CMS Announces Changes to ESRD Payment Model
Latest Medicare rule changes aim to increase payment rates and improve health equity and quality of care for those with end-stage renal disease.
On Oct. 29, 2021, The Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates payment rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services for calendar year (CY) 2022. The rule finalizes modifications to ESRD Treatment Choices (ETC) Model policies, including an updated payment incentive for ESRD facilities and clinicians who manage dialysis patients to significantly improve home dialysis and kidney transplant rates. These policy updates mark a step forward in the CMS Innovation Center’s objectives of driving health equity and ensuring quality, affordable healthcare in all communities.
ETC Model Changes
The ETC Model (in effect since Jan. 1, 2021) is a mandatory payment model that encourages greater utilization of home dialysis and kidney transplants. It incentivizes ESRD facilities and clinicians to provide Medicare recipients with education about home dialysis and kidney transplants as alternatives to in-center dialysis. The final rule includes new payment rates and an improved scoring and benchmarking methodology to improve participation outcomes.
Payment adjustments to the ETC Model in the final rule:
- The Home Dialysis Payment Adjustment (HDPA) is an upward adjustment on home dialysis and home dialysis-related claims with claim service dates between Jan. 1, 2021, and Dec. 31, 2023, the initial three years of the ETC Model.
- The Performance Payment Adjustment (PPA) creates upward or downward performance-based adjustment on dialysis and dialysis-related claims with claim service dates between July 1, 2022, and June 30, 2027. The PPA amount will depend on the ETC participant’s performance on the ETC Model’s home dialysis rate and transplant rate among the beneficiaries attributed to the ETC Participant.
These changes to the ETC Model — one of the agency’s first CMS Innovation Center models to directly address health equity — aim to decrease the health equity gap for those living with chronic kidney disease (CKD). CKD is disproportionately higher in low-income populations. By offering these patients more treatment choices and access to care under the ETC Model, providers may not only improve their bottom line but improve healthcare outcomes for disadvantaged patients as well.
ESRD PPS Updates
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 (with the exception of oral-only ESRD drugs until 2025). Additionally, the bundled payment includes all other renal dialysis items and services that were formerly separately payable under the 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 payments for certain drugs, equipment, and supplies.
In CY 2022, Medicare expects to pay an estimated $8.8 billion to approximately 7,700 ESRD facilities for furnishing renal dialysis services. The final CY 2022 ESRD PPS base rate is $257.90, an increase from the current base rate of $253.13. CMS projects that the updates for CY 2022 will increase the total payments to all ESRD facilities by 2.5 percent compared with CY 2021. For hospital-based ESRD facilities, CMS projects an increase in total payments of 3.3 percent, and, for freestanding facilities, CMS projects an increase in total payments of 2.5 percent.
ESRD QIP Updates
The final rule updates requirements for the ESRD Quality Incentive Program (QIP), which assesses total performance of facilities on measures specified for a payment year and applies an appropriate payment reduction to each facility that does not meet a minimum total performance score. CMS will take into account the COVID-19 public health emergency (PHE) for performance year (PY) 2022, since it has greatly affected the reliability of these scores, and will not penalize facilities based on the circumstances of the PHE. Under the finalized policies, no facility will receive a payment reduction for PY 2022.
The acute kidney injury (AKI) dialysis payment rate has also increased. The rate for CY 2022 will equal the CY 2022 ESRD PPS base rate and to apply the CY 2022 wage index. The final CY 2022 payment rate is $257.90, compared to $253.13 for CY 2021.