ESRD PPS Billing Instructions Now Available

The new End Stage Renal Disease Prospective Payment System (ESRD PPS), effective Jan. 1, 2011, means major billing and payment changes for physicians, providers, and suppliers who provide ESRD services to Medicare beneficiaries. A physician education article, issued by the Centers for Medicare & Medicaid Services (CMS) Aug. 20, serves to answer the many questions this new payment system will undoubtedly generate.

CMS published a final rule in the Federal Register Aug. 12 to replace the current basic case mix adjusted composite payment system with a new single payment system. Once implemented, physicians, providers, and suppliers submitting claims to payers for ESRD services provided to Medicare beneficiaries will receive a single payment that will cover all the resources used in providing an outpatient dialysis treatment, including supplies and equipment used to administer dialysis in the ESRD facility or at a patient’s home*, drugs**, biologicals, laboratory tests**, training, and support services.
* Medicare will, however, allow separate billing for ESRD supply HCPCS Level II codes (as shown on attachment four of Change Request (CR) 7064) by durable medical equipment (DME) suppliers when submitted for services not related to the beneficiary’s ESRD dialysis treatment and such services are billed with modifier AY.
** ESRD facilities billing for any labs or drugs not related to the treatment of ESRD will be considered part of the bundled PPS payment unless billed with modifier AY.
According to MLN Matters article MM7064, the per dialysis treatment base rate for adult patients is subsequently adjusted to reflect differences in:

• Wage levels among the areas in which ESRD facilities are located;
• Patient-level adjustments for case-mix (includes age, body surface area (BSA), low body mass index (BMI), six co-morbidity categories*, and the onset of renal dialysis);
• An outlier adjustment (for ESRD facilities treating patients with unusually high resource requirements);
• Facility-level adjustments (for location and volume);
• A training add-on payment amount of $33.44 (if applicable); and
• A budget neutrality adjustment during the transition period through 2013.

* The ESRD PPS provides for three categories of chronic comorbid conditions and three categories for acute comorbid conditions. See MLN Matters article MM7064 for details.

ESRD PPS Phase-in

The ESRD PPS provides ESRD facilities a four-year transition period under which they will receive payment based on a blend of the current basic case mix adjusted composite payment system and the new ESRD PPS. In 2011, payments will be based 75 percent on the old payment system and 25 percent on the new PPS; in 2012, payments will be based 50/50 on both payment systems; in 2013, payments will be based 25/75; and in 2014, payments will be based 100 percent on the ESRD PPS.
ESRD facilities have until Nov. 1 to exercise the option of being excluded from this transition period and having their payment based entirely on the ESRD PPS as of Jan. 1, 2011. ESRD facilities that don’t exercise this option should not submit claims spanning service dates in 2010 and 2011.
The ESRD PPS base rate is $229.63 for both adult and pediatric ESRD patients, effective Jan. 1, 2011. This base rate will be wage adjusted as previously mentioned. The labor-related share of the base rate from the ESRD PPS market basket is 0.41737, and the non labor-related share of the base rate is $133.79 ((229.63 x (1 – 0.41737) = $133.79). During the transition, the labor-related share of the case-mix adjusted composite payment system will remain 0.53711. Once the payment rate for the dialysis treatment is determined, the last item in the computation to determine the final payment rate is the application of the transition budget neutrality factor of .969 (i.e., a 3.1 percent reduction).
Note: Telehealth services billed with HCPCS Level II Q3014 Telehealth originating site facility fee, preventive services covered by Medicare, and blood and blood services are exempt from the ESRD PPS and will be paid based on existing payment methodologies. See MM7064 for other billing reminders.
This information is based on MLN Matters article MM7064. For billing instructions issued to payers, see Change Request (CR) 7064, which includes the following attachments:

• Attachment 3, lists outlier services;
• Attachment 4, lists DME ESRD Supply HCPCS Level II codes used in for ESRD PPS consolidated billing edits;
• Attachment 5, lists DME ESRD Supply HCPCS Level II codes that are NOT payable to DME suppliers;
• Attachment 6, lists laboratory CPT®/HCPCS Level II codes subject to ESRD consolidated billing;
• Attachment 7, lists drug codes subject to ESRD consolidated billing; and
• Attachment 8, lists by ICD-9-CM codes, the comorbid categories and diagnosis codes.

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