CMS issued two final rules on October 29, 2015 updating the Medicare prospective payment systems (PPS) for end-stage renal disease (ESRD) and home health services, both effective January 1, 2016.

Under the ESRD final rule, Medicare payments to both hospital-based and freestanding ESRD facilities are projected to increase by 0.2 percent, while Medicare payments to home health agencies are projected to decrease by 1.4 percent in calendar year (CY) 2016.

CY 2016 ESRD PPS final rule

Under the ESRD final rule, treatment base rates will be reduced. CMS explains that this is the result of changes to adjustment payment amounts based on an updated regression analysis using CY 2012 and CY 2013 ESRD claims and cost report data, as well as the removal of two comorbidity payment adjustments.

In the CY 2016 final rule, CMS revises the low volume payment adjustment (LVPA) criteria for ESRD facilities that furnish fewer than 4,000 treatments per year by (i) removing the grandfathering criterion, and (ii) reducing the geographic proximity criterion from 25 road miles to 5 road miles. According to CMS, this LVPA revision now excludes facilities of common ownership that are located within 5 miles of one another, regardless of when these facilities opened.

In the CY 2016 final rule, CMS has delayed ESRD PPS reimbursement for oral-only ESRD drugs until January 1, 2025. In addition, CMS finalizes a drug designation process to (i) determine when a drug is no longer considered an oral-only drug and (ii) include new injectable and intravenous products into the bundled payment under ESRD PPS.

Finally, CMS provides changes to the ESRD Quality Incentive Program (QIP), under which dialysis facilities are subject to a reduction of up to 2 percent in ESRD PPS reimbursement based on their performance on certain quality measures. For payment year 2019, CMS adds one new measure and removes four measures from the program.

The ESRD PPS final rule fact sheet is available here; the final rule will appear in the November 6, 2015 Federal Register.

Home Health PPS final rule

Under the Home Health PPS final rule, payment rates will be increased by 1.9 percent. However, the reduction in overall payments includes $80.95 rebasing adjustment to home health payment rates for CY 2016 (third year of the four-year phase-in) and decrease in the national, standardized 60-day episode payment amount by 0.97 percent intended to account for estimated case-mix growth unrelated to increases in patient acuity between CY 2012 and CY 2014.

Along with the payment update, CMS revises the ICD-10-CM translation list and adds certain initial encounter codes to the Home Health PPS Grouper based upon revised ICD-10-CM coding guidance.

CMS also implements a Home Health Value-Based Purchasing model in which all Medicare-certified home health agencies in selected states will be required to participate as of January 1, 2016.

Finally, CMS adds a quality measure to the Home Health Quality Reporting Program and provides minor other changes to the program.

The Home Health PPS final rule will appear in the November 5, 2015 Federal Register.