CMS Retains 12% Cut in Drug Payments for ESRD Care, Approves New QIP Measures

November 25, 2013

Published by Nephrology News & Issues
Mark E. Neumann
November 25, 2013

The Centers for Medicare and Medicaid Services issued its much-anticipated final rule Nov. 22 that updates 2014 payment rates for dialysis facilities paid under the end-stage renal disease Prospective Payment System (PPS). The agency also approved final changes to the ESRD Quality Incentive Program for performance year 2014, which will impact dialysis clinic payments in 2016.

Despite more than 1,000 comments protesting the proposed cut by the dialysis industry, patients, renal association groups, and even members of Congress, the agency decided to keep a 12% reduction in the drug utilization adjustment to the base rate, but implement it over a three- to four-year transition period.

CMS released a proposed rule in July that called for a 12% reduction in payments for injectable drugs based on a 30%+ drop in utilization––primarily in the prescribing of anemia drugs––from 2007 to 2012. The agency proposed to temper the cut with a 2.6% payment increase for 2014 based on the annual Medicare market basket review of costs of providing care to dialysis patients.

Congress required CMS to implement a payment reduction as part of the American Taxpayer Relief Act passed by Congress in 2012, but Congress left it up to the agency to determine the amount of the cut.

CMS said it would implement the first portion of the cut in 2014––a 3.3% reduction to the drug payment adjustment––but dialysis clinics won’t see a change in the overall payment for patients for 2014 and 2015 because of other offsets, the agency said.

The cuts will still have an impact on the bottom line for dialysis clinics, said Kidney Care Council and Kidney Care Partners in prepared statements released on Friday in response to the final rule. “Today’s Medicare ruling substantially reduces funding needed for patient care and interferes with the ability of our physicians, nurses, and clinical teams to do the very best for their patients,” said KCC chairman Tom Weinberg. Ultimately, the payment cut of $29.93 per dialysis treatment “contradicts the unified voice of patients, clinicians, providers, facilities, and members of Congress to correct the total amount of the reduction” originally proposed in July, said Weinberg. “Phasing in a cut of this magnitude only delays the harm.”

According to Kidney Care Partners, a coalition of patients, physicians, nurses, providers, and manufacturers, the rule deals a “significant blow to an already fragile system” by ultimately reducing Medicare payments to a level that will not cover the cost of care for individuals on dialysis. “Phasing in this cut does not solve the problem,” said KCP chairman Ron Kuerbitz. “Instead, it only delays the inevitable harm that will come as a result of failing to cover the cost of care. Simply put, this model is unsustainable.”

As a result of the rule, KCP said, providers and physicians will face difficult choices regarding staffing, facility hours, quality improvement interventions, and ultimately whether an entire facility can be kept open to service a community. In turn, Medicare beneficiaries could face reduced access to care.

“Our community worked with Congress to establish a sustainable bundled payment system,” said Kuerbitz. “It is troubling that, as we celebrate the 40th anniversary of the Medicare dialysis benefit, this rule appears to be a step backwards. We appreciate those in Congress on both sides of the aisle who support their constituents living with kidney failure, and we will continue to work with them to ensure that these, and all Americans with kidney failure, have access to the highest quality care in the years to come.”

Details of the final rule include:

The ESRD payment base rate: This remains the same from CY 2013 to CY 2014 at $239.02. CMS said the rate reflects the CY 2013 ESRD PPS base rate of $240.36 adjusted by the ESRD market basket (3.2%) minus the productivity (0.4%) increase, the wage index budget neutrality factor of 1.000454, and the home dialysis training add-on budget neutrality adjustment factor of 0.999912. That brings the base rate up to $247.18, but then CMS makes a 3.3% cut in the portion of the CY 2014 drug utilization adjustment that is being transitioned for 2014, or $8.16, to arrive at a final CY 2014 ESRD PPS base rate of $239.02 ($247.18 – $8.16 =$239.02).

The wage index: No changes

The outlier policy: Outlier services fixed dollar loss amounts are updated for 2014 for adult and pediatric patients, along with Medicare Allowable Payments (MAPs) for adult patients for CY 2014 using 2012 claims data. Based on the use of more current data, the fixed-dollar loss amount for pediatric beneficiaries would increase from $47.32 to $54.01 and the adjusted average outlier services MAP amount would decrease from $41.39 to $40.49 as compared to CY 2013 values. For adult beneficiaries, the fixed-dollar loss amount would decrease from $110.22 to $98.67 and the adjusted average outlier services MAP amount would decrease from $59.42 to $50.25. The 1% target for outlier payments was not achieved in CY 2012. “We believe using CY 2012 claims data to update the outlier MAP and fixed dollar loss amounts for CY 2014 will increase payments for ESRD beneficiaries requiring higher resource utilization in accordance with a 1% outlier policy,” CMS said in the final rule.

The self-dialysis and home dialysis training add-on adjustment: Medicare is increasing this add-on adjustment by 50% for both peritoneal dialysis and home hemodialysis training treatments. In CY 2014, the nursing time accounted for in the training add-on adjustment will increase from one hour to 1.5 hours per training treatment, resulting in an increase of $16.72, for a total training add-on adjustment of $50.16 per training treatment.

The 50% increase in payment, however, is one of the offsets the agency is using to keep the 2014 base rate the same as 2013. “We note that the increase to the training add-on adjustment will be made in a budget neutral manner in that we have applied a training add-on budget-neutrality adjustment factor of 0.999912 to the base rate.”

The final rule also ends the four-year transition period for dialysis clinics that chose not to move directly into the new bundled payment system when it took effect in January 2011. Dialysis facilities were paid a blended payment with a portion of payments based on the composite rate methodology and a portion based on the new PPS rate. In 2014, the final year of the four-year transition period, all dialysis facilities will be paid 100% of the ESRD PPS rate for dialysis services.

QIP measures finalized

The final rule also includes new reporting and clinical measures as part of the ESRD Quality Incentive Program. For the ESRD QIP Payment Year (PY) 2016 program (which will rely on measures of dialysis facility performance during 2014), CMS is finalizing 11 measures addressing infections, anemia management, dialysis adequacy, vascular access, mineral metabolism management, and patient experience of care. Performance scores will be calculated by weighting clinical measures at 75% of the total performance score and weighting the reporting measures at 25%.

More details on Provider Call

On Jan. 15, CMS will hold a National Provider Call to help facilities and other stakeholders in the ESRD community understand the final rule. The discussion will be recorded and made available at

See the original article here.