Fact Sheets

ESRD PAYMENT POLICIES UNDER MEDICARE'S PHYSICIAN FEE SCHEDULE

ESRD PAYMENT POLICIES UNDER MEDICARE'S PHYSICIAN FEE SCHEDULE

For calendar year 2006, CMS made 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 made revisions to the ESRD exceptions policies and process also required by the MMA.

• CMS will 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 will 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 will 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.    In order to mitigate significant impact on smaller facilities, CMS will establish a 4-year transition for all facilities.
• CMS will 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 will also pay hospital-based facilities for all ESRD drugs at Asp+6 percent.
• CMS will increase the drug add-on adjustment from 1.087 to 1.147.
• CMS has simplified the ESRD exceptions process to make it easier for pediatric facilities to apply for and receive exceptions.