Fact Sheets

END STAGE RENAL DISEASE POLICY AND PAYMENT INITIATIVES

END STAGE RENAL DISEASE POLICY AND PAYMENT INITIATIVES

Overview:   The Centers for Medicare & Medicaid Services (CMS) is undertaking a number of initiatives to improve care of Medicare beneficiaries with End Stage Renal Disease (ESRD), while refining payment policies for services received by these patients to insure that they support the provision of high quality care.

Over 400,000 Americans suffer from kidney failure (end stage renal disease, or ESRD) and require either kidney dialysis or transplantation to live. Additionally, 8 to 20 million Americans have reduced kidney function, due primarily to diabetes and hypertension that can lead to kidney failure.

ESRD is Medicare’s only disease-specific program that entitles people of all ages to Medicare coverage on the basis of their diagnosis.  In 2003, more than 340,000 individuals received dialysis treatments in over 4,500 facilities across the United States .  In 2002, total Medicare costs for the ESRD program were $17 billion, an increase of 11 percent over costs in 2001.

Quality Initiative:     The objective of the ESRD Quality Initiative is to stimulate and support significant improvement in the quality of dialysis care. The initiative aims to refine and standardize dialysis care measures, ESRD data definitions, and data transmission to support the needs of Medicare’s ESRD program; empower patients and consumers by providing access to facility service and quality information; provide quality improvement support to dialysis providers; assure compliance with conditions of coverage; and build strategic partnerships with patients, providers, professionals, and other stakeholders.

Key components of the Quality Initiative include:

• Fistula First Breakthrough Initiative

This community-wide quality initiative aims to improve vascular access for dialysis patients, with the specific goal of increasing arterial venous fistula (AVF) use from 33 to 66% by 2009.  AVFs are the “gold standard” for vascular access in that they last longer, need less rework and are associated with lower rates of infection, medication use, hospitalization, and mortality.

• In-Center Hemodialysis Patient Survey (ICH CAHPS®)

CMS, in partnership with the Agency for Healthcare Research and Quality (AHRQ) and the renal community, is developing survey for ESRD patients to assess their experience of care.  The survey will focus on hemodialysis patients in chronic dialysis facilities.  The pilot test for the draft survey was completed in May 2005 and responses from the pilot test are currently being analyzed in order to publish a final survey instrument in early 2006.

• Consolidated Renal Operations in a Web-based Network (CROWN)

The CROWN system is the backbone of CMS’s ESRD information system and contains all things critical to program administration.   CMS is currently collaborating with providers, the ESRD Networks, and the renal community to develop a standardized set of data elements and a standard data transmission methodology to administer and oversee Medicare’s ESRD program.

• Dialysis Facility Compare (DFC) on www.medicare.gov

The DFC website contains dialysis facility service and quality information on all Medicare approved dialysis facilities in the United States  , allowing consumers and patients to review and compare facilities and choose a dialysis facility that best meets their needs. 

• ESRD Facility, OPO, and Transplant  Center Conditions for Coverage

On February 4, 2005 CMS published three proposed rules that will help ensure high quality care for ESRD beneficiaries. The first proposed rule will improve the quality of care provided to patients receiving care in dialysis facilities and the other two proposed rules will ensure that organ procurement organizations (OPOs) maximize the number of organs they recover for transplantation and that transplant centers provide the best possible care so that transplants are not lost due to death or graft failure.

• The ESRD Clinical Performance Measures (CPM)

This project collects data annually for a standard set of measures on a random national sample of dialysis patients to identify and track opportunities for improvement in areas that include adequacy of hemodialysis and peritoneal dialysis, anemia management, and vascular access management.

ESRD Disease Management Payment Demonstration

Scheduled to begin early 2006 and last for four years, this demonstration allows organizations serving ESRD patients to receive a capitation payment, which includes a pay-for-performance component, in order to test the effectiveness of disease management models at increasing quality of care for ESRD patients and improving the efficiency of the Medicare Program.

ESRD Bundled Payment Demonstration

Scheduled to begin early 2006 and last for three years, this fee-for-service demonstration will cover most separately billed items and services provided by dialysis facilities (including erythropoietin) and it expected to include a pay-for-performance component to encourage and recognize improvements in quality of care.  The proposed payment system design is currently under development and the solicitation is expected to be published Fall 2005.

Proposed Payment Policies Under Medicare’s Physician Fee Schedule

For calendar year 2006, CMS is proposing three significant changes to payments to ESRD facilities.  They include: 1) revision to the geographic designations and wage index adjustment applied to the composite payment rate; 2) revision of the drug payment methodology, moving from average acquisition cost pricing to average sales price (ASP) + 6 percent; and, 3) revision of the drug add-on adjustment to the composite payment rate as required under MMA. In addition, CMS is proposing revisions to the ESRD exceptions policies and process also required by the MMA.

• CMS is proposing to use the new CBSA geographic definitions and the hospital wage data based on 2002 data without taking into account geographic reclassifications applicable to IPPS hospitals only (consistent with SNF PPS). 

• CMS is proposing to eliminate the wage index cap, currently set at 1.3 because of the effect it has had on restricting payment in high cost wage areas.

• CMS is proposing to reduce the wage index floor for 2006 to 0.85 from 0.9.

• The MMA requires that any revisions to the geographic adjustments applicable to composite rate payments must be phased in over multiple years.   CMS is proposing a two year transition for the geographic adjustments under which facilities would get the new wage index, if higher, and a 50-50 blend if the new wage index is lower.  This is consistent with the phase-in implemented under IPPS.  CMS is proposing to allow winners under the new geographic adjustments to move directly to 100% of the new geographic adjustment,.

• CMS is proposing to pay for separately billable drugs and biologicals furnished by ESRD facilities at the Average Sales Price (ASP) plus 6%.  This is consistent with the formula used to pay for other Part B drugs.

• CMS is proposing to increase the drug add-on adjustment from 1.087 to 1.089.

• CMS is proposing to simplify the ESRD exceptions process to make it easier for pediatric facilities to apply for and receive exceptions