On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) issued a final rule updating payment rates and policies under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to Medicare beneficiaries on or after January 1, 2025. This rule also finalizes an update to the acute kidney injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities for calendar year (CY) 2025 and extends Medicare payment to dialysis in the home setting for beneficiaries with AKI. In addition, the final rule modifies how CMS will calculate the Transitional Drug Add-on Payment Adjustment (TDAPA) for oral-only phosphate binders beginning January 1, 2025. Furthermore, the rule updates requirements for the ESRD Quality Incentive Program (QIP), ESRD Facility Conditions for Coverage, and ESRD Treatment Choices Model.
For CY 2025, CMS is increasing the ESRD PPS base rate to $273.82, which CMS expects will increase total payments to all ESRD facilities, both freestanding and hospital-based, by approximately 2.7%. The CY 2025 ESRD PPS final rule also includes changes to the methodology for calculating the ESRD facility wage index, changes to the Low-Volume Payment Adjustment (LVPA) methodology, and several changes to the ESRD outlier policy.
Updates to the ESRD PPS for CY 2025
Background: The ESRD PPS provides a bundled, per-treatment payment to ESRD facilities that includes all renal dialysis services furnished for outpatient maintenance dialysis, including drugs and biological products. Additionally, the bundled payment includes all other renal dialysis items and services that were formerly separately payable under previous payment methodologies. The bundled payment rate is case mix adjusted for a number of factors relating to patient characteristics. There are also facility-level adjustments for ESRD facilities that have a low patient volume, for facilities in rural areas, and for the wage index. When applicable, the bundled payment rate also includes a training add-on payment adjustment for home and self-dialysis modalities, an outlier payment for high-cost patients, and add-on payment adjustments for certain drugs, equipment, and supplies.
Annual Update to the ESRD PPS Base Rate: Under the ESRD PPS for CY 2025, Medicare expects to pay $6.6 billion to approximately 7,700 ESRD facilities for furnishing renal dialysis services. The final CY 2025 ESRD PPS base rate is $273.82, which is an increase of $2.80 from the current CY 2024 base rate of $271.02. This final amount reflects the application of the wage- index, budget-neutrality adjustment factor (0.988600), and a CY 2025 final ESRD Bundled market basket update of 2.2%, equaling $273.82 (($271.02 X 0.988600) x 1.022 = $273.82). CMS projects that the updates for CY 2025 will increase the total payments to all ESRD facilities by 2.7% compared with CY 2024. For hospital-based ESRD facilities, CMS projects an increase in total payments of 4.5%, and for freestanding facilities, CMS projects an increase in total payments of 2.6%.
Wage-Index Changes: CMS is finalizing a new ESRD PPS-specific wage index that will be used to adjust ESRD PPS payments for geographic differences in area wages. This methodology combines data from the Bureau of Labor Statistics (BLS) Occupational Employment & Wage Statistics (OEWS) program and freestanding ESRD facility cost reports to produce this ESRD PPS-specific wage index. This new ESRD PPS-specific wage index will be used to determine geographic payment adjustments in lieu of the hospital wage-index values for each geographic area used in past years, which are derived from hospital cost-report data. Additionally, CMS is updating the ESRD PPS wage index to reflect the latest core-based statistical-area delineations, as determined by the Office of Management and Budget, to better account for differing wage levels in areas in which ESRD facilities are located. CMS will continue to apply the wage-index floor of 0.6000 and a 5% cap on wage-index decreases from the prior year, as finalized in the CY 2023 ESRD PPS final rule.
Updates to the Outlier Policy: To better recognize cost drivers for providing renal dialysis services under the ESRD PPS, CMS is expanding the list of ESRD outlier services to include drugs and biological products that were or would have been included in the composite rate prior to establishment of the ESRD PPS. We are also finalizing several technical changes to the methodologies for calculating the outlier services' fixed-dollar loss (FDL) amounts and Medicare allowable payment (MAP) amounts for CY 2025. CMS believes each of these changes will improve the ability of the ESRD PPS to continue making payments under the outlier adjustment that equals 1.0% of total ESRD PPS payments. Based on these methodological changes and the latest available data, CMS is updating the FDL and MAP amounts for CY 2025. For pediatric beneficiaries, the FDL amount will increase from $11.32 to $234.26, and the MAP amount will increase from $23.36 to $59.60 as compared to CY 2024 values. For adult beneficiaries, the FDL amount will decrease from $71.76 to $45.41, and the MAP amount will decrease from $36.28 to $31.02.
Changes to the Low-Volume Payment Adjustment (LVPA): CMS is finalizing its proposal to modify the LVPA policy to create a two-tiered LVPA, whereby ESRD facilities that furnished fewer than 3,000 treatments per cost-reporting year will receive a 28.9% upward adjustment to the ESRD PPS base rate. ESRD facilities that furnished 3,000 to 3,999 treatments will receive an 18.3% adjustment. In addition, the tier determination for facilities that are eligible for the LVPA will be based on the median treatment count over the past three cost-reporting years. CMS believes these changes to the LVPA will support the goals of the LVPA by increasing payment to the lowest volume facilities to better align payments with resource use.
Inclusion of Oral-Only Drugs in the ESRD PPS Bundled Payment: Section 1881(b)(14)(A)(i) of the Social Security Act (the Act) requires the Secretary to implement an ESRD payment system under which a single payment is made to a provider of services or renal dialysis facility in lieu of any other payment. When the ESRD PPS was first implemented in 2011, CMS excluded oral-only drugs from the bundled payment until January 1, 2014, because we lacked pricing and utilization data for those drugs. Subsequently, several laws delayed the incorporation of oral-only renal dialysis drugs into the ESRD PPS bundled payment, ultimately until January 1, 2025. In the CY 2016 ESRD PPS final rule (80 FR 68968), CMS finalized its policy to include oral-only renal dialysis drugs in the ESRD PPS bundled payment and its mechanism for collecting utilization and price information for these drugs. Under our current regulation at 42 C.F.R. § 413.174(f)(6), payment to an ESRD facility for oral-only renal dialysis drugs and biological products is included in the ESRD PPS bundled payment, effective January 1, 2025. CMS provided information in the proposed rule about how we will operationalize the inclusion of oral-only drugs and biological products into the ESRD PPS, as well as budgetary estimates of the effects of this inclusion for public awareness.
In the CY 2025 ESRD PPS proposed rule, CMS discussed potentially increasing the TDAPA amount for phosphate binders. In response to comments that we received on the proposed rule, we are finalizing a policy to pay the TDAPA for phosphate binders based on 100% of the Average Sales Price (ASP), increased by a fixed amount of $36.41 for incremental costs such as dispensing and storage of phosphate binders, which will be added to any monthly claim for which there is a TDAPA payment for phosphate binders. We expect that incorporating oral-only drugs and biological products into the ESRD PPS will increase access to these drugs. We have seen previously that incorporating Medicare Part D drugs into the ESRD PPS has had a significant positive effect on expanding access to such drugs for beneficiaries who do not have Medicare Part D coverage, with significant positive health equity impacts.
Changes to the Payment for Renal Dialysis Services Furnished to Individuals with AKI:
For CY 2025, CMS is finalizing its proposal to allow payment for AKI renal dialysis services furnished to beneficiaries in their homes, allowing Medicare beneficiaries with AKI a wider range of choices about how and where they receive renal dialysis services. CMS will permit ESRD facilities to bill Medicare for the home and self-dialysis training add-on payment adjustment for beneficiaries with AKI. CMS believes these changes will also support more frequent dialysis at a lower ultrafiltration rate, which may support recovery of kidney function in beneficiaries with AKI.
As required by section 1834(r) of the Act, CMS is updating the AKI dialysis payment rate for CY 2025 to $273.82, which is equal to the CY 2025 ESRD PPS base rate. CMS is also applying the new CY 2025 ESRD PPS wage index to calculate AKI dialysis payments.
ESRD Facility Conditions for Coverage (CfCs) Update
CMS is finalizing its proposal to expand coverage of home dialysis for beneficiaries with AKI. Previously, CMS had only covered payment for in-center hemodialysis for beneficiaries with AKI who were not hospitalized. CMS is finalizing several conforming changes to the ESRD facility CfCs to clarify that home dialysis is available to all renal dialysis beneficiaries, including beneficiaries with AKI and ESRD. By providing multiple choices of dialysis modality (hemodialysis vs. peritoneal dialysis) and location (incenter vs. in-home), CMS is delivering more flexibility to beneficiaries with AKI in making decisions about their care.
Changes to the ESRD QIP
Background:
The ESRD QIP is authorized by section 1881(h) of the Act. Under the program, CMS assesses the total performance of each facility on quality measures specified for a payment year, applies an appropriate payment reduction to each facility that does not meet a minimum total performance score (mTPS), and publicly reports the results.
Beginning with payment year (PY) 2027, CMS will replace the Kt/V Dialysis Adequacy Comprehensive clinical measure, on which facility performance is scored on a single measure based on one set of performance standards, with a Kt/V Dialysis Adequacy measure topic, which is comprised of four individual Kt/V measures and scored based on a separate set of performance standards for each of those measures. Under this update, the individual Kt/V measures would be adult hemodialysis (HD) Kt/V, adult peritoneal dialysis (PD) Kt/V, pediatric HD Kt/V, and pediatric PD Kt/V. By replacing the current Kt/V Dialysis Adequacy Comprehensive clinical measure with four separate measures, CMS will be able to assess Kt/V performance more accurately, based on whether the patient is an adult or child and what type of dialysis the patient is receiving. CMS will score the four measures as a Kt/V Dialysis Adequacy Measure Topic and limit the total weight of that topic to 11% of the total performance score (TPS), which is the weight of the current Kt/V Dialysis Adequacy Comprehensive clinical measure. These adjustments will continue to maintain Kt/V measurement as an important part of the quality of care assessed by the ESRD QIP.
CMS will also remove the National Healthcare Safety Network (NHSN) Dialysis Event reporting measure from the ESRD QIP measure set beginning with PY 2027. The removal of the NHSN Dialysis Event reporting measure is consistent with evolving the program to focus on a measure set of high-value, impactful measures that have been developed to drive care improvements for a broader set of ESRD patients. Although removing this measure will enable facilities to focus on the remaining measures in the ESRD QIP measure set, CMS notes that facilities will still be required to fully comply with the NHSN Dialysis Event protocol and report all dialysis event data for the NHSN Bloodstream Infection (BSI) Clinical Measure.
Updates to the ESRD Treatment Choices (ETC) Model for CY 2025
Background:
The ESRD Treatment Choices (ETC) Model is a mandatory model intended to encourage greater use of home dialysis and kidney transplantation for Medicare beneficiaries with ESRD while reducing Medicare expenditures and preserving or enhancing the quality of care furnished to beneficiaries with ESRD. The ETC Model includes two drivers of behavior changes to increase ESRD beneficiary access to alternatives to in-center dialysis, the Home Dialysis Payment Adjustment (HDPA) and Performance Payment Adjustment (PPA). The ETC Model was finalized by the Specialty Care Models final rule of September 20, 2019, and implemented beginning January 1, 2021.
Based on feedback from model participants, we became aware that the use of the ICD-10 code T86.12 to identify transplant failures may be incorrectly identifying beneficiaries for attribution to the ETC Model because a claim that is only coded with T86.12 may signify delayed graft function rather than a true transplant failure. To ensure that we are correctly identifying ESRD beneficiaries for the purposes of ETC Model ESRD beneficiary attribution, we proposed to modify our definition of an ESRD beneficiary at § 512.310.
Updates to the policy:
We are finalizing our proposed modification to the definition of ESRD Beneficiary at 42 CFR 512.310, as that definition is used to attribute beneficiaries to the ETC Model with one modification. An ESRD beneficiary isa beneficiary who meets any of the following:
(1) Is receiving dialysis or other services for end-stage renal disease, up to and including the month in which the beneficiary receives a kidney transplant, (2) Has already received a kidney transplant and has a non-AKI dialysis or Making Care Primary (MCP) claim at least 12 months after the beneficiary's latest transplant date, or (3) Has a kidney transplant failure less than 12 months after the beneficiary’s latest transplant date as identified by: (i) Two or more MCP claims in the180 days following the date on which the kidney transplant was received; (ii) 24 or more maintenance dialysis treatments at any time after 180 days following the transplant date; or, (iii) Indication of a transplant failure after the beneficiary’s date of transplant based on data from the Scientific Registry of Transplant Recipients (SRTR) database. If a beneficiary meets more than one of the criteria described in paragraphs (3)(i) through (iii) of this definition, the patient will be considered an ESRD beneficiary starting with the earliest month in which transplant failure was recorded.
The final rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2024-25486/medicare-program-end-stage-renal-disease-prospective-payment-system-payment-for-renal-dialysis.