October 15, 2010 Medicare End-stage Renal Disease PPS: The Final Rule AT A GLANCE The Issue: On August 12, the Centers for Medicare & Medicaid Services (CMS) published in the Federal Register the final rule governing the end-stage renal disease (ESRD) prospective payment system (PPS). As required by law, CMS will make a single, prospectively determined (“bundled”) payment to ESRD facilities that takes into account patient and facility characteristics, effective January 1, 2011. The bundled payment will include all services currently included in the ESRD composite rate, as well as most services that are now billed separately, including training and home dialysis services, laboratory services, and ESRD-related Part B and D drugs. The law requires that the new system reduce total payment by 2.0 percent below the estimated payments that would have otherwise been made in 2011 under the current payment system. The rule also finalizes three quality performance standards and a data collection process for dialysis facilities, based on what is currently used on Dialysis Facility Compare to evaluate dialysis facilities. These measures will be used in the initial implementation of a proposed new quality incentive program (QIP), which was issued in the Federal Register on August 12 as a proposed rule . The ESRD QIP proposed rule would establish a scoring methodology that would tie dialysis facility payments to performance on these measures beginning in 2012. CMS plans to issue a final ESRD QIP rule this year. The four-year transition to the ESRD PPS, during which payments for renal dialysis services will be determined by a blended rate based on the basic case-mix adjusted composite payment system and the payment rate under the ESRD PPS, begins on January 1, 2011. ESRD facilities can make a one-time election to be excluded from the transition, which would result in a facility’s payments being based entirely on the ESRD PPS payment amount starting on January 1, 2011. Our Take: We are pleased that CMS made several AHA-recommended changes in the final rule. For instance, CMS will provide a separate self-dialysis training add-on to the ESRD PPS base rate. CMS also postponed the bundling of ESRD-related oral-only drugs, permitting them to continue to remain separately billable until January 1, 2014. CMS also adopted AHA recommendations to limit and specify the clinical laboratory tests that will be bundled into the ESRD PPS to only those that are ESRD-related and made it easier to qualify for the low-volume facility adjustment by raising the threshold number of dialysis services. What You Can Do: 9 Share this advisory with your chief financial officer and other members of senior management, ESRD staff, billing and coding staff, nurse managers and key physician leaders. 9 Work with your coding and billing staff to ensure that they understand the consolidated billing rules around the ESRD PPS and are prepared to code appropriately. 9 Model the impact of the final ESRD PPS changes on your expected 2011 Medicare revenue. We have attached a set of comprehensive payment examples excerpted from the rule to help you in conducting your analysis. 9 If you believe that your facility will fare better by opting out of the transition, notify your Fiscal Intermediary or Medicare Administrative Contractor of this decision, in the manner established by the FI/MAC, by November 1. Further Questions: Please contact Roslyne Schulman, AHA director for policy, at [email protected]. AHA's Regulatory Advisories are produced whenever there are significant regulatory developments that affect the job you do in your community. A 12-page, in-depth examination of this issue follows, plus a CMS attachment.
Transcript
October 15, 2010
Medicare End-stage Renal Disease PPS: The Final Rule
AT A GLANCE The Issue: On August 12, the Centers for Medicare & Medicaid Services (CMS) published in the Federal Register the final rule governing the end-stage renal disease (ESRD) prospective payment system (PPS). As required by law, CMS will make a single, prospectively determined (“bundled”) payment to ESRD facilities that takes into account patient and facility characteristics, effective January 1, 2011. The bundled payment will include all services currently included in the ESRD composite rate, as well as most services that are now billed separately, including training and home dialysis services, laboratory services, and ESRD-related Part B and D drugs. The law requires that the new system reduce total payment by 2.0 percent below the estimated payments that would have otherwise been made in 2011 under the current payment system. The rule also finalizes three quality performance standards and a data collection process for dialysis facilities, based on what is currently used on Dialysis Facility Compare to evaluate dialysis facilities. These measures will be used in the initial implementation of a proposed new quality incentive program (QIP), which was issued in the Federal Register on August 12 as a proposed rule. The ESRD QIP proposed rule would establish a scoring methodology that would tie dialysis facility payments to performance on these measures beginning in 2012. CMS plans to issue a final ESRD QIP rule this year. The four-year transition to the ESRD PPS, during which payments for renal dialysis services will be determined by a blended rate based on the basic case-mix adjusted composite payment system and the payment rate under the ESRD PPS, begins on January 1, 2011. ESRD facilities can make a one-time election to be excluded from the transition, which would result in a facility’s payments being based entirely on the ESRD PPS payment amount starting on January 1, 2011. Our Take: We are pleased that CMS made several AHA-recommended changes in the final rule. For instance, CMS will provide a separate self-dialysis training add-on to the ESRD PPS base rate. CMS also postponed the bundling of ESRD-related oral-only drugs, permitting them to continue to remain separately billable until January 1, 2014. CMS also adopted AHA recommendations to limit and specify the clinical laboratory tests that will be bundled into the ESRD PPS to only those that are ESRD-related and made it easier to qualify for the low-volume facility adjustment by raising the threshold number of dialysis services. What You Can Do:
Share this advisory with your chief financial officer and other members of senior management, ESRD staff, billing and coding staff, nurse managers and key physician leaders.
Work with your coding and billing staff to ensure that they understand the consolidated billing rules around the ESRD PPS and are prepared to code appropriately.
Model the impact of the final ESRD PPS changes on your expected 2011 Medicare revenue. We have attached a set of comprehensive payment examples excerpted from the rule to help you in conducting your analysis.
If you believe that your facility will fare better by opting out of the transition, notify your Fiscal Intermediary or Medicare Administrative Contractor of this decision, in the manner established by the FI/MAC, by November 1.
Further Questions: Please contact Roslyne Schulman, AHA director for policy, at [email protected].
AHA's Regulatory Advisories are produced whenever there are significant regulatory developments that affect the job you do in your community. A 12-page, in-depth examination of this issue follows, plus a CMS attachment.
BACKGROUND In the August 12 Federal Register, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that establishes a prospective payment system (PPS) for dialysis services for Medicare beneficiaries with end-stage renal disease (ESRD). The final rule is available at: http://edocket.access.gpo.gov/2010/pdf/2010-18466.pdf. Currently, Medicare makes payments for dialysis services to 590 hospital-based and 4,361 independent ESRD facilities under a basic case-mix adjusted payment system. A composite-rate payment is made to ESRD facilities for furnishing outpatient maintenance dialysis in the facility or in the beneficiary’s home. The composite rate payment covers dialysis treatment costs and certain routinely furnished ESRD-related drugs, laboratory tests and supplies. The composite rate is adjusted by a drug add-on payment, added in 2005, that accounts for changes in the drug pricing methodology, and by basic case-mix adjustment factors including age and body size. A special adjustment is applied for services provided to pediatric patients. In addition, the composite rate is adjusted for geographic differences in costs using a wage index. For 2010, the unadjusted composite rate is $135.15 and the drug add-on payment is $20.33. The composite rate does not include a number of other ESRD-related items and services, particularly injectable drugs such as erythropoietin (EPO) to treat ESRD-associated anemia, iron sucrose, vitamin D and non-routine laboratory tests. These items and services are billed separately under other Medicare payment systems, such as the clinical laboratory and physician fee schedules. As required by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), CMS will make a single, prospectively determined (“bundled”) payment to ESRD facilities beginning in 2011, taking into account patient and facility characteristics. MIPPA specifically requires that the new system reduce total payment by 2.0 percent compared to the estimated payments that would have been made in 2011 under the current payment system. The rule also finalizes three quality performance standards and a data collection process for dialysis facilities, based on what is currently used on Dialysis Facility
Medicare End-stage Renal Disease PPS: The Final Rule
Compare to evaluate dialysis facilities. These three quality measures will be used in the initial implementation of a proposed new quality incentive program (QIP). On August 12, CMS also published in the Federal Register (75 FR 49215) a proposed rule to implement the QIP for Medicare outpatient ESRD dialysis facilities, effective January 1, 2012. The proposed ESRD QIP rule would reduce ESRD payments by up to 2.0 percentage points for facilities that fail to meet or exceed a total performance score. A CMS fact sheet about the proposed rule can be downloaded at: https://www.cms.gov/apps/media/press/factsheet.asp?Counter=3801&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=6&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date. CMS plans to issue a final rule adopting the ESRD QIP later this year. The ESRD PPS will be implemented over a four-year transition period. During the transition, which begins on January 1, 2011, payments for renal dialysis services will be based on a blended rate comprised of the payments determined through the basic case-mix adjusted composite payment system and the payment rate under the ESRD PPS. For 2011, the first year of the transition, payments will be based on 75 percent of the payment rate under the composite rate and 25 percent of the payment rate under the ESRD PPS. ESRD facilities may make a one-time election to be excluded from the transition, which would result in a facility’s payments being based entirely on the ESRD PPS payment amount starting on January 1, 2011. ESRD facilities wishing to opt out of the transition must notify their Fiscal Intermediary (FI) or Medicare Administrative Contractor (MAC) by November 1, 2010. More information can be found at: http://www.cms.gov/ESRDPayment/.
AT ISSUE
Final Rule for a Fully Bundled ESRD PPS
As required by MIPPA, CMS creates an ESRD PPS that establishes a single bundled payment rate to be applied on a per-treatment basis. We have attached to the end of this regulatory advisory a set of comprehensive payment examples excerpted from the ESRD PPS final rule to help hospital leaders understand how the following final CMS policies are applied. ESRD Bundle of Services The following items and services are included in the final ESRD PPS bundle: all the items and services currently included in the composite rate; erythropoiesis stimulating agents (ESAs) and any oral form of such agents; other ESRD-related drugs and biologicals and their oral forms (with a temporary exception for certain oral-only drugs, described below); ESRD-related diagnostic laboratory tests; home dialysis services,
supplies and equipment (excluding physicians’ services); and other ESRD-related items and services (such as syringes, specialized tubing, etc.). Blood and blood products are excluded from the bundle and will remain separately billable. In addition, as described below, CMS will provide an add-on payment for self-dialysis training services. In comments on the proposed rule, the AHA and many others opposed the inclusion of oral drugs and biologicals that had no injectible equivalent, stating that including them would be contrary to the statutory requirements, pose a burden to hospitals, and lead to poorer patient outcomes because the proposed payment amount per treatment was inadequate to cover the average cost of these drugs. CMS responded to these concerns, by delaying the implementation date to bundle the oral-only ESRD drugs and biologicals (primarily calcimimetics and phosphate binders) to January 1, 2014 instead of January 1, 2011. CMS said that the transition period would provide sufficient time to address the pricing issues raised by the commenters, and to evaluate and correct any potential concerns that may emerge as a result of the inclusion of the oral drugs and biologicals with other forms of drug administration in the payment bundle effective January 1, 2011. However, CMS will include in the ESRD PPS bundled payment amount other drugs and biologicals (injectable drugs, oral drugs with some other form of administration, etc.) as of January 1, 2011. ESRD Base Rate CMS determined that, based on 2007 claims data (the year CMS uses to develop the ESRD PPS base rate amount), total per-treatment payments inflated to reflect calendar year (CY) 2011 are projected to be $251.60. This represents the average Medicare-allowable payment per treatment for composite rate and separately billable services, including training and home dialysis costs, laboratory services and all ESRD-related Part B and formerly covered Part D drugs. The average per-treatment payment is adjusted to reflect patient- and facility-specific differences in case-mix (described below) and other adjustments, as required by MIPPA. Based on these adjustments, CMS establishes an adjusted standardized payment amount of $229.63 per dialysis treatment. Adjustments for Case Mix and Wages. CMS reduces the total per-treatment payment amount by 5.93 percent to standardize for the effects of case-mix and geographic differences in average hourly wages. To determine patient case mix, CMS used all applicable final patient-level and facility-level adjustments (described below). CMS uses the latest available ESRD wage indexes, which are calculated without regard to geographic reclassifications and utilize pre-floor hospital data that are unadjusted for occupational mix. Adjustments for case-mix and wages are subsequently applied in the payment formula to cover these costs. The adjustment for case mix and wages lowers the standardized amount from $251.60 to $236.68.
Outlier Adjustment. CMS reduces the standardized amount by 1.0 percent for outlier payments for cases requiring unusually high amounts of drugs or other services that are
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separately payable under the current payment system. This 1.0 percent reduction lowers the standardized amount from $236.68 to $234.31. MIPPA-required 2.0 Percent Adjustment. As required, CMS reduces the standardized amount by 2.0 percent to ensure that estimated total Medicare payments to ESRD facilities in CY 2011 are 98 percent of what they would have been under the existing system. This additional reduction yields a standardized amount of $229.63.
Transition Budget-neutrality Adjustment. MIPPA requires CMS to implement a three-year “blended payment” transition to the new ESRD PPS but also allows providers to make a one-time election to be excluded from the transition, thereby receiving payments based on 100 percent of the payment rate under the ESRD PPS. MIPPA also requires the transition to be budget neutral. That is, the total amount of payments under the ESRD PPS, including payments under the transition, is required to equal the total amount of payments that would otherwise occur under the ESRD PPS without such a transition. CMS believes that ESRD facilities, in making the decision about whether to elect to be paid using the transition payment system or under the 100 percent fully implemented ESRD PPS payment system, will choose the option that is most financially beneficial to them. Therefore, during the first three years of the transition, CMS will apply an additional percent reduction to all payments to ESRD facilities (both those paid under the transition and those electing to be paid entirely under the ESRD PPS) to ensure budget neutrality. This budget-neutrality adjustment will be recomputed for each subsequent year of the transition. For 2011, CMS will apply a 3.1 percent reduction. Patient-level Adjustments As authorized by MIPPA, CMS will adjust the base rate for case mix using a variety of factors that have been found to affect costs. Under the current ESRD payment system, the composite rate is adjusted for age, body surface area (BSA), body mass index (BMI) and pediatric status. Case Mix and Co-morbidity Adjustments for Adult Patients. For adult patients, the final rule includes adjustments for patient age, BSA and low BMI. In addition, CMS adds adjustments for six co-morbidities – pericarditis (acute); bacterial pneumonia (acute); gastro-intestinal tract bleeding with hemorrhage (acute); hemolytic anemia with sickle cell anemia (chronic); myelodysplastic syndrome (chronic); and monoclonal gammopathy (chronic). The six co-morbidity diagnostic categories and the associated payment adjustment multipliers are shown in Table 22 in the final rule and the diagnostic codes for each of the six diagnostic categories are found in Table E in the appendix to the final rule. The co-morbidity payment adjustment is applied only to the portion of the composite rate related to “separately billable services.” Further, in order for the co-morbidity payment adjustment to apply, CMS requires an ESRD facility to document in the patient’s medical or clinical records the presence of one of the diagnosis codes eligible for the co-morbidity payment adjustment. In order to avoid overly high payments for co-morbidities, an ESRD facility will receive only one co-morbidity adjustment per claim. In the event that there is more than one co-morbidity
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diagnosis category that is applicable, CMS will apply the category with the highest payment adjustment. “Onset of Dialysis” Adjustment for Adult Patients. CMS also includes a multiplier adjustment of 1.510 for new in-facility and home dialysis adult patients in the first four months of maintenance dialysis. ESRD facilities that are eligible for and receive the “onset of dialysis” adjustment for a patient cannot receive a co-morbidity adjustment, nor can they receive the self-dialysis training add-on adjustment (described below) for that patient during the first four months of dialysis. Self-dialysis Training. CMS states that although training payments will be included in the calculation of the final ESRD PPS base rate, they agree with commenters, including the AHA, that the base rate alone does not account for the staffing costs associated with one-on-one focused home dialysis training treatments furnished by a registered nurse. Therefore, CMS finalizes a separate training add-on adjustment of $33.44 per treatment, adjusted based on the geographic wage index for nursing salaries, which will be added to the ESRD PPS payment amount. This adjustment will apply to both hemodialysis and peritoneal dialysis modalities. Pediatric Patient Adjustments. CMS finalizes a pediatric payment adjuster of 10.5 percent (a multiplier adjustment of 1.105) to reflect the degree to which total actual CY 2007 payments for composite rate and separately billable services for pediatric ESRD patients exceed the comparable figure for adult ESRD patients. CMS also finalizes pediatric payment adjustments that will apply to the portion of the bundled payment rate related to “separately billable services.” These include two age categories (less than age 13 or ages 13-17) and two categories for dialysis modality (hemodialysis or peritoneal dialysis). These payment adjusters, as shown in Table B in the appendix of the final rule, are included below
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Several of the adult payment adjustments will not apply to pediatric patients, including the adjustments for co-morbidities, BSA, low BMI, onset of dialysis and for low-volume facilities (described below). CMS indicates that this is because the special payment adjusters for pediatric patients already account for the overall difference in average payments per treatment for pediatric patients compared to adult patients. However, ESRD facilities that treat pediatric patients will be eligible for the self-dialysis training add-on for pediatric dialysis patients. Facility-level Adjustments Low-volume Adjustment. MIPPA requires CMS to adopt an adjustment of not less than 10 percent for low-volume facilities furnishing renal dialysis services from January 1, 2011 through December 31, 2013. Based on an analysis of ESRD data, CMS finalizes a revised definition of low-volume facilities as those facilities that: (1) furnished fewer than 4,000 treatments (compared to 3,000 as proposed) in each of the three years preceding the payment year; and (2) have not opened, closed nor received a new provider number due to a change in ownership during the three years preceding the payment year. In its comments to CMS, the AHA had supported such an increase in the threshold for defining low-volume facilities. Further, CMS discusses its concern that the low-volume adjustment could be misused to incentivize dialysis companies to establish small ESRD facilities in close geographic proximity to other ESRD facilities in order to obtain the low-volume adjustment. Therefore, CMS will require that the number of treatments considered furnished by the
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ESRD facility include the total number of treatments furnished by the ESRD facility and the number of treatments furnished by other ESRD facilities that are both under common ownership with and located 25 miles or less from the ESRD facility in question. ESRD facilities in existence and certified for Medicare participation prior to January 1, 2011 will not be subject to this geographic consideration. Based on its analysis of data, CMS will apply an 18.9 percent increase to the base rate for ESRD facilities that meet its criteria for low-volume for renal dialysis services furnished on or after January 1, 2011. As noted above, pediatric dialysis services furnished in facilities that otherwise meet the low-volume definition will not be eligible for payment of the low-volume adjustment. Wage Index Adjustment. CMS will apply a wage index adjustment using the core-based statistical area (CBSA) geographic area designations to define urban/rural areas and corresponding wage index values, as proposed. Also, although the agency had proposed to eliminate the wage index floor under the ESRD PPS, it will continue to apply the wage index floor during the transition to the PPS portion of the ESRD PPS payment in 2011. The ESRD wage index values are calculated without regard to geographic reclassifications and utilize pre-floor hospital data that are unadjusted for occupation mix. The labor-related share of the composite rate portion of the blended payment will be 53.711 percent. The labor-related share derived from the ESRD PPS marketbasket is 41.737 percent. In response to comments expressing concern about the reduction in the labor-related share for the ESRD PPS compared to the labor-related share used in calculating the current composite rate, CMS notes that it will closely monitor the cost structure of the ESRD industry and the labor-related share of the ESRD bundled rate (ESRDB) market basket following implementation of the new system. If new data show material shifts in the average cost structure for ESRD providers, including changes in the labor-related share, CMS will propose to rebase the ESRDB market basket, as appropriate. Transition Period and Payments MIPPA requires CMS to transition to the new bundled payment system within four years. However, facilities will be given a one-time opportunity to elect to be paid entirely under the new ESRD PPS beginning on January 1, 2011. CMS states that ESRD facilities wishing to “opt out” of the transition must notify their FI/MAC, in a manner established by the FI/MAC, no later than November 1, 2010, regardless of any postmarks or anticipated delivery dates. Once made, this election may not be rescinded. ESRD facilities that choose the transition will receive a blended payment for each dialysis treatment consisting of the payment amount under the current basic case-mix adjusted composite system and the payment amount under the ESRD PPS during the transition period beginning January 1, 2011 and ending December 31, 2013. For 2011, CMS will make payments based on 75 percent of the payment rate under the current basic case-mix adjusted composite payment system and 25 percent of the payment rate under the ESRD PPS. For 2012, the blend will be 50/50. For 2013, the blend will be
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25/75. In 2014, payment to ESRD facilities will be based on 100 percent of the ESRD PPS payment amount. The portion of the blended rate with regard to the basic case-mix adjusted composite payment system will be comprised of the composite payment rate (which is adjusted by the basic case-mix and a wage index), the drug add-on amount and payment amounts for items and services furnished to dialysis patients that are currently separately paid by Medicare under Part B to entities other than the ESRD facility (such as ESRD-related laboratory tests). In the proposed rule, CMS had also included a $14 adjustment to the portion of the blended rate related to the basic case-mix adjusted payment system during the transition. The $14 adjustment was to account for the ESRD-related drugs and biologicals that are currently separately paid under Part D and are proposed to be included in the ESRD PPS base rate. However, because CMS is delaying payment under the ESRD PPS for former Part D oral-only drugs, the $14 adjustment they proposed was reduced to a $0.49 adjustment in the final rule. Outlier Policy MIPPA requires CMS to make adjustments for high-cost patients, called outlier payments, to ESRD facilities that treat patients who use more than the predicted amount of services, including the amount of erythropoietin-stimulating agents (ESAs) used to manage dialysis-related anemia. As noted, CMS reduces the standardized amount for all dialysis treatments by 1.0 percent to fund this outlier policy. Outlier payments will apply only to items and services that currently are separately billable from the ESRD composite rate. In the final rule, CMS defines outlier services as:
• ESRD-related drugs and biologicals that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B;
• ESRD-related laboratory tests that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B;
• Medical/surgical supplies, including syringes, used to administer ESRD-related drugs that were or would have been, prior to January 1, 2011, separately billable under Medicare Part B; and
• Renal dialysis service drugs that were or would have been, prior to January 1, 2011 covered under Medicare Part D, (this would not include those oral-only drugs that will be excluded from the bundled ESRD PPS payment until January 1, 2014).
An ESRD facility will be eligible for an additional outlier payment when the facility’s average per treatment costs of ESRD outlier services exceeds the predicted per treatment Medicare allowable payment (MAP) amount for outlier services plus the fixed dollar loss amount. The final fixed dollar loss amount is $155.44 for adult patients and $195.02 for pediatric patients. Table 28 in the final rule provides additional details about the policy.
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Once the fixed dollar amount is met, CMS will pay 80 percent of the ESRD facility’s outlier service costs. For those ESRD facilities that do not elect to be excluded from the three-year transition, outlier payments will be limited to the portion of the blended rate based on the payment rates under the ESRD PPS. The final rule includes helpful hypothetical outlier payment examples for adult and pediatric patients. These examples are attached in the attachment to this advisory. Consolidated Billing Rules and Edits The implementation of the ESRD PPS will require changes to the way in which CMS processes claims, including establishing consolidated billing rules and edits and changes to the data elements reported on claims. Since the ESRD PPS payment model is all-inclusive for renal dialysis services and home dialysis items and services, items and services that are paid separately under the current basic case-mix adjusted composite rate, such as laboratory services and durable medical equipment (DME), will no longer be billed for by entities such as laboratories or DME suppliers. Payment for these services will be made only to the ESRD facility so that duplicate payment is not made by Medicare. CMS will use consolidated billing edits to prevent suppliers from billing Medicare for ESRD PPS-related services. In the event that some non-ESRD items and services are furnished to ESRD patients, CMS will establish modifiers through sub-regulatory guidance so that separate payment can be made. With respect to changes to the claims, ESRD facilities will be required to provide additional information in existing fields. For example, ESRD facilities will be required to itemize all drugs, biologicals and laboratory tests provided to each individual patient. Further, a modifier will have to be placed on claims for any non-ESRD related laboratory tests, drugs and supplies/equipment in order to receive separate payment. Finally, ESRD facilities will have to enter a co-morbidity ICD-9-CM diagnostic code to receive the co-morbidity payment adjustments. Laboratory Tests. MIPPA requires that all ESRD-related diagnostic lab tests not included under the current basic case-mix composite payment system be included as part of the ESRD PPS bundle. In the final rule, in response to comments from AHA and others, CMS has compiled a listing of lab tests that are ESRD-related, listed in Table F in the appendix to the final rule. When these listed tests are furnished to ESRD patients by an ESRD facility directly or under arrangement, they will be covered under the ESRD PPS bundled payment. If a lab test is furnished to an ESRD beneficiary that is not ESRD-related, the facility will receive separate payment only if the lab test is billed with a modifier. Drugs and Biologicals. In the ESRD PPS proposed rule, CMS proposed to include all renal dialysis drugs currently covered under Medicare Parts B and D under the ESRD PPS, including oral-only drugs. As a result, it proposed that ESRD facilities be required to furnish these and any other self-administered ESRD-related drugs to patients either
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directly or under arrangement. CMS sought public comment on ways to ensure beneficiary access to these drugs, specifically the extent to which Part D access requirements such as pharmacy networks and formularies would be relevant in this context. However, in the final rule, as described above, CMS delays payment under the ESRD PPS of most ESRD-related oral-only medications until January 1, 2014. CMS indicates that it will use the delay period to further evaluate beneficiary protections under the ESRD PPS related to oral drugs. However, to the extent that there are a limited number of ESRD-related oral drugs and biologicals with other forms of administration which will be implemented on January 1, 2011, ESRD facilities will be required to ensure that patients have access to these drugs. Therefore, CMS will require that ESRD facilities furnish these drugs to patients either directly or under arrangement. In the case of any ESRD facility that seeks to furnish these drugs directly by dispensing on-site, the facility will be required to comply with state pharmacy licensure requirements. However, CMS expects that many ESRD facilities will forego this process and instead enter into an arrangement with a licensed pharmacy for the provision of ESRD drugs formerly covered under Part D. Facilities that establish such arrangements are required to do so in a manner that facilitates beneficiary access to renal dialysis drugs. More specifically, CMS finalizes regulatory language that states: “Effective January 1, 2011, an ESRD facility that enters into an arrangement with a pharmacy to furnish renal dialysis service drugs and biologicals must ensure that the pharmacy has the capability to provide all classes of renal dialysis drugs and biologicals to patients in a timely manner.” Annual Payment Rate Updates As required by MIPPA and the Patient Protection and Affordable Care Act (ACA), beginning in CY 2012, the ESRD PPS base rate will be updated annually by an ESRD market basket index reduced by a productivity adjustment. The law requires that the ESRD market basket increase factor also be used to update the composite rate portion of the payment during the ESRD PPS phase-in period from 2011 through 2013, though beginning in 2012, such a market basket increase factor will be reduced by the productivity adjustment. For CY 2011, as required by the ACA, a full 2.5 percent market basket update will be applied to the composite rate portion of the blended payment during the first year of the transition. Beneficiary Coinsurance The beneficiary coinsurance amount will be 20 percent of the ESRD bundled payment amount, including applicable case-mix adjustments and outlier payments. Impact Analysis Overall, CMS estimates that a hospital-based ESRD facility will receive a 1.8 percent increase in payments under the new ESRD PPS for CY 2011 compared to the
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estimated 2011 payments under the current payment system. This compares to a -3.0 percent impact in 2011 for large dialysis organizations; a -0.9 percent impact for regional chains; and a -0.3 percent impact for independent facilities. CMS estimates that the 187 rural hospital-based dialysis facilities will experience an estimated 4.4 percent increase in payments. If all hospital-based facilities were to go directly to the full ESRD PPS payment (i.e., “opt out” of the transition), CMS estimates a 3.9 percent increase in 2011. This compares to a -3.7 percent impact in 2011 for large dialysis organizations; a -0.1 percent impact for regional chains; and a 0.7 percent impact for independent facilities.
Quality Incentive Program Provisions MIPPA requires CMS to create a quality incentive program (QIP) for ESRD facilities that will link payment to performance on certain quality measures for services furnished on or after January 1, 2012. This will be the first pay-for-performance program instituted under Medicare and will tie payment incentives to improving dialysis quality and outcomes. The law requires CMS to select measures and develop performance standards for health care categories such as anemia management and dialysis adequacy. In choosing measures, MIPPA instructs CMS to consider the availability of data to calculate such measures. In addition, as part of this program, CMS must develop procedures for making the QIP information public, after giving providers and facilities an opportunity to review the information that is to be released. As noted above, on August 12, CMS published in the Federal Register (75 FR 49215) a proposed rule to implement a QIP for Medicare outpatient ESRD dialysis providers and facilities, effective for services furnished on or after January 1, 2012. The proposed ESRD QIP rule would reduce ESRD payments by up to 2.0 percentage points for facilities that fail to meet or exceed a total performance score. The comment period for this proposed rule ended September 24. A CMS fact sheet about the proposed rule can be downloaded at: https://www.cms.gov/apps/media/press/factsheet.asp?Counter=3801&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=6&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date. CMS plans to issue a final rule adopting the ESRD QIP later this year. Final Measures for Quality Improvement Program In the final ESRD PPS rule, CMS adopts the following three measures for use in the QIP for payment consequence year 2012:
• Hemodialysis Adequacy: Achieved urea reduction ratio (URR) of 65 percent or more; and
• Anemia Management: Controlled anemia, as shown in two measures:
o the percentage of patients at a facility whose hemoglobin levels were less than 10 grams per deciliter (g/dL); and
o the percentage of patients at a facility whose hemoglobin levels were greater than 12 g/dL.
The proposed measures have been in use since 2001. These measures are currently collected from Medicare dialysis facility claims so there is no need for facilities to separately collect data for submission.
NEXT STEPS We suggest you model the impact of the final ESRD PPS changes on your expected 2011 Medicare revenue. We have attached a set of comprehensive payment examples excerpted from the rule to help you in conducting your analysis. If you believe that your facility will fare better by opting out of the transition, notify your FI or MAC of this decision, in the manner established by the FI/MAC, by November 1. Please contact Roslyne Schulman, AHA director for policy, at [email protected] with any further questions.
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 1
Attachment
EXCERPT FROM ESRD PPS FINAL RULE
COMPREHENSIVE PAYMENT MODEL EXAMPLES1 AND OUTLIER PAYMENT EXAMPLES2
Comprehensive Payment Model Examples In section II.D. of this final rule, we demonstrated how the case-mix adjustments based on separate estimating equations for composite rate (CR) and separately billable (SB) services (that is, the two equation model) were combined to obtain a single payment formula under the ESRD PPS. Table A in the Appendix contains the case-mix adjustments applicable to adult patients. In section II.G. of this final rule, we addressed the pediatric payment adjustments under the ESRD PPS. Table B in the Appendix contains the four pediatric classification categories and corresponding case-mix adjusters that will be applied to pediatric patients. In this section, we explain how the area wage index and case-mix adjustments will be applied to the adjusted base rate amount described in section II.E.4. of this final rule, reflecting combined CR and SB services, resulting in a patient-specific per treatment payment amount under the ESRD PPS, as set forth in § 412.56. We demonstrate how the case-mix adjustments presented in Tables A and B in the Appendix would be applied for eight hypothetical ESRD patients to obtain the per treatment payment amounts under the ESRD PPS. We refer to the product of the applicable case-mix adjustment factors as the patient multiplier or PM. The ESRD PPS case-mix adjusters are shown in Table A in the Appendix for adult patients and Table B in the Appendix for pediatric patients. Each example uses the adjusted base rate of $229.63, covering Part B renal dialysis services and self-care home dialysis services as set forth under section 1881(b)(4) of the Act. Each example also assumes an ESRD wage index value of 1.1000. The labor-related share derived from the ESRD PPS market basket, described in section II.J. of this final rule, is 41.737 percent. Therefore, the starting point in each example prior to determining the patient-specific PM is a wage index adjusted base rate of $239.21. This amount was computed as follows:
Base rate $229.63 Labor-related share of base rate ($229.63 * .41737 = $95.84)
1 Found on pages 49147-49151 of the ESRD PPS final regulation 2 Found on pages 49144-49145 of the ESRD PPS final regulation
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 2
Non labor-related share of base rate ($229.63 * (1 - .41737) = $133.79
$133.79 Wage index adjusted base rate ($105.42 + $133.79 = $239.21)
$239.21 We also point out that each case-mix adjusted payment amount is reduced by 3.1 percent through the application of an adjustment factor of .969 to account for budget neutrality during the transition period. This is referred to as the transition budget neutrality adjustment, and is included as the last item in the computation of the payment amount for each patient, after application of all other case-mix adjustment factors (that is, all PMs), including any applicable add-on amounts for training treatments. It also applies to any outlier payments. Example 1—Relatively Healthy ESRD Patient With No ESRD Payment Co-Morbidities; No Outlier Payments Apply John, a 45 year old male Medicare beneficiary, is 187.96 cm. (1.8796 m.) in height and weighs 95 kg. John was diagnosed with ESRD in early 2010 and has been on HD since July 2010. He has chronic glomerulonephritis and hypertension, and has an AV fistula. The patient also has secondary hyperparathyroidism. John’s payment rate for treatments furnished in January 2011 would be calculated as follows. Table A in the Appendix reveals that none of John’s co-morbidities is among those for which a case-mix adjustment applies. The only pertinent factors to adjust the base rate amount are age, height, and weight. Using the formula for BMI, we see that John is not underweight, having a BMI of 26.89 kg/m2, which is greater than the threshold value of 18.5, the cut-off for underweight status:
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 3
Using the Table A in the Appendix multiplier of 1.020, John’s case-mix adjustment or payment multiplier (PM) based on his BSA of 2.2161 is computed as follows:
John’s PM would reflect the applicable case-mix adjustments from Table A in the Appendix for both age and BSA and may be expressed as:
PMJohn = PMage * PMBSA = 1.013 * 1.0709 = 1.0848
John’s ESRD payment rate for treatments furnished in January 2011 would be:
$239.21 * 1.0848 * .969 = $251.45 Example 2—Same as Example 1, Except Dialysis Began November 15, 2010 John’s PM would have to include the adjustment for the onset of dialysis, because the treatments for which we are calculating the payment amount occur within 4 months of November 15, 2010. Because the onset of dialysis adjustment is limited to a maximum of 120 days, this particular adjustment would apply for treatments furnished between January 1, 2011 and March 15, 2011. John’s applicable case-mix adjustments would be for a patient new to dialysis, age, and BSA, and may be expressed as:
PMJohn = PMDialQuest * PMAge * PMBSA Using the adjustment factors from Table 10, John’s PM is:
PMJohn = 1.510 * 1.013 * 1.0709 = 1.6381 For treatments furnished between January 1, 2011 and March 15, 2011, John’s payment rate per treatment would be:
$239.21 * 1.6381 * .969 = $379.70 After March 15, 2011, when the onset of dialysis adjustment has expired, the payment would be $251.45, as calculated in Example 1. Example 3—ESRD Patient With Multiple Co-Morbidities Mary, a 66 year old female, is 167.64 cm. (1.6764 m.) in height and weighs 105 kg. She has diabetes mellitus and cirrhosis of the liver. Mary was diagnosed with ESRD in 2006, and has been on HD since that time. Mary was admitted for a two week hospitalization
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 4
from January 2–16, 2011 due to gastrointestinal tract bleeding, a diagnosis confirmed upon discharge. Mary’s hemorrhaging due to her GI bleeding ceased during her hospitalization. While in the hospital, Mary received inpatient dialysis. Mary was also discharged with a diagnosis of monoclonal gammopathy. After convalescing at home for 3 days, she resumed HD at an ESRD facility on January 20, 2010. The facility records the GI bleeding and monoclonal gammopathy diagnoses using the relevant ICD–9–CM codes for treatments received during the month of January. For claims submitted beginning with the month of February and continuing thereafter, the facility reports only the monoclonal gammopathy diagnosis, a chronic condition. The BMI calculation is:
Table A in the Appendix reveals that the PM in this example must be considered using the case-mix adjustments for gastrointestinal tract bleeding, monoclonal gammopathy, age, and BSA. Although Mary has diabetes and cirrhosis of the liver, these co-morbidities are not used in determining the case-mix adjusters under the ESRD PPS. The formula for calculation of a patient’s BSA is:
BSA = 0.007184 * heightcm.725 * weightkg
.425 BSAMary = 0.007184 * 167.64.725 * 105.425
= 0.007184 * 40.9896 * 7.2278 = 2.1284
Using the Table A in the Appendix multiplier of 1.020, Mary’s case-mix adjustment or PM based on her BSA of 2.1284 is computed as follows:
Although Mary has both an acute comorbidity (GI bleeding) and a chronic co-morbidity (monoclonal gammopathy) for the month of January, the facility may only be paid using the condition with the higher adjustment factor for the maximum number of 4 consecutive claim months in which payment for both co-morbidities must be considered. Because the case-mix adjustment for GI bleeding (1.183) exceeds that for monoclonal gammopathy (1.024), Mary’s case-mix adjustment for comorbidities will reflect GI bleeding only for treatments received in January 2011 through April 2011. Therefore, for these treatments, Mary’s PM may be expressed as:
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 5
= 1.2451
For treatments received from January 20, 2011 through April 2011, Mary’s payment rate per treatment is:
$239.21 * 1.2451 * .969 or $288.61 Beginning with claims for May, only one co-morbidity applies for payment purposes, monoclonal gammopathy, for which the PM is 1.024. As this is a chronic condition, beginning with treatments furnished in May and continuing thereafter, Mary’s PM may be expressed as:
For treatments received in May 2011 and thereafter, provided no other comorbidities apply, Mary’s payment rate per treatment would be:
$239.21 * 1.0778 * .969 or $249.83 Example 4—ESRD Patient With Multiple Co-Morbidities, Onset of Dialysis Adjuster, Training Treatments, and Acute Co-Morbidity Recurrence Apply Ted, a 30-year-old male, began in-center HD on March 20, 2011. Ted has type II diabetes mellitus, sickle cell anemia, and was diagnosed on March 2 with bacterial pneumonia, which was treated with antibiotics. After completing his course of treatment with antibiotics, Ted was declared free of pneumonia on April 15. Because the patient has family caregivers available to assist him, Ted expressed a desire to become a PD patient. His nephrologist agreed that Ted was a suitable candidate for CAPD. On June 20, 2011, Ted began a series of 12 training treatments at his dialysis facility (one which does not qualify for the low-volume adjustment, but which is certified to provide home dialysis training) to transition to CAPD. These training treatments ended on July 21, 2011. Between July 18 and July 21, Ted had 2 training treatments. Ted successfully began CAPD on July 23, 2011, but was again diagnosed with bacterial pneumonia on August 10. After prolonged treatment with antibiotics, Ted was declared free of pneumonia on November 15, 2011. Ted is 170 cm. (1.70 m.) in height and weighs 78 kg. Table A in the Appendix reveals that the case-mix adjusters which must be considered in this case are those for age, BSA, onset of dialysis, bacterial pneumonia, and sickle cell anemia. As will be shown Ted does not qualify for the low BMI adjustment. In addition, the training add-on of $33.44 per treatment (prior to adjustment for area wage levels) must also be considered in the payment computations.
BMITed = weightkg/height (m2)
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 6
= 78/1.702 = 78/2.89 = 26.99
Because Ted’s BMI exceeds the required threshold value of 18.5, there is no case-mix adjustment for low BMI. The formula for the calculation of a patient’s BSA is:
The onset of dialysis adjustment is applicable in Ted’s case, and extends from March 20, 2011 through July 17, 2011 (120 days). During this period, no case-mix adjustments for co-morbidities may be applied because the onset of dialysis adjustment supersedes the application of case-mix adjusters for co-morbidities. Neither may the training add-on be paid for the 10 training treatments furnished during the period the onset of dialysis adjustment is in effect. The only pertinent case-mix adjustments are those for age, BSA, and the onset of dialysis. For the 120 day period from March 20, 2011, through July 17, 2011, Ted’s PM is calculated as follows:
Ted’s ESRD payment rate per treatment from March 20, 2011 through July 17, 2011 would be:
$239.21 * 1.7769 * .969 = $411.88 For the 2 training treatments furnished between July 18 and July 21, the dialysis facility would receive a training add-on for each treatment, computed as follows:
Training rate—$33.44 Wage index—1.10 Training payment—$33.44 * 1.10 = $36.78
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 7
Because Ted has a chronic co-morbidity, sickle cell anemia, the payment rate per treatment for dialysis treatments beginning July 18 must reflect case-mix adjustments for age, BSA, and sickle cell anemia:
Ted’s ESRD payment rate per treatment (excluding the training add-on amount for 2 training treatments) would be:
$239.21 * 1.2615 = $301.76 Total payments for each of the 2 training treatments provided between July 18 and July 21 would be:
($301.76 + $36.78) * .969 = $328.05 For claims submitted beginning August 2011, Ted’s dialysis facility correctly reported the co-morbidities of sickle cell anemia and bacterial pneumonia. Because payment can only be made for the condition which yields the highest payment where two or more co-morbidities apply, Table A in the Appendix reveals that bacterial pneumonia is the condition with the higher case-mix adjuster (1.135). Therefore, this is the co-morbidity that will be reflected in the computation of Ted’s PM as follows for claims submitted for the 4 months of August 2011 through November 2011 (the maximum number of claim months an acute co-morbidity case-mix adjuster can be applied without a subsequent recurrence):
Ted’s ESRD payment rate per treatment for the months of August 2011 through November 2011 would be:
$239.21 * 1.3356 * .969 = $309.58 After November 2011, the only comorbidity that would apply in computing the payment rate is Ted’s chronic sickle cell anemia, for which the PM is 1.072. Beginning with claims submitted for the months of December 2011 and thereafter, assuming no other changes in Ted’s condition, the payment rate per treatment would be based on the following case-mix adjusters:
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 8
= 1.2615 Beginning with monthly claims for December 2011 and thereafter, Ted’s ESRD payment rate per treatment would be:
$239.21 * 1.2615 * .969 = $292.41 Example 5—Aged ESRD Patient With Low BMI (< 18.5kg/m2), History of Hospitalization, Multiple Co-Morbidities, and Treatment in a Facility Qualifying for the Low-Volume (LV) Adjustment Agnes, an 82 year old female, is 160.02 cm. (1.6002 m.) in height and weighs 45.36 kg. She has longstanding type II diabetes mellitus and was diagnosed with ESRD in 2008. The patient has coronary artery disease and peripheral vascular disease. In January 2009, Agnes began dialyzing with an upper arm AV fistula which had been created the previous year. In March 2010, after an unsuccessful attempt to declot the AV fistula during hospitalization, Agnes experienced additional bleeding complications and has been dialyzed using a catheter ever since. In December 2010, the patient was admitted to the hospital after fainting during an outpatient dialysis treatment. She was diagnosed with pericarditis and discharged January 11, 2011. She resumed outpatient dialysis on January 13, 2011 at a facility which qualifies for the LV adjustment, because it has never had a treatment volume exceeding 3500 treatments since it opened in 2005. Her treating physician declared her free of pericardial inflammation on February 12, 2011. On April 10, 2011, Agnes was hospitalized with bacterial pneumonia and remained hospitalized until April 25. She resumed outpatient dialysis on April 28. Agnes was declared free of bacterial pneumonia on May 15, 2011, after post-hospitalization treatment with antibiotics. The facility submitted monthly claims for the months of January and February 2011 with the reported diagnosis of pericarditis. For dialysis treatments furnished during the month of March, the facility submitted a monthly claim reporting no co-morbidities. For dialysis treatments furnished Agnes during the months of April and May, the facility reported on the monthly claims the co-morbidity of bacterial pneumonia. We must first use Agnes’ height and weight to determine if a case-mix adjustment for low BMI applies and determine Agnes’ BSA. BMI is computed as follows:
The applicable factors that should be used to calculate Agnes’ PM are the case-mix adjusters for age, BSA, low BMI, pericarditis, bacterial pneumonia, and the facility adjuster for LV. For the months of January and February 2011, Agnes’ ESRD facility reported on her monthly claims the pericarditis co-morbidity. Using the Table A in the Appendix adjusters, Agnes’ PM for the months of January and February may be expressed as:
Agnes’ ESRD payment rate for treatments furnished in January, February, and March 2011 would be:
$239.21 * 1.2668 * .969 = $293.64 Although Agnes no longer had pericarditis as of February 12, 2011, her facility is entitled to payments for treatments furnished in March which reflect a case-mix adjustment for this acute co-morbidity, because case-mix for an acute co-morbidity may be applied for claims submitted for four claim months unless another co-morbidity yields a higher payment amount. Agnes’ PM for April 2011 reflecting pericarditis is as follows:
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 10
1.025 * 1.135 * 1.189 = 1.2907 Agnes’ dialysis facility normally would be entitled to a payment adjustment for treatments reflecting the pericarditis co-morbidity for 3 claim months after February 2011, because a payment adjustment reflecting a co-morbidity may be paid for 4 claim months, including the month in which the diagnosis was present and dialysis treatments were furnished. However, in April Agnes was diagnosed with bacterial pneumonia. Because Agnes’ PM based on pneumonia is higher than that for pericarditis, her payment rate for April 2011 will be based on the bacterial pneumonia co-morbidity as follows:
$239.21 * 1.2907 * .969 = $299.18 Because Agnes’ dialysis facility is entitled to payments reflecting the bacterial pneumonia co-morbidity for claims for 4 claim months, the payment rate of $299.18 per treatment would apply for all treatments furnished in April through the month of July 2011, provided there are no other changes in Agnes’ condition. Example 6—Same as Example 1, With Outlier Payments John receives HD 3 times weekly. However, in January 2011 he suffered a compound ankle fracture and was hospitalized for 4 days from January 10 through 14. During the hospitalization John did not undergo any dialysis treatments. After discharge John resumed his dialysis treatments, but it was noted that his dialysis clinical indicators were markedly perturbed from baseline values, requiring additional laboratory testing and above average doses of several injectable drugs, particularly EPO, to return them to normal levels. During January 2011 John received 9 outpatient HD treatments at his usual facility. The facility submitted a claim for allowable outlier services including drugs and biologicals, laboratory tests, and supplies totaling $3,000.00. Using Table A in the Appendix, we begin by computing the predicted outlier services MAP per treatment based on the SB case-mix adjustment factors for the PM variables applicable to John, age and BSA:
SBPMJohn = PMageSB * PMBSASB John’s BSA from Example 1 is 2.2161. Applying the SB adjustment factor from Table 10 for BSA, John’s outlier services PM for BSA is computed as follows:
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 11
From Table 28, we determine that the outlier services MAP per treatment for adult patients is $82.78. Therefore, the case-mix adjusted predicted outlier services MAP per treatment for John is:
$82.78 * 1.0409 = $86.17 Next, we determine the imputed outlier services MAP amount per treatment which reflects the cost of outlier services actually incurred by the ESRD facility. John’s outlier services imputed amount averaged $3000.00/9 or $333.33 per session. Next, we must determine if John’s dialysis facility is entitled to outlier payments by comparing the predicted outlier services MAP amount to the imputed outlier services MAP amount. But first, we must add the fixed dollar loss amount to the predicted outlier services MAP amount. The fixed dollar loss (FDL) amount for the predicted outlier services MAP, reflecting the case-mix adjustments for John for age and BSA is:
JohnFDL = $86.17 + $155.44 = $241.61 Because John’s average outlier services MAP for the outlier services received was $333.33, which exceeds the outlier services MAP plus the FDL totaling $241.61, John’s ESRD facility is eligible for outlier payments beyond the otherwise applicable ESRD PPS payment amount of $251.45. The outlier payments are calculated as follows:
Amount by which the imputed amount exceeds the predicted amount plus the FDL— $333.33 - $241.61 = $91.72
Loss sharing ratio—80% Outlier payments per treatment—$91.72 * .80 = $73.38 Outlier payments—$73.38 * 9 treatments * .969 = $639.95 Regular ESRD payments for January 2011—$251.45 * 9 = $2263.05 Total ESRD PPS payments for January 2011—$2263.05 + $639.95 = $2903.00
Example 7—Pediatric ESRD Patient Receiving Treatments in a Low-Volume (LV) Facility; Outlier Payments Apply Timmy is a 16 year old male with ESRD due to renal hypoplasia. The patient was on PD until 2009, when he received a deceased donor kidney transplant. Timmy’s transplant failed in August 2010, and he has been on HD since that time. The patient receives dialysis through an AV graft. Timmy has a history of post-transplant lymphoma, which is
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 12
in remission. He also has diabetes mellitus, which developed after the kidney transplantation. Timmy weighs 66.2 kg. and is 161.6 cm. in height. He was hospitalized in December 2010 with Staph bacteremia. As part of his HD, Timmy receives ARANESP® 60 mcg. IV q 2 weeks, paracalcitol 4 mcg. IV 3 times a week, and iron dextran 100 mg. IV every 2 weeks. The patient also takes 2 tablets, 667 mg. each of calcium acetate 3 times per day. Timmy had 12 HD treatments in January 2011. The ESRD facility, which qualifies for the LV adjustment for adult patients, submitted a January claim for allowable outlier services including drugs and biologicals, laboratory tests, and supplies totaling $3800.00. Co-morbidities are not used to determine a pediatric patient’s ESRD payment rate because these factors have been taken into account in the pediatric payment adjustments. Neither is the LV adjustment applicable to pediatric dialysis patients. The only variables relevant in determining Timmy’s payment amount per treatment, without regard to outlier payments, are age and dialysis modality. Because Timmy is 16 and undergoes HD, Table B in the Appendix reveals that his pediatric classification group is category 4, for which the PM is 1.277. Timmy’s payment rate per treatment, without regard to outlier payments, is:
$239.21 * 1.277 * .969 = $296.00 Timmy’s dialysis facility would receive $296.00 for each of the 12 treatments it furnished in January 2011. Table B in the Appendix reveals that the SB case-mix adjustment factor for Timmy’s pediatric classification group (cell 4) is 1.459. From Table 28, we determine that the outlier services MAP per treatment for pediatric patients is $53.06. Therefore, the case-mix adjusted predicted outlier services MAP per treatment for Timmy is:
$53.06 * 1.459 = $77.41 Next, we determine the imputed outlier services MAP amount per treatment which reflects the cost of outlier services actually incurred by the ESRD facility. Timmy’s outlier services imputed amount averaged $3800.00/12 or $316.67 per treatment. We then determine if Timmy’s dialysis facility is entitled to outlier payments by comparing the predicted outlier services MAP amount to the imputed outlier services MAP amount. But first, we must add the fixed dollar loss amount to the predicted outlier services MAP amount. The fixed dollar loss (FDL) amount for the predicted outlier services MAP, reflecting Timmy’s pediatric classification group, is:
TimmyFDL = $77.41 + $195.02 = $272.43 Because Timmy’s average outlier services MAP for the outlier services received was $316.67, which exceeds the outlier services MAP plus the FDL totaling $272.43,
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 13
Timmy’s ESRD facility is eligible for outlier payments beyond the otherwise applicable ESRD PPS payment amount of $296.00. The outlier payments are calculated as follows:
Amount by which the imputed amount exceeds the predicted amount plus the FDL—$316.67- $272.43 = $44.24 Loss sharing ratio—80% Outlier payments per treatment—$44.24 * .80 = $35.39 Outlier payments—$35.39 * 12 treatments * .969 = $411.51 Regular ESRD payments for January 2011—$296.00 * 12 = $3552.00 Total ESRD PPS payments for January 2011—$3552.00 + $411.51 = $3963.51
Example 8—Pediatric ESRD Patient Receiving Training Treatments in a Low-Volume Facility Andrew, a 12 year old male with diabetes mellitus, has been on CCPD since June 2010. Andrew’s father has been deceased for 5 years. His mother, who assists him with his dialysis at home, will be unable to assist Andrew with dialysis beginning on February 10, 2011, because of major surgery which will leave her physically unable to participate in her son’s care for an extended period of time. Andrew’s Aunt Millie, who lives nearby, has agreed to be Andrew’s caregiver and assist him with his dialysis. Millie required 17 training sessions at Andrew’s dialysis facility, which is certified to provide home dialysis training, in order to become knowledgeable and skilled sufficiently to perform this role. These training sessions began February 16 and ended March 10. Andrew’s dialysis facility, which has been open for 5 years, has never furnished more than 3100 treatments in a year, and qualifies for the low-volume (LV) adjustment. Table B in the Appendix reveals that Andrew’s pediatric dialysis classification group is cell 1, with an associated PM of 1.033. Although Andrew’s dialysis facility is eligible for the LV adjustment for its adult patients, the LV multiplier does not apply to pediatric patients. During the months of January and February 2011, Andrew’s ESRD payment rate per HD-equivalent treatment would be:
$239.21 * 1.033 * .969 = $239.44 However, Andrew’s dialysis facility is entitled to receive payment for a maximum of 15 training treatments furnished in connection with Andrew’s new caregiver, Aunt Millie. Because the amount of the training add-on is adjusted by the dialysis facility’s wage index (1.10), the amount of the training add-on is calculated as follows:
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 14
Training rate—$33.44 Wage index—1.10 Training payment—$33.44 * 1.10 = $36.78
For the maximum number of 15 training treatments for which the training adjustment may be provided in connection with a PD patient, Andrew’s payment rate, including the training add-on, would be:
($239.21 * 1.033 + $36.78) * .969 = $275.08
Hypothetical Outlier Payment Examples Hypothetical Example—Adult Patient Martha, a 66 year old female who is 167.64 cm. tall, weighs 105 kg., and has a recent diagnosis of GI bleeding. A patient of this weight and height is not below the threshold for underweight status and thus would not qualify for a low BMI adjustment. The formula for calculation of a patient’s BSA is: 4700 E:\FR\FM\12AUR2.SGM
Table 29 reveals that the separately billable multiplier for BSA is 1.014. Martha’s case-mix adjustment based on her BSA of 2.1284 would be:
= 1.014(2.1284 - 1.87/0.1) = 1.0142.584 = 1.037
Step 1: Determine the predicted, ESRD outlier services MAP amount using the product of all applicable case-mix adjusters.
The product of the patient-level outlier services case-mix adjusters as identified in Table 29:
= 66 year old: 1.000, BSA: 1.037, and GI bleeding: 1.571: = 1.000 * 1.037 * 1.571 = 1.6291
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 15
The adjusted, average, ESRD outlier services MAP amount = $82.78 The adjusted, average ESRD outlier services MAP amount * product of the outlier services case-mix adjusters:
= $82.78 * 1.6291 = $134.86
Step 2: Determine the imputed average, per treatment, ESRD outlier services MAP amount based on utilization of all separately billable services on the monthly ESRD facility bill.
Assume the imputed monthly ESRD outlier services amount = $4,000 and that the corresponding total number of treatments in the month = 10 The imputed, average, per treatment, outlier services MAP amount
= $4,000/10 = $400
Step 3: Add the fixed dollar loss amount to the predicted, ESRD outlier services MAP amount.
The fixed dollar loss amount = $155.44. The predicted, ESRD outlier services MAP amount = $134.86
= $134.86 + $155.44 = $290.30
Step 4: Calculate outlier payment per treatment.
Outlier payment = imputed average, per treatment, outlier services MAP amount -(predicted, ESRD outlier services MAP amount plus the fixed dollar loss amount) * loss sharing percentage:
Hypothetical Example—Pediatric Patient: John, is a 13 year old HD pediatric patient. Step 1: Determine the predicted, ESRD outlier services MAP amount.
Excerpted from CMS Final Regulation on the ESRD PPS, 75 Federal Register 49030, August 12, 2010 16
As specified in Table 29, determine the patient-level ESRD outlier services case-mix adjuster:
= 13 year old HD patient = 1.459 The adjusted, average, ESRD outlier services MAP amount = $53.06 The adjusted, average, ESRD outlier services MAP amount * the product of the outlier services case-mix adjusters:
= $53.06 * 1.459 = $77.41
Step 2: Determine the imputed, average, per treatment, ESRD outlier services MAP amount.
The imputed monthly ESRD outlier services amount = $4,000 Assume the corresponding total number of treatments = 10 The imputed, average, per treatment, outlier services MAP amount =
= $4,000/10 = $400
Step 3: Add fixed dollar loss amount to predicted, ESRD outlier services MAP amount.
The fixed dollar loss amount = $195.02 The predicted, ESRD outlier services MAP amount = $77.41
= $77.41 + $195.02 = $272.43
Step 4: Calculate outlier payment per treatment.
Outlier payment = imputed, average, per treatment, outlier services MAP amount - (predicted, ESRD outlier services MAP amount plus the fixed dollar loss amount) * loss sharing percentage:
