Fact sheet

CMS Updates to Policies and Payment Rates for End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury (CMS 1674-F)

CMS Updates to Policies and Payment Rates for End-Stage Renal Disease Prospective Payment System, Quality Incentive Program, and Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury (CMS 1674-F)


On October 27, 2017, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to beneficiaries on or after January 1, 2018. In addition, this rule finalizes updates to the acute kidney injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities to individuals with AKI, as well as updates to the ESRD Quality Incentive Program (ESRD QIP), including for payment years (PYs) 2019, 2020, and 2021, under which payment incentives are made to dialysis facilities to improve the quality of care that they provide. 

The ESRD PPS rule is one of several rules for calendar year (CY) 2018 that reflect a broader Administration-wide strategy to support the patient-doctor relationship in health care and promote flexibility and innovation in the delivery of care. 

CMS is committed to transforming the health care delivery system – and the Medicare program – by putting a strong focus on patient-centered care, so providers can direct their time and resources to patients and improve outcomes. 


ESRD PPS BACKGROUND:  Section 1881(b)(14) of the Social Security Act (the Act) requires the implementation of a bundled PPS for renal dialysis services furnished to Medicare beneficiaries for the treatment of ESRD effective January 1, 2011.  The bundled payment under the ESRD PPS includes all renal dialysis services furnished for outpatient maintenance dialysis, including drugs and biologicals (with the exception of oral-only ESRD drugs until 2025) and other renal dialysis items and services that were formerly separately payable under the previous payment methodologies.  The ESRD 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 wage index.  For high-cost patients, an ESRD facility may be eligible for outlier payments. The ESRD PPS also provides for a transitional drug add-on payment adjustment to pay for a new injectable or intravenous product category that is not included in the bundled payment. Under the ESRD PPS for CY 2018, Medicare expects to pay approximately $9.8 billion to approximately 6,750 ESRD facilities for the costs associated with furnishing chronic maintenance dialysis services. 

Update to the ESRD PPS Base Rate: The CY 2018 ESRD PPS base rate is $232.37, an increase of $0.82 to the current base rate of $231.55. This amount reflects a reduced market basket increase as required by section 1881(b)(14)(F)(i)(I) of the Act (0.3 percent) and application of the wage index budget-neutrality adjustment factor (1.000531). 

Annual Update to the Wage Index and Wage Index Floor: The ESRD wage indices are adjusted on an annual basis using the most current hospital wage data and the latest Core-Based Statistical Area (CBSA) delineations to account for differing wage levels in areas in which ESRD facilities are located. For CY 2018, CMS did not change the application of the wage index and will continue to apply the current wage index floor (0.4000) to areas with wage index values below the floor.

Update to the Outlier Policy: Consistent with our policy to annually update the outlier policy using the most current data, CMS is updating the outlier services fixed-dollar loss (FDL) amounts for adult and pediatric patients and Medicare Allowable Payment (MAP) amounts for adult patients for CY 2018 using 2016 claims data. Based on the use of more current data, the FDL amount for pediatric beneficiaries will decrease from $68.49 to $47.79 and the MAP amount will decrease from $38.29 to $37.31, as compared to CY 2017 values. For adult beneficiaries, the FDL amount will decrease from $82.92 to $77.54 and the MAP amount will decrease from $45.00 to $42.41. In CY 2016, outlier payments were 0.78 percent of total ESRD PPS payments, that is, slightly less than the 1.0 percent target for outlier payments. Using CY 2016 claims data to update the outlier MAP and FDL amounts for CY 2018 will increase outlier payments for ESRD beneficiaries requiring higher resource utilization.

In order to have pricing options for certain drugs and biologicals that do not have an average sales price (ASP), CMS is expanding pricing options for drugs and biologicals to all methodologies available under section 1847A of the Act. In addition to the ASP methodology for pricing drugs and biologicals under Part B, section 1847A of the Act provides Medicare Administrative Contractors other pricing options if the ASP is unavailable, such as the Wholesale Acquisition Cost or Average Manufacturer Price.  

Impact Analysis:  CMS projects that the updates for CY 2018 will increase the total payments to all ESRD facilities by 0.5 percent compared with CY 2017.  For hospital-based ESRD facilities, CMS projects an increase in total payments of 0.7 percent, while for freestanding facilities, the projected increase in total payments is 0.5 percent.


As required by section 1834(r) of the Act, CMS is updating the AKI dialysis rate for CY 2018 to equal the final CY 2018 ESRD PPS base rate and to apply the final CY 2018 wage index. For CY 2018, the final AKI payment rate is $232.37.


ESRD QIP Background:. The ESRD QIP is intended to incentivize renal dialysis facilities to furnish high quality care. This program changes the way Medicare pays for renal dialysis services by linking a portion of the ESRD PPS payment directly to facilities’ performance on quality measures. Under the ESRD QIP, payments to facilities under the ESRD PPS are reduced by up to 2 percent if facilities do not meet or exceed a minimum total performance score with respect to performance standards established by the Secretary with respect to certain quality measures for a given year. 

Finalized Changes

Updates to the Extraordinary Circumstances Policy (ECE): We are finalizing updates to the ESRD QIP Extraordinary Circumstances Exception (ECE) policy to better align with the ECE policy adopted by other CMS Medicare quality programs. Specifically, we will require that facilities submit their ECE request form within 90 days following the date of the extraordinary event, and we are expanding the reasons for which an ECE can be requested to include an unresolved issue with a CMS data system which affected the ability of the facility to submit data. We are also finalizing that the facility need not be closed to request an ECE exception, as long as the facility can show that its normal business operations were significantly affected due to an extraordinary circumstance beyond the control of the facility. 

Replacement of Existing Measures with New and Improved Measures: The PY 2021 ESRD QIP measure set includes measures that address anemia management, dialysis adequacy, vascular access type, patient experience of care, infections, mineral metabolism management, safety, pain management, depression management, and hospital readmissions. 

In this rule, we are finalizing the replacement of the current Vascular Access Type clinical measures with two new measures—the Hemodialysis Vascular Access: Standard Fistula Rate Clinical Measure and the Hemodialysis Vascular Access: Long-Term Catheter Rate Clinical Measure—that were recently endorsed by the National Quality Forum (NQF), beginning in PY 2021. Likewise, we are revising the Standardized Transfusion Ratio clinical measure effective for PY 2021 so that the specifications for that measure align with updates endorsed by the NQF.

Administrative Updates

In this final rule, we are updating our Performance Score Certificate so that it provides more user-friendly and actionable information to Medicare beneficiaries, their caregivers, and the general public. 

The final rule will be published in the November 01, 2017 Federal Register and can be downloaded from the Federal Register at: