End-Stage Renal Disease (ESRD) Prospective Payment System (PPS)

The ESRD PPS provides a patient-level and facility-level adjusted per treatment (dialysis) 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, laboratory services, supplies and capital-related costs related to furnishing maintenance dialysis. The ESRD PPS provides adjustments, when applicable, for (1) a training add-on for home and self-dialysis modalities; (2) an additional payment for high-cost outliers when there are unusual variations in the type or amount of specific medically necessary care; (3) a transitional drug add-on payment adjustment (TDAPA) for certain new renal dialysis drugs and biological products; and (4) a transitional add-on payment adjustment for certain new and innovative renal dialysis equipment and supplies (TPNIES).

Refer to the following resources for more information on:

• Patient-Level Adjustments
• Facility Level Adjustments
• Outlier Services

ESRD PPS Drug Designation Process (DDP)

To add new drugs and biological products to the ESRD PPS bundled payment, CMS uses a drug designation process (DDP) that is based on ESRD PPS functional categories. An ESRD PPS functional category is a distinct grouping of drugs or biological products, as determined by CMS, whose end action effect is the treatment or management of a condition or conditions associated with ESRD. In general, drugs and biological products are considered to be included in the ESRD PPS base rate if they fit within one of the ESRD PPS functional categories. However, under current law, certain oral-only drugs are paid separately under Medicare Part D until January 1, 2025.

Section 217(c) of the Protecting Access to Medicare Act of 2014 (PAMA) required CMS to establish a process to: (1) determine when a product would no longer be considered an oral-only drug; and (2) include new injectable and intravenous products into the bundled payment under the ESRD PPS. We finalized a process in our regulations based on our longstanding DDP and later revised the regulation to apply to all new renal dialysis drugs and biological products.

For more information about the DDP, including ESRD PPS functional categories, refer to the ESRD PPS drug designation process webpage.

ESRD PPS Transitional Drug Add-on Payment Adjustment (TDAPA)

The TDAPA requirements are set forth in the ESRD PPS regulations in 42 C.F.R. § 413.234. The TDAPA is a payment adjustment under the ESRD PPS for certain new renal dialysis drugs and biological products: (1) those that fall within an existing ESRD PPS functional category, with certain exceptions; and (2) those that do not fall within an existing ESRD PPS functional category.

For new renal dialysis drugs and biological products that fall into an existing ESRD PPS functional category, the new renal dialysis drug or biological product is considered included in the ESRD PPS bundled payment; added to an existing ESRD PPS functional category; and paid the TDAPA for 2 years.

For new renal dialysis drugs and biological products that do not fall within an existing ESRD PPS functional category, the new renal dialysis drug or biological product is not considered included in the ESRD PPS. CMS adds a new ESRD PPS functional category or revises an existing ESRD PPS functional category through rulemaking and pays for the new renal dialysis drug or biological product using the TDAPA for a period of at least 2 years until sufficient claims data for rate setting analysis is available. Following payment of the TDAPA, CMS undertakes rulemaking to modify the ESRD PPS base rate, if appropriate, to account for the new renal dialysis drug or biological in the ESRD PPS bundled payment.

In order to receive the TDAPA, ESRD facilities report use of the TDAPA-eligible renal dialysis drug or biological product using the appropriate HCPCS code and modifier.

Refer to the ESRD TDAPA webpage for more information about the TDAPA requirements and application process.

Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES)

The TPNIES requirements are set forth in the ESRD PPS regulations in 42 C.F.R. § 413.236. The TPNIES is an add-on payment adjustment that CMS uses for certain new and innovative renal dialysis equipment and supplies. The intent of the TPNIES is to facilitate beneficiary access to certain qualifying, new, and innovative renal dialysis equipment and supplies by providing an add-on payment adjustment to support ESRD facilities in the uptake of new and innovative equipment and supplies under the ESRD PPS.

Eligibility Criteria 

Beginning January 1, 2020, the TPNIES is paid to an ESRD facility for furnishing a covered equipment or supply only if the item: 

1. Has been designated by CMS as a renal dialysis service under 42 C.F.R. §413.171; 
2. Is new, meaning within 3 years beginning on the date of the Food and Drug Administration (FDA) marketing authorization; 
3. Is commercially available by January 1 of the particular calendar year, meaning the year in which the payment adjustment would take effect; 
4. Has a complete Healthcare Common Procedure Coding System (HCPCS) Level II code application submitted in accordance with the HCPCS Level II coding procedures on the CMS website, by the HCPCS Level II code application deadline for biannual Coding Cycle 2 for durable medical equipment, orthotics, prosthetics and supplies (DMEPOS) items and services as specified in the HCPCS Level II coding guidance on the CMS website prior to the calendar year; 
5. Is innovative, meaning it meets the criteria specified in 42 C.F.R. § 412.87(b)(1) of this chapter; and 
6. Is not a capital-related asset, except for capital-related assets that are home dialysis machines.

For eligible items, the TPNIES is paid for two calendar years. See 42 C.F.R. § 413.236 for more information about TPNIES payment.

Refer to the ESRD TPNIES webpage for additional information about the application process and timeline for determination.

Resources

Additional information is available on the ESRD PPS webpage. For specific questions on the ESRD PPS, TDAPA, or TPNIES contact:

• ESRDPayment@cms.hhs.gov (for PPS)
• ESRDApplications@cms.hhs.gov (for TDAPA and TPNIES)