On June 21, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that proposes to update 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, 2023. This rule also proposes an update to the Acute Kidney Injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities for calendar year (CY) 2023. In addition, the rule proposes to update requirements for the ESRD Quality Incentive Program (QIP), and includes requests for information on topics that are relevant to the ESRD QIP. CMS is proposing refinements to the ESRD Treatment Choices Model in this proposed rule.
In order to explore options regarding payment under the ESRD PPS, the CY 2023 ESRD PPS proposed rule includes requests for information regarding (1) a potential add-on payment adjustment for certain new renal dialysis drugs and biological products, and (2) health equity issues under the ESRD PPS, with a focus on pediatric dialysis payment. The rule also includes a proposed change to the definition of “oral-only drug” beginning January 1, 2025, along with a proposal to clarify the descriptions of the ESRD PPS functional categories. These proposals, if finalized, would help ensure that CMS policies are appropriately supporting innovation for new drugs that are truly innovative and not simply variations of existing drugs, and the requests for information will help CMS collect information on ways to align resource use with payment and ensure that Medicare beneficiaries with ESRD have continued access to technologies that can improve health outcomes and quality of life.
This rule also proposes a change to the ESRD PPS methodology for calculating the outlier threshold for adult patients, a proposed rebasing and revising of the ESRD Bundled (ESRDB) market basket, a proposed update to the labor-related share, a proposed increase to the wage index floor, and a proposed permanent 5% cap on decreases to the ESRD PPS wage index.
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.
Proposed Updates to the ESRD PPS for CY 2023
Under the ESRD PPS for CY 2023, Medicare expects to pay $8.2 billion to approximately 7,800 ESRD facilities for furnishing renal dialysis services. The proposed CY 2023 ESRD PPS base rate is $264.09, which would be an increase of $6.19 to the current base rate of $257.90.
CMS projects that the updates for CY 2023 would increase the total payments to all ESRD facilities by 3.1% compared with CY 2022. For hospital-based ESRD facilities, CMS projects an increase in total payments of 3.7%, and for freestanding facilities, CMS projects an increase in total payments of 3.1%.
Rebasing and revision of the End-Stage Renal Disease Bundled (ESRDB) market basket for CY 2023: We are proposing to rebase and revise the ESRDB market basket to a 2020 base year using data from the Medicare Cost Report and other publicly available data. In addition, we are proposing to update the labor-related share, as it is based on the labor-related cost share weights in the ESRDB market basket. The proposed CY 2023 labor-related share is 55.2% based on the proposed 2020-based ESRDB market basket weights.
Proposed 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.
Beginning CY 2023, CMS is proposing to increase the wage index floor from 0.5 to 0.6. Additionally, CMS is proposing to apply a permanent 5% cap on decreases in the ESRD PPS wage index beginning CY 2023. Specifically, CMS is proposing that an ESRD facility’s wage index for CY 2023 would not be less than 95% of its final wage index for CY 2022, and that for subsequent years, a facility’s wage index would not be less than 95% of its wage index calculated in the prior CY.