Press release



The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule that would update Medicare policies and payment rates for 5,304 dialysis facilities paid under a new bundled Prospective Payment System (PPS) that was implemented in calendar year (CY) 2011.   The proposed rule would also strengthen incentives for improved quality of care and better outcomes for beneficiaries diagnosed with End-stage Renal Disease (ESRD) through proposed improvements to the ESRD Quality Incentive Program (QIP).  

The proposals in the proposed rule, if finalized, would be effective for dialysis treatments furnished on or after Jan. 1, 2012; and the proposed new requirements for the ESRD QIP would affect the payment year (PY) 2013 and PY 2014 program years.


CMS is projecting that payment rates for dialysis treatments will increase by 1.8 percent, representing a projected inflation (or ESRD market basket) increase of 3.0 percent, less a projected productivity adjustment of 1.2 percent as required by statute.  CMS estimates that federal payments to ESRD facilities in 2012 will total $8.3 billion.


“CMS continues to closely monitor implementation of the new prospective payment system.  The proposals in this rule would ensure that Medicare beneficiaries with ESRD continue to have strong access to dialysis care,” said Jonathan Blum, Deputy Administrator and Director of the Center for Medicare.


CMS is also proposing to strengthen the QIP, under which payments to individual facilities are reduced if they do not achieve a high enough total performance score based on their performance with respect to measures that assess the quality of dialysis care. 

The initial ESRD QIP will affect payments in PY 2012 based on performance standards CMS established with respect to two anemia management measures and one measure of dialysis adequacy. 

The proposed rule proposes to change the performance measures for PY 2013 by retiring the hemoglobin level less than 10g/dL measure from the measure set, and equally weighting the two remaining measures (hemoglobin levels greater than 12g/dL and hemodialysis adequacy, as measured by Urea Reduction Ratio (URR) levels of at least 65). 

The proposal to retire the hemoglobin level less than 10g/dL measure beginning with the PY 2013 ESRD QIP is consistent with new medical evidence questioning the safety of one of the common treatments for anemia in dialysis patients, administration of erythropoiesis-stimulating agents (ESAs) and is consistent with revised U.S Food and Drug Administration safety guidelines.  

“Clinicians should use the lowest dose of ESA sufficient to reduce the need for red blood cell transfusions,” said Patrick Conway, M.D., M.Sc., CMS Chief Medical Officer and Director of the agency’s Office of Clinical Standards & Quality.  “Retiring this measure means that providers and patients will have greater incentive to work together to tailor their anemia management strategies to the unique balance of risks and benefits that anemia treatment presents for each person, resulting in better outcomes for patients.”

ESAs work to produce more red blood cells in patients with certain types of anemia, including anemia related to kidney disease.   Based on new medical evidence about the risks and benefits of ESA use in patients with kidney disease or kidney failure, the FDA has recently issued a new label for these drugs to reflect new recommendations about how these drugs should be prescribed and used. 

“We agree that the proposal to remove the quality measure for the ESRD program focused on keeping hemoglobin above 10 in all ESRD dialysis patients is consistent with the new ESA label approved by FDA on June 24, 2011,” said Ann T. Farrell, M.D., acting director of the Division of Hematology Products in the FDA’s Center for Drug Evaluation and Research. “The recommendations in the previous drug labeling to achieve and maintain hemoglobin levels between 10 and 12 g/dL are no longer appropriate and have been removed from the drug labeling.”

CMS is investigating how it can use a number of policy levers to address incentives for treating anemia in dialysis patients.  In the meantime, CMS also plans to actively monitor patients’ clinical outcomes to ensure that the retirement of this measure does not harm patients.

   “CMS continues to believe that anemia management is vitally important for all patients on dialysis,” said Dr. Conway. “However, at this time, the medical evidence fails to demonstrate an exact minimum hemoglobin level at which all patients need treatment.  Therefore, the anemia management and therapy should be determined by the patient’s physician in light of the patient’s individual needs.”

For the PY 2014 payment determination, CMS is proposing to retain the anemia management measure (hemoglobin level greater than 12g/dL) and to adopt seven new measures that expand the breadth of dialysis services CMS would measure to determine whether patients with ESRD are receiving “high-quality care.”  Specifically, CMS is proposing to adopt the following eight measures for PY 2014:


  • Dialysis adequacy, as measured through the Kt/V method, which is widely recognized as a more accurate measure of whether dialysis cleanses blood effectively
  • Anemia management, as measured by the rate of patients with a hemoglobin level greater than 12 grams per deciliter;
  • Percent of patients receiving treatment through an arteriovenous fistula – a type of vascular access used to connect patients’ bloodstreams to dialysis equipment for cleansing;
  • Rates of infection of the vascular access sites;
  • Ratios of hospitalization rates among dialysis clinic patients;
  • Whether the facility reports certain dialysis-related infections to the Centers for Disease Control & Prevention;
  • Whether the facility administers a patient experience of care survey; and
  • Whether the facility monitors phosphorus and calcium levels on a monthly basis.


The proposed rule also includes two proposals for scoring a facility’s performance under the ESRD QIP—one proposal relates to the two-measure framework proposed for PY 2013, and a second proposal outlines how CMS would score facilities under the eight-measure program proposed for PY 2014. The proposed PY 2013 scoring methodology would more closely align the ESRD QIP with the scoring methodology adopted for the Medicare Hospital Inpatient Value-Based Purchasing Program, make it easier to adopt new measures, and reward facilities not only for delivering high-quality care, but also for improving the standard of care they deliver over time.

Both the ESRD PPS and the QIP were mandated by the Medicare Improvements for Patients and Providers Act of 2008.  The previous system consisted of a basic case-mix

adjusted composite rate payment for a defined set of services, including certain laboratory tests, drugs and other supplies, while separate payments were made for any items or services furnished as part of the dialysis treatment but for which no payment was made under the composite rate.  The ESRD PPS was intended to improve efficiency and reduce incentives for overutilization of separately payable items and services; while the QIP was intended to promote improvements in the quality of care provided to Medicare’s ESRD beneficiaries.

The proposed rule also includes several proposals that are not related to the ESRD PPS and QIP.   These include a proposal on a one-year extension of certain payment rate increases for both ground and air ambulance services, and a proposal to establish a 3-year minimum lifetime for equipment to be considered durable for purposes of payment under the benefit category for durable medical equipment. 

CMS has not included any regulatory changes to the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program in this proposed rule.   The program was implemented successfully in nine areas of the country on January 1, 2011, and is projected to save Medicare and its beneficiaries approximately $28 billion over 10 years when fully phased-in.  CMS continues to closely monitor this program and has found that beneficiaries continue to have strong access to high quality items of DMEPOS from licensed and accredited contract suppliers at substantial savings. 

CMS also continues to analyze recommendations on how to improve the program for the future.  CMS will provide guidance about any improvements to the program, as well as the timeline for implementing the Round 2 expansion of the program as decisions are finalized.

CMS will accept comments on the proposed rule until Aug. 30, 2011, and will respond to them in a final rule to be issued by Nov. 1, 2011.

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