The CMS issued a final rule on October 31 updating the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to beneficiaries, effective January 1, 2015.

For Calendar Year (CY) 2015, the ESRD PPS base rate will be US$249.43, reflecting  a zero percent update to the payment rate and a wage index budget-neutrality adjustment factor of 1.001729 to the CY 2014 ESRD PPS base rate (US$239.02).

CMS projects the aggregate ESRD PPS expenditures for CY 2015 to ESRD facilities will increase by 0.3 percent, or US$30 million, compared with CY 2014 (an increase of 0.5 percent for hospital-based ESRDs and 0.3 percent for freestanding facilities). CMS also projects that beneficiary co-insurance payments will increase by 0.3 percent, or approximately US$10 million.

Further, in the rule, CMS finalized the ESRD Quality Incentive Program (QIP) requirements for payment year (PY) 2017 and PY 2018, in efforts to improve patient outcomes to meet CMS’s performance standards.

For example, according to a study cited by CMS, 30 percent of ESRD patients return for an unplanned readmission within 30 days of their hospital discharge; and Medicare paid more than $10.5 billion for costs associated with hospitalized ESRD patients in 2011.

So for PY 2017, CMS is adopting the Standardized Readmission Ration (SRR) clinical measure to assess readmission rates of ESRD dialysis Medicare patients who return to an acute care hospital within 30 days of their discharge, “thereby identifying poor or incomplete quality of care in the dialysis facility.”

Lastly, in the final rule, CMS instituted a methodology for paying national price adjustments for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) under fee schedules effective January 1, 2016, as well as a phase-in of special payment rules in a limited number of competitive bidding areas for certain, specified Durable Medical Equipment.

Impact of the final rule

It is unclear what actual impact the impending quality measures in this final rule will have on renal dialysis service providers, in conjunction with the financial repercussions resulting from reduced payment rates adjustments.

For instance, with regard to the SRR initiative, CMS relied on studies of non-ESRD populations to hypothesize that improved care coordination and discharge planning may reduce readmission rates of ESRD patients. The outcomes for ESRD patients, however, are still unknown.

Moreover, like in the Readmissions Reduction Program (RRP), CMS did not apply the socioeconomic status of patients in the SRR quality measure model, even though the Medicare Payment Advisory Commission (MedPAC) explained in its 2013 and 2014 recommendations that it is necessary to “evaluate each hospital’s readmission rate against the rate for a group of its peers with similar shares of low-income Medicare beneficiaries as a way to adjust the readmission penalties for socioeconomic status.”

This means that with regard to dialysis providers, in addition to existing payment cuts, unaccounted for socioeconomic disparities in the SRR model may result in financial penalties for poor or incomplete quality of care based on socioeconomic factors beyond their influence, such as poverty and lack of social support at the individual patient level.

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