Fact Sheets

Calendar Year 2023 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) Proposed Rule (CMS-1768-P) Fact Sheet

On June 21, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that proposes to update payment rates and policies under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to Medicare beneficiaries on or after January 1, 2023. 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) 2023. In addition, the rule proposes to update requirements for the ESRD Quality Incentive Program (QIP), and includes requests for information on topics that are relevant to the ESRD QIP.  CMS is proposing refinements to the ESRD Treatment Choices Model in this proposed rule.

In order to explore options regarding payment under the ESRD PPS, the CY 2023 ESRD PPS proposed rule includes requests for information regarding (1) a potential add-on payment adjustment for certain new renal dialysis drugs and biological products, and (2) health equity issues under the ESRD PPS, with a focus on pediatric dialysis payment. The rule also includes a proposed change to the definition of “oral-only drug” beginning January 1, 2025, along with a proposal to clarify the descriptions of the ESRD PPS functional categories. These proposals, if finalized, would help ensure that CMS policies are appropriately supporting innovation for new drugs that are truly innovative and not simply variations of existing drugs, and the requests for information will help CMS collect information on ways to align resource use with payment and ensure that Medicare beneficiaries with ESRD have continued access to technologies that can improve health outcomes and quality of life.

This rule also proposes a change to the ESRD PPS methodology for calculating the outlier threshold for adult patients, a proposed rebasing and revising of the ESRD Bundled (ESRDB) market basket, a proposed update to the labor-related share, a proposed increase to the wage index floor, and a proposed permanent 5% cap on decreases to the ESRD PPS wage index.

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 Updates to the ESRD PPS for CY 2023

Under the ESRD PPS for CY 2023, Medicare expects to pay $8.2 billion to approximately 7,800 ESRD facilities for furnishing renal dialysis services. The proposed CY 2023 ESRD PPS base rate is $264.09, which would be an increase of $6.19 to the current base rate of $257.90.

CMS projects that the updates for CY 2023 would increase the total payments to all ESRD facilities by 3.1% compared with CY 2022. For hospital-based ESRD facilities, CMS projects an increase in total payments of 3.7%, and for freestanding facilities, CMS projects an increase in total payments of 3.1%.

Rebasing and revision of the End-Stage Renal Disease Bundled (ESRDB) market basket for CY 2023: We are proposing to rebase and revise the ESRDB market basket to a 2020 base year using data from the Medicare Cost Report and other publicly available data. In addition, we are proposing to update the labor-related share, as it is based on the labor-related cost share weights in the ESRDB market basket. The proposed CY 2023 labor-related share is 55.2% based on the proposed 2020-based ESRDB market basket weights.

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.

Beginning CY 2023, CMS is proposing to increase the wage index floor from 0.5 to 0.6.  Additionally, CMS is proposing to apply a permanent 5% cap on decreases in the ESRD PPS wage index beginning CY 2023. Specifically, CMS is proposing that an ESRD facility’s wage index for CY 2023 would not be less than 95% of its final wage index for CY 2022, and that for subsequent years, a facility’s wage index would not be less than 95% of its wage index calculated in the prior CY.

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 2023, using 2021 claims data. Additionally, CMS is proposing refinements to its methodology for calculating the FDL amount for adults in order to more effectively target 1.0% of total ESRD PPS payments. Based on the latest available data, the proposed FDL amount for pediatric beneficiaries would decrease from $26.02 to $21.51, and the Medicare allowable payment (MAP) amount would decrease from $27.15 to $25.62, as compared to CY 2022 values.  For adult beneficiaries, based on the latest data and proposed methodology, the proposed FDL amount would decrease from $75.39 to $40.75, and the MAP amount would decrease from $42.75 to $36.85.

Proposed Change to Definition of Oral-only Drug: We are proposing to include the word “functional” in the definition of oral-only drug at § 413.234(a), effective January 1, 2025.  Specifically, under the proposed definition, an oral-only drug would be a drug or biological product with no injectable functional equivalent or other form of administration other than an oral form.

Proposed Clarification to the ESRD PPS Functional Category Descriptions: We are proposing revisions to clarify the descriptions of the ESRD PPS functional categories to ensure they reflect current policies.

Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) Applications: Three products, a monitoring system for peritoneal dialysis, a post-dialysis compression sleeve, and a dialyzer, are under consideration for the TPNIES for CY 2023. CMS is requesting public comment on whether the products meet the eligibility criteria. 

Proposed Changes to the Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury: 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 2023 to equal the CY 2023 ESRD PPS base rate and to apply the CY 2023 wage index. The proposed CY 2023 payment rate is $264.09.

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

The End-Stage Renal Disease Quality Incentive Program (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 (TPS), and publicly reports the results.

Proposals for Payment Year 2023:

  • CMS is proposing to continue to collect and publicly report all ESRD QIP measures while pausing the use of certain measures data for scoring and payment adjustment purposes in the PY 2023 ESRD QIP because CMS has determined that circumstances caused by the Public Health Emergency (PHE) for the coronavirus disease 2019 (COVID-19) pandemic have significantly affected the validity and reliability of the measures and resulting performance scores.  This policy is intended to ensure that these programs do not penalize facilities based on circumstances caused by the PHE for COVID-19 that the measures were not designed to accommodate. Specifically, CMS is proposing to pause the Standardized Hospitalization Ratio (SHR) clinical measure, the Standardized Readmission Ratio (SRR) clinical measure, the In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) clinical measure, the Long-Term Catheter Rate clinical measure, the Percentage of Prevalent Patients Waitlisted (PPPW) clinical measure, and the Kt/V Dialysis Adequacy Comprehensive clinical measure. Although they are not affecting payments, these measures will still be collected and made public.  Although the paused measures would not be scored for PY 2023, CMS would still provide confidential feedback reports to facilities on their measure rates on all measures to ensure that they are made aware of the changes in performance rates that have been observed. CMS would also publicly report suppressed measure data with appropriate caveats noting the limitations of the data due to the PHE for COVID-19. 
  • CMS is proposing to update the PY 2023 performance standards to use CY 2019 data to avoid using paused CY 2020 data for scoring purposes for that payment year. Currently, CY 2021 is the performance period and CY 2020 is the baseline period for the PY 2023 ESRD QIP. Under the nationwide Extraordinary Circumstance Exception that CMS granted in response to the PHE, first and second quarter data for CY 2020 are excluded from scoring for purposes of the ESRD QIP. CMS is concerned that it would be difficult to assess performance standards for PY 2023 using a baseline period based on partial year data. Therefore, CMS is proposing to use pre-pandemic data from CY 2019 as the baseline period for the PY 2023 ESRD QIP.

Proposals for Payment Year 2024:

  • CMS is proposing technical updates to begin expressing the Standardized Hospitalization Ratio (SHR) clinical measure and Standardized Readmission Ratio (SRR) clinical measure results as rates beginning with the PY 2024 ESRD QIP. CMS believes that converting these measures’ results to be expressed as rates will help providers and patients better understand a facility’s performance on the measures, and would be more intuitive for a facility to track its performance from year to year.

Proposals for Payment Years 2025 and 2026:

  • CMS is proposing to modify the technical measure specifications for the SHR and the SRR clinical measures to include a covariate adjustment for patient history of COVID-19 in the 12 months prior to measure eligibility.
  • CMS is proposing the adoption of the COVID-19 Healthcare Personnel (HCP) Vaccination reporting measure in the PY 2025 ESRD QIP measure set as a reporting measure. This measure will assess the percentage of healthcare personnel employed at the facility who receive a complete COVID-19 vaccination course. CMS is proposing quarterly reporting deadlines for the ESRD QIP and a 12-month performance period.  If finalized, facilities would report the measure through the Centers for Disease Control and Prevention’s National Healthcare Safety Network (NHSN) web-based surveillance system beginning in CY 2023.
  • CMS is proposing to convert the STrR reporting measure to a clinical measure beginning in PY 2025. CMS believes that previous validity concerns have been adequately examined and addressed, and the proposed STrR clinical measure would more closely align with National Quality Forum (NQF) measure specifications. In addition to CMS’s proposal to convert the STrR reporting measure to a clinical measure, CMS is also proposing to update the scoring methodology for the STrR clinical measure so that facilities that meet previously finalized minimum data and eligibility requirements would receive a score on the STrR clinical measure based on the actual clinical values reported by the facility, rather than the successful reporting of the data. Consistent with the technical updates to the SHR clinical measure and the SRR clinical measure, this proposal would also modify the clinical measure results to be expressed as a rate beginning in PY 2025.
  • CMS is proposing to convert the Hypercalcemia clinical measure to a reporting measure beginning in PY 2025. CMS is proposing to convert the Hypercalcemia clinical measure to a reporting measure, while exploring possible replacement measures that would be more clinically meaningful for purposes of quality improvement. CMS is also proposing to update the scoring methodology so that facilities that meet previously finalized minimum data and eligibility requirements would receive a score on the Hypercalcemia reporting measure based on the successful reporting of the data, rather than the actual clinical values reported by the facility.
  • CMS is proposing to create a new domain for reporting measures and re-weight current measure domains beginning with PY 2025. Currently, ESRD QIP measures are weighted and distributed across four measure domains: Patient & Family Engagement, Care Coordination, Clinical Care, and Safety. Based on changes to the measure set since PY 2021, CMS has reassessed the impact of the ESRD QIP measure domains and domain weights on TPSs, and believes it is necessary to increase incentives for improving performance by increasing the weights on measures where there is the most room for improvement, especially on patient clinical outcomes. Therefore, CMS is proposing to create a new Reporting Measure Domain, which would include the four current reporting measures in the ESRD QIP measure set, as well as the proposed COVID-19 HCP Vaccination reporting measure and the proposed Hypercalcemia reporting measure.  CMS is also proposing to update the domain weights and individual measure weights in the Care Coordination Domain, Clinical Care Domain, and Safety Domain accordingly to accommodate the new Reporting Measure Domain and individual reporting measures therein. As the ESRD QIP measure set has evolved over the years, CMS believes this would help to address concerns regarding the impact of individual measure performance on a facility’s TPS, while also further incentivizing improvement on clinical measures.

Requests for Information: In this proposed rule, CMS also requests information on the following topics relevant to the ESRD QIP:

  • Quality Indicators for Home Dialysis Patients:
    • CMS is seeking public comments on potential indicators of quality for patients who receive dialysis at home in order to support the use of home dialysis for ESRD patients where it is appropriate. While home-based dialysis may not meet the needs of every patient, home dialysis has clear benefits for those who are suitable candidates. Often, it may be more convenient for many ESRD patients, and survivability rates for home dialysis are comparable to those of transplant recipients and in-center hemodialysis.  Although some measures in the ESRD QIP apply to home dialysis facilities, certain measures do not apply to facilities that have high rates of home dialysis. Therefore, many of these facilities are eligible for fewer ESRD QIP measures than facilities that provide in-center hemodialysis only. As increasing numbers of ESRD patients use home dialysis therapies, CMS is interested in learning more about potential indicators of quality of care for home dialysis patients that are not currently being captured by the ESRD QIP. 
  • Principles for Measuring Healthcare Quality Disparities:
    • Consistent with Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities through the Federal Government, CMS’ Equity Plan for Improving Quality in Medicare, and CMS’ strategic pillar to advance equity, CMS is committed to addressing persistent inequities in health outcomes in the U.S. through improving data collection to better measure and analyze disparities across programs and policies. As disparity initiatives expand, it is important to model efforts off of existing best practices. In the proposed rule, CMS is seeking comment, via a request for information, on considerations that CMS can take into account when advancing the use of measurement and stratification as tools to address healthcare disparities and advance healthcare equity. CMS is seeking comment on key considerations in five specific areas that could inform our approach: identification of goals and approaches for measuring healthcare disparities and using measure stratification across CMS quality programs; guiding principles for selecting and prioritizing measures for disparity reporting across CMS quality programs; principles for social risk factor and demographic data selection and use; identification of meaningful performance differences; and guiding principles for reporting disparity results. CMS also seeks comment on additional disparity measurement or stratification guidelines suitable for overarching consideration across quality programs.
  • Potential Future Inclusion of Two Social Drivers of Health Measures:
    • CMS is requesting information through public comment on two potential social drivers of health screening measures. The Screening for Social Drivers of Health measure would assess whether facilities screen all patients that are 18 years or older for food insecurity, housing instability, transportation needs, utility difficulties, and interpersonal safety. The Screen Positive Rate for Social Drivers of Health measure would be complimentary to the Screening for Social Drivers of Health measure. This measure would facilitate estimation of the impact of individual-level social risk factors and community-level conditions in which patients live when evaluating quality of care. Reporting the screen positive rate for each domain would inform actionable planning within the ESRD QIP program and at the facility level.

Proposed Changes to the ESRD Treatment Choices Model 

The ESRD Treatment Choices (ETC) Model is a mandatory payment model tested under the authority of section 1115A of the Act. Under the ETC Model, participating ESRD facilities and clinicians who manage dialysis patients (Managing Clinicians) receive positive or negative adjustments on certain claims for dialysis and dialysis-related services based on the home dialysis rate and transplant rate among their attributed beneficiaries. The ETC Model began January 1, 2021, and payment adjustments under the Model will end June 30, 2027.

The ETC Model includes two payment adjustments:        

  • The Home Dialysis Payment Adjustment (HDPA) is an upward adjustment on home dialysis and home dialysis-related claims with claim service dates between January 1, 2021 and December 31, 2023, the initial three years of the ETC Model.
  • The Performance Payment Adjustment (PPA) creates upward or downward performance-based adjustment on dialysis and dialysis-related claims with claim service dates between July 1, 2022 and June 30, 2027. The PPA amount will depend on the ETC Participant’s performance on the ETC Model’s home dialysis rate and transplant rate among the beneficiaries attributed to the ETC Participant.

In the CY 2023 ESRD PPS proposed rule, CMS is proposing refinements to the ETC Model, including a change to the improvement scoring methodology, and a change to the requirements related to flexibilities regarding kidney disease patient education services under the ETC Model. CMS also discusses its intent to publish certain performance data. Learn more about the ETC Model here.

The proposed rule can be downloaded from the Federal Register at: