Calendar Year 2024 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) Final Rule (CMS-1782-F)
On October 27, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates 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, 2024. This rule also updates 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 updates requirements for the ESRD Quality Incentive Program (QIP).
For CY 2024, CMS is increasing the ESRD PPS base rate to $271.02, increasing total payments to ESRD facilities by approximately 2.1%. The CY 2024 ESRD PPS final rule also includes several changes related to ESRD PPS payment policies. First, this rule includes a payment adjustment that will increase payment for certain new renal dialysis drugs and biological products after the Transitional Drug Add-on Payment Adjustment (TDAPA) period ends. This increase will help ensure payment is not a barrier to accessing innovative treatments for Medicare ESRD beneficiaries.
In addition, this rule includes new requirements, effective January 1, 2025, for reporting on ESRD PPS claims, of “time on machine” data (that is, the amount of time that a beneficiary spends receiving in-center hemodialysis treatment) and reporting of discarded amounts of certain renal dialysis drugs and biological products from single-dose containers and single-use packages. This rule also finalizes a new 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.
Additionally, the CY 2024 ESRD PPS final rule discusses responses to the requests for information issued in the proposed rule 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 finalizes certain exceptions to the LVPA attestation process for ESRD facilities affected by disasters and other emergencies.
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.
Annual Update to the ESRD PPS Base Rate: Under the ESRD PPS for CY 2024, Medicare expects to pay $6.7 billion to approximately 7,900 ESRD facilities for furnishing renal dialysis services. The final CY 2024 ESRD PPS base rate is $271.02, which is an increase of $5.45 to the current CY 2023 base rate of $265.57. This amount reflects the application of the wage index budget-neutrality adjustment factor (1.000031), a transitional pediatric ESRD add-on payment adjustment (TPEAPA) budget neutrality factor (0.999503), and a CY 2024 productivity-adjusted ESRDB market basket update factor (1.021), equaling $271.02 (($265.57 X 1.000031 X 0.999503) x 1.021 = $271.02). CMS projects that the updates for CY 2024 will increase the total payments to all ESRD facilities by 2.1% compared with CY 2023. CMS projects an increase in total payments of 3.1% for hospital-based ESRD facilities and an increase in total payments of 2.0% for freestanding ESRD facilities.
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 wage index for CY 2024 will be updated using the data from the fiscal year (FY) 2024 hospital wage index. CMS will apply the wage index floor of 0.6000 and a 5% cap on wage index decreases from the prior year, as finalized in the CY 2023 ESRD PPS final rule.
Updates to the Outlier Policy: CMS annually updates the outlier policy using the most current data. CMS is updating the outlier services threshold values for adult and pediatric patients to better target outlier payments at 1% of total payments in CY 2024.
ESRD PPS Reform — Low-Volume Payment Adjustment (LVPA): For CY 2024, CMS is creating an exception to the current LVPA attestation process for ESRD facilities affected by disasters and other emergencies. Specifically, CMS is establishing an exception process that will allow ESRD facilities to close temporarily and reopen in response to a disaster or other emergency and still receive the LVPA. Additionally, we will 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 note that we have received comments in response to the request for information that was issued in the proposed rule 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: To assess the alignment of resource use with payment, particularly for sub-populations of ESRD beneficiaries that may require higher-than-average resource use, effective January 1, 2025, CMS will require ESRD facilities to report on ESRD PPS claims, the “time on machine,” which is the amount of time in minutes that a beneficiary spends receiving in-center hemodialysis treatment. CMS will 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 Policy Changes — Transitional Pediatric ESRD Add-on 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. To address equity concerns about access for pediatric beneficiaries with ESRD, we are finalizing a new transitional pediatric ESRD add-on payment adjustment (TPEAPA) of 30% of the per treatment payment amount. This adjustment will apply to all ESRD PPS payments for renal dialysis services furnished to pediatric ESRD patients and will 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 use by pediatric ESRD patients with payment. The three-year time period will 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 applying the TPEAPA budget neutrally under the ESRD PPS.
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 two years. CMS took into consideration the many thoughtful comments in response to both the CY 2024 ESRD PPS proposed rule and the request for information included in the CY 2023 ESRD PPS proposed rule and is now finalizing 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 new add-on payment adjustment will support Medicare ESRD beneficiaries’ continued access to new renal dialysis drugs and biological products. This payment adjustment will be case-mix adjusted and set at 65% of estimated expenditure levels for the given renal dialysis drug or biological product in the prior year. The post-TDAPA payment adjustment will be applied to all ESRD PPS payments for a period of three years. This policy will provide five years of increased payment for certain new renal dialysis drugs and biological products, which receive a payment adjustment under the TDAPA for a period of two years, followed by a post-TDAPA payment adjustment for a period of three years.
Reporting Policy for Discarded Amounts of Renal Dialysis Drugs and Biological Products Paid for Under the ESRD PPS: To more effectively identify and monitor billing and payment for discarded amounts of renal dialysis drugs and biological products, we are requiring that 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 requiring 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. In response to the comments we received on this proposal, we are delaying the effective date of these reporting requirements until January 1, 2025.
Clarifications Regarding Evaluation of the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES) Eligibility Criteria: CMS is finalizing three clarifications regarding the evaluation of the TPNIES eligibility criteria. These clarifications will become effective January 1, 2024, for CY 2025 payment. First, we are clarifying that CMS’ 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 will be ineligible for the TPNIES. We will not include an analysis of the remaining criteria in the annual CY final rule. Second, CMS is clarifying that the three-year newness period at § 413.236(b)(2) will be 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, will 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: We considered an application for one product, an external use vibration device used with ice packs to temporarily desensitize and block pain associated with dialysis cannulation, for the TPNIES for CY 2024. This product did not meet the TPNIES eligibility criteria at 42 C.F.R. § 413.236(b) and, therefore will not receive the TPNIES in CY 2024.
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 updating 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 final CY 2024 payment rate is $271.02.
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.
Finalized Policies for Payment Year 2026:
- CMS is finalizing its proposal to add the Facility Commitment to Health Equity reporting measure to the ESRD QIP measure set beginning with payment year (PY) 2026. This measure, which we first adopted for use in the Hospital Inpatient Quality Reporting (IQR) Program in the FY 2023 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (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 finalizing its proposal 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 finalizing its proposal to convert the Clinical Depression Screening and Follow-Up reporting measure to a clinical measure beginning with PY 2026. CMS is also finalizing its proposal to update the scoring methodology so that the measure is better aligned with current clinical guidelines for depression screening and follow-up.
- CMS is finalizing its proposal to remove the Ultrafiltration Rate reporting measure from the ESRD QIP measure set beginning with PY 2026. CMS is removing this measure from the program measure set under measure removal factor two (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; therefore, a facility’s performance on the measure may not accurately reflect the quality of care provided.
- CMS is finalizing its proposal to remove the Standardized Fistula Rate clinical measure from the ESRD QIP measure set beginning with PY 2026. CMS is removing this measure from the program measure set under measure removal factor three (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.
Finalized Policies for Payment Year 2027:
- CMS is finalizing its proposal 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.
CMS is finalizing its proposal 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.
The final rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2023-23915/medicare-program-end-stage-renal-disease-prospective-payment-system-payment-for-renal-dialysis