CMS Forecasts Increase in Dialysis Payment, Health Equity Gap Reduction


Proposed rule improves payment rates, incentives, and ESRD treatment choices.

Disadvantaged Medicare patients suffer from end-stage renal disease (ESRD) at higher rates and are also more likely to be readmitted to hospitals, experience higher costs, and receive in-center hemodialysis when their kidneys are no longer able to function properly. Furthermore, non-white patients with ESRD are much less likely to receive pre-ESRD renal care, be waitlisted for a transplant, or even receive a kidney transplant.

In an effort to close health equity gaps for Medicare patients with ESRD and provide better access to care, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to revamp the ESRD Prospective Payment System (PPS). If finalized, the 345-page filing would update Medicare payment rates for renal dialysis services, change the ESRD Quality Incentive Program (QIP), and modify the ESRD Treatment Choices (ETC) Model. Revisions to the latter are designed to encourage dialysis providers to reduce disparities in the rates of home dialysis and kidney transplants among patients of lower socioeconomic standing. Modifications to the model aim to address health and socioeconomic disparities, which the agency says are major contributors to chronic kidney disease (CKD) and ESRD.

CMS Estimates Payments to ESRD Facilities Will Increase in CY 2022

The ESRD PPS provides a patient-level and facility-level adjusted per treatment payment to facilities for renal dialysis services provided in either an ESRD facility or in a patient’s home. The bundled per treatment payment includes medications (except for oral-only ESRD drugs; included beginning in 2025), laboratory services, supplies, and capital-related costs related to furnishing maintenance dialysis.

Overall, CMS is estimating an increase in ESRD facility payments of approximately $140 million for the 2022 calendar year, as compared to ESRD PPS expenditures in CY 2021. This reflects a $120 million increase stemming from the ESRD PPS payment rate update and a $20 million increase due to updated outlier threshold amounts.

Key Changes Impacting ESRD Payment

Major provisions to the ESRD PPS outlined in the proposed rule include:

Base rate update – CMS proposes increasing the ESRD PPS base rate by $2.42 to $255.55 for the 2022 calendar year. This reflects application of the wage index budget-neutrality adjustment factor and a productivity-adjusted market basket increase of 1 percent. The agency projects that the base rate change, along with other updates to ESRD Medicare reimbursement, will increase total payments to all ESRD facilities by 1.2 percent in CY 2022 compared to CY 2021. However, CMS expects hospital-based ESRD facilities to see a decrease in total payments of 1.3 percent, while projecting freestanding facilities will see total payments increase by 1.2 percent.

Wage index update – CMS adjusts wage indices on an annual basis. For CY 2022, the agency is proposing to update the wage index values based on the latest data and continuing the two-year transition to the Office of Management and Budget (OMB) delineations.

Outlier policy update – CMS suggests updates to the outlier policy, fixed-dollar loss (FDL) amounts, and Medicare allowable payment amounts to reflect the most current data available, which is CY 2020. For pediatric beneficiaries, this would result in a decreased FDL amount of $30.38 and a decreased proposed MAP of $28.72, down from $44.78 and $30.88, respectively. For adult beneficiaries, the FDL amount would decrease to $111.18, and the MAP amount would decrease to $50.92, down from $122.49 and $50.92, respectively.

Another proposed change involves Medicare coverage for renal dialysis services furnished to individuals with acute kidney injury (AKI). CMS is seeking to update the AKI dialysis payment rate for CY 2022 to $255.55, which mirrors the proposed base rate for the ESRD PPS, and to apply the CY 2022 wage index.

CMS Proposes Zero Payment Reductions Based on ESRD QIP Score in PY 2022

Under the End-Stage Renal Disease Quality Incentive Program (ESRD QIP), CMS assesses the overall performance of each facility on measures specified for a payment year. For facilities that do not meet a minimum total performance score (TPS), the agency applies an appropriate payment reduction and publicly reports the results. The proposed rule includes proposals under the ESRD QIP to address the circumstances created by the public health emergency (PHE) for COVID-19 such as not scoring or reducing payment to any facility in 2022 based on data from 2020.

If finalized, the rule would also extend the time facilities have to report ESRD QIP data from September 2020 to December 2020 because of the impact the COVID-19 pandemic had on data reporting. Facilities would have until Sept. 1, 2021, to report 2020 data.

Additionally, the agency is proposing to adopt a measure suppression policy that would enable it to suppress the use of certain ESRD QIP quality measures for scoring and payment adjustment purposes if it determines that circumstances caused by the COVID-19 PHE have significantly affected the validity and reliability of the measure and resulting performance scores. Under this policy, CMS plans to suppress the use of four measures for performance year (PY) 2022 — hospitalization rate, patient satisfaction surveys, long-term catheter rate, and hospital readmissions. Thus, these measures would have no bearing on payment adjustments during the 2022 performance year because of the impact of COVID-19.

CMS is also proposing not score or reduce payment to any facility in 2022 “to address technical issues with the ESRD Quality Reporting System (EQRS), and additionally, due to the impact of the COVID-19 PHE on some of the PY 2022 ESRD QIP measures.” Lastly, the agency seeks to exclude CY 2020 data from calculation of performance standards in future years.

ETC Model Modifications Aim to Address Health Equity

The ETC model is an alternate payment model designed to encourage greater use of home hemodialysis and kidney transplants for the care of patients with CKD through payment adjustments. By helping to ensure that patients with ESRD have access to and receive education about their renal disease treatment options, the model aims to increase patient choice, reduce Medicare expenditures, and improve outcomes.

CMS proposes to build on the current model to reward participating ESRD facilities and managing clinicians for achieving significant improvement in the rates of home dialysis and kidney transplants for lower-income beneficiaries. These proposed changes intend to reduce the disparities in rates of home dialysis and kidney transplants among ESRD patients with lower socioeconomic status and improve access to alternatives to in-center dialysis, making the ETC model the agency’s first CMS Innovation Center (CMMI) model to directly address health equity.

In this proposed rule, CMS also requests information on a myriad of topics relevant to the ESRD PPS and QIP. Comments on the proposed changes are due to CMS by August 31. Stay tuned!

For more information:




Request a Free Quote