did not propose 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 did not propose any changes to the methodology. Consequently, for the 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 can be found through Dialysis Facility Compare (DFC). The DFC can be found at the Dialysis Facility Compare Web page on the Medicare.gov Web site at
www.Medicare.gov/Dialysis.
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 final rule, we used 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 was applied to the wage index values for the composite rate portion of the blended payment. Therefore, in this final rule, we are finalizing for CY 2013, the wage index budget-neutrality adjustment factor for the composite portion of the ESRD PPS blended payment of 1.001141, which is 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 finalizing the wage index budget-neutrality adjustment factor of 1.000613 that will 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. We note that this would apply to areas in Puerto Rico, subject to the floor. Therefore, for the composite rate portion of the blended payment, we are finalizing for CY 2013, to 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 (1.001141 × 0.500) because under the composite rate, the wage index budget-neutrality adjustment is applied to the wage index value. Under the ESRD PPS, the wage index budget-neutrality adjustment factor is applied to the base rate.
d. ESRD PPS Wage Index Tables
The CY 2013 ESRD PPS 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/vESRDPayment/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. The other 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 finalized for CY 2012 and subsequent years that we will apply the wage index budget-neutrality adjustment factor to the ESRD PPS base rate.
We received one comment. The comment and our response are set forth below.
Comment:
We received a comment from an LDO that expressed concern about the negative impact of the wage index floor on dialysis providers in Puerto Rico. The commenter expressed concern that wages for dialysis facilities in Puerto Rico are not accurately captured by the current hospital wage index methodology. The commenter urged CMS to determine an alternate basis for calculating the wage index floor in Puerto Rico, stating that it does not believe that the wage index as reported for Puerto Rico is representative of the wage levels of dialysis providers in Puerto Rico relative to a sample of other states. Specifically, the commenter provided its own analysis of its random sampling of cost report salaries comparing ESRD facilities in Puerto Rico with ESRD facilities in Florida, Georgia, Ohio, South Carolina and Virginia. The commenter recommended that reimbursement for Puerto Rico be based on “some measure other than the hospital wage index, such as basing the wage index on cost report salaries relative to other state salaries.” The commenter further explained that Puerto Rico requires that only registered nurses (RN) provide dialysis therapy, and therefore, in the dialysis setting, the occupational mix would be weighted more toward RNs than the mix for hospital.
Response:
We understand that the commenter is concerned about wage
index values in Puerto Rico, however, it is our policy to use wage indices for all ESRD facilities that are based on the IPPS pre-floor, pre-reclassified hospital wage data. We discuss this in detail above. We believe that this is an appropriate mechanism for obtaining wage index values to be used to geographically adjust the ESRD PPS base rate for all ESRD facilities. It has been the same method that we have used previously for the basic case-mix adjusted composite rate payment system. We refer the commenter to the discussion on the methodology used to determine wage index values in the CY 2013 IPPS final rule (77 FR 53365 through 55367). We will, however, consider the commenter's recommended approach if we determine in the future that a change to the methodology for determining geographic wage index values is warranted.
In the CY 2012 ESRD PPS proposed rule (76 FR 40509 and 40510), we proposed to continue to reduce the wage index floor by 0.50 for each of the remaining years of the transition (that is, CYs 2012 and 2013). We also stated that “we continue to believe that artificially adjusting wage index values by substituting a wage index floor is not an appropriate method to address low wages in certain geographic locations” and that, accordingly, we will no longer apply a wage index floor beginning January 1, 2014 (76 FR 70241). We will include in the CY 2014 ESRD PPS proposed rule, the methodology we propose to use to address wages in rural Puerto Rico when we no longer apply the wage index floor.
Therefore, we are finalizing the wage index floor value of 0.500 for CY 2013.
6. 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 vascular 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 for 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. We further stated that any anti-infective drug or biological used for the treatment of ESRD-related conditions would be considered a renal dialysis service and not eligible for separate payment. We noted that this policy also applies to any drug or biological that may be developed in the future.
In the CY 2012 ESRD PPS final rule (76 FR 70243), we explained that 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 (76 FR 70243), we allowed ESRD facilities to receive separate payment for vancomycin when furnished to treat non-ESRD related conditions. When ESRD facilities furnish vancomycin to treat non-ESRD related conditions, they place the AY modifier on the claim. We stipulated that in accordance with ICD-9-CM guidelines as described in the CY 2011 ESRD PPS final rule (75 FR 49107), an ESRD facility must report on the claim 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 (76 FR 70243). Finally, in response to comments, we stated that we would consider allowing separate payment for daptomycin (76 FR 70243).
In the CY 2013 ESRD PPS proposed rule (77 FR 40963), we explained that after consultation with our medical experts, we proposed to allow ESRD facilities to receive separate payment for daptomycin when furnished to treat non-ESRD related conditions for CY 2013 and subsequent years. When ESRD facilities furnish daptomycin to treat non-ESRD-related conditions, they would place the AY modifier on the claim. We also explained that if ESRD facilities submitted claims for daptomycin with the AY modifier, then the ESRD facility would also be required to report the diagnosis code for which the daptomycin is indicated in accordance with ICD-9-CM diagnostic coding guidelines. We sought public comments on our proposal to permit separate payment for daptomycin when furnished to treat non-ESRD-related conditions. As we discussed in the proposed rule, we will continue to monitor the use of anti-infectives furnished by ESRD facilities including those that are identified as non-ESRD related (77 FR 40963). The comments we received and our responses are set forth below.
Comment:
We received eight comments in support of our proposal to allow for separate payment for daptomycin when furnished for non-ESRD related conditions. One commenter encouraged CMS to consider the appropriateness of other anti-infective drugs and biologicals which could be used in the future for both ESRD and non-ESRD conditions, with the primary goal to help reduce drug resistance in this compromised and susceptible patient population.
Response:
We thank the commenters for their support. We believe that the commenter is suggesting that CMS should frequently consider whether other drugs should be included in the ESRD PPS. We will consider allowing separate payment for other anti-infective drugs and biologicals as we may determine appropriate.
We are finalizing the proposal 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. In accordance with ICD-9-CM diagnostic coding guidelines as described in the CY 2011 ESRD PPS final rule (75 FR 49107), the ESRD facility must indicate on the claim the diagnosis code for which the daptomycin is indicated.
During our monitoring of claims we have noted that there are ESRD facilities that are indicating a type of organism rather than a diagnosis that would indicate that the anti-infective was furnished for non-ESRD-related conditions. We reiterate that the diagnosis code for which vancomycin or daptomycin is used must be indicated on the claim. We also reiterate that treatment of any skin infection that is related to renal dialysis access management will be considered a renal dialysis service and will continue to be paid under the ESRD PPS, and no separate payment will be made. We will continue to monitor the use of anti-infectives furnished by ESRD facilities including those that are identified as non-ESRD related to ensure proper billing of these drugs.
b. Alteplase and Other Thrombolytics
In the CY 2012 ESRD PPS final rule (76 FR 70246 through 70247), we explained that after the CY 2011 ESRD PPS final rule was published, 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. Medicare 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 discussion on the outlier policy is in section II.C.7 of this final rule. 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 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, we noted in the CY 2012 ESRD PPS final rule (76 FR 70249), that for CY 2012 we had not proposed to exclude separate payment of thrombolytic drugs under the composite rate portion of the blended payment and therefore, separate payment would be made for thrombolytics for the composite rate portion of the blended payment in CY 2012.
For CY 2013, we proposed 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 (77 FR 40963). We believe that this is consistent with the changes we made to our outlier policy regarding excluding thrombolytic drugs from outlier eligibility as discussed above. We note that these conclusions are specific to ESRD. We solicited comments on our proposal to exclude thrombolytic drugs from separate payment under the composite rate portion of the blended payment during the transition.
The comments and our responses are set forth below.
Comment:
We received five comments pertaining to our proposal to no longer provide separate payment for thrombolytic drugs under the composite rate portion of the blended payment in CY 2013. In general, commenters agreed with CMS that both heparin and alteplase or other thrombolytic drugs are used for access management, but a few commenters disagreed with our assertion that heparin and alteplase are used for the same purpose. Some commenters specifically noted that CMS's proposal not to allow separate payment for alteplase and thrombolytic drugs under the composite rate portion of the blended payment during the transition period for CY 2013 is flawed because the drugs are used to achieve different clinical results and utilize different mechanisms of action. In particular, the commenters noted that heparin is used to prevent clotting whereas alteplase is used to avoid a poorly functioning catheter. Some commenters provided examples of the efficacy of alteplase and thrombolytics, as compared to heparin. Some commenters, including a renal organization and a pharmaceutical manufacturer, disagreed that heparin can be used as a substitute for alteplase, citing the different mechanisms of action for the two drugs. One commented that because heparin and thrombolytics achieve different clinical results, they should not be treated as substitutes for payment purposes.
Response:
We believe alteplase and heparin are used for the same renal dialysis-related purpose, namely, vascular access management. In the CY 2012 ESRD PPS final rule (76 FR 70246 through 70249), we addressed similar comments regarding the use of alteplase and heparin in the context of our proposal to eliminate thrombolytics from the outlier policy. We noted that in the development of the ESRD PPS, we recognized that alteplase and heparin were pharmacologically different (that one is a thrombolytic that lyses clots and the other is an anticoagulant that prevents clots, respectively) (76 FR 70248). We further stated, however, that we believed that both drugs enable the catheter or graft to function either through clot prevention or clot degradation, thereby providing effective dialysis vascular access. We further believe that, for purposes of payment for renal dialysis services, it is sufficient that these products can be used for the purpose of providing dialysis vascular access. Consistent with the ESRD Benefit Policy Manual, Pub. 100-02, chapter 11, section 30.4.1, drugs used as substitutes for any of the listed items, or used to accomplish the same effect, are covered under the composite rate and are not separately payable. Because heparin is a composite rate drug and thrombolytics are used to achieve the same renal dialysis-related clinical outcome, we believe it is appropriate to exclude thrombolytic drugs from separate payment under the composite rate portion of the blended payment during the transition.
Comment:
One ESRD facility commented that the high cost of alteplase compared to heparin would prevent substitution of alteplase for heparin. The commenter argued that CMS's policy in the ESRD Benefit Policy Manual, Pub. 100-02, chapter 11, section 30.4.1 of covering under the composite rate drugs used as substitutes for composite rate drugs, or used to accomplish the same effect, is without regard to innovation, cost, effectiveness, and efficiencies, and may result in increased cost to the Medicare program. The commenter also noted that the cost of thrombolytics is included in the ESRD PPS for those not in the transition and that elimination of separate payment for those in the transition would negatively impact reimbursement. A pharmaceutical company stated that the proposed changes may negatively affect catheter care because disallowing outlier payments and separate payment for thrombolytics creates a financial incentive for facilities to avoid restoring patency with alteplase.
Response:
In the CY 2012 ESRD PPS final rule (76 FR 70247), we explained that the ESRD PPS provides an opportunity for ESRD facilities to make decisions based on the medical needs of patients and not on the basis of financial gain. We further explained that we are not implying that thrombolytics or any access management drug should not be used when clinically indicated. We noted that Medicare payment policy is not intended to dictate, determine, or influence clinical practice or favor one course of treatment over another. Rather, by accounting in the ESRD PPS base rate for the cost of drugs and biologicals that had been separately payable under the composite rate system, we believe that we provide adequate payment to maintain patency of the access site regardless of whether patency is maintained using heparin or a thrombolytic. For additional information regarding this issue, we refer the commenters to the comment responses in the CY 2012 ESRD PPS final rule (76 FR 70247 through 70249).
We disagree with the commenter that ESRD facilities receiving blended payments during the transition are unfairly disadvantaged because they will not receive separate payment for thrombolytics for the portion of the
blended payment based on the composite rate. Even when the composite rate system was in place before the ESRD PPS was implemented, it was our policy not to pay separately for drugs that could be used to accomplish the same effect as composite rate drugs. Accordingly, it is consistent with that policy not to provide separate payment for thrombolytics for the composite rate portion of blended payments during the remainder of the transition.
For all of the reasons stated above, we continue to believe that alteplase and other thrombolytics should not be eligible for separate payment under the composite rate portion of the blended payment. After consideration of public comments, we are finalizing our CY 2013 proposal to exclude alteplase and other thrombolytics from separate payment, which we believe is consistent with the CY 2012 ESRD PPS changes made to the outlier policy to exclude thrombolytic drugs from outlier payments.
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 will use the ASP methodology.
In the CY 2013 ESRD PPS proposed rule (77 FR 40963), we proposed for CY 2013 and subsequent years to continue to use the ASP methodology, including any modifications finalized in the 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 explained that we would use this methodology for payment analyses that CMS may perform. We did not receive public comments on our proposal to apply the ASP methodology or any modifications to the ASP for these purposes, as updated in the PFS rule or in updating the ASP pricing. Therefore, we are finalizing that for CY 2013 and subsequent years we will continue to use the ASP methodology, including any modifications finalized in the Physician Fee Schedule (PFS) final rules, to compute 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.
7. 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) provide 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).
In the CY 2013 ESRD PPS proposed rule (77 FR 40964), we explained that drugs, laboratory tests, and medical/surgical supplies that we would recognize as outlier services are specified in Attachment 3 of Change Request 7064, Transmittal 2033 issued August 20, 2010 and rescinded and replaced by Transmittal 2094, dated November 17, 2010. We also explained that 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 stop issuing 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 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. In the CY 2013 ESRD PPS proposed rule (77 FR 40964), we explained that we planned to identify, through our monitoring efforts, those 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.
We indicated in the CY 2013 ESRD PPS proposed rule (77 FR 40964), that Medicare regulations at 42 CFR 413.237(a)(2) through (a)(6), and (b) specify the methodology used to calculate outlier payments. We explained that 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. We further explained that 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. We also stated that 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. Finally, we explained that in accordance with 42 CFR 413.237(c), 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 and that 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.
Comment:
Several commenters agreed that no changes need to be made to the methodology and commended CMS for its transparency regarding the data and methodology used to update the MAP and fixed dollar loss thresholds. Some commenters expressed appreciation of CMS's clear explanation of eligible outlier services.
Response:
We thank the commenters for their support. We will continue to issue guidance regarding the renal dialysis items and services that could qualify for outlier payment.
a. Impact of Changes to the Outlier Policy
In the CY 2013 ESRD PPS proposed rule (77 FR 40964), we explained that we did not propose any changes to the methodology used to compute the MAP or fixed dollar loss amounts. Rather, we explained that we were 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. In this final rule, for CY 2013, we used the June 2012 update of the CY 2011 National Claims History File to update the outlier services MAP amounts and fixed dollar loss amounts. That is, for CY 2013, the MAP and fixed dollar loss amounts are based on utilization data from the 2011 ESRD PPS claims. For this final rule, 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. The estimates for the 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 CY2012 (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
Final outlier policy for CY2013 (based on 2011 data price inflated to 2013) *
Age
< 18
Age
> = 18
Average outlier services MAP amount per treatment
1
$46.26
$81.73
$37.84
$59.49
$38.65
$61.38
Adjustments
Standardization for outlier services
2
1.0024
0.9738
1.0927
0.9878
1.0927
0.9878
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
$40.52
$57.59
$41.39
$59.42
Fixed dollar loss amount that is added to the predicted MAP to determine the outlier threshold
4
$71.64
$141.21
$44.16
$103.47
$47.32
$110.22
Patient months qualifying for outlier payment
5.7%
5.4%
7.8%
5.2%
7.6%
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 epoetin 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 CY 2011, 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) with the outlier service MAP amounts in Column II (which are 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 the CY 2012 amount. Based on the use of the most recently available data, the fixed-dollar loss amount for pediatric patients will decrease from $71.64 to $47.32 and the MAP amount will decrease from $45.44 to $41.39 as compared to CY 2012 values. For adult patients, the fixed-dollar loss amount drops from $141.21 to $110.22 and the MAP amount drops from $78.00 to $59.42.
We estimate that the percentage of patient months qualifying for outlier payments under the current policy will be 5.1 percent and 7.6 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).
Comment:
All of the commenters supported CMS's decision to lower the threshold for both the fixed dollar loss
and MAP amounts for pediatric and adult patients. The commenters stated that they believed that outlier payment mechanisms are fundamental to the long-term success of prospective payment systems to ensure patients get the care they need, even when there are financial disincentives. The commenters further expressed that it is important for CMS to ensure that the information it uses to determine the outlier thresholds each year is as current as possible and agreed with CMS in using the 2011 ESRD claims and utilization for CY 2013.
Response:
We thank the commenters for their support.
Comment:
Several commenters expressed concern that some ESRD facilities may not have the necessary resources available to identify outlier services on the claim, and therefore are not receiving the outlier payments to which they are entitled. One commenter suggested that CMS make available data indicating that the outlier policy is beneficial to small ESRD facilities. The commenter further explained that this policy could be detrimental to small facilities because, although the facilities' base rate is reduced by 1 percent to account for outlier services, the facilities may be unable recoup this amount because of resource limitations.
Response:
Outlier services are the items and services that were separately paid prior to the implementation of the ESRD PPS and are also separately paid under the composite rate portion of the blended payment for those ESRD facilities under the transition. We do not believe that it should be difficult for small facilities to identify outlier services on claims because these facilities should have had experience identifying these items on claims before the PPS was implemented. Specifically, the items eligible for outlier payments under the ESRD PPS are the same items that had been separately paid under the basic case-mix adjusted composite rate system and are separately paid under the composite rate portion of the blended payment for ESRD facilities receiving payment under the transition. Consequently, we believe that identifying items eligible for outlier payment is not an additional burden nor do we believe that it is difficult for small ESRD facilities.
In terms of demonstrating that the outlier policy is beneficial to small ESRD facilities, we note that the outlier policy is intended to account for the cost of beneficiaries with high resource utilization; it is not intended to account for facility size. Instead, our low-volume adjustment accounts for facility size by adjusting for the cost of treating a low volume of ESRD patients. Although we will continue to monitor the impact of our outlier policy, as noted above, we believe that all facilities, regardless of size, should be able to identify outlier services on claims and be compensated for the cost of treating beneficiaries with high resource utilization.
b. Outlier Policy Percentage
In the CY 2013 ESRD PPS proposed rule (77 FR 40965), we explained that 42 CFR 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. We further explained that because of the decrease in utilization associated with the implementation of the ESRD PPS, the 1 percent target for outlier payments was not achieved in CY 2011. For this final rule, using the June 2012 update of the CY 2011 National Claims History File, we found that outlier payments represented approximately 0.3 percent of total payments. That is, the historical data previously used to set the outlier thresholds for CY 2011 projected greater use of outlier services than was observed under the expanded ESRD PPS, leading to lower outlier payments than expected. Use of 2011 data to recalibrate the thresholds, reflecting lower utilization of epoetin and other outlier services, will 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 final 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.
Comment:
One commenter recommended that CMS estimate and publish the amount of the shortfall in outlier payments paid during CY 2011. The commenters recommended that CMS develop a mechanism to return these funds to the ESRD facilities so that these funds may be used to offset the costs associated with numerous “unfunded mandates” imposed on these facilities. One commenter suggested that CMS set less than 1 percent aside for outliers and allocate the leftover funds to the ESRD PPS base rate.
Response:
We disagree that the shortfall in outlier payments should be used to make additional payments to ESRD facilities to account for not achieving the 1 percent threshold. The 1 percent outlier policy is a prospective payment mechanism in which thresholds are established and adjusted on a yearly basis based on historical data. In the FY 1997 Inpatient Prospective Payment System (IPPS) final rule (61 FR 46229 and 46230), we explained that we believe our outlier policies are consistent with the statute and the goals of the prospective payment system. Many of the factors used to set prospective payment amounts for a given year are based on estimates. These factors include not only the outlier thresholds, but also the market basket rate of increase, the update factors and the required budget-neutrality provisions. We do not believe that Congress intended that the standardized amounts should be adjusted (upward or downward) to reflect differences between projected and actual outlier payments for a given year. Moreover, retroactive adjustments would be extremely difficult or impracticable (if not impossible) to administer. We further explained that the thresholds for a given year reflect certain levels of costs, so that if costs are held down, fewer cases qualify for outlier payments and outlier payments are lower than expected. We believe that the same explanation applies to the ESRD PPS.
D. 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 items and 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 42 CFR 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.” We further 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. We indicated that, 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 (75 FR 49173). We stated in the CY 2013 ESRD PPS proposed rule that the composite rate represented the routine items and services provided to Medicare beneficiaries for outpatient maintenance dialysis and therefore was full payment for those items and services. Therefore, 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 by Medicare (77 FR 40965).
We also explained in the CY 2011 ESRD PPS final rule (75 FR 49048), 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 inadvertent 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 and 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 ESRD PPS final rule (76 FR 70243), with regard to antibiotics, we provided for separate payment for vancomycin when furnished to treat 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). In the CY 2013 ESRD PPS proposed rule (77 FR 40963), we proposed to allow for separate payment for daptomycin if furnished for non-ESRD-related conditions and finalized in section II.C.6.2 of this final rule.
As described at 42 CFR 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 inadvertently 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 42 CFR 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 that as of CY 2012, we would no longer issue 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. 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 because all drugs and biologicals with a rate available on the ASP pricing file when the modifier AY is not present may be eligible for outlier consideration.
We explained in the CY 2013 ESRD PPS proposed rule, that as a result of our monitoring efforts, we continue to find composite rate drugs reported on ESRD claims and reiterated that composite rate items and services are not to be reported on the ESRD facility claims. We noted that we are instituting measures to ensure that composite rate drugs are prevented from being applied to the outlier payment. These measures will be discussed through administrative issuances, as appropriate. We also noted that we would continue to monitor the reporting of composite rate items and services on ESRD claims and plan to take actions to recoup inappropriate and duplicative payments. Finally, we noted that if the inclusion of composite rate items and services such as laboratory tests, drugs and supplies on claims will be required to be reported, we will discuss this requirement in future rulemaking (77 FR 40966).
We received one comment on this issue. The comment and our response are set forth below.
Comment:
One commenter concluded that any action to recoup inappropriate and duplicative payments for reporting composite rate items and services should be pursued on a going forward basis rather than retrospectively.
Response:
CMS has a fiduciary responsibility to ensure that accurate payments are made. If we were to identify inappropriate payments that had been made because composite rate items and services were reported on claims for the purpose of receiving separate payment we would pursue recoupment of those payments in accordance with applicable laws and regulations.
2. ESRD Facility Responsibilities for ESRD-Related Drugs and Biologicals
In the CY 2013 ESRD PPS proposed rule (77 FR 40966), we indicated that we had become aware that some ESRD facilities are requiring ESRD beneficiaries to purchase renal dialysis drugs from the ESRD facility and are instructing beneficiaries not to use their Part D plan for their purchases. We explained that 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 for those services. Furthermore, section 1881(b)(2)(A) of the Act states that payments shall be made to an ESRD 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.
Furthermore, 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 or 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 drugs and biologicals could be used for dialysis purposes and therefore, are considered ESRD-related when used for those purposes. We indicated that we presumed these drugs and biologicals to be renal dialysis services in whatever form they are furnished, unless indicated on the claim 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 are considered renal dialysis services (75 FR 49050 and 49051).
In the CY 2013 ESRD PPS proposed rule, we reiterated 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 also expect that ESRD facilities will not restrict access to necessary drugs for financial purposes by requiring patients to purchase medically necessary drugs and biologicals. We expect that ESRD facilities will 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.
We received no comments on the clarification of our policy regarding ESRD facility responsibilities for ESRD-related drugs and biologicals.
3. Use of AY Modifier
As we indicated in the CY 2013 ESRD PPS proposed rule (77 FR 40967), in the CY 2011 ESRD PPS final rule, we developed a mechanism to be used by ESRD facilities to identify and be paid separately for non-ESRD-related items and services, such as drugs, biologicals, and equipment and supplies (75 FR 49052 and 75 FR 49168). We provided this mechanism in order to support a Medicare beneficiary's need for non-ESRD-related items and services (that is, predominantly drugs and laboratory tests) during a dialysis treatment and 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 on the claim for those supplies and equipment, signifying that they were used for services that were not ESRD-related and eligible for separate payment outside of the ESRD PPS (75 FR 49168). Change Request 7064, Transmittal 2033, titled “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 on 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 signal separate payment outside of the ESRD PPS. In the CY 2012 ESRD PPS final rule, we provided for the use of the AY modifier with vancomycin if used for non-ESRD-related conditions and with the requirement that the ESRD facilities include the diagnosis code of the condition on the claim (76 FR 70243). In the CY 2013 ESRD PPS proposed rule (77 FR 40967), we proposed to allow the use of the AY modifier for separate payment when daptomycin is furnished by an ESRD facility to an ESRD Medicare beneficiary for non-ESRD related conditions. We are finalizing this policy above. ESRD facilities are required to indicate an appropriate diagnosis code on the claim that reflects the condition requiring the use of daptomycin.
We explained in the CY 2013 ESRD PPS proposed rule (77 FR 40967) that our monitoring activities have identified that ESRD facilities and clinical laboratories are appending the AY modifier for items that we believe are ESRD-related. We noted in the proposed rule (77 FR 40967) that some ESRD facilities and clinical laboratories appear to be appending the AY modifier on many items and services reported on claims. We reiterated in the proposed rule that the purpose of the AY modifier is to allow beneficiaries the convenience to receive non-ESRD-related items (for example, drugs and laboratory tests) during their dialysis treatment and to allow the ESRD facility to receive a separate 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 is required for non-ESRD-related conditions. The AY modifier is not intended to be used to receive a separate payment for items that are ESRD-related and therefore included in the ESRD PPS base rate. We further stated that we would continue to monitor the use of the AY modifier and intend to take steps to recoup inappropriate payments. In the event that we believe 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.
We received several comments on our clarification of this policy and our responses are set forth below.
Comment:
We received six comments regarding the AY modifier. Commenters supported maintaining the AY modifier for non-ESRD conditions. Several commenters provided reasons for supporting the AY modifier. For example, some commenters concurred that the AY modifier is intended to allow Medicare beneficiaries the convenience of receiving non-ESRD related items and services during the course of dialysis treatment; and to allow the ESRD facility or laboratory to receive a separate payment when furnishing non-ESRD items or services. It also enables optimal coordinated care to Medicare beneficiaries by minimizing their need for additional doctor visits and duplicative or unnecessary lab tests. Five commenters largely encouraged CMS to continue the use of the modifier for reporting non-ESRD related items or services for payment and to furnish supporting data on AY modifier misuse. A few commenters suggested that CMS should consider drafting guidance on the appropriate use of the AY modifier.
A few commenters expressed concern over the possible elimination of the AY modifier and identified possible resulting hardships for Medicare ESRD
beneficiaries. One commenter noted that the elimination of the AY modifier would force facilities to send dialysis patients to labs or infusion centers to receive IV medications that would risk the vascular access and add transportation and time burdens for the beneficiary.
Response:
We thank commenters for their support of the use of the AY modifier. We agree that the elimination of the AY modifier could result in additional hardships for ESRD beneficiaries.
Comment:
One commenter suggested that, rather than eliminating the AY modifier, CMS should rely upon the contractors to educate providers, audit payments for AY items, and request documentation when appropriate. Another commenter encouraged CMS to provide data on the exact abuses or the scope of modifier misuse noting that patients should not suffer because of modifier abuse, but rather CMS should work with facilities and providers to ensure policy compliance.
Response:
With regard to the suggestion that the responsibility for AY modifier monitoring education should rest on the CMS contractors (that is, the Medicare Administrative Contractors (MACs)), we note that we do provide education and instructions to the A/B MACs through administrative issuances and MedLearn articles that they can then use to educate providers. For example, CMS Change Request #7064 and subsequent Medicare Learning Network Matters (MLN) article # MM7064, published on January 14, 2011, notifies contractors that ESRD-related laboratory services, drugs and supplies will be subject to Part B consolidated billing edits and no longer separately payable when furnished to ESRD beneficiaries. However, these consolidated billing edits do not apply when the items and services are not ESRD-related. When items and services are furnished to an ESRD beneficiary for conditions other than ESRD, the AY modifier must be present on the claim to bypass billing edits and allow for a separate payment outside of the ESRD PPS. CMS MLN #MM7064 may be viewed at
http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM7064.pdf.
Finally, we are in the process of updating the ESRD Benefit Policy Manual, Pub 100-02, chapter 11, to reflect the policy requirements under the ESRD PPS, including the use of the AY modifier.
With regard to the comment concerning monitoring the use of the AY modifier and the suggested functions to be performed by the MACs, as we discussed in the CY 2013 ESRD PPS proposed rule (77 FR 40967), we are continuing to monitor the use of the AY modifier and intend to take steps to recoup inappropriate payments. Although we are updating our manual, we believe that we have provided adequate instructions as to the appropriate use of the AY modifier. We expect that the contractors will convey information regarding the proper use of the AY modifier to the ESRD facilities, and will also audit payments and request documentation as necessary. However, CMS has the responsibility to ensure that payments are made appropriately. Therefore, we will continue to monitor the use of the AY modifier. If we believe that the AY modifier is not being used as intended, or it is being used in order to receive separate payment for renal dialysis items and services that are in the bundled payment, we will be forced to reconsider its use.
E. Miscellaneous Comments
We received thirty-five comments from Medicare beneficiaries, family members, ESRD facilities, nurses, physicians, professional organizations, renal organizations, and manufacturers related to issues that were not specifically addressed in the CY 2013 ESRD PPS proposed rule.
Comment:
We received comments from patients, their families, renal associations and manufacturers requesting changes in how CMS pays for home dialysis and home dialysis training. Many of these commenters described the benefits of home dialysis. Most commenters asked CMS to increase the number of weekly allowable dialysis sessions and eliminate the medical justification requirement for additional sessions. One commenter questioned why payment for in-facility dialysis was the same as for home dialysis, noting the differences between staff and supply use between in-facility and home dialysis. Some commenters contended that patient requests for home dialysis are being denied. Commenters also stated that beneficiaries with ESRD are not provided with the same home training opportunities as beneficiaries whose care is covered by other payment sources. Many of the commenters stated that payment for home dialysis training is insufficient and does not reflect the true cost of training. Some commenters indicated various ranges of time required for home training in terms of time per day and number of training sessions. One home dialysis organization stated that ESRD facilities only receive payment for 18, rather than 25, training sessions for new patients.
Response:
CMS developed a reimbursement mechanism with the 2011 implementation of the ESRD PPS that we believe supports home-based dialysis. That is, the ESRD PPS payment, which includes drugs, laboratory tests, staff time, supplies, patient-level adjustments, facility-level adjustments and outlier payments, is the same regardless of the location where the dialysis services are furnished or the dialysis modality, which we believe supports beneficiaries' ability to elect to receive dialysis at home, where appropriate. It is not, however, CMS's intent to encourage, discourage or require any particular dialysis modality. Rather, we believe that decisions regarding whether to receive dialysis and which dialysis modality to use should be made by beneficiaries in consultation with their physicians. This includes the decision whether to receive home hemodialysis or home peritoneal dialysis, rather than in-facility dialysis. We believe that the decision to perform home dialysis includes determining the beneficiary's abilities, the beneficiary's desire to perform home dialysis and the beneficiary's physical and emotional status.
With regard to the comment asking why the payment is the same for in-facility as home dialysis, we believe that our policy to pay the same amount, including the patient-level and facility-level adjustments, as well as the outlier policy for home and in-facility dialysis, provides adequate payment to account for the short-term increase in staff time necessary to train beneficiaries for home dialysis. Training costs are included in the ESRD PPS base rate, however, we also provide an add-on adjustment for each training session that represents one hour of nursing time to conduct one-on-one training treatments for each training treatment furnished by a Medicare certified home dialysis training facility. The add-on payment for one hour of training per training session does not imply that it takes only one hour per training session to properly educate a beneficiary to perform home dialysis. We believe that our payment is adequate for training and home dialysis.
We have been and will continue to monitor and analyze trends in home dialysis and home dialysis training. We have seen a continuing increase in overall home dialysis since mid-2009, including in 2011. In particular, we have observed an increase in home hemodialysis and a decline in home peritoneal dialysis with an overall higher rate of home peritoneal dialysis. In addition, our monitoring shows that
ESRD facilities receive payments for more treatments for home hemodialysis than for in-facility hemodialysis. We also have seen an increase in home training in 2011, particularly in retraining. Consequently, we do not believe that the ESRD PPS and our training adjustment discourage beneficiaries from receiving home dialysis.
Commenters also requested that we increase the maximum number of dialysis sessions and eliminate the medical justification requirement for dialysis treatments after a beneficiary has received three sessions in one week. We note that, although three is the maximum number of sessions that we will cover without a showing of medical necessity, we will cover additional sessions where those sessions are medically necessary. We are aware that there are observational studies that support additional weekly dialysis treatments and that there is some industry support for additional treatments. We have and will continue to monitor and analyze the number of dialysis treatments that Medicare beneficiaries receive to determine whether a change in this longstanding policy is warranted.
In addition, in the CY 2011 ESRD PPS final rule (75 FR 49064) we stated in response to a MedPAC comment that we would consider whether it would be appropriate to utilize a larger unit of payment, rather than a per treatment payment, after the transition period. We further stated that “we may evaluate whether the ERSD PPS has resulted in improved outcomes, the degree to which home dialysis has increased, and whether interested stakeholders would favor an alternative to the per treatment approach.” We will continue to monitor the impact of the ESRD PPS and will take these comments into consideration if we determine that any changes to the per treatment payment approach are warranted.
With regard to the comment that ESRD facilities receive payment for 18 rather than 25 training treatments for new patients, we believe that the commenter is confusing the adjustment for beneficiaries who are receiving home dialysis training but are not in their first four months of dialysis, with beneficiaries who have been newly diagnosed with ESRD and are receiving their first four months of dialysis. The home dialysis training adjustment applies to those beneficiaries who are not in their first four months of dialysis treatments. This adjustment does not apply for those beneficiaries newly diagnosed with ESRD. Instead, facilities receive the onset of dialysis adjustment for these beneficiaries. As we explained in the CY 2011 ESRD PPS final rule (75 FR 49094), we believe that the costs associated with the onset of dialysis adjustment and the training add-on adjustment overlap (that is, costs for services could be accounted for in both adjustments). Accordingly, we finalized a policy that ESRD facilities will not receive the home dialysis training adjustment when they are receiving the onset of dialysis adjustment. This does not mean that an ESRD facility may not furnish home training services during the onset period. Rather, the onset of dialysis payment adjustment of 51 percent per treatment accounts for the administrative and labor costs associated with new patients, including the costs to train patients.
We are unable to address the comment contending that ESRD beneficiaries are not offered the same home dialysis training opportunities as those offered to ESRD beneficiaries covered by private payers because we are not familiar with these payment sources.
Comment:
One patient support group recommended that CMS use revenue code 0820 when reporting home dialysis instead of revenue code 0821, which is currently used to describe both in-facility and home dialysis services. The commenter contends that this will correctly identify patients on home dialysis in Medicare claims data.
Response:
Our current Medicare policy for reporting home dialysis services with revenue code 0821 appended with ESRD condition code 74 (Dialysis in the Home) allows us to distinguish beneficiaries receiving dialysis at home from those receiving treatment in an ESRD facility.
Comment:
We received twelve comments regarding the Agency's plan to include oral-only drugs in the ESRD PPS bundled payment for CY 2014. Commenters expressed concern about the administrative burden, compliance with state laws, and associated costs in furnishing oral-only drugs within the scope of the ESRD service. A few commenters requested that CMS ask for community input so that the inclusion of the oral-only drugs will be an uneventful transition for patients. ESRD industry associations cautioned that the inclusion of oral-only drugs into the ESRD PPS CY 2014 bundled payment may limit patient access to the most clinically appropriate drugs and threaten optimal health outcomes for ESRD Medicare beneficiaries. Some commenters recommended that CMS include patient protections to ensure patient care is not compromised and that oral-only drugs continue to be furnished at the recommended doses. Many commenters requested that the Agency share advance information about the methodology and data sources that the Agency will use to calculate the reimbursement rates for drugs and therapies and encouraged CMS to use the most recent year of available data to establish a payment rate for oral-only drugs. Other commenters requested that CMS adopt a methodology that measures the actual utilization on a per treatment basis and includes costs associated with drug administration when reimbursing oral-only drugs as part of the ESRD PPS.
Response:
We thank the commenters for their comments. In the CY 2011 ESRD PPS final rule (75 FR 49038 through 49044), we responded to comparable comments regarding the inclusion of oral-only drugs in CY 2014. We received many suggestions from stakeholders on how oral-only drugs should be included in the ESRD PPS bundled payment. We have reviewed and will continue to review all of the comments, which we will consider as we formulate our proposals on this issue. We intend to address the inclusion of oral-only drugs in the ESRD PPS in the CY 2014 ESRD PPS proposed rule.
Comment:
We received three comments from industry associations requesting that CMS release the rate-setting file to allow the industry to test the Agency's assumptions and complete its own analysis of the payment policies set forth in the CY 2013 ESRD PPS proposed rule. One commenter encouraged CMS to make data available to the public generally, not just dialysis facilities in particular, to allow for a more complete assessment of the ESRD PPS program.
Response:
We received comparable requests and comments in response to the CY 2012 ESRD PPS proposed rule and responded to those comments in the CY 2012 ESRD PPS final rule (76 FR 70254 to 70255). We believe that we have provided and will provide data sufficient to analyze the payment policies included in the proposed rule, by posting the impact file for CY 2012 on the ESRD PPS Payment Web site. We will also post a provider-level impact file and the wage index file for CY 2013 shortly after publication of this final rule. We also explained that we have not made the rate setting file available “because the release of patient identifiable data is not necessary to accomplish the purpose of analyzing our proposals. Applicable Federal privacy laws and regulations, including the Privacy Act and HIPPA Privacy Rule only permit us to disclose personal
identifiable information when it is necessary to administer the program, or for health care operations and payment.”
Comment:
We received 8 comments requesting modification to the standardization factor methodology and calculation for CY 2013. Many of these commenters encouraged CMS to use the most current data available in order to establish the standardization factor, rather than historical estimates. Some commenters indicated that because we had adjusted the outlier fixed dollar loss and MAP amounts to account for outlier payments below the 1 percent threshold in CY 2011, we should provide a comparable adjustment to the standardization factor and the ESRD PPS base rate to account for payments for patient- and facility-level adjusters that were not utilized. Some commenters continue to contend that the ESRD PPS base rate established in CY 2011 is incorrect and that CMS should return the payment amounts removed from the base rate to account for the adjusters, thereby increasing the base rate. Other commenters stated that the ESRD PPS base rate should be adjusted to account for payments allocated for the patient- and facility-level adjusters that had not ultimately been paid to the ESRD facilities. A few commenters requested that CMS modify the payment for case-mix and co-morbidity adjustments.
Response:
In the CY 2011 ESRD PPS final rule, we described the data sources that were used in constructing the ESRD PPS payment bundle, the development of the ESRD PPS base rate, and the payment adjusters (75 FR 49064 through 49127). In the CY 2013 ESRD PPS proposed rule, we proposed to update the base rate by the rate of increase in the ESRD market basket, reduced by the productivity adjustment (77 FR 40959). The base rate was developed using 2007 claims, in accordance with section 1881(b)(14)(A)(ii) of the Act, which requires CMS to use the lowest per patient utilization year. We also explained the methodology used to determine the case-mix adjustment amount, including co-morbidities (75 FR 49087 through 49116). In the CY 2013 ESRD PPS proposed rule, we stated that we were not proposing any changes to the methodology used to compute the MAP or fixed dollar loss amounts, but were 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 (77 FR 40964). The methodology for calculating and updating the base rate was finalized last year through notice and comment rulemaking, as were the methodologies for updating the outlier threshold. In the CY 2013 ESRD PPS proposed rule, we did not propose to change how the base rate is calculated or updated. We also did not propose in the CY 2013 ESRD PPS proposed rule to modify the payment adjusters. We do not believe that because we lowered the MAP and fixed dollar loss amounts to adjust for outlier payment expenditures that were below the 1 percent target, we must adjust the standardization factor for the ESRD PPS base rate. We will, however, continue to monitor our payments and consider if any changes need to be made in the future.
Comment:
One commenter requested clarification when billing Medicare for Lipid Profile laboratory services furnished to ESRD beneficiaries. Another commenter encouraged CMS to furnish guidance for blood draws and laboratory collections under the ESRD PPS.
Response:
ESRD-related laboratory tests may not be billed with the AY modifier and no separate payment shall be made when an ESRD facility or laboratory furnishes ESRD-related laboratory tests to an ESRD beneficiary. We discuss laboratory tests furnished under the PPS in our CY 2011 and CY 2012 ESRD PPS final rules (75 FR 49053 through 49056 and 76 FR 70249 through 70250, respectively). Furthermore, the Lipid Profile laboratory test is appropriately included in the ESRD PPS payment bundle when Lipid abnormalities result from, or are related to the beneficiary's ESRD. For example, some forms of dialysis, particularly peritoneal dialysis, are associated with increased cholesterol and triglyceride levels, and a Lipid Profile laboratory test to assess these levels would be included in the bundled payment. If, however, the Lipid Profile laboratory test is furnished for reasons other than for the treatment of ESRD, the laboratory services may be billed with the AY modifier and are eligible for separate payment. With regard to the comment requesting guidance for blood draws and laboratory collections, we refer the commenter to Change Request 7617, Transmittal 150, entitled, “Implementation of Changes in End Stage Renal Disease Payment for Calendar Year 2012” issued on November 16, 2011.
Comment:
One commenter requested that CMS consider the implementation of pediatric co-morbidities to the pediatric case mix adjustments, while another commenter requested consideration of a case-mix adjustment for race. One association called for CMS to establish a new technology adjuster in a non-budget-neutral manner, stating that new technologies have the potential to lead to better diagnosis, treatment, and patient outcomes.
Response:
We thank the commenters for their suggestions, but note that we did not propose to implement these adjusters in the CY 2013 ESRD PPS proposed rule. We refer the commenters to the CY 2011 ESRD PPS final rule (75 FR 49128 through 49134; 75 FR 49108 and 49115; 75 FR 49174), in which we explained the methodology used to develop the ESRD PPS for the pediatric population, discussed the reasons for not including a patient-level case mix adjuster for race, and responded to comments suggesting that we provide separate payment for new and innovative drugs and technologies.
Comment:
Some commenters requested that the cost reports be amended to reflect the actual cost of care. Some of the recommendations included that the cost report should provide flexibility to allow for innovation, eliminate the limitation on medical director fees, recognize the cost of supporting the ESRD networks, and allow immediate recognition on cost reports of “new or innovative items/services,”
Response:
We thank the commenters for their suggestions. We plan to analyze the cost reports to determine if there are any changes required and will consider the suggestions provided.
We received a number of other comments on a variety of topics that we believe are outside the scope of the proposed rule. The commenters requested that ESRD beneficiaries be able to maintain disability benefits while employed; expressed concern about the “corporate practice of medicine” by dialysis facilities; noted that securing the necessary documentation for acute co-morbidities is problematic and urged CMS to furnish co-morbidity claims data from the CMS database; advocated for inclusion of their product in the ESRD PPS payment; and disputed over payment changes to its product under Part D. We appreciate the comments; however, because these comments were not in response to any proposals or discussions in the proposed rule, they are beyond the scope of this final rule. We refer the commenters to the CY 2011 ESRD PPS final rule, where we believe that we addressed many of these issues (75 FR 49030).
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 ESRD payment reductions based on quality performance are being made to dialysis facilities, 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 final 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, which we have implemented 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. In this final rule, we describe each of these elements, as applicable, and our final policies for their application to PY 2015 and future payment years of the ESRD QIP.
B. Summary of the Proposed Provisions and Responses to Comments on the ESRD QIP for PY 2015
A proposed rule, entitled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment System, Quality Incentive Program, and Bad Debt Reductions for All Medicare Providers” (77 FR 40952), hereinafter referred to as the CY 2013 ESRD PPS proposed rule, appeared in the
Federal Register
on July 11, 2012, with a comment period that ended on August 31, 2012. In that proposed rule, we made proposals for the ESRD QIP, including introducing and expanding measures, refining the scoring methodology, modifying the program's public reporting requirements, establishing how the ESRD QIP payment reduction applies to facilities whose ownership has changed, and initiating a data validation pilot program. We received approximately 55 public comments on these proposals from many interested parties including dialysis facilities, organizations representing dialysis facilities, nephrologists, nurses, dietitians, home health advocacy groups, pharmaceutical manufacturers, patients, advocacy groups, and the Medicare Payment Advisory Commission (MedPAC). In this section of the final rule, we provide a summary of each proposed requirement, a summary of the public comments received on these requirements, our responses to these comments, and the final policies that we will adopt for the program.
C. 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 payments to providers and suppliers to the quality of care of the 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 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 overall. 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 high-quality, safer, and more efficient care. In addition to the priorities of the National Quality Strategy, our measure development and selection activities for the ESRD QIP take into account other national priorities, such as those established by the National Priorities Partnership (
http://www.qualityforum.org/npp/
), 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 Proposals
For PY 2014, we adopted measures for the ESRD QIP that fall under three of the six VBP measure priority domains based on the National Quality Strategy:
• 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 2014, we also proposed to change the requirements for the Mineral Metabolism reporting measure.
For PY 2015, we proposed to add new measures in the clinical quality of care domain and to expand the scope of the NHSN Dialysis Event reporting measure (sa
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