CMS Updates Policies and Payment Rates for ESRD/DME NPRM, DMEPOS

November 2018 ~

CMS has issued the final rule that updates payment policies and rates for Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) and the End-Stage Renal Disease (ESRD) programs.

The rule, which is updated annually and titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program (CBP) and Fee Schedule Amounts, and Technical Amendments to Correct Existing Regulations Related to the CBP for Certain DMEPOS,” also addressed changes to the DMEPOS Competitive Bidding program and potential changes to the gap filling methodology that is currently used to establish Medicare fee schedules for new HCPCS codes.

The summary below includes key provisions and significant changes within the final rule.

Changes and Updates to the ESRD PPS for CY 2019

ESRD PPS Base Rate Update

The final CY 2019 ESRD PPS base rate is $235.27, an increase of $2.90 to the current base rate of $232.37.  This amount reflects a productivity-adjusted market basket increase as required by section 1881(b)(14)(F)(i)(I) of the Act (1.3 percent) and application of the wage index budget-neutrality adjustment factor (0.999506).

CMS ESRD Bundled Market Basket and Labor-Related Share Rebase

For CY 2019, CMS is rebasing the ESRDB market basket to a 2016 base year; CMS periodically rebases the CMS market baskets in order to reflect more up-to-date cost structures.  The main impact from rebasing the ESRDB market basket is an increase in the labor-related share from 50.673 percent (using the 2012-based ESRDB market basket) to 52.3 percent (using the 2016-based ESRDB market basket).  From 2012 to 2016 the data show a relative increase in compensation costs and a relative decrease in all other costs, particularly drug costs.

Wage Index and Wage Index Floor Annual Update

The ESRD wage indices are adjusted on an annual basis using the most current hospital wage data and the latest Core-Based Statistical Area (CBSA) delineations to account for differing wage levels in areas in which ESRD facilities are located.  For CY 2019, CMS is not changing the application of the wage index; however, CMS is increasing the wage index floor from 0.40 to 0.50, which will increase the wage index value for any areas currently below the floor.

Outlier Policy Update

CMS annually updates the outlier policy using the most current data. CMS is updating the outlier services fixed-dollar loss (FDL) amounts for adult and pediatric patients and Medicare Allowable Payment (MAP) amounts for adult and pediatric patients for CY 2019, using 2017 claims data.  Based on the use of more current data, the FDL amount for pediatric beneficiaries will increase from $47.79 to $57.14 and the MAP amount will decrease from $37.31 to $35.18, as compared to CY 2018 values.  For adult beneficiaries, the FDL amount will decrease from $77.54 to $65.11 and the MAP amount will decrease from $42.41 to $38.51.  The 1.0 percent target for outlier payments was not achieved in CY 2017.  Outlier payments represented approximately 0.8 percent of total payments rather than 1.0 percent.  CMS believes in using CY 2017 claims data to update the outlier MAP and FDL amounts for CY 2019 will increase payments for ESRD beneficiaries requiring higher resource utilization in accordance with a 1.0 percent outlier percentage.

Transitional Drug Add-on Payment Adjustment (TDAPA) Expansion

CMS is revising the drug designation process to allow all new renal dialysis drugs and biological products approved by the Food and Drug Administration on or after January 1, 2020, regardless of whether they fit into an existing ESRD PPS functional category, to be eligible for the TDAPA.  After the end of the TDAPA period, modifications to the ESRD PPS base rate will not be available for new drugs that fall within existing functional categories.  Additionally, effective January 1, 2020, all drugs and biological products paid under the TDAPA will be paid at 100 percent of Average Sales Price (ASP), with the exception of calcimimetics, which will continue to be paid based on pricing methodologies under section 1847A of the Social Security Act (which includes ASP+6) until they are bundled under the ESRD PPS.

Burden Reduction Related to the Comorbidity Adjustment

CMS is finalizing a policy to rely on the International Classification of Diseases (ICD) official guidelines and general documentation requirements with regard to the comorbidity adjustment, consistent with other payment systems.  These guidelines provide clear direction on the coding and sequencing of diagnosis codes, and CMS will continue to monitor claims data to observe diagnosis reporting trends.

Impact Analysis

CMS projects that the updates for CY 2019 will increase the total payments to all ESRD facilities by 1.6 percent compared with CY 2018.  For hospital-based ESRD facilities, CMS projects an increase in total payments of 1.7 percent, while for freestanding facilities; the projected increase in total payments is 1.6 percent.

Payment for Renal Dialysis Services Furnished to Individuals with AKI

As required by section 1834(r) of the Act, CMS is updating the Acute Kidney Injury (AKI) dialysis payment rate for CY 2019 to equal the CY 2019 ESRD PPS base rate and to apply the CY 2019 wage index.  For CY 2019, the AKI dialysis payment rate is $235.27.

Changes to the End-Stage Renal Disease Quality Incentive Program (ESRD QIP)

CMS has designed the ESRD QIP to promote high-quality care by dialysis facilities. This program changes the way CMS pays for the treatment of dialysis patients by linking a portion of payment directly to facilities’ performance on quality measures. According to the agency, the ESRD QIP will reduce payments to an ESRD facility under the ESRD PPS by up to two percent if the facilities does not meet or exceed a minimum TPS.

Finalized Policies Beginning with the PY 2021 ESRD QIP 

Removal of Four Reporting Measures

CMS is finalizing its proposal to remove four reporting measures beginning with the PY 2021 ESRD QIP to align with the Meaningful Measures Initiative, which is a new initiative aimed at identifying the highest priority areas for quality measurement and quality improvement. The four reporting measures being removed from the program are:

  1. Healthcare Personnel Influenza Vaccination,
  2. Pain Assessment and Follow-Up,
  3. Anemia Management, and
  4. Serum Phosphorus.

CMS also finalized a proposal to update the measure removal factors used for the ESRD QIP to better align them with the measure removal factors CMS uses for other quality reporting and pay for performance programs, and the adoption of a new measure removal factor where the costs associated with a measure outweigh the benefit of its continued use in the program.

New Domain Structure and Weights

CMS also finalized a new domain structure and weighting policy that more closely aligns with the Meaningful Measures Initiative.  Under the updated scoring methodology, facilities that report a sufficient amount of data will receive a score on each measure included in the following four quality domains:

  • Patient & Family Engagement,
  • Care Coordination,
  • Clinical Care, and
  • Safety

Updated Validation

CMS also finalized the expansion of the NHSN validation under the ESRD QIP to 150 facilities in PY 2021 to ensure accurate reporting and payment to facilities. CMS also finalized the adaptation of the CROWNWeb validation as a permanent feature of the program beginning in PY 2021.

Finalized Policies Beginning with the PY 2022 ESRD QIP

New Measures

CMS finalized two new measures beginning with the PY 2022 ESRD QIP:

  1. Percentage of Prevalent Patients Placed on a Transplant Waiting List (PPPW), and
  2. Medication Reconciliation for Patients Receiving Care at Dialysis Facilities (MedRec).

CMS did not finalize one proposed measure, Standardized First Kidney Transplant Waitlist Ratio (SWR) for Incident Dialysis Patients because the measure is narrower in scope and less reliable than PPPW.

Changes for the DMEPOS CBP and Fee Schedule Payment Rules

The final rule also changes the bidding and pricing methodologies under the DMEPOS CBP; makes adjustments to DMEPOS fee schedule amounts using information from competitive bidding for items furnished from January 1, 2019 through December 31, 2020; adds new payment classes for liquid oxygen and oxygen equipment and a new methodology for ensuring that all new payment classes for oxygen and oxygen equipment added since 2006 are budget neutral; and establishes special payment rules for innovative multi-function ventilators or ventilators that perform functions of other DME.

Changes to the DMEPOS CBP finalized, according to CMS, will also reduce burden on suppliers by requiring suppliers to submit only one bid per product category would need to be submitted. In addition, the single payment amounts under DMEPOS CBP and establishing the SPAs for items in each product category would be based on the maximum winning bid for the lead item in the product category. These changes streamline the program and help ensure the long term sustainability of the program and the savings it generates.

The final rule also establishes methodologies for adjusting fee schedule amounts for items subject to the DMEPOS CBP furnished in non-CBAs that consider the information mandated by section 16008 of the Cures Act. The rule maintains increases in DMEPOS fee schedule rates in rural and non-contiguous areas that are not subject to the DMEPOS CBP, using a 50/50 blend of adjusted and unadjusted fee amounts, in order to protect access to needed durable medical equipment.  The rule also finalizes CMS’ proposal to fully adjust the fee schedule rates in areas that are currently not CBAs, are not rural areas, and are located in the contiguous United States (U.S.).  It also established a methodology for adjusting fee schedule amounts for items subject to the DMEPOS CBP furnished in former CBAs when there is a gap in the DMEPOS CBP.

The rule will also establish new payment classes for portable liquid oxygen equipment, portable gaseous oxygen equipment, and high flow portable liquid oxygen contents.  It establishes a new methodology for ensuring that all new payment classes for oxygen and oxygen equipment are budget neutral in accordance with section 1834(a)(9)(D)(ii) of the Act. The final rule also establishes new rules regarding payment for innovative ventilators that also perform the function of other items of DME that are subject to payment rules other than those at section 1834(a)(3) of the Act.

CMS is also finalizing its proposal to amend § 414.210(g)(7) to say that beginning on or after the date that the Northern Mariana Islands are included in a national mail order CBP, under this paragraph would no longer apply (83 FR 34389).

Gap-Filling Process for Establishing Fees for New DMEPOS Items Request for Information

In addition, CMS is considering if changes should be made to the gap-filling process for establishing fees for newly covered DMEPOS items paid on a fee schedule basis.  The gap-filling process allows Medicare to establish fee schedule amounts for new DMEPOS items that align with the statutory basis for the DMEPOS fee schedule.  In this final rule, CMS summarizes comments it received in response to an information solicitation on how the gap-filling process could be revised in a way that complies with the exclusive statutory payment rules for DMEPOS, but also prevents excessive overpayments or underpayments for new technology items and services.



Source(s): CY 2019 Fact Sheet; Federal Register; CY19 ESRD/DME NPRM (CMS-1691-F) and DMEPOS Competitive Bidding Program Temporary Gap Period Fact Sheet; American Orthotic & Prosthetic Association;