Fact Sheets
Calendar Year 2025 End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) Proposed Rule (CMS-1805-P)
***Updated***
On June 27, 2024, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update payment rates and policies and includes requests for information 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 proposes 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 proposes to extend Medicare payment to dialysis in the home setting for beneficiaries with AKI. In addition, the rule provides information on how CMS will operationalize the inclusion of oral-only drugs in the ESRD PPS payment as of January 1, 2025. Furthermore, the rule proposes to update requirements for the ESRD Quality Incentive Program (QIP).
For CY 2025, CMS is proposing to increase the ESRD PPS base rate to $273.20, which would increase total payments to all ESRD facilities, both freestanding and hospital-based, by approximately 2.2%. The CY 2025 ESRD PPS proposed rule also includes a proposed change to the methodology for calculating the ESRD facility wage index, proposed changes to the Low-Volume Payment Adjustment (LVPA) methodology, and several proposed changes to the ESRD outlier policy.
Proposed Updates to the End-Stage Renal Disease (ESRD) Prospective Payment System (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.
Proposed Annual Update to the ESRD PPS Base Rate: Under the ESRD PPS for CY 2025, Medicare expects to pay $7.2 billion to approximately 7,700 ESRD facilities for furnishing renal dialysis services. The proposed CY 2025 ESRD PPS base rate is $273.20, which is an increase of $2.18 from the current CY 2024 base rate of $271.02. This proposed amount reflects the application of the wage index budget-neutrality adjustment factor (0.990228) and a CY 2025 proposed productivity-adjusted market basket increase of 1.8%, equaling $273.20 ($271.02 X 0.990228) x 1.018 = $273.20). CMS projects that the updates for CY 2025 would increase the total payments to all ESRD facilities by 2.2% compared with CY 2024. For hospital-based ESRD facilities, CMS projects an increase in total payments of 3.9%, and for freestanding facilities, CMS projects an increase in total payments of 2.1%.
Proposed Wage Index Changes: CMS is proposing a new ESRD PPS-specific wage index that would be used to adjust ESRD PPS payment for geographic differences in area wages. This proposed methodology would combine data from the Bureau of Labor Statistics Occupation Employment Wage & Statistics and freestanding ESRD facility cost reports to produce an ESRD PPS-specific wage index for use instead of using the hospital wage index values for each geographic area, which are derived from hospital cost report data. Additionally, we are proposing to update the wage index to reflect the latest core-based statistical area delineations, determined by the Office of Management and Budget, to better account for differing wage levels in areas in which ESRD facilities are located. CMS would 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.
Proposed Updates to the Outlier Policy: To better recognize the drivers of cost for the provision of renal dialysis services under the ESRD PPS, CMS is proposing to expand 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 proposing 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 proposals would improve the ability of the ESRD PPS to continue making payments under the outlier adjustment that equal 1.0% of total ESRD PPS payments. Based on these proposed methodology changes and latest data, CMS is proposing to update the FDL and MAP amounts for CY 2025. For pediatric beneficiaries, the proposed FDL amount would increase from $11.32 to $223.44, and the proposed MAP amount would increase from $23.36 to $58.39 as compared to CY 2024 values. For adult beneficiaries, the proposed FDL amount would decrease from $71.76 to $49.46, and the proposed MAP amount would decrease from $36.28 to $33.57.
Proposed Changes to the Low-Volume Payment Adjustment (LVPA): CMS is proposing 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 would receive a 28.4% upward adjustment to the ESRD PPS base rate, and ESRD facilities that furnished 3,000 to 3,999 treatments would receive an 18.1% adjustment. We are also proposing that the tier determination for facilities that are eligible for the LVPA would be based on the median treatment count over the past three cost reporting years. CMS believes these proposed changes to the LVPA would support the goals of the LVPA by increasing payment to the lowest volume facilities, thereby better aligning payment 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 required that payment for oral-only renal dialysis drugs could not be made under the ESRD PPS bundled payment prior to certain dates, 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. In this proposed rule, we are providing information 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. We expect that incorporation of oral-only drugs and biological products into the ESRD PPS will increase access to these drugs, as 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.
Proposed Changes to the Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury (AKI)
For CY 2025, CMS is proposing 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 is also proposing to permit ESRD facilities to bill Medicare for the home and self-dialysis training add-on payment adjustment for beneficiaries with AKI. CMS believes these proposed changes would also support more frequent dialysis at a lower ultrafiltration rate, which may support recovery of kidney function in with AKI.
As required by Section 1834(r) of the Act, CMS is proposing to update the AKI dialysis payment rate for CY 2025 to be $273.20, which is equal to the CY 2025 ESRD PPS base rate. CMS is also proposing to apply the CY 2025 ESRD PPS wage index to calculate AKI dialysis payments.
Proposed ESRD Facility Conditions for Coverage (CfCs) Update
Under current Medicare regulations, CMS covers only in-center hemodialysis for beneficiaries with acute kidney injury (AKI) who are not hospitalized, regardless of their individual prognosis or modality of treatment prior to hospital discharge.
Unlike ESRD patients, individuals with dialysis-dependent AKI can potentially avoid long-term dialysis through recovery of kidney function.
CMS believes it is necessary to provide for more flexibility in the modality options available to beneficiaries with AKI. Therefore, CMS is proposing to expand coverage of home dialysis for beneficiaries with AKI, increasing patient options for dialysis treatment beyond in-center hemodialysis, and empowering these patients to make decisions about their care. Additionally, this proposed change reflects efforts to increase home dialysis access and uptake.
Accordingly, CMS is proposing to make several conforming changes throughout the ESRD facility CfCs to clarify that home dialysis is available to all dialysis patients, including both AKI and ESRD patients.
Proposed Changes to the End-Stage Renal Disease Quality Incentive Program (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 is proposing to 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 would be comprised of four individual Kt/V measures and scored based on a separate set of performance standards for each of those measures. Under this proposed 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 would 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 is also proposing to score the four measures as a Kt/V Dialysis Adequacy Measure Topic and to limit the total weight of that topic to 11% of the TPS, which is the weight of the current Kt/V Dialysis Adequacy Comprehensive clinical measure. These proposals would continue to maintain Kt/V measurement as an important part of the quality of care assessed by the ESRD QIP.
CMS is also proposing to remove the National Healthcare Safety Network (NHSN) Dialysis Event reporting measure from the ESRD QIP measure set beginning with PY 2027. The proposed 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 would enable facilities to focus on the remaining measures in the ESRD QIP measure set, CMS notes that facilities would 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.
Finally, CMS is requesting public comment on a potential future health equity payment adjustment and potential future updates to the data validation policy.
The proposed rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2024-14359/medicare-program-end-stage-renal-disease-prospective-payment-system-payment-for-renal-dialysis
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