SUMMARY OF THE CY2011 MEDICARE

END-STAGE RENAL DISEASE PROSPECTIVE

PAYMENT SYSTEM FINAL RULE

September 2010

TABLE OF CONTENTS

I. Overview.............................................................................................................................. 1Major Provisions of the Final Rule.................................................................................1

II. Legislative Mandates............................................................................................................ 2

III. Transition Period.................................................................................................................. 2

IV. ESRD PPS Payment Methodology.......................................................................................3ESRD PPS Payment Rates.............................................................................................. 4Market Basket Update..................................................................................................... 6Base Rate........................................................................................................................ 7Budget Neutrality Adjustments ......................................................................................8

Facility Level Adjustments................................................................................................. 10Wage Index Adjustment................................................................................................ 10Low-Volume Facility Adjustment.................................................................................11Rural Adjustment.......................................................................................................... 12

Patient Level Adjustments ................................................................................................. 12Patient Age................................................................................................................... 12Patient Sex ................................................................................................................... 13Body Surface Area and Body Mass Index ....................................................................13Onset of Dialysis (New Patient Adjustment) ................................................................14Comorbidities .............................................................................................................. 15Race/Ethnicity .............................................................................................................. 16Dialysis Modality ......................................................................................................... 17

Other ESRD PPS Payments................................................................................................ 17Outlier Policy ............................................................................................................... 17

V. Reporting ESRD Quality Data ...........................................................................................21Quality Incentive Program............................................................................................ 21

VI. Pediatric ESRD Patients..................................................................................................... 22Pediatric Patients........................................................................................................... 22

VII. Other Issues........................................................................................................................ 24Self-Administered ESRD-Related Drugs and Biologicals.............................................24Beneficiary Coinsurance............................................................................................... 24

If you have any questions about this summary, contact Kathy Reep, FHA Vice President/Financial Services, by email at kathyr@fha.org or by phone at (407) 841-6230.

I. OVERVIEW

The Centers for Medicare & Medicaid Services (CMS) published the final Medicare end-stage renal disease prospective payment system (ESRD PPS) rule for calendar year (CY) 2011 in the August 12, 2010 Federal Register. Changes are effective January 1, 2011, unless otherwise noted.

Note: Text in italics is extracted from either the September 29, 2009 or the August 12, 2010 Federal Register.

Major Provisions of the Final Rule

ESRD PPS: CMS is implementing a case mix-adjusted, bundled PPS for Medicare outpatient ESRD dialysis facilities beginning January 1, 2011. This new system will replace the current “basic” case mix-adjusted composite payment system and methodologies for reimbursing separately billable outpatient ESRD services.

ESRD Market Basket: For CY2011, CMS will provide a full market basket update of 2.5 percent.

Base Rate: For CY2011, CMS is adopting a base rate per treatment of $229.63, with an outlier adjustment and budget neutrality.

98 Percent Budget Neutrality Adjustment: As authorized by MIPAA, the finalized ESRD PPS payment system beginning in CY2011 should be equal to 98 percent of the estimated total amount of payments for renal services that would have been made with respect to services in 2011 if the ESRD PPS had not been implemented.

Transition Period: For CY2011, which is the first year of the four-year transition period, CMS will make payments based on 75 percent of the payment rate under the basic case mix-adjusted composite payment system and 25 percent of the payment rate under the ESRD PPS. ESRD facilities can choose to be reimbursed 100 percent by the new ESRD PPS or a blended payment based in part on the new PPS system and in part on the current composite payment system during transition.

Wage Index: CMS will continue use of the pre-reclassification and pre-rural floor wage indexes. The wage indexes under the new PPS system will not include the upward wage index budget neutrality adjustment applied under the current composite rate payment system. CMS did not adopt their proposal to eliminate a wage index floor. Instead, CMS will continue the use of a wage index floor of 0.60 for CY2011.

Low-Volume Facility Adjustment: CMS is finalizing an 18.9 percent increase to the base rate for low-volume facilities for renal dialysis services furnished on or after January 1, 2011. ESRD facilities must have less than 4,000 treatments in each of the prior three years and meet certain geographic location requirements to qualify for the low-volume facility adjustment. Patient Level Adjustment Factors: CMS will adjust the base rate by patient-specific case mix

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adjustment factors including age (five groups), body surface area (BSA), and low body mass index (BMI). CMS is also adding six comorbidity categories and the onset of renal dialysis to the list of patient level adjustments. CMS did not finalize their proposal to include the patient’s sex as a payment adjustment.

Outlier Policy: For CY2011, CMS is implementing an outlier percentage of 1.0 percent of total ESRD PPS payments. CMS is finalizing two different fixed dollar loss amounts for adult and pediatric patients due to differences in the use of separately billable services among adult and pediatric patients, especially drugs. The final fixed dollar loss amounts are $155.44 for adult patients and $195.02 for pediatric patients.

Quality Data:  CMS is adopting two anemia management measures and one hemodialysis adequacy measure.

II. LEGISLATIVE MANDATES

Over the years, Congress has required at least two studies on bundling ESRD services into a composite rate system. The first requirement was part of the Medicare, Medicaid, and State Children’s Health Insurance Program (SCHIP) Benefits Improvements and Protection Act (BIPA) of 2000; a report was sent to Congress in May 2003. Subsequently, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 also required the Secretary of Health and Human Services (HHS) to submit a report to Congress detailing the elements and features for the design and implementation of a bundled ESRD PPS, including bundling of separately billable drugs, clinical laboratory tests, and other items. These two reports to Congress provided a foundation for the MIPPA requirements, which would create an ESRD bundled PPS payment system by combining the composite rate and separately billable services to yield a single case mix-adjusted payment beginning January 1, 2011. In addition, the Patient Protection and Affordable Care Act (PPACA) of 2010, contains Medicare provisions that either currently affect program payment policy or will begin to affect payment policy in upcoming calendar years. Where appropriate, legislative references are provided in the text below.

III. TRANSITION PERIOD

Federal Register pages 49162 - 49164

Background: As authorized under MIPPA, the HHS Secretary is required to provide a budget-neutral, four-year transition period to phase-in payments made under the proposed ESRD PPS beginning CY2011. MIPPA also permits ESRD facilities to make a one-time election to be excluded from the transition and to be paid 100 percent under the new ESRD PPS.

CMS Proposal: Beginning in CY2011, CMS proposed the following four-year transition:

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EffectiveBeginning

NEWESRD PPS(percent)

Prior PaymentAmount(percent)

January 1, 2011 25 75January 1, 2012 50 50January 1, 2013 75 25January 1, 2014 100 0

CMS also proposed “. . . that ESRD facilities notify CMS of their election choice in a manner established by their respective FI/MAC no later than November 1, 2010 . . . . Instruction as to how the FIs/MACs would implement the proposed ESRD PPS would be provided in future guidance.”

“. . . we propose that ESRD facilities that are certified for Medicare participation and begin providing renal dialysis services and home dialysis on or after January 1, 2011, not have the option to choose . . . .” and will “. . . be paid based on 100 percent of the payment amount under the ESRD PPS.”

CMS Final Rule: For CY2011, CMS is adopting their proposal as final without modification.

IV. ESRD PPS PAYMENT METHODOLOGY

The following is an example of the ESRD PPS payment calculation. Subsequent sections of this summary explain the calculation and provide details of the various components that are incorporated in the ESRD PPS payments.

ESRD PPS Payment ExampleA 66-year-old female ESRD patient is 160.02 cm. (1.6002 m.) in height and weighs 45.36 kg. She has diabetes mellitus and parathyroidism. She was diagnosed with ESRD in 2005, esophageal varices in 2006, and had upper gastrointestinal (GI) bleeding in January 2011. She was discharged with a diagnosis of monoclonal gammopathy. The ESRD provider is eligible for a low-volume adjustment based on the specified criteria.

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ESRD PPS Payment Methodology - Example

Base Rate 229.63$ Labor Related Share (percent) 41.74Wage Index 1.1000 Wage-Adjusted Base Rate 239.21$ Low Volume Adjustment 1.1890

Wage-Adjusted Base Rate including Low Volume Adjustment 284.43$

Age and Comorbidities Age Adjustment Factor 1.0000Comorbidity Adjustment Factors: Gastrointestinal Tract Bleeding (0-3 months ago) 1.1830 Monoclonal Gammopathy 1.0240

Age and Comorbidities Adjustment Factors 1.2114

Body Mass Index and Body Surface AreaBody Mass Index (BMI) = weight kg / height (m

2) 17.7143

Underweight Adjustment Factor (BMI< 18.5) 1.0250

Body Surface Area (BSA) = weight kg ^ .425

* height cm ^.725

* .0.007184 1.4404 BSA Adjustment Factor = (1.020^ ((BSA - (BSA national average 1.84))/0.1) 0.9239

BMI and BSA Case Mix Adjustment Factors 0.9470

Transition Budget Neutrality Adjustment 0.969

Total ESRD PPS Payment Per Treatment including all Applicable Adjustment Factors 316.18$

Patient Level Adjustments

Facility Level Adjustments

ESRD PPS Payment RatesFederal Register pages 49036 - 49064

Background: The current basic case mix composite payment system includes only a limited amount of bundled outpatient renal dialysis services, including some routinely provided drugs, laboratory tests, and supplies. A substantial portion of expenditures for renal dialysis services are excluded from the current basic case mix composite payment system and are billed separately in accordance with Medicare fee schedules and other payment methodologies under Part B and Part D. For example, payment for erythropoiesis stimulating agents (ESAs) such as epoetin alfa (EPO, for example, Epogen®) and darbepoetin alfa (ARANESP®) used to treat anemia, and vitamin D analogues (paracalcitol, doxercalciferol, calcitriol), is made outside of the basic case mix composite payment system as separately billable services.

Under the current system, Medicare ESRD beneficiaries who receive self-care home dialysis, must select between two methods of payments:

Method I – The ESRD facility would assume responsibility for providing all home dialysis equipment and supplies in which the facility would receive the composite payment; or

Method II – The ESRD beneficiary can elect to obtain home dialysis equipment and supplies from a supplier that is not a Medicare-approved dialysis facility, in which case the beneficiary is responsible for dealing directly with the suppliers. An ESRD facility

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can only receive payment for home dialysis support services and may not be paid for home dialysis equipment or supplies under this method.

Under the current basic case mix payment system for self-dialysis training, Medicare pays the ESRD facility its case mix-adjusted composite rate plus $12 per training treatment for Continuous Ambulatory Peritoneal Dialysis (CAPD) and $20 per training treatment for Continuous Cycling Peritoneal Dialysis (CCPD) and hemodialysis training.

CMS Proposal: For CY2011, CMS proposed to adopt “. . . a single payment to ESRD facilities for ‘renal dialysis services’ in lieu of any other payment, and home dialysis supplies, equipment, and support services.”

The proposed definition of “renal dialysis services” that are included in the ESRD PPS payment bundle are:

ESAs and any oral form of such agents; all drugs and biologicals formerly payable under either Medicare B or Part D used to

treat ESRD, regardless of the route of administration; diagnostic laboratory tests and other items and services not included above for the

treatment of ESRD; and Costs for home dialysis (Method I and II) and self-dialysis training services.

CMS stated:

– “. . . since we are proposing that the costs of home dialysis services furnished under Method I and Method II . . . regardless of home treatment modality, would be included in the proposed ESRD PPS, we also are proposing that the Method II home dialysis approach in its present form would no longer exist under the proposed ESRD PPS.

– “. . . effective January 1, 2011, a supplier could only furnish, under an arrangement with the ESRD facility, home dialysis equipment and supplies to a Medicare home dialysis beneficiary, and then the supplier would need to look to the ESRD facility for payment.

– “. . . effective January 1, 2011, under the proposed ESRD PPS, ESRD facilities would no longer receive an add-on of $12 for CAPD and $20 for hemodialysis and CCPD to the otherwise applicable payment amount per treatment for the costs of training.”

CMS Final Rule: For CY2011, as required by law, CMS is adopting their proposal to create an ESRD PPS bundled payment amount with some modifications. Specifically, CMS is adopting their proposed definition of “renal dialysis services” which includes ESRD-related oral drugs without injectable equivalents or other forms of administration (oral-only drugs), but is delaying “. . . the implementation date for oral-only ESRD drugs and biologicals to . . . January 1, 2014.”

For a complete list of the drugs and biologicals that were included in the final ESRD PPS base rate, refer to Table C of the Appendix on pages 49205- 49209 of the Federal Register.

Home Dialysis

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For CY2011, CMS will “. . . bundle home dialysis furnished under Method I and pay the bundled ESRD PPS rate for such home dialysis services. . . .” As proposed, CMS will eliminate the Method II home dialysis approach under the ESRD PPS. In addition, CMS will allow the supplier to “. . . still furnish, under arrangement with the support dialysis facility, home dialysis equipment and supplies to a Medicare home dialysis beneficiary under the ESRD PPS. However, the supplier would have to look to the ESRD facility for payment since the ESRD PPS payment would be made to the ESRD facility and DME MACs would no longer make payment for ESRD-related supplies to suppliers.”

Self-Dialysis Training

For CY2011, CMS is finalizing “. . . a training add-on adjustment under the ESRD PPS in the amount of $33.38 per training treatment, adjusted based on the geographic wage index for nursing salaries to account for the hourly nursing time for dialysis training treatments.”

For “ESRD training facilities that opt to go through the ESRD PPS transition, Medicare will continue to pay $20.00 per training treatment for hemodialysis and CCPD and $12.00 for PD. . . .” CMS will also “. . . continue the current cap on training treatments at 15 for peritoneal dialysis (CAPD and CCPD) and 25 for hemodialysis training. . . .”

Market Basket UpdateFederal Register pages 49151 - 49162

Background: Under the current basic case mix payment system there is no annual update; inflation increases are only applied in response to specific statutory directives. The payment rates were established in 1983 at $127 per treatment for independent facilities and $131 for hospital-based facilities, and have increased only three times between 1983 and 2001. A $1.00 increase per treatment was effective January 1, 1991 as a result of the enactment of the Omnibus Budget Reconciliation Act of 1990. The rates were revised again as a result of the enactment of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, which increased the payments by 1.2 percent in 2000 and 2001, respectively.

CMS Proposal: For CY2011, CMS proposed “. . . a 1.5 percent update to the composite rate . . . .” This reflects a full market basket update of 2.5 percent minus 1.0 percentage points as mandated by MIPPA.

“. . . CMS has developed an all inclusive ESRD bundled rate (ESRDB) input price index. The percentage change in the ESRDB marketbasket reflects the average change in the price of goods and services purchased by ESRD facilities in providing renal dialysis services. . . . The proposed ESRDB marketbasket for ESRD facilities includes both operating and capital-related costs.“Medicare cost reports from hospital-based ESRD providers were not used to construct the proposed ESRDB marketbasket because data from independent ESRD facilities tend to better reflect the actual cost structure faced by the ESRD facility itself, and are not influenced by the allocation of overhead over the entire institution, as can be the case with hospital-based providers. This approach is consistent with our standard methodology used in the development

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of other marketbaskets, particularly those used for updating the skilled nursing facility PPS and home health PPS.”

CMS Final Rule: The PPACA requires CMS to apply “. . . a full market basket . . . to the composite rate portion of the blended payment during the first year of transition,” resulting in a market basket update of 2.5 percent for CY2011.

For CY2011, CMS has adopted their proposal to construct an ESRDB market basket “. . . based on the CY2008 cost report data for independent ESRD facilities.” However, CMS has made several methodological changes to the proposed ESRDB market basket, specifically:

“. . . we are using a 2008 base year rather than a 2007 base year. . . ; we have changed the price proxies for the Wages and Salaries and the Benefits cost

categories from ECIs for Health Care and Social Assistance to blended indexes of the ECIs for Hospitals and the ECIs for Health Care and Social Assistance; and

we are no longer including blood and blood products in the ESRDB market basket.”

Base RateFederal Register pages 49081- 49082

Background: The current basic case mix composite payment system reimburses outpatient maintenance dialysis services on a per-treatment basis, with a maximum of three treatments for each full week a patient undergoes outpatient dialysis. The current basic case mix composite payment is limited to maintenance dialysis treatments and all associated services including historically defined dialysis-related drugs, laboratory tests, equipment, supplies, and staff time. MIPPA directed the HHS Secretary to implement an ESRD PPS system under which a single payment would be made for “renal dialysis services” in lieu of any other payment. The estimated amount of total payments under the ESRD PPS for 2011 must be equal to 98 percent of the estimated total amount of payments for renal dialysis services if a new system was never implemented. The ESRD PPS must include adjustments for case mix variables, high-cost outlier payments, and low-volume facilities.

CMS Proposal: For CY2011, CMS proposed “. . . the base rate per treatment with an outlier adjustment and budget neutrality was calculated to be $198.64. This amount includes a 21.73 percent reduction from $261.58 to account for standardization to the projected CY2011 current system payment per treatment, a 1 percent reduction to account for proposed outlier payments, and a 2 percent reduction for the required 98 percent budget neutrality.”

CMS is also proposed “. . . to continue the present per treatment basis of payment in which ESRD facilities would be paid for up to three treatments per week, unless medical necessity justified more than three weekly treatments. ESRD facilities treating patients on PD or home HD would also receive payments for up to three treatments for each week of dialysis, unless medical necessity justified the furnishing of additional treatment.”

CMS Final Rule: For CY2011, CMS is finalizing their “. . . base rate per treatment with an outlier adjustment and budget-neutrality . . . to be $229.63.”

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The final base rate represents the average Medicare allowable payment (MAP) for composite rate and separately billable services based on CY2007 claims data, inflated to 2009. Components included in the base rate calculation are payments for composite rate services, dialysis support services, Part B drugs and biologicals, laboratory tests, durable medical equipment (DME) and supplies, supplies and other services billed by dialysis facilities, and former Part D drugs and biologicals. By dividing total MAP by the number of total Medicare Hemodialysis-Equivalent sessions, the average MAP per treatment is $243.19. “. . . The sum of the MAP amount for all renal dialysis services excluding Part D drugs ($243.19), plus the MAP amount for the Part D drugs component, which excludes oral-only drugs, ($0.46), yielded the total average MAP per treatment for the renal dialysis services included in the ESRD PPS payment bundle. This amount, $243.65, is the unadjusted base rate amount and reflects price inflation to 2009.” CMS will “. . . further reduce the projected CY2011 payment rate for estimated outlier payments, and the budget neutrality . . . .”

CMS also adopted their proposal to continue payment in which ESRD facilities would be paid for up to three treatments per week.

Budget Neutrality Adjustments Federal Register pages 49081 – 49083

Background: As authorized by MIPAA, total CY2011 payments under the proposed ESRD PPS payment system should equal 98 percent of the estimated total amount of payments for renal services that would have been made with respect to services in 2011 if the ESRD PPS had not been implemented.

Because ESRD-related Part D drug payment, unlike other separately billable ESRD-related items and services under Part B, would not be reimbursed by the current basic case mix composite payment system after January 1, 2011, blended payments to ESRD facilities that choose the transition would be understated during the transition. Therefore, CMS has adopted an adjustment as described below. The portion of payment reimbursed by the ESRD PPS is not affected since the bundled base rate calculation already includes Part D drug payments.

98 Percent Budget Neutrality Adjustment

CMS Proposal: For CY2011, CMS proposed to reduce “. . . the 2011 standardized base rate per treatment . . . by an additional two percent . . . to yield a proposed base rate of $198.64.” CMS Final Rule: For CY2011, CMS is finalizing their proposal to reduce the standardized base rate by an additional two percent, which results in a “. . . final base rate per treatment . . . calculated to be $229.63.”

Transition Budget Neutrality Adjustments

CMS Proposal – Part D Drugs: For CY2011, CMS proposed to “. . . provide a $14.00 per treatment adjustment to the portion of the blend with regard to the basic case mix adjusted composite payment system. This amount is based on the 2011 per treatment ESRD-related Part

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D drug payments included in the proposed ESRD PPS base rate. We further propose that the $14.00 per treatment adjustment . . . would be made without regard to basic case mix adjustments or wage index adjustments. This is because ESRD-related Part D drugs were not included in the development of the adjustments for the basic case mix adjusted composite payment system.”

CMS Final Rule – Part D Drugs: For the final rule, CMS “. . . revised the method of computing the Part D per treatment amount to divide by the number of Part D enrolled ESRD beneficiaries rather than total ESRD beneficiaries. As a result of these changes, the final transition budget-neutrality adjustment related to Part D drugs has been recomputed to be $0.49.”

CMS Proposal – Transition Budget Neutrality Adjustment: For CY2011, CMS proposed “. . . to apply the transition budget neutrality adjustment factor to all ESRD payments, including the component of the blended rates based on the current basic case mix adjusted composite payment system.” CMS believes this approach “. . . would evenly distribute the effect of the transition budget neutrality adjustment, and it would not change ESRD facilities’ incentives with respect to whether to opt out of the transition.”

To maintain the 98 percent budget neutrality adjustment required by law, CMS proposed “. . . to reduce all payments to ESRD facilities in CY2011 by a factor that is equal to 1 minus the ratio of the estimated payments under the ESRD PPS were there no transition (that is, 98 percent of total estimated payments that would have been made under the current basic case mix adjusted payment system) to the total estimated payments under the transition, or 3.0 percent. We propose to apply this adjustment to both the blended payments made under the transition and payments made under the 100 percent ESRD PPS. We propose to calculate similar factors for CY2012 and CY2013 that would allow a blended payment system to be budget-neutral to a fully implemented 100 percent ESRD PPS.”

CMS Final Rule – Transition Budget Neutrality Adjustment: For CY2011, CMS is “. . . finalizing the reduction of all payments to ESRD facilities . . . by a factor that is equal to 1 minus the ratio of the estimated payments under the ESRD PPS were there no transition . . . to the total estimated payments under the transition, or 3.1 percent.” As proposed, CMS will “. . . apply this adjustment to both the blended payments made under the transition and payments made under the 100 percent ESRD PPS.”

Facility Level Adjustments

Wage Index AdjustmentFederal Register pages 49116 - 49117

Background: Currently, the labor-related portion of the basic case mix adjusted composite rate is adjusted for differences in area wage levels using a wage index. The wage index for ESRDs is calculated using acute inpatient prospective payment system (IPPS) wage data, without geographic reclassifications, and without applying the rural floor. An upward budget neutrality adjustment is applied to the wage indexes under the current composite rate payment system. The

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current labor related share is 53.711 percent.

Under the current basic case mix composite payment systems, CMS applies a wage index floor for areas with very low wage index values. The wage index floor has been gradually reduced over the years from 0.90 in CY2005, to 0.85 in CY2006, 0.80 in CY2007, 0.75 in CY2008, 0.70 in CY2009 and 0.65 in CY2010.

CMS Proposal: For CY2011, CMS proposed “. . . that the ESRD wage index values used in the proposed ESRD PPS be calculated without regard to geographic reclassifications . . . and utilize pre-floor hospital data that are unadjusted for occupational mix. We also propose to use the OMB’s CBSA-based geographic area designations to define urban/rural areas and corresponding wage index values.”

In addition, CMS proposed “. . . not to adopt a wage index floor, as we believe we have provided a gradual reduction to the ESRD wage index floor through the existing basic case mix adjusted composite payment system and that the impact on ESRD facilities will be minimal.” For those ESRD facilities that opt out of the four-year transition, CMS intends “. . . to continue to gradually reduce the ESRD wage index floor for the portion of the payment that is based on the current basic case mix adjusted composite payment system.”

CMS Final Rule: For CY2011, CMS is adopting their proposal as final with some modification. Specifically, for CY2011, CMS “. . . will continue to apply the wage index floor during the transition to the PPS portion of the ESRD PPS payment . . .” The wage index floor for CY2011 will be 0.60. CMS indicates “. . . that no rural ESRD facilities outside of Puerto Rico would benefit from the current floor because their wage indexes exceed 0.60.”

The wage indexes under the new PPS system will not include the upward wage index budget neutrality adjustment applied under the current composite rate payment system.

The labor-related amount will decrease from 53.711 in 2009 to 41.37 in CY2011 due to the fact that it “. . . does not include the labor-related share component associated with the separately billable items and services.”

Low-Volume Facility AdjustmentFederal Register pages 49117 - 49125

Background: CMS believes that a low-volume adjustment should encourage small ESRD facilities to continue to provide access to care for ESRD patients. As required under MIPPA, low-volume ESRD facilities would be protected because a payment that “. . . reflects the extent to which costs incurred by low-volume facilities . . . in furnishing renal dialysis services exceed the costs incurred by other facilities in furnishing such services, and for payment for renal dialysis services furnished on or after January 1, 2011, and before January 1, 2014, such payment adjustment shall not be less than 10 percent.”

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CMS Proposal – Percent of Increase: For CY2011, CMS proposed “. . . a 20.2 percent increase to the base rate to account for the costs incurred by low-volume facilities for renal dialysis services furnished on or after January 1, 2011, and before January 1, 2014.”

CMS Final Rule – Percent of Increase: For CY2011, CMS is “. . . finalizing a 18.9 percent increase to the base rate to account for the costs incurred by low-volume facilities for renal dialysis services furnished on or after January 1, 2011.”

CMS Proposal – Qualifying Criteria: To qualify for the low-volume adjustment, CMS proposed that “. . . a ‘low-volume facility’ is an ESRD facility that meets the following criteria:

(1) Furnished less than 3,000 treatments in each of the three years preceding the payment year; and (2) Has not opened, closed, or received a new provider number due to a change in ownership during the three years preceding the payment year.”

CMS Final Rule – Qualifying Criteria: For CY2011, CMS is adopting their proposal as final with some modification. Specifically, CMS is “. . . finalizing a threshold of less than 4,000 treatments . . .” based on an updated analysis using more recent cost reports.

CMS Proposal – Geographic Requirements: CMS is concerned that the low-volume adjustment could provide an incentive for a provider to open multiple small facilities in place of a single larger facility. Therefore, “We propose, for purpose of determining the number of treatments under the proposed definition of a low-volume facility, that the number of treatments considered furnished by the ESRD facility would be equal to the aggregate number of treatments actually furnished by the ESRD facility and the number of treatments furnished by other ESRD facilities that are both: (i) under common ownership with and; (ii) 25 road miles or less from the ESRD facility in question. Under our proposal, ‘common ownership’ means the same individual, individuals, entity, or entities directly or indirectly own 5 percent or more of each ESRD facility.”

CMS Final Rule – Geographic Requirements: For CY2011, CMS had adopted their proposal as final without modification.

CMS Proposal – Grandfathering: CMS proposed to “. . . grandfather those commonly owned ESRD facilities that have been in existence and certified for Medicare participation on or before December 31, 2010. Specifically, ESRD facilities that are in existence and certified for Medicare participation prior to January 1, 2011, will be exempt from treatment determination requirement and the geographic proximity restriction . . . to identify which existing ESRD facilities meet the low-volume criteria, we propose that ESRD facilities could attest to the fiscal intermediary (FI)/Medicare administrative contractor (MAC) that they qualify as a low-volume facility.”

CMS Final Rule – Grandfathering: For CY2011, CMS is adopting their proposal as final without modification.

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Rural AdjustmentFederal Register page 49125 - 49126

Background: Under MIPPA, CMS has the authority to include a payment adjustment as deemed appropriate by the HHS Secretary for facilities located in rural areas. Currently, no adjustment is applied to rural facilities.

CMS Proposal: For CY2011, CMS is “. . . not proposing a facility level adjustment that is based on rural location . . . . We do not believe that the proposed ESRD PPS would result in decreased access to care for beneficiaries residing in rural areas based on the results of the impact analysis.”

CMS Final Rule: For CY2011, CMS is not “. . . implementing a facility-level payment adjustment that is based on rural location.”

Patient Level Adjustments

In 2005, CMS adopted “basic” case mix adjustments into the composite payment system in accordance with MMA requirements. The basic case mix adjustment factors reflect a “limited number of patient characteristics,” including age (five groups, excluding patients less than age 18), BSA, and low BMI. These basic case mix adjusters only affect the composite rate; they do not reflect costs associated with separately billable services.

In July 2008, the enactment of MIPPA required the implementation of an ESRD bundled payment system effective January 1, 2011 that would include a payment adjustment based on case mix, but gives the Secretary broad discretion to select and develop case mix adjusters.

Patient AgeFederal Register pages 49088 - 49089

Background: An analysis by CMS has found that age is a strong predictor of variation in payments for ESRD patients and an objective measure. The largest increments in costs based on CMS analysis were for pediatric ESRD patients.

CMS Proposal: For CY2011, CMS proposed “. . . payment adjustment factors for five age groups . . . .”

CMS Final Rule: For CY2011, CMS is “. . . implementing payment adjustment factors for the same five age groups as proposed . . . .” The adjustment factors are as follows:

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Variable

ESRD PPS Combined Multiplier

Ages 18-44 1.171 Ages 45-59 1.013 Ages 60-69 1.000 Ages 70-79 1.011 Ages 80+ 1.016

“With respect to pediatric patients . . . we have adopted pediatric payment adjustments for two age groups (<13 and 13-17 (as discussed in the “Pediatric ESRD Patients” section below).

Patient SexFederal Register page 49089

Background: Before enactment of MIPPA, gender was not used as a basic case mix adjuster to the composite payment system. CMS analysis found that gender is a strong predictor of variation in payments for ESRD patients. CMS concluded that female ESRD patients are more costly to treat than male ESRD patients due to differences in the use of erythropoiesis stimulating agents (SAs).

CMS Proposal: For CY2011, CMS proposed “. . . an adjustment of 13.2 percent for female patients.”

CMS Final Rule: For CY2011, “. . . we are not finalizing our proposal to include patient sex as a patient level case mix adjustment.” However, CMS will continue to monitor the issue of patient sex influencing the cost of ESRD services.

Body Surface Area and Body Mass IndexFederal Register pages 49089 - 49090

Background: CMS analysis found that body size measurements, including both height and weight, are a strong predictor of variation in payments for ESRD patients. The current basic case mix adjusters include both a height and weight adjustment to the composite payment system.

The BSA adjustment in the current basic case mix payment system is 1.037, which implies that costs increase 3.7 percent for every 0.1m2 increase in BSA. This suggests that there are longer treatment times and additional resources needed for larger patients. CMS’ more recent analysis concludes that the BSA adjustment has slightly declined from the original analysis done in 2005.The current basic case mix payment system includes a payment adjustment for low BMI (<18.5kg/m2), which is consistent with the Centers for Disease Control and Prevention (CDC) and the National Institute of Health (NIH) definition of malnourishment. The payment adjustment for low BMI in the current basic case mix payment system is 1.112, which serves as a surrogate for the severity of comorbid conditions associated with malnourishment in the dialysis population.

CMS Proposal: For CY2011, CMS proposed “. . . 1.034 as a payment adjustment factor for BSA in the proposed ESRD PPS. We adopted the DuBois and DuBois formula for BSA because based on our research, this formula was the most widely known and accepted. This formula is: BSA = W0.425 * H0.725 * 0.007184 . . . where w and h represent weight in kilograms and

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height in centimeters, respectively.”

CMS will continue to measure low BMI as less than 18.5kg/m2 and is “. . . proposing 1.020 as a payment adjustment factor for low BMI.”

CMS Final Rule: For CY2011, CMS will apply “. . . the case mix patient-level adjustment for BSA (per 0.1m2) is 1.020 and for low BMI (BMI<18.5) is 1.025. . . .”

Onset of Dialysis (New Patient Adjustment)Federal Register pages 49090 - 49094

Background: CMS is required by MIPPA to include a payment adjustment based on case mix that accounts for a patient’s length of time on dialysis for the ESRD PPS. CMS current analysis indicates that costs are higher for ESRD patients during the first four months of dialysis.

CMS Proposal: For CY2011, CMS proposed “. . . an adjustment of 1.473 for patients in their first 4 months of dialysis.” CMS proposed to multiply the onset dialysis adjustment of 1.473 by the BSA Adjustment Factor which equals (1.034^ ((BSA - (BSA national average of 1.87))/0.1).

CMS stated, “. . . we propose to define onset of dialysis beginning with the starting date as reported on the ESRD Medical Evidence Report Form through the first four months a patient is receiving dialysis.

“We acknowledge that there may be patients whose first four months of initial dialysis occur when they are not eligible for the Medicare ESRD benefit. In these circumstances, no adjustment would be made. We also acknowledge that eligibility for the ESRD benefit may occur during the first four months. In that situation, only the period of time in the first four months of dialysis that occurs while the patient is under the ESRD benefit would apply . . . . The onset of dialysis adjustment is made only in the initial first four months of dialysis and for the period of time that the individual is eligible for the ESRD benefit.”

CMS proposed “. . . that this adjustment be applied to both in-facility and home dialysis patients.”

CMS Final Rule: For CY2011, “. . . the onset of dialysis adjustment under the ESRD PPS for ESRD items and services . . . is 1.510.” As proposed, this adjustment will apply to “. . . in-facility and home dialysis patients eligible for the Medicare ESRD benefit for the first 4 months of initial onset of dialysis.” ESRD facilities will not receive a co-morbidity adjustment or the home dialysis training adjustment while receiving the onset of dialysis adjustment for a patient.

ComorbiditiesFederal Register pages 49094 - 49107

Background: MIPPA requires CMS to include a payment adjustment based on case mix that accounts for patient comorbidities. Comorbidities are specific patient conditions that are secondary to the patient’s principal diagnosis, yet have a direct affect on dialysis. Not all

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comorbidities are predictors of variation in payment for ESRD patients. CMS’ intent under the ESRD PPS is to identify increased costs that are associated with comorbidities and provide additional payments for certain conditions that occur concurrently with the need for dialysis. The current basic case mix adjusters do not include comorbidities as an adjustment to the composite payment system.

CMS Proposal: For CY2011, CMS proposed “. . . adjustments for . . . eleven comorbidity categories under the proposed ESRD PPS.”

CMS is “. . . proposing that in order to be eligible for the proposed comorbidity payment adjustment, the comorbid condition must exist (or have existed within the past three months for the diagnoses) and affect treatment . . . . We are proposing that an ESRD facility may receive only one comorbidity case mix adjustment per comorbidity category, but it may receive an adjustment for more than one comorbidity category.”

“We are proposing that in order to receive a comorbidity payment adjustment, the appropriate ICD-9-CM code that corresponds to the specific condition/disease . . . be placed on the claims . . . . This includes using V codes for those conditions that reflect that a patient had a disease/condition in the past and that the disease/condition . . . are not subject to any comorbidity adjustment.”

CMS Final Rule: For CY2011, CMS is finalizing the following six co-morbidity diagnostic categories:

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“. . . the three acute co-morbidity adjustments will be paid for the month the diagnosis is reported on ESRD facility claims and for the next three months. The chronic co-morbidity adjustments will continue to apply to all claims submitted.”

In addition, CMS will require “. . . facilities to report the appropriate ICD-9-CM code for the co-morbid condition recognized for the purposes of the co-morbidity payment adjustment under the ESRD PPS . . .” in order for the facility to receive the adjustment. Facilities will also need documentation to support the ICD-9-CM code on the patients chart.

ESRD facilities will not receive a co-morbidity adjustment while receiving the onset of dialysis adjustment for a patient. CMS will continue to monitor ESRD claims and consider future refinement to their co-morbidity adjustment policy.

For a complete listing of the ICD-9-CM codes that will be recognized for a comorbidity payment adjustment, refer to Table E in the Appendix on pages 49211 – 49212 of the Federal Register.

Race/EthnicityFederal Register pages 49108 - 49115

Background: Before MIPPA, race and ethnicity were considered, but never adopted, as patient-level payment adjusters. CMS is considering two data sources to determine a case mix adjustment factor for race and ethnicity under the ESRD PPS.

The first data source is the Renal Management Information System (REMIS), which is a tracking system for both Medicare and non-Medicare ESRD patients and is populated by the ESRD Networks with race and ethnicity data collected on the ESRD Medical Evidence Report (Form CMS-2728).

The second data source is the Enrollment Database (EDB), which contains enrollment and entitlement information for all people who are or were ever entitled to Medicare. EDB is populated with race and ethnicity data from the Social Security Administration (SSA). EDB is more condensed than REMIS and combines race and ethnicity into five categories.

CMS Final Rule: For CY2011, CMS is “. . . not finalizing race or ethnicity case mix adjustments in this final rule.” However, they will continue to perform studies to determine “. . . whether there are underlying clinical or biological factors contributing to the increased

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Case Mix Adjustment Co-morbidityModeled Case Mix

Adjustment

Pericarditis (acute) 1.114Infection (acute): Bacterial Pneumonia 1.135Gastrointestinal Tract Bleeding with Hemorrhage (acute) 1.183Hemolytic Anemia with Sickle Cell Anemia (chronic) 1.072Myelodysplastic Syndrome (chronic) 1.099Monoclonial Gammopathy (chronic) 1.024

cost of providing renal dialysis services for certain racial or ethnic groups.”

Dialysis ModalityFederal Register pages 49115 - 49116

Background: MIPPA gives the HHS Secretary authority to develop an ESRD PPS that would establish payment rates based on dialysis modality. In general, peritoneal dialysis (PD) is the primary mode for home dialysis and costs substantially less than in-center hemodialysis (HD).

CMS Proposal: For CY2011, CMS proposed “. . . not to develop an ESRD PPS which uses type of dialysis modality as a payment variable, despite the increased predictive power a modality variable would yield . . . . Because composite rate costs and separately billable payments are lower for PD, the use of a modality payment variable would result in substantially lower payments for PD patients. The payment rates for HD patients would be slightly higher, because of the greater volume of HD patients, and the exclusion of PD patients from the average payment amount that would apply to HD patients. We believe that the substantially lower payments for PD patients that would result if modality were used as a payment adjuster in the ESRD PPS would discourage the increased use of PD for patients able to use that modality.”

CMS Final Rule: For CY2011, CMS is “. . . finalizing the application of the same base rate payment amount under ESRD PPS for both HD and PD patients. . . .”

Other ESRD PPS Payments

Outlier PolicyFederal Register pages 49134 - 49147

Background: Before CY2011, the basic case mix-adjusted composite payment system did not provide for outlier payments. Beginning in CY2011, as required by MIPPA, ESRD PPS will include a payment adjustment for high-cost outliers due to unusual variations in the type or amount of medically necessary care. Generally, outlier payments made under Medicare PPSs are provided when the cost of providing care exceeds a threshold amount. The costs that exceed the outlier threshold are adjusted by a loss-sharing ratio.

Under the basic case mix-adjusted composite payment system, a “50 percent rule” is applied to the Automated Multi-Channel Chemistry (AMCC) laboratory tests to determine if these tests should be separately billable.

CMS Proposal – Outlier Services: For CY2011, CMS proposed “. . . that the ESRD outlier policy parallel the outlier policies adopted under other Medicare PPSs.” However, CMS proposed to limit outlier payments for ESRD outlier services to items and services that are separately billable under Medicare Part B with regard to the current basic case mix composite payment system.

CMS stated, “. . . we are proposing to define outlier services as items and services that currently

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1. Are separately billable under Medicare Part B, including ESRD-related drugs, ESRD related laboratory tests, and ESRD related services; and

2. Renal dialysis service drugs proposed for inclusion in the ESRD PPS bundle that currently are covered under Medicare Part D.”

CMS also proposed “. . . to ensure that the AMCC tests qualify as separately billable under the basic case mix adjusted composite payment system, and thus, qualify as outlier services, it would be necessary for ESRD facilities to continue applying the 50 percent rule under the proposed ESRD PPS.”

The 50 percent rule’s relevance would be limited to its use in determining eligibility for outlier payment, not for purposes of determining if Medicare would make a separate payment for these laboratory tests.

CMS Final Rule – Outlier Services: For CY2011, CMS will “. . . retain the 50 percent rule to determine whether AMCC panel tests would be considered composite rate or separately billable for the ESRD PPS portion of the blended payment, we are retaining the 50 percent rule and laboratory tests as outlier services. ESRD facilities that opt out of the transition period and those that go through the transition, will be required to follow the 50 percent rule until the transition period ends January 1, 2014.”

CMS also made some modifications to “. . . the definition of outlier services to include the following items and services that are included in the ESRD PPS bundle:

1. ESRD-related drugs and biologicals that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B;

2. ESRD-related laboratory tests that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B;

3. Medical/surgical supplies, including syringes, used to administer ESRD-related drugs that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; and

4. Renal dialysis service drugs that were or would have been, prior to January 1, 2011, covered under Medicare Part D, notwithstanding the delayed implementation of ESRD related oral-only drugs effective January 1, 2014.”

CMS Proposal – MAP Amounts: To determine outlier payments, CMS proposed $64.54 as the amount that would cover the separately billable drugs. CMS defines this amount as the MAP for outlier payments. CMS proposed “. . . a single outlier services MAP amount based on the average utilization of separately billable services for all Medicare ESRD patients.”

CMS Final Rule – MAP Amounts: For CY2011, CMS adopted “. . . separate outlier services MAP amounts for adult and pediatric patients . . . . The final average outlier services MAP amounts are $54.14 for patients <18, and $86.58 for patients age 18 and older. The average outlier service MAP amount per treatment, adjusted for the standardization, MIPPA reduction, and outlier payment factors . . . for adult and pediatric patients, results in the adjusted average outlier services MAP amounts . . . .” of $53.06 for <18 and $82.78 for patients age 18 and older.

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CMS Proposal – Outlier Payments: CMS proposed “. . . that the outlier percentage would be 1 percent of total ESRD PPS payments. The fixed dollar loss amounts that would be added to the predicted, outlier services MAP amounts would differ for adult and pediatric patients due to differences in the usage of separately billable services among adult and pediatric patients, especially drugs.”

“We are proposing an 80 percent loss sharing percentage because this percentage is consistent with certain other Medicare payment systems, including the Inpatient Rehabilitation Facility and Home Health PPSs, and, more importantly, is consistent with the amount Medicare pays, in general, for Part B services.”

“We are proposing that an ESRD facility would be eligible for an additional payment under the ESRD PPS where the facility’s imputed, average per treatment costs for ESRD outlier services furnished to a beneficiary exceed the predicted per treatment MAP amount for outlier services plus the fixed dollar loss amount . . . we are proposing to estimate an ESRD facility’s imputed costs for the ESRD outlier services based on available data rather than a provider-specific cost-to-charge ratio.”

CMS Final Rule – Outlier Payments: For CY2011, CMS is adopting their proposal as final with some modification. CMS has finalized the “. . . fixed dollar loss amounts of $155.44 and $195.02 for adult and pediatric patients, respectively, and a 1.0 percent outlier percentage.”

For establishing the outlier threshold, CMS provides for the same case mix adjustment categories; however, CMS calculates separate and distinct adjustment multipliers for separately billable items and services as shown in the table below.

Variable

Outlier Service Payment Adjustments for Separately Billable Items and Services

Low Volume Adjustment 0.975

Ages 18-44 0.996

Ages 45-59 0.992

Ages 60-69 1.000

Ages 70-79 0.963

Ages 80+ 0.915

Body Surface Area (BSA, per 0.1 m2; mean BSA = 1.87) 1.014

Underweight (BMI<18.5) 1.078

Onset for Renal Dialysis 1.450Pericarditis (acute) 1.354Infection (acute):

Bacterial Pneumonia 1.422Gastrointestinal Tract Bleeding with Hemorrhage (acute) 1.571Hemolytic Anemia with Sickle Cell Anemia (chronic) 1.225Myelodysplastic Syndrome (chronic) 1.309

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Variable

Outlier Service Payment Adjustments for Separately Billable Items and Services

Monoclonial Gammopathy (chronic) 1.074

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V. REPORTING ESRD QUALITY DATA

Federal Register pages 49182 - 49190

In January 2001, in response to the Balanced Budget Act (BBA), CMS created the Dialysis Facility Compare (DFC) site modeled after Nursing Home Compare. This tool provides information to the public for comparing the quality of dialysis services. The key quality measures reported in this tool include facility level measures of anemia control, adequacy of hemodialysis treatment, and patient survival.

Quality Incentive Program

MIPPA requires CMS to create a Quality Incentive Program (QIP) for ESRD facilities that would link payment to performance on certain quality measures for services furnished on or after January 1, 2012. This would be the first pay-for-performance program implemented under Medicare and would tie payment incentives to improving dialysis quality and outcomes. Facilities that do not meet or exceed minimum performance standards would receive payment reductions of up to 2.0 percent for a specified year.

The Act requires the HHS Secretary to:

Select measures; Establish the performance standards that apply to the individual measures; Specify a performance period with respect to a year; Develop a methodology for assessing the total performance of each provider and facility

based on the performance standards with respect to the measures for a performance period; and

Apply an appropriate payment reduction to providers and facilities that do not meet or exceed the established total performance score.

CMS published the ESRD QIP proposed rule in the August 12, 2010 Federal Register. Performance standards and other implementation issues are addressed in the ESRD QIP proposed rule. Comments on the ESRD QIP proposed rule are due to CMS no later than 5:00 p.m. on September 24, 2010.

CY2012 Payment Determinations

CMS Proposal: For CY2012, payment determinations CMS proposed “. . . to adopt the two anemia management measures and one hemodialysis adequacy measure that are currently used for DFC. Data needed to calculate these measures can be collected from Medicare claims submitted by ESRD providers and facilities on a patient-specific basis.”

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Proposed Quality Measures

Anemia Management (Controlled Anemia): *The percentage of patient at a facility whose hemoglobin levels were less than 10 grams per deciliter (g/dL) *The percentage of patient at a facility whose hemoglobin levels were greater than 12 g/dL

Hemodialysis Adequacy: *Achieved urea reduction ratio (URR) of 65 percent or more

“We are proposing to use the same methodology we use to calculate the anemia management measures for purposes of DFC to calculate them for purposes of the QIP . . . . Under this methodology, we will calculate the measures using hemoglobin data for Medicare patients who have been diagnosed with ESRD for at least 90 days and whose Medicare claims submitted by providers/facilities indicated the use of an ESA during that 90-day period. Data from patients whose first ESRD maintenance dialysis starts before day 90 or who have hemoglobin values of less than 5 or greater than 20 will be excluded from the measure calculation. In addition, there must be for the same patient at least 4 claims meeting this criteria for that data to be included in the data for a specific provider or facility.

The methodology for calculating the . . . in-center hemodialysis measure has been used since January 2001 with the initial release of DFC, and we are proposing to use the same methodology to calculate the measure for purposes of the QIP . . . . Under this methodology, we will calculate URR data only for Medicare patients who have been diagnosed with ESRD and received maintenance dialysis for at least 183 days from the date that they received their first maintenance dialysis treatment, and whose Medicare claims submitted by providers/facilities included a value for the URR. In addition, there must be for the same patient at least four claims meeting the criteria above for that data to be included in the data for a specific provider or facility.”

CMS Final Rule: For CY2012 payment determinations, CMS is adopting their proposal as final with one modification. Specifically, CMS will “. . . use the same methodology for data collection and analysis as used for calculation of the anemia measures reported to the DFC with the exception of not including patients <18 years of age in the final calculation of provider/facility performance on the measures.”

VI. PEDIATRIC ESRD PATIENTS

Pediatric PatientsFederal Register pages 49128 - 49134

Background: The current basic case mix adjusted composite payment system uses a set of case mix adjusters or multipliers based on three variables: age, BSA, and low BMI. CMS tried to develop case mix adjusters for outpatient pediatric ESRD patients under age 18, but CMS’ analysis proved to be highly variable and statistically unstable and, therefore, was never implemented. Beginning October 1, 2002, MMA provided that ESRD facilities with at least 50 percent of patients under age 18 be considered ESRD pediatric facilities and eligible for a pediatric exception to the

composite payment rate. Due to the high cost of treating pediatric ESRD patients, CMS developed a temporary methodology for these ESRD facilities.

In CY2005, CMS developed an adjustment factor of 1.62 to be applied to the current basic case mix composite payment rate per treatment for those ESRD facilities furnishing outpatient dialysis services to pediatric patients.

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CMS Proposal: For CY2011, CMS proposed a “. . . payment adjuster of 1.199 for the composite rate portion of the ESRD PPS for pediatric patients . . . this is an empirically developed measure derived from data for all Medicare outpatient ESRD pediatric patients treated by ESRD facilities.”

CMS also proposed “. . . a pediatric payment adjustment for separately billable services that uses:

Two age categories (<age 13, age 13–17), Two comorbidity categories (none, and one or more comorbidities from among the

following diagnoses: HIV/AIDS, septicemia, cardiac arrest, and diabetes), and Dialysis modality (HD or PD), as the basis for classifying pediatric patients into one of

eight groups.”

“Similar to the payment model for adult patients . . . a payment model for pediatric patients can be constructed from cost/payment models of composite rate and separately billable services.”

CMS proposed a process by which the composite rate and separately billable payment rates can be combined and applied to each of the eight pediatric classification groups, which result in payment multipliers that range from 0.963 to 1.215. CMS stated “These are the proposed pediatric patient-specific case mix adjustment factors that would be applied to the base rate under the ESRD PPS.”

CMS Final Rule: For CY2011, CMS is finalizing a pediatric payment adjuster of 1.105 “. . . to reflect the degree to which total actual CY2007 payments for composite rate and separately billable services for pediatric ESRD patients exceed the comparable figure for adult patients.”

CMS has “. . . adopted two payment variables from the proposed methodology used to develop the pediatric payment adjusters, that is, age and modality . . . . We are no longer adopting co-morbidities with regard to the pediatric payment adjustments, we are using actual payments to ESRD facilities for composite rate services in CY2007 for treating pediatric dialysis patients to determine payment for pediatric ESRD patients under the ESRD PPS.”

“Pediatric dialysis patients . . . will not be eligible for case mix adjustments based on BSA, low BMI, and the onset of dialysis. In addition, the low-volume adjustment . . . will not apply to pediatric patients.” However, the training add-on amount of $33.38 per treatment is applicable for pediatric dialysis patients.

CMS finalized “. . . four pediatric classification groups or cells, not eight as originally proposed.” For more details on the combined payment multipliers, refer to Table B on page 49204 of the Federal Register.

VII. OTHER ISSUES

Self-Administered ESRD-Related Drugs and BiologicalsFederal Register pages 49169 - 49173

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Background: Under the current basic case mix composite payment system, oral drugs and biologicals furnished to ESRD patients are separately payable under Medicare Part D. Beginning January 1, 2011, former Part D drugs will be bundled and paid under the ESRD PPS, in accordance with MIPPA requirements. ESRD facilities will be responsible for providing ESRD-related oral drugs formerly covered under Part D to their patients.

CMS Proposal: For CY2011, CMS proposed “. . . that ESRD facilities would be required to furnish these and any other self-administered ESRD-related drugs to beneficiaries either directly or under arrangement. We are particularly interested in assuring beneficiary access to these drugs.”

CMS Final Rule: For CY2011, CMS is “. . . not adopting a national method for establishing contracts with pharmacies, nor will we negotiate with drug manufacturers on behalf of ESRD facilities to establish ESRD-related drug prices . . . . In the meantime, we encourage ESRD facilities to pursue group purchasing arrangements. . . .”

Beneficiary CoinsuranceFederal Register pages 49164 - 49167

Background: Individuals receiving dialysis services from ESRD providers or facilities are responsible for a coinsurance amount equal to 20 percent of the Part B payment (and Medicare pays 80 percent).

CMS Proposal: For CY2011, CMS proposed “. . . that an ESRD facility receiving an ESRD PPS payment may charge the Medicare beneficiary or other person only for the applicable deductible and coinsurance amounts . . . . The beneficiary coinsurance amount for the ESRD PPS base rate is 20 percent of the total ESRD PPS payment (including payments made under the transition).”

CMS Final Rule: For CY2011, CMS is adopting their proposal as final without modification.

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