Fact Sheets

Calendar Year 2024 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) Proposed Rule (CMS-1782-P)

On June 26, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that proposes to update payment rates and policies and includes requests for information under the end-stage renal disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to Medicare beneficiaries on or after January 1, 2024. This rule also proposes an update to the Acute Kidney Injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities for calendar year (CY) 2024. In addition, the rule proposes to update requirements for the ESRD Quality Incentive Program (QIP).

For CY 2024, CMS is proposing to increase the ESRD PPS base rate to $269.99, increasing total payments to ESRD facilities by approximately 1.6 percent. The CY 2024 ESRD PPS proposed rule also includes several proposals and requests for information related to ESRD PPS payment policies. First, this rule includes a proposed payment adjustment that would increase payment for certain new renal dialysis drugs and biological products after the Transitional Drug Add-on Payment Adjustment (TDAPA) period ends. This proposed increase would help ensure payment is not a barrier to accessing innovative treatments for Medicare ESRD beneficiaries. Additionally, in order to explore options regarding payment, the CY 2024 ESRD PPS proposed rule includes requests for information to inform potential future rulemaking regarding updates to the Low-Volume Payment Adjustment (LVPA) methodology and the possible creation of a new payment adjustment that would increase payment to geographically isolated ESRD facilities. The rule also proposes to create certain exceptions to the LVPA attestation process for ESRD facilities affected by disasters and other emergencies. Additionally, this rule includes proposals to require reporting of “time on machine” data (that is, the amount of time that a beneficiary spends receiving an in-center hemodialysis treatment) and reporting of discarded and unused amounts of certain renal dialysis drugs and biological products from single-dose containers and single-use packages, on ESRD PPS claims. This rule also includes a proposed transitional add-on pediatric ESRD dialysis payment adjustment for CYs 2024, 2025, and 2026, which is expected to promote equitable and accurate payments, since treatment for the pediatric ESRD population tends to be especially complex and costly.

Proposed Updates to the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for CY 2024

Background:

The ESRD PPS provides a bundled, per-treatment payment to ESRD facilities that includes all renal dialysis services furnished for outpatient maintenance dialysis, including drugs and biological products (with the exception of oral-only ESRD drugs until 2025). Additionally, the bundled payment includes all other renal dialysis items and services that were formerly separately payable under previous payment methodologies. The bundled payment rate is case mix adjusted for a number of factors relating to patient characteristics. There are also facility-level adjustments for ESRD facilities that have a low patient volume, for facilities in rural areas, and for the wage index. When applicable, the bundled payment rate also includes a training add-on payment adjustment for home and self-dialysis modalities, an outlier payment for high-cost patients, and add-on payment adjustments for certain drugs, equipment and supplies. 

Proposed Annual Update to the ESRD PPS Base Rate:

Under the ESRD PPS for CY 2024, Medicare expects to pay $6.4 billion to approximately 7,800 ESRD facilities for furnishing renal dialysis services. The proposed CY 2024 ESRD PPS base rate is $269.99, which is an increase of $4.42 to the current CY 2023 base rate of $265.57. This proposed amount reflects the application of the wage index budget-neutrality adjustment factor (1.000120), a proposed transitional pediatric ESRD add-on payment adjustment (TPEAPA) budget neutrality factor (0.999652), and a CY 2024 proposed productivity-adjusted market basket increase (1.7 percent), equaling $269.99 (($265.57 X 0.999652)) x 1.017 = $269.99).CMS projects that the updates for CY 2024 would increase the total payments to all ESRD facilities by 1.6% compared with CY 2023.  For hospital-based ESRD facilities, CMS projects an increase in total payments of 2.6%, and for freestanding facilities, CMS projects an increase in total payments of 1.6%.

Proposed Wage Index Changes: The ESRD PPS uses the latest core-based statistical area (CBSA) delineations and the latest available “pre-reclassified” hospital wage data collected under the Hospital Inpatient Prospective Payment System. The wage index is applied to the labor-related share of the payment rate to account for differing wage levels in areas in which ESRD facilities are located. The proposed wage index for CY 2024 will be updated using the data from the FY 2024 hospital wage index. CMS would apply the wage index floor of 0.6000 and a 5 percent cap on wage index decreases from the prior year, as finalized in the CY 2023 ESRD PPS final rule.

Proposed Updates to the Outlier Policy: CMS annually updates the outlier policy using the most current data. CMS is proposing to update the outlier services fixed-dollar loss (FDL) amounts for CY 2024, using 2022 claims data. In combination with the proposed changes for pediatric ESRD payment described further below, based on the latest available data, the proposed FDL amount for pediatric beneficiaries would decrease from $23.29 to $13.71, and the proposed Medicare allowable payment (MAP) amount would decrease from $25.59 to $24.53 as compared to CY 2023 values.  For adult beneficiaries, based on the latest data and the methodology finalized in the CY 2023 ESRD PPS final rule, the proposed FDL amount would increase from $73.19 to $78.21, and the proposed MAP amount would decrease from $39.62 to $38.58.

ESRD PPS Reform – Low-Volume Payment Adjustment (LVPA) Request for Information (RFI) and Proposal: For CY 2024, CMS is proposing to create an exception to the current LVPA attestation process for ESRD facilities affected by disasters and other emergencies. Specifically, CMS is proposing to establish an exception process that would allow ESRD facilities to close temporarily and reopen in response to a disaster or other emergency and still receive the LVPA. Additionally, under our proposal, we would allow a facility to continue to receive the LVPA even if it exceeds the LVPA threshold if its treatment counts increase due to treating additional patients displaced by a disaster or other emergency. In addition, we are issuing an RFI and soliciting comments regarding potential changes to the LVPA methodology and the possible creation of a new payment adjustment that accounts for isolation, rurality, and other geographic factors to inform future rulemaking.

ESRD PPS Reform – Measuring Patient-Level Resource Usage: In order to assess the alignment of resource use with payment, particularly for sub-populations of ESRD beneficiaries that may require higher-than-average resource use, CMS is proposing to require ESRD facilities to report the “time on machine,” which is the amount of time in minutes that a beneficiary spends receiving an in-center hemodialysis treatment, on ESRD PPS claims. CMS is seeking comment on the proposed effective date of January 1, 2025, given the implementation needs that ESRD facilities have described in past comments. CMS is proposing to use this time on machine data to more precisely estimate dialysis treatment costs for the purposes of considering future refinements to the ESRD PPS adjustment factors.

ESRD PPS Reform – Refinement of Pediatric Payment Adjustments: CMS has recently begun to gather additional cost report data about costs involved in furnishing renal dialysis services to pediatric ESRD patients. Based on the current data, CMS estimates that pediatric patients incur higher resource use than average adult dialysis patients. In order to address equity concerns about access for pediatric beneficiaries with ESRD, we are proposing a transitional pediatric ESRD add-on payment adjustment (TPEAPA) of 30 percent of the per treatment payment amount. This adjustment would apply to all ESRD PPS payments for renal dialysis services furnished to pediatric ESRD patients, and would apply for a period of three years (CYs 2024, 2025, and 2026) beginning January 1, 2024, while we collect additional data from cost reports to evaluate the alignment of resource by pediatric ESRD patients with payment. The three-year time period would allow adequate time to collect the information added to the cost report form in CY 2023 to assess the alignment of pediatric renal dialysis payment with cost. CMS is proposing to apply the TPEAPA budget neutrally.

Proposed Payment for Certain New Renal Dialysis Drugs and Biological Products After the Transitional Drug Add-on Payment Adjustment (TDAPA) Period Ends: The TDAPA is a payment adjustment under the ESRD PPS for certain new renal dialysis drugs and biological products.  For drugs and biological products in existing ESRD PPS functional categories, the TDAPA is paid for a period of 2 years. In order to support Medicare ESRD beneficiaries’ continued access to new renal dialysis drugs and biological products, CMS is proposing a new add-on payment adjustment for certain new renal dialysis drugs and biological products in existing ESRD PPS functional categories after the end of the TDAPA period. This payment adjustment would be case-mix adjusted and set at 65 percent of estimated expenditure levels for the given renal dialysis drug or biological product in the prior year. The post-TDAPA payment adjustment would be applied to all ESRD PPS payments for a period of 3 years. This proposal would provide a 5-year pathway to increased payment for certain new renal dialysis drugs and biological products, which receive payment adjustment under the TDAPA for a period of 2 years, followed by a post-TDAPA payment adjustment for a period of 3 years.

Proposed Reporting Policy for Unused and Discarded Amounts of Renal Dialysis Drugs and Biological Products Paid for Under the ESRD PPS: In order to more effectively identify and monitor billing and payment for discarded amounts of renal dialysis drugs and biological products, we are proposing to require that beginning no later than January 1, 2024, ESRD facilities must report information on ESRD PPS claims about the total number of billing units of any discarded amount of a renal dialysis drug or biological product from a single-dose container or single-use package that is paid for under the ESRD PPS, using the JW modifier (or any successor modifier that includes the same data). CMS is also proposing to require that ESRD facilities must report the JZ modifier on ESRD PPS claims when billing for any drug or biological product from a single-dose container or single-use package for which there is no discarded amount.

Proposed Clarifications Regarding Evaluation of the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) Eligibility Criteria: CMS is proposing three clarifications regarding the evaluation of the TPNIES eligibility criteria that if finalized, would become effective January 1, 2024, for CY 2025 payment. First, we are proposing to clarify that CMS’s review of the six TPNIES eligibility criteria at § 413.236(b) is sequential, and as CMS proceeds through the review for a particular equipment or supply, if CMS determines that the item has failed to demonstrate having met one of the eligibility criteria, the item would be ineligible for the TPNIES. We would not include an analysis of the remaining criteria in the annual CY final rule. Second, CMS is proposing to clarify that the three-year newness period at § 413.236(b)(2) is based on the date of the TPNIES application submission. Third, CMS is clarifying that equipment or supplies with FDA Exempt status, lacking FDA marketing authorization, would not meet the TPNIES newness criterion at § 413.236(b)(2).  

Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) Applications: One product, an external use vibration device used with ice packs to temporarily desensitize and block pain associated with dialysis cannulation, is under consideration for the TPNIES for CY 2024. CMS is providing our preliminary analysis and requesting public comment on whether the product meets the eligibility criteria.

Proposed Changes to the Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury (AKI): As required by section 1834(r) of the Social Security Act (the Act), CMS is proposing to update the AKI dialysis payment rate for CY 2024 to equal the CY 2024 ESRD PPS base rate and to apply the CY 2024 wage index. The proposed CY 2024 payment rate is $269.99.

Proposed Changes to the End-Stage Renal Disease Quality Incentive Program (ESRD QIP)

The ESRD QIP is authorized by section 1881(h) of the Act. Under the program, CMS assesses the total performance of each facility on quality measures specified for a payment year, applies an appropriate payment reduction to each facility that does not meet a minimum total performance score (mTPS), and publicly reports the results.

Proposals for Payment Year 2026:  

• CMS is proposing to add the Facility Commitment to Health Equity reporting measure to the ESRD QIP measure set beginning with PY 2026. This measure, which we first adopted for use in the Hospital Inpatient Quality Reporting (IQR) Program in the FY 2023 IPPS/LTCH PPS final rule, assesses an ESRD facility’s commitment to health equity based on its responses to five equity related attestation-based questions. 

• CMS is proposing to update the COVID-19 Vaccination Coverage Rate Among Healthcare Personnel (HCP) reporting measure beginning with PY 2026 to align with updated measure specifications developed by the CDC. The update reflects the status of COVID-19 transmission in the U.S., recommendations from the CDC and FDA that eligible individuals be up to date on their vaccination, and real-world data demonstrating vaccine efficacy.
• CMS is proposing to convert the Clinical Depression Screening and Follow-Up reporting measure to a clinical measure beginning with PY 2026. CMS is also proposing to update the scoring methodology so that the measure is better aligned with current clinical guidelines for depression screening and follow-up.
• CMS is proposing to remove the Ultrafiltration Rate reporting measure from the ESRD QIP measure set beginning with PY 2026. CMS is proposing to remove this measure from the program measure set under measure removal factor 2 (performance or improvement on a measure does not result in better or the intended patient outcomes) because documentation of a patient’s ultrafiltration rate through the current measure may not indicate the quality of a patient’s ESRD treatment, and therefore a facility’s performance on the measure may not accurately reflect the quality of care provided.
• CMS is proposing to remove the Standardized Fistula Rate clinical measure from the ESRD QIP measure set beginning with PY 2026. CMS is proposing to remove this measure from the program measure set under measure removal factor 3 (a measure no longer aligns with current clinical guidelines or practice) because updated vascular access treatment guidelines indicate a preference toward increased flexibility in the choice of arteriovenous (AV) access (either AV fistula or AV graft) where appropriate and urge providers to consider what would be most appropriate for the individual patient.

Proposals for Payment Year 2027:

• CMS is proposing to add the Screening for Social Drivers of Health reporting measure to the ESRD QIP measure set beginning with PY 2027. This health-equity-related measure, which we first adopted for use in the Hospital IQR Program in the FY 2023 IPPS/LTCH PPS final rule, assesses the percent of patients 18 years of age and older screened for food insecurity, housing instability, transportation problems, utility help needs, and interpersonal safety. If finalized as proposed, we will begin using the Screening for Social Drivers of Health reporting measure for payment purposes as part of the ESRD QIP beginning with PY 2027 and for subsequent years.
• CMS is proposing to add the Screen Positive Rate for Social Drivers of Health reporting measure to the ESRD QIP measure set beginning with PY 2027.  This health-equity related measure, which we first adopted for use in the Hospital IQR Program in the FY 2023 IPPS/LTCH PPS final rule, assesses the percent of patients 18 years of age and older who screen positive for one or more of the listed five health-related social needs. If finalized as proposed, we will begin using the Screen Positive Rate for Social Drivers of Health reporting measure for payment purposes as part of the ESRD QIP beginning with PY 2027 and for subsequent years.

The proposed rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2023-13748/medicare-program-end-stage-renal-disease-prospective-payment-system-payment-for-renal-dialysis

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