On October 31, the Centers for Medicare & Medicaid Services (CMS) issued the 2023 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) final rule. The official CMS fact sheet is available here. In this final rule, CMS makes the following updates:

• Increases ESRD payment rates by 3.1 percent;
• Denies all three applications for transitional add-on payment for new and innovative renal equipment and supplies;
• Finalizes COVID-19 pandemic-related flexibilities for the ESRD Quality Incentive Program;
• Finalizes changes to the ESRD Treatment Choices Model; and
• Responds to comments on several requests for information.

 Provisions of this final rule are effective January 1, 2023.

ESRD FACILITIES GET A PAYMENT BUMP, CHANGES TO OUTLIER POLICY ARE FINALIZED

The ESRD PPS provides a patient-level and facility-level adjusted per treatment payment to ESRD facilities for renal dialysis services provided in an ESRD facility or in a beneficiary’s home. The bundled per treatment payment includes drugs (except for oral-only ESRD drugs that are included beginning in 2025), laboratory services, supplies, and capital-related costs related to furnishing maintenance dialysis. There are currently 7,800 ESRD facilities.

For 2023, ESRD facilities will see a 3.1 percent increase in payments as compared with 2022. CMS estimates that the Medicare program will pay $7.9 billion to ESRD facilities for furnishing renal dialysis services in 2023.

The final 2023 base rate is $265.57, which is a $7.67 increase to the current base rate of $257.90 and reflects the wage index budget-neutrality adjustment factor of 0.999730 and a productivity-adjusted market basket increase of 3.0 percent.

Additionally, CMS finalized its proposal to rebase and revise the ESRD bundled market basket to a 2020 base year to reflect the most recent set of Medicare Cost Report data. CMS is also finalizing the wage index floor increase from 0.5 to 0.6 and applying a permanent five percent cap on any decreases in the ESRD PPS wage index. This means that for CY 2023 and beyond, a facility’s wage index would not be less than 95 percent of its wage index calculated in the prior calendar year.

CMS is updating its outlier policy, fixed-dollar loss (FDL) amounts, and Medicare allowable payment (MAP) amounts using 2021 claims data. CMS calculates FDL amounts so that projected outlier payments equal 1.0 percent of total ESRD PPS payments. In 2022, CMS received feedback for a Request for Information on outlier payment policy because outlier payments represented 0.4 percent of total payments in CY 2021 and have not been meeting the 1.0 percent target. Therefore, CMS is finalizing its proposed revisions to its methodology for calculating FDL amounts.

Using the finalized methodology, the outlier services FDL amount for pediatric beneficiaries will decrease to $23.29 and MAP will decrease to $25.59, down from $26.02 and $27.15 respectively. For adult beneficiaries, the outlier services FDL amount will decrease from $75.39 to $73.19, and the MAP amount would decrease from $42.75 to $39.62.

Acute Kidney Injury Payment Rate Mirrors ESRD Base Rate

Since CY 2017, Medicare provides coverage for renal dialysis services provided to individuals with acute kidney injury (AKI). CMS finalizes updated payment rate of $265.57 for AKI payment in CY 2023, which mirrors the finalized base rate for the ESRD PPS. Aggregate payments to ESRD facilities for renal dialysis services provided to AKI patients will increase by $2 million in CY 2023, as compared to CY 2022 payment.

NO APPLICANTS WILL RECIEVE TRANSITIONAL ADD-ON PAYMENT FOR CERTAIN NEW AND INNOVATIVE RENAL DIALYSIS EQUIPMENT AND SUPPLIES IN CY 2023

CMS established the transitional add-on payment adjustment for certain new and innovative renal dialysis equipment and supplies (TPNIES) in the 2020 ESRD PPS final rule. There, CMS expanded eligibility for TPNIES to include certain capital-related assets that include home dialysis machines when used for a single patient in 2021.

For CY 2023, CMS finalizes average per treatment offset amount of $9.79 for TPNIES for capital related assets that include home dialysis machines.

CMS received three TPNIES applications for CY 2023:the CloudCath Peritoneal Dialysis Drain Set Monitoring System, SunWrap™ System, and THERANOVA 400 Dialyzer / THERANOVA 500 Dialyzer. CMS determined that none of the products have demonstrated sufficient evidence to receive TPINES in CY 2023, see Table 1.

TABLE 1: TPNIES Application Requests[1]

Manufacturer Applicant	Indication	CMS Concerns
CloudCath Peritoneal Dialysis Drain Set Monitoring System (CloudCath System)	Detection and monitoring of solid particles in dialysate effluent during peritoneal dialysis (PD) treatments.	·       Unclear whether the CloudCath System meets the substantial clinical improvement criterion for TPNIES. ·       Seeks comment on the CloudCath System’s commercial availability status, as the system was not commercially available at the time of application. ·       CloudCath previously applied but rescinded application for the TPNIES for the CloudCath System in CY 2022.
Sun Scientific Inc. SunWrap™ System	Static pneumatic compression to the forearm and/or upper arm following dialysis needle removal from the arteriovenous (AV) fistula access.	·       Newness criterion may not be met. Unclear to which SunWrap™ System products the TPNIES application applies to. The product currently lacks FDA marketing authorization, and it is unclear whether the product’s FDA Class I Exemption status still applies. ·       Several concerns with whether the submitted data substantiates the applicant’s claims that the product meets the substantial clinical improvement criterion. Applicant submitted broad information rather than claim-specific information.
Baxter Healthcare Corporation THERANOVA 400 Dialyzer / THERANOVA 500 Dialyzer (THERANOVA)	More comprehensive removal of harmful proteins called large middle molecules (LMMs), while maintaining essential proteins in the blood during hemodialysis (HD).	·       Studies provided for the substantial clinical improvement criterion were mostly open-label and observational and may have biased results. Many studies did not use a control group. ·       Applicant did not address criterion that limits capital-related assets from being eligible for the TPNIES; THERANOVA does not meet the definition of a capital-related asset. CMS welcomes comments on THERANOVA’s status as a non-capital related asset. ·       Baxter Healthcare Corp. previously submitted a TPNIES application for THERANOVA in CY 2021.

CMS FINALIZES PANDEMIC FLEXIBILITIES FOR THE ESRD QUALITY INCENTIVE PROGRAM

Finalized Policies for Payment Year 2023

Under the ESRD Quality Incentive Program (QIP), 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).

For payment year (PY) 2022, CMS finalized a measure suppression policy for the duration of the COVID-19 Public Health Emergency (PHE). CMS determined that circumstances caused by the COVID-19 PHE have significantly affected the validity and reliability of the measures and resulting performance scores. As a result, CMS is finalizing its proposals to pause the use of the following measures:

• Standardized Hospitalization Ratio (SHR) clinical measure
• Standardized Readmission Ratio (SRR) clinical measure
• In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) clinical measure
• Long-term Catheter Rate clinical measure
• Percentage of Prevalent Patients Waitlisted (PPPW) clinical measure
• Kt/V Dialysis Adequacy Comprehensive clinical measure

While CMS did not propose to pause the Standardized Fistula Rate clinical measure, after reviewing stakeholder comments on the proposed rule, CMS agrees with commenters and is finalizing that this measure will also be paused for PY 2023.

Additionally, due to the pandemic’s impact, CMS is finalizing the use of pre-pandemic data from CY 2019 to serve at the baseline period for the PY 2023 ESRD QIP.

Finalized Policies for Payment Year 2024

Beginning in PY 2024, CMS is finalizing its proposal to express the Standardized Hospitalization Ratio (SHR) clinical measure and Standardized Readmission Ratio (SRR) clinical measure results as a rate. Currently, both measures are calculated as a ratio but can also be expressed as a rate. CMS states that expressing the measure results in a rate will help providers and patients to better understand a facility’s performance.

Finalized Policies for Payment Years 2025 and 2026

CMS is finalizing several proposals for PY 2025 and 2026, including:

• The adoption of the COVID-19 Healthcare Personnel (HCP) Vaccination reporting measure in the PY 2025 ESRD QIP measure set as a reporting measure. CMS acknowledges the importance of incentivizing and tracking HCP COVID-19 vaccination through quality measurement to protect patients, healthcare workers, and caregivers. This measure will track the percentage of employed healthcare workers who are fully vaccinated at a facility. Facilities will report the measure via the Centers for Disease Control and Prevention’s National Healthcare Safety Network (NHSN) web-based surveillance system.
• The modification of the technical measure specifications for both the SHR and SRR clinical measures to include a covariate adjustment for patient history of COVID-19 in the previous 12 months before measure eligibility.
• The conversion of the Standardized Transfusion Ratio (STrR) Reporting measure to a clinical measure starting in PY 2025. CMS is making this change in response to commentors who had validity concerns and CMS states that the finalized STrR measure will better align with National Quality Forum (NQF) measure specifications. Additionally, CMS is also finalizing updates to the scoring methodology for this measure so that facilities that meet minimum data and eligibility requirements will receive a score based on actual clinical values from a facility—instead of on the successful reporting of data. Similar to finalized technical changes to the SRR and SHR clinical measures, the STrR measure will be represented as a rate, instead of as a ratio.
• The conversion of the Hypercalcemia clinical measure to a reporting measure starting in PY 2025. CMS is also updating the scoring methodology for this measure so that facilities that meet minimum data and eligibility requirements would receive a score based on reporting of data—instead of actual clinical values from a facility.
• The creation of a new domain for reporting measures and re-weighting current measure domains starting in 2025. Currently, ESRD QIP measures are weighted and distributed across four measure domains: Patient & Family Engagement, Care Coordination, Clinical Care, and Safety. To incentivize improving performance, CMS states the weights on measures where there is the most room for improvement should be increased. As a result, CMS is finalizing its proposal to create a new Reporting Measure domain that will include the current four reporting measures in the ESRD QIP measure set, with the addition of the finalized COVID-19 HCP Vaccination reporting measure and the finalized Hypercalcemia reporting measure. To accommodate the new domain weights, CMS is finalizing its proposal to update the domain and individual measure weights in the following domains: Care Coordination, Clinical Care, and Safety.

CMS finalized payment reductions for the PY 2025 ESRD QIP using updated CY 2021 data. A facility that achieves a total performance score (TPS) under 55 will incur a payment reduction based on the TPS scores outlined below in Table 2. CMS finalized as proposed the payment reduction scale shown below in Table 2.

 TABLE 2: Estimated Payment Reduction Scale for PY 2025 Based on the CY 2019 data[2]

Total Performance Score	Reduction (%)
100-55	0%
54-45	-0.5%
44-35	-1.0%
34-25	-1.5%
24-0	-2.0%

CMS Summarizes Public Comments Relevant to the ESRD QIP

In this final rule, CMS summarizes public comments in response to the Requests for Information (RFI) CMS published in the proposed rule on the following topics relevant to the ESRD QIP.

• Quality Indicators for Home Dialysis Patients: CMS received comments in response to an RFI on potential indicators of quality for patients who receive dialysis at home in order to support the use of home dialysis for ESRD patients where it is appropriate. While home-based dialysis may not meet the needs of all patients, it has benefits for certain patients. It may be more convenient for many ESRD patients, and survivability rates for patients who receive home dialysis are comparable to those of transplant recipients and patients who receive in-center hemodialysis. CMS indicates an interest in learning more about potential indicators of quality of care for home dialysis patients that are not currently being captured by the ESRD QIP.
• Principles for Measuring Healthcare Quality Disparities: CMS notes that it is committed to addressing inequities in health outcomes in the U.S. through improving data collection to better measure and analyze disparities across programs and policies. In the proposed rule, CMS sought comment on considerations that CMS can take into account when advancing the use of measurement and stratification as tools to address healthcare disparities and advance healthcare equity. CMS received comments on key considerations in five specific areas that could inform their approach: 1.) identification of goals and approaches for measuring healthcare disparities and using measure stratification across CMS quality programs; 2.) guiding principles for selecting and prioritizing measures for disparity reporting across CMS quality programs; 3.) principles for social risk factor and demographic data selection and use; 4.) identification of meaningful performance differences; 5.) and guiding principles for reporting disparity results.
• Potential Future Inclusion of Two Social Drivers of Health Measures CMS sought public comment on two screening measures and stated that the feedback will be used in future policy development. The Screening for Social Drivers of Health measure would assess whether facilities screen all patients that are 18 years or older for food insecurity, housing instability, transportation needs, utility difficulties, and interpersonal safety. The Screen Positive Rate for Social Drivers of Health measure would be complementary to the Screening for Social Drivers of Health  This measure would facilitate estimation of the impact of individual-level social risk factors and community-level conditions in which patients live when evaluating quality of care.

CMS FINALIZES CHANGES TO ESRD TREATMENT CHOICES MODEL

CMS finalizes several proposed changes to the ESRD Treatment Choices (ETC) model.[3] The ETC Model is a mandatory payment model for the care of patients with chronic kidney disease (CKD), finalized in 2020 as part of the final rule “Medicare Program; Specialty Care Models to Improve Quality of Care and Reduce Expenditures” published on September 29, 2020 (85 FR 61114). The model tests the use of payment adjustments to encourage kidney transplants and home hemodialysis. The aim of this model is to encourage providers to invest in care coordination programs that will increase patient choice, reduce Medicare expenditures, and improve outcomes. The ETC model went into effect on January 1, 2021, and is mandatory for dialysis facilities and managing clinicians in randomly selected geographic areas across all 50 states and District of Columbia.

The ETC model includes two payment adjustments:

• Home Dialysis Payment Adjustment (HDPA) – a positive adjustment on certain home dialysis and home dialysis-related claims during the initial 3 years of the model.
• Performance Payment Adjustment (PPA) – a positive or negative adjustment on dialysis and dialysis-related Medicare payments, for both home dialysis and in-center dialysis. This adjustment is based on ESRD facilities’ and Managing Clinicians’ rates of home dialysis, and of kidney transplant waitlisting and living donor transplantation, among attributed beneficiaries during the applicable measurement year (MY).

These adjustments are made to the adjusted ESRD PPS base rate for selected facilities and to the monthly capitation payment for selected managing clinicians. Greater positive and negative adjustments for model participants are phased in over the duration of the model.

In the CY 2022 Final Rule,[4] CMS finalized, among other things, a policy to begin stratifying achievement benchmarks in MY3 by the proportion of beneficiaries who are dual-eligible for Medicare and Medicaid or are Low Income Subsidy (LIS) recipients to ensure that ETC Participants who see a high volume of these patients are not disproportionately negatively affected under the achievement benchmark methodology. However, CMS found that achievement benchmark stratification under this policy could increase the likelihood of the lowest benchmark being set at a home dialysis or transplant rate of zero.

Therefore, CMS finalized its proposal to add a requirement that, beginning January 1, 2023 (MY5), ETC Model participants must have a home dialysis or transplant rate greater than zero to receive an accompanying achievement score. Commenters generally supported this proposal, while others suggested changes to the achievement benchmarking methodology, such as weighting aggregation groups by size, increasing total strata, and not basing benchmarks on rates Comparison Geographic Areas during a benchmark year. In response, CMS notes that the agency did not make any proposals regarding the achievement benchmarking methodology and CMS may take these under advisement for potential consideration in future modifications to the ETC Model.

CMS also finalized its proposal to restrict clinical staff from providing kidney disease patient education services[5]  if they are leased from or provided by an ESRD facility. This restriction would be in place regardless of whether the ETC Participant reduces or waives the patient’s Medicare coinsurance obligation. Commenters were generally mixed in their response to this proposal, with some expressing support that this requirement would better protect patient choices, while others expressed concern that it would further exacerbate the underutilization of kidney disease patient education services and limit access to the best qualified professionals. In response, CMS states this requirement is necessary to protect Medicare beneficiary care choices by limiting inappropriate referrals to specific ESRD facilities and would further not inhibit access to the best qualified professionals for these patients. Some commenters also urged CMS to increase the types of qualified staff who may provide kidney disease patient education services under the direction of and incident to the services of an ETC participant managing clinician. CMS notes the agency may take this recommendation under advisement for potential consideration in future modifications to the ETC Model.

Further, CMS finalized its proposal to publish performance data for ESRD facilities and managing clinicians on the ETC Model website after the conclusion of each MY. This information would only be posted at an aggregation group level, with a list of the aggregation group’s relevant ESRD facilities and managing clinicians. In its proposed rule, CMS indicated its intent to publish de-identified patient results from all MYs of the ETC Model, including home dialysis and transplant rate aggregate results with the identification of all ESRD facilities or managing clinicians in the aggregation group for each MY. As proposed, CMS will also publish results from already completed MYs. Several commenters expressed support for this proposal, while others requested more clarity on what would be posted, as well as a need to preview results before publication. In response, CMS indicates that information is aggregated and that a preview is unnecessary prior to publication, noting that ETC participants have already reviewed the data as part of the targeted review process.

CMS anticipates that ETC Model proposals will not impact projected direct savings alone. Overall, CMS estimates that the Model will generate $28 million in payment adjustment-related direct savings over the six-and-a-half-year model period.

CMS ADRESSES COMMENTS ON REQUESTS FOR INFORMATION RELATED TO HEALTH EQUITY

CMS sought comment on health equity issues within the ESRD PPS in the proposed rule and published a summary of public comments for future consideration. Comments received were primarily focused on the following topics:

• Refinements to mitigate health disparities: Commenters expressed support for CMS’s efforts to reduce disparities and improve health equity and offered suggestions on how to incentivize providers and payers to efficiently deliver high quality care. Suggestions included add-on payments to the facility payer mix to provide for complex care, more add-on payments for dual eligible home dialysis patients and patients with housing or food insecurities, and extended kidney disease patient education services. A few commenters supported a model similar to CMS’s ESRD Treatment Choices Model for pediatric patients.
• Comorbidities: Several commenters noted that the current comorbidity case mix adjusters are unsound and should be eliminated from the ESRD PPS.
• Subpopulations: Several commenters noted that the needs of ESRD patients who are dually eligible may not be adequately addressed in current policy.
• Demographic information and social determinants of health: Commenters supported collecting social determinants of health (SDOH) data but were concerned it may result in increased administrative burden.
• Revisions to case-mix categories in the ESRD PPS: Commenters suggested adjustments that would support facilities treating patients with a large number of SDOH needs.
• Renal dialysis technologies, treatments, and clinical tools: Commenters suggested strategies for how CMS can prevent or mitigate bias in renal dialysis technologies, treatment, and tools, including increasing health literacy and using peer mentors.

Additionally, CMS sought comment on health equity issues related to pediatric payment with the ESRD PPS. Several commenters noted disparities faced by Black pediatric patients. CMS noted that almost all of the comments regarding cost of care were related to SDOH, with some suggesting SDOH be included in the ESRD PPS case mix adjustment model. CMS will use these comments to guide future policy development.

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This Applied Policy® Summary was prepared by Simay Okyay McNutt with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at sokyay@appliedpolicy.com or at 703-303-9598.

[1] See pages 119 – 165 of the unpublished rule for CMS’ discussion of these applications.

[2] See page 356 of the unpublished rule.

[3] https://innovation.cms.gov/innovation-models/esrd-treatment-choices-model

[4] 86 FR 61874.

[5] Medicare may cover outpatient, face-to-face kidney disease educational services provided to patients with stage IV chronic kidney disease by certain qualified persons and clinical staff.