Fact Sheets

End Stage Renal Disease (ESRD) Prospective Payment System (PPS) Calendar Year (CY) 2021 Proposed Rule (CMS-1732-P) Fact Sheet

On July 6, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that proposes to update 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, 2021.  This rule also proposes updates to the acute kidney injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities to individuals with AKI and proposes changes to the ESRD Quality Incentive Program (QIP).

In addition to the annual technical updates for the ESRD PPS, the proposed rule proposes the following: an addition to the ESRD PPS base rate to include calcimimetics in the ESRD PPS bundled payment; changes to the eligibility criteria and determination process for the transitional add-on payment adjustment for new and innovative equipment and supplies (TPNIES); the expansion of the TPNIES to include new and innovative capital-related assets that are home dialysis machines; a change to the low-volume adjustment eligibility criteria and attestation requirement to account for the COVID-19 PHE; and an update to the ESRD PPS wage index to adopt the new Office of Management and Budget (OMB) delineations with a transition period.

This proposed rule also provides information received from two manufacturers whose products, a dialyzer and a cartridge for a home dialysis machine, are being considered for TPNIES in CY 2021, Additionally, the proposed rule proposes the following updates to the ESRD QIP: scoring methodology changes to the Ultrafiltration Rate (UFR) reporting measure and updates to the National Healthcare Safety Network (NHSN) validation study.


ESRD PPS Background: Under the ESRD PPS for CY 2021, Medicare expects to pay $10.3 billion to approximately 7,400 ESRD facilities for the costs associated with furnishing renal dialysis services. 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 biological products (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 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.  The ESRD PPS provides a training add-on payment adjustment for home and self-dialysis modalities and, 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 (TDAPA) and the TPNIES.

Update to the ESRD PPS base rate: The proposed CY 2021 ESRD PPS base rate is $255.59, an increase of $16.26 to the current base rate of $239.33.  This proposed amount reflects the application of the proposed wage index budget-neutrality adjustment factor (.998652), the proposed addition to the base rate of $12.06 to include calcimimetics, and a proposed productivity-adjusted market basket increase as required by section 1881(b)(14)(F)(i)(I) of the Act (1.8 percent), equaling $255.59 (($239.33 x .998652) + $12.06) x 1.018 = $255.59).

Annual Update to the Wage Index: The ESRD PPS uses the latest core-based statistical area (CBSA) delineations and the latest available hospital wage data collected under the IPPS that is not adjusted for geographic reclassification or occupational mix. 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 CY 2021 labor-related share is 52.3 percent. The wage index update is budget neutral.

New OMB Delineations and 2-year Transition Policy: CMS is proposing to adopt the OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18-04, beginning with the CY 2021 ESRD PPS wage index.  In addition, CMS is proposing to apply a 5-percent cap on any decrease in an ESRD facility’s wage index from the ESRD facility’s wage index from the prior calendar year.  This transition would be phased in over 2 years, such that the estimated reduction in an ESRD facility’s wage index would be capped at 5 percent in CY 2021, and no cap would be applied to the reduction in the wage index for the second year, CY 2022.

Update 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 adult and pediatric patients and Medicare Allowable Payment (MAP) amounts for adult and pediatric patients for CY 2021, using 2019 claims data.  Based on the use of the latest available data, the proposed FDL amount for pediatric beneficiaries would increase from $41.04 to $47.73, and the MAP amount would increase from $32.32 to $33.08, as compared to CY 2020 values.  For adult beneficiaries, the proposed FDL amount would increase from $48.33 to $133.52, and the MAP amount would increase from $35.78 to $54.26.  The 1.0 percent target for outlier payments was not achieved in CY 2019.  Outlier payments represented approximately 0.5 percent of total payments rather than 1.0 percent.

Changes to the Eligibility Criteria and Determination Process Deadlines for the TPNIES: CMS is proposing changes to the TPNIES eligibility criteria in light of the changes implemented in CY 2020 to provide bi-annual coding cycles for code applications for new Healthcare Common Procedure Coding System (HCPCS) Level II codes for durable medical equipment, orthotics, prosthetics and supplies (DMEPOS) items and services.  CMS is proposing that for purposes of eligibility for the TPNIES, the HCPCS code application must be submitted by the HCPCS Level II code application deadline for biannual Coding Cycle 2 for DMEPOS items and services as specified in the HCPCS Level II coding guidance on the CMS website.  In addition, the Food and Drug Administration (FDA) marketing authorization must be submitted to CMS by the HCPCS Level II code application deadline in order for the equipment or supply to be eligible for the TPNIES the following year.  Finally, CMS is proposing to define “new” for purposes of the TPNIES policy as 3 years beginning on the date of the FDA marketing authorization.

Expansion of the TPNIES to Include Capital-Related Assets that are Home Dialysis Machines When Used in the Home for a Single Patient: CMS is proposing to expand eligibility for the TPNIES to include certain capital-related assets that are home dialysis machines when used in the home for a single patient.  As with other renal dialysis equipment and supplies potentially eligible for the TPNIES, CMS would evaluate the application to determine whether the home dialysis machine represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries, and meets the other requirements under § 413.236(b).  CMS is proposing additional steps the Medicare Administrative Contractors (MACs) would follow to establish the basis payment of the TPNIES for these home dialysis machines.  CMS would pay 65 percent of the MAC-determined pre-adjusted per treatment amount for 2 calendar years.  CMS is proposing that after the 2-year TPNIES period ends, the home dialysis machines would not become eligible outlier services and no change would be made to the ESRD PPS base rate.

Inclusion of Calcimimetics in the ESRD PPS Base Rate: CMS is proposing the methodology for modifying the ESRD PPS base rate to include calcimimetics in the ESRD PPS bundled payment.  Using the proposed methodology based on the latest available data, CMS is proposing to add $12.06 to the ESRD PPS base rate beginning in CY 2021.

Low-Volume Eligibility Criteria and Attestation Requirement: CMS is proposing to hold harmless ESRD facilities that would otherwise qualify for the Low Volume Payment Adjustment (LVPA) but for a temporary increase in dialysis treatments furnished in 2020 due to the Public Health Emergency (PHE) for the COVID-19 pandemic.  CMS is proposing that, for purposes of determining LVPA eligibility for payment years 2021, 2022, and 2023, ESRD facilities would attest that their total dialysis treatments for any 6 months (consecutive or non-consecutive) of their cost-reporting period ending in 2020 is less than 2,000 and that, although the total number of treatments furnished in the entire year otherwise exceeded the LVPA threshold, the excess treatments furnished were due to temporary patient shifting resulting from the COVID-19 PHE.  MACs would then annualize the number of treatments reported for those 6 months by multiplying the number of treatments by 2. In addition, CMS determined that the COVID-19 pandemic justifies an exception to the November 1, 2020 attestation deadline. Therefore, for payment year 2021, CMS is proposing to allow more time for ESRD facilities to submit attestations by moving the deadline to December 31, 2020. 

Impact Analysis: CMS projects that the updates for CY 2021 will increase the total payments to all ESRD facilities by 1.6 percent compared with CY 2020.  For hospital-based ESRD facilities, CMS projects a decrease in total payments of 0.4 percent, while for freestanding facilities, the projected increase in total payments is 1.6 percent.


As required by section 1834(r) of the Act, CMS is proposing to update the AKI dialysis payment rate for CY 2021 by the payment rate update factor (1.8 percent), the proposed wage index budget neutrality factor (.998652), and the proposed addition to the ESRD PPS base rate to include calcimimetics. The proposed CY 2021 payment rate is $255.59, which is the same as the base rate proposed under the ESRD PPS for CY 2021.


ESRD QIP Background: 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 measures specified for a payment year and 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 the Payment Years 2023 and 2024 ESRD QIP: This proposed rule proposes several programmatic updates to the ESRD QIP, which include but are not limited to the following:

  • Updating the scoring methodology for the Ultrafiltration Rate Reporting Measure to score facilities based on the number of eligible patient-months as opposed to facility-months. CMS does not believe that the current methodology is flexible enough to account for situations in which a facility is unable to obtain data on 100% of all patients. Further, the proposed methodology aligns with our policy to reevaluate our reporting measures for opportunities to more closely align them with NQF-endorsed measure specifications and focus more on outcomes-based measures.
  • Updating our National Healthcare Safety Network (NHSN) validation study to reduce the number of required records from 20 records across each of the first two quarters (total of 40 records) to 20 records across any two quarters. CMS believes that this proposed update minimizes facility burden while ensuring the integrity and reliability of our NHSN validation study.

The proposed rule is displayed in the July 6, 2020 Federal Register and can be downloaded at: