Vol. 78 Monday, 

No. 130 July 8, 2013 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 413 and 414 

Medicare Program; End-Stage Renal Disease Prospective Payment 

System, Quality Incentive Program, and Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies; Proposed Rule 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
40836 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 413 and 414 

[CMS–1526–P] 

RIN 0938–AR55 

Medicare Program; End-Stage Renal 

Disease Prospective Payment System, 

Quality Incentive Program, and 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This rule proposes to update 

and make revisions to the End-Stage 

Renal Disease (ESRD) prospective 

payment system (PPS) for calendar year 

(CY) 2014. This rule also proposes to set 

forth requirements for the ESRD quality 

incentive program (QIP), including for 

payment year (PY) 2016 and beyond. In 

addition, this rule proposes to clarify 

the grandfathering provision related to 

the 3-year minimum lifetime 

requirement (MLR) for Durable Medical 

Equipment (DME). In addition, it 

provides clarification of the definition 

of routinely purchased DME. This rule 

also proposes the implementation of 

budget-neutral fee schedules for splints 

and casts, and intraocular lenses (IOLs) 

inserted in a physician’s office. Finally, 

this rule would make a few technical 

amendments and corrections to existing 

regulations related to payment for 

DMEPOS items and services. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. E.S.T on August 30, 2013. 

ADDRESSES: In commenting, please refer 

to file code CMS–1526–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1526–P, P.O. Box 8010, Baltimore, 

MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1526–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments ONLY to the 

following addresses prior to the close of 

the comment period: a. For delivery in 

Washington, DC—Centers for Medicare 

& Medicaid Services, Department of 

Health and Human Services, Room 445– 

G, Hubert H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, call 

telephone number (410) 786–9994 in 

advance to schedule your arrival with 

one of our staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Michelle Cruse, (410) 786–7540, for 

issues related to the ESRD PPS. 

Stephanie Frilling, (410) 786–4507, for 

issues related to the ESRD PPS wage 

index, home dialysis training, and the 

delay in payment for oral-only drugs 

under the ESRD PPS. 

Heidi Oumarou, (410) 786–7942, for 

issues related to the ESRD market 

basket. 

Anita Segar, (410) 786–4614, for issues 

related to the ESRD QIP. 

Sandhya Gilkerson, (410) 786–4085, for 

issues related to the clarification of 

the grandfathering provision related 

to the 3-year MLR for DME. 

Anita Greenberg (410) 786–4601, for 

issues related to the clarification of 

the definition of routinely purchased 

DME. 

Christopher Molling (410) 786–6399, for 

issues related to DMEPOS technical 

amendments and corrections. 

Hafsa Vahora, (410) 786–7899, for issues 

related to the implementation of 

budget neutral fee schedules for 

splints and casts, and IOLs inserted in 

a physician’s office. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Electronic Access 

This Federal Register document is 

also available from the Federal Register 

online database through Federal Digital 

System (FDsys), a service of the U.S. 

Government Printing Office. This 

database can be accessed via the 

internet at http://www.gpo.gov/fdsys/. 

Addenda Are Only Available Through 

the Internet on the CMS Web site 

In the past, a majority of the Addenda 

referred to throughout the preamble of 

our proposed and final rules were 

available in the Federal Register. 

However, the Addenda of the annual 

proposed and final rules will no longer 

be available in the Federal Register. 

Instead, these Addenda to the annual 

proposed and final rules will be 

available only through the Internet on 

the CMS Web site. The Addenda to the 

End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) rules 

are available at: http://www.cms.gov/ 

ESRDPayment/PAY/list.asp. Readers 

who experience any problems accessing 

any of the Addenda to the proposed and 

final rules of the ESRD PPS that are 

posted on the CMS Web site identified 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 40837 

above should contact Michelle Cruse at 

410–786–7540. 

Table of Contents 

To assist readers in referencing 

sections contained in this preamble, we 

are providing a Table of Contents. Some 

of the issues discussed in this preamble 

affect the payment policies, but do not 

require changes to the regulations in the 

Code of Federal Regulations (CFR). 

I. Executive Summary 

A. Purpose 

1. End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) 

2. End-Stage Renal Disease (ESRD) Quality 

Incentive Program (QIP) 

3. Durable Medical Equipment, Prosthetics, 

Orthotics, and Supplies (DMEPOS) 

B. Summary of the Major Provisions 

1. ESRD PPS 

2. ESRD QIP 

3. DMEPOS 

C. Summary of Costs and Benefits 

1. Impacts of the Proposed ESRD PPS 

2. Impacts for ESRD QIP 

3. Impacts for DMEPOS 

II. Calendar Year (CY) 2013 End-Stage Renal 

Disease (ESRD) Prospective Payment 

System (PPS) 

A. Background on the End-Stage Renal 

Disease (ESRD) Prospective Payment 

System (PPS) 

B. Routine Updates and Proposed Policy 

Changes to the CY 2014 ESRD PPS 

1. Composite Rate Portion of the ESRD PPS 

Blended Payment 

2. ESRD PPS Base Rate 

a. Proposed Adjustment to the ESRD PPS 

Base Rate to Reflect Change in 

Utilization of ESRD-Related Drugs and 

Biologicals 

i. Methodology for Reducing the CY 2014 

ESRD PPS Base Rate 

ii. Determining Utilization of ESRD-Related 

Drugs and Biologicals 

iii. Pricing of ESRD-Related Drugs and 

Biologicals 

iv. Calculation of the Amount of the Per 

Treatment Reduction 

v. Comparison of ASP versus PPI 

3. ESRD Bundled Market Basket 

a. Overview and Background 

b. Proposed Market Basket Update Increase 

Factor and Labor-related Share for ESRD 

Facilities for CY 2014 

c. Proposed Productivity Adjustment 

d. Calculation of the ESRDB Market Basket 

Update, Adjusted for Multifactor 

Productivity for CY 2014 

4. The Proposed CY 2014 Wage Index 

a. Payment Under the ESRD PPS for 

Facilities Located in Guam, American 

Samoa, and the Northern Mariana 

Islands and Proposed Wage Index Value 

for Guam 

b. Proposed Policies for Areas with No 

Wage Data 

c. Proposed Reduction to the ESRD Wage 

Index Floor 

d. Proposed Wage Index Budget-Neutrality 

Adjustment 

5. Application of the International 

Classification of Diseases (ICD), Tenth 

Revision, to the Comorbidity Payment 

Adjustment Codes 

a. One ICD–9–CM Code Crosswalks to One 

ICD–10–CM Code 

b. One ICD–9–CM Code Crosswalks to 

Multiple ICD–10–CM Codes 

c. Multiple ICD–9–CM Codes Crosswalk to 

One ICD–10–CM Code 

6. Proposed Revisions to the Outlier Policy 

a. Impact of Proposed Changes to the 

Outlier Policy 

b. Outlier Policy Percentage 

C. Discussion of Self-Dialysis and Home 

Dialysis Training Add On Adjustment 

and Request for Public Comments 

a. Medicare Policy for Self-Dialysis 

Training, Home Dialysis Training, and 

Retraining 

b. Payment Methodology 

D. Delay of Payment for Oral-Only Drugs 

Under the ESRD PPS 

III. End-Stage Renal Disease (ESRD) Quality 

Incentive Program (QIP) 

A. Background 

B. Considerations in Updating and 

Expanding Quality Measures under the 

ESRD QIP for PY 2016 and Subsequent 

PYs 

1. Value-Based Purchasing (VBP) Overview 

2. Brief Overview of Proposed PY 2016 

Measures 

3. Measures Application Partnership 

Review 

C. Proposed Measures for the PY 2016 

ESRD QIP and Subsequent PYs of the 

ESRD QIP 

1. PY 2015 Measures Continuing in PY 

2016 and Future Payment Years 

2. Proposal to Expand One PY 2015 

Measure and Revise Two PY 2015 

Measures for PY 2016 and Subsequent 

Payment Years 

a. Proposed Expanded ICH CAHPS 

Reporting Measure 

b. Proposed Revised Mineral Metabolism 

Reporting Measure 

c. Proposed Revised Anemia Management 

Reporting Measure 

3. New Measures Proposed for PY 2016 

and Subsequent Payment Years of the 

ESRD QIP 

a. Proposed Clinical Anemia Management 

Measure and Anemia Management 

Clinical Measure Topic 

i. Anemia Management: Hgb > 12 

ii. Anemia of Chronic Kidney Disease: 

Patient Informed Consent for Anemia 

Treatment 

b. Hypercalcemia 

c. Use of Iron Therapy for Pediatric 

Patients Reporting Measure 

d. NHSN Bloodstream Infection in 

Hemodialysis Outpatients Clinical 

Measure 

e. Comorbidity Reporting Measure 

4. Other Measures under Development 

5. Proposed Scoring for the PY 2016 ESRD 

QIP and Future Payment Years 

6. Proposed Performance Period for the PY 

2016 ESRD QIP 

7. Proposed Performance Standards for the 

PY 2016 ESRD QIP and Future Payment 

Years 

a. Proposed Clinical Measure Performance 

Standards 

b. Estimated Performance Standards for 

Proposed Clinical Measures 

c. Proposed Performance Standards for 

Reporting Measures 

8. Proposed Scoring for the PY 2016 ESRD 

QIP Proposed Measures 

a. Proposals for Scoring Facility 

Performance on Clinical Measures Based 

on Achievement 

b. Proposals for Scoring Facility 

Performance on Clinical Measures Based 

on Improvement 

c. Proposals for Calculating Facility 

Performance on Reporting Measures 

9. Proposals for Weighting the PY 2016 

ESRD QIP Measures and Calculating the 

PY 2016 ESRD QIP Total Performance 

Score 

a. Weighting Individual Measures to 

Compute Measure Topic Scores for the 

Kt/V Dialysis Adequacy measure topic, 

the Vascular Access Type measure topic, 

and the Anemia Management Clinical 

measure topic 

b. Proposal for Weighting the Total 

Performance Score 

c. Examples of the Proposed PY 2016 ESRD 

QIP Scoring Methodology 

10. Proposed Minimum Data for Scoring 

Measures for the PY 2016 ESRD QIP and 

Future Payment Years 

11. Proposed Payment Reductions for the 

PY 2016 ESRD QIP and Future Payment 

Years 

12. Data Validation 

13. Proposals for Scoring Facilities Whose 

Ownership has Changed 

14. Proposals for Public Reporting 

Requirements 

IV. Clarification of the Definition of 

Routinely Purchased Durable Medical 

Equipment (DME) 

A. Background 

1. Background for DME 

2. Medicare Guidance and Rulemaking 

Regarding Definition of Routinely 

Purchased DME 

3. Payment for Inexpensive or Routinely 

Purchased Items and Capped Rental 

Items 

B. Current Issues 

C. Classification of Items under the 

Existing Regulations and Definition of 

Routinely Purchased Equipment 

V. Clarification of the 3-year Minimum 

Lifetime Requirement (MLR) for DME 

A. Background 

B. Current Issues 

C. Scope of the 3-Year MLR 

VI. Implementation of Budget-Neutral Fee 

Schedules for Splints, Casts and 

Intraocular Lenses (IOLs) 

A. Background 

1. Payment Under Reasonable Charges 

2. Payment Under Fee Schedules 

B. Provisions of the Proposed Regulations 

VII. DMEPOS Technical Amendments and 

Corrections 

A. Background 

B. Proposed Technical Amendments and 

Corrections 

VIII. Collection of Information Requirements 

A. Legislative Requirement for Solicitation 

of Comments 

B. Requirements in Regulation Text 

C. Additional Information Collection 

Requirements 

1. ESRD QIP 

a. Proposed Expanded ICH CAHPS 

Reporting Measure for PY 2016 and 

Future Payment Years of the ESRD QIP 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
40838 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

b. Proposed Data Validation Requirements 

for the PY 2016 ESRD QIP 

2. Clarification of the Definition of 

Routinely Purchased Durable Medical 

Equipment 

3. Clarification of the 3-year Minimum 

Lifetime Requirement for DME 

4. Implementation of Budget-Neutral Fee 

Schedules for Splints, Casts and 

Intraocular Lenses 

IX. Response to Comments 

X. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

2. Statement of Need 

3. Overall Impact 

B. Detailed Economic Analysis 

1. CY 2014 End-Stage Renal Disease 

Prospective Payment System 

a. Effects on ESRD Facilities 

b. Effects on Other Providers 

c. Effects on the Medicare Program 

d. Effects on Medicare Beneficiaries 

e. Alternatives Considered 

2. End-Stage Renal Disease Quality 

Incentive Program 

a. Effects of the PY 2016 ESRD QIP 

b. Alternatives Considered for the PY 2016 

ESRD QIP 

3. DMEPOS Provisions 

a. Effects of the Implementation of Fee 

Schedules for Splints, Casts and IOLs 

b. Clarification of the 3-year MLR 

c. Definition of Routinely Purchased DME 

C. Accounting Statement. 

XI. Regulatory Flexibility Act Analysis 

XII. Unfunded Mandates Reform Act 

Analysis 

XIII. Federalism Analysis 

XIV. Congressional Review Act 

XV. Files Available to the Public via the 

Internet 

Regulations Text 

Acronyms 

Because of the many terms to which 

we refer by acronym in this final rule, 

we are listing the acronyms used and 

their corresponding meanings in 

alphabetical order below: 

AHRQ Agency for Healthcare Research and 

Quality 

ASP Average Sales Price 

BLS Bureau of Labor Statistics 

CBSA Core based statistical area 

CCN CMS Certification Number 

CDC Centers for Disease Control and 

Prevention 

CKD Chronic Kidney Disease 

CY Calendar Year 

DFC Dialysis Facility Compare 

DME Durable Medical Equipment 

DMEPOS Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

ESA Erythropoiesis stimulating agent 

ESRD End-Stage Renal Disease 

ESRDB End-Stage Renal Disease bundled 

ESRD PPS End-Stage Renal Disease 

Prospective Payment System 

FDA Food and Drug Administration 

GEM General Equivalence Mappings 

HAIs Healthcare-Acquired Infections 

HCPCS Healthcare Common Procedure 

Coding System 

HHS Department of Health and Human 

Services 

ICD International Classification of Diseases 

ICD–9–CM International Classification of 

Disease, 9th Revision, Clinical 

Modification 

ICH CAHPS In-Center Hemodialysis 

Consumer Assessment of Healthcare 

Providers and Systems 

IGI IHS Global Insight 

IOLs Intraocular Lenses 

IPPS Inpatient Prospective Payment System 

MAP Medicare Allowable Payment 

MFP Multifactor Productivity 

MLR Minimum Lifetime Requirement 

NHSN National Health Safety Network 

NQF National Quality Forum 

OMB Office of Management and Budget 

PFS Physician Fee Schedule 

QIP Quality Incentive Program 

SHR Standardized Hospitalization Ratio 

Admissions 

SMR Standardized Mortality Ratio 

TPS Total Performance Score 

VBP Value Based Purchasing 

I. Executive Summary 

A. Purpose 

1. End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) 

On January 1, 2011, we implemented 

the ESRD PPS, a case-mix adjusted 

bundled prospective payment system 

for renal dialysis services furnished by 

ESRD facilities. Effective January 1, 

2014, the transition to the ESRD PPS 

will conclude and all Medicare ESRD 

facilities will be paid 100 percent under 

the ESRD PPS. This rule proposes to 

update and make revisions to the EndStage Renal Disease (ESRD) prospective 

payment system (PPS) for calendar year 

(CY) 2014. In accordance with section 

1881(b)(14) of the Social Security Act 

(the Act), as added by section 153(b) of 

the Medicare Improvements for Patients 

and Providers Act of 2008 (MIPPA) 

(Public Law 110–275), and section 

1881(b)(14)(F) of the Act, as added by 

section 153(b) of MIPPA and amended 

by section 3401(h) of the Affordable 

Care Act (ACA) (Pub. L. 111–148), 

established that beginning CY 2012, and 

each subsequent year, the Secretary 

shall reduce the market basket increase 

factor by a productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act. 

In addition, section 1881(b)(14)(I) of 

the Act, as added by section 632(a) of 

the American Taxpayer Relief Act of 

2012 (ATRA) (Pub. L. 112–240) requires 

the Secretary, by comparing per patient 

utilization from 2007 with such data 

from 2012, to reduce the single payment 

amount to reflect the Secretary’s 

estimate of the change in the utilization 

of ESRD-related drugs and biologicals. 

Section 632(b) of ATRA prevents the 

Secretary from paying for oral-only 

ESRD-related drugs and biologicals 

under the ESRD PPS before January 1, 

2016. 

2. End-Stage Renal Disease (ESRD) 

Quality Incentive Program (QIP) 

This rule also proposes to set forth 

requirements for the ESRD Quality 

Incentive Program (QIP), including for 

payment year (PY) 2016. The program is 

authorized under section 153(c) of 

MIPPA, which added section 1881(h) to 

the Social Security Act (the Act). The 

ESRD QIP is the most recent step in 

fostering improved patient outcomes by 

establishing incentives for dialysis 

facilities to meet performance standards 

established by CMS. 

3. Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) 

This rule would clarify the definition 

of routinely purchased equipment 

covered under the DME benefit category 

and the scope of the 3-year minimum 

lifetime requirement (MLR) for DME. In 

addition, this rule proposes to 

implement budget neutral fee schedules 

for splints and casts as well as 

intraocular lenses (IOLs) inserted in a 

physician’s office. Finally, this rule 

would make a few technical 

amendments and corrections to existing 

regulations related to payment for 

DMEPOS items and services. 

B. Summary of the Major Provisions 

1. ESRD PPS 

• Update to the ESRD PPS base rate 

for CY 2014: For CY 2014, we propose 

an ESRD PPS base rate of $216.95. This 

amount reflects the application of the 

proposed ESRD bundled (ESRDB) 

market basket reduced by the 

productivity adjustment, or 2.5 percent, 

the wage index budget-neutrality 

adjustment factor of 1.000411, and the 

drug utilization adjustment to the CY 

2013 ESRD PPS base rate of $240.36. 

The proposed CY 2014 ESRDB market 

basket increase factor is 2.9 percent. The 

current forecast of the proposed CY 

2014 productivity adjustment is 0.4 

percent. The proposed drug utilization 

adjustment factor to account for changes 

in utilization as required by section 

1881(b)(14)(I) is ¥12 percent. 

• Updates to the wage index and 

wage index floor: We adjust wage 

indices on an annual basis using the 

most current hospital wage data to 

account for differing wage levels in 

areas in which ESRD facilities are 

located. In CY 2014, we are not 

proposing any changes to the 

application of the wage index budgetneutrality adjustment factor and will 

continue to apply the budget-neutrality 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 40839 

adjustment to the base rate for the ESRD 

PPS. We have been gradually decreasing 

the wage index floor by .05 in an effort 

to gradually phase out the floor. For CY 

2014 and CY 2015 we are proposing to 

continue our policy for the gradual 

phase out of the wage index floor and 

to reduce the wage index floor values to 

0.45 and 0.40, respectively. 

• Update to the outlier policy: We are 

updating the outlier services fixed 

dollar loss amounts for adult and 

pediatric patients and Medicare 

Allowable Payments (MAPs) for adult 

patients for CY 2014 using 2012 claims 

data. Based on the use of more current 

data, the fixed-dollar loss amount for 

pediatric beneficiaries would increase 

from $47.32 to $54.23 and the MAP 

amount would remain $38.65 as 

compared to CY 2013 values. For adult 

beneficiaries, the fixed-dollar loss 

amount would decrease from $110.22 to 

$94.26 and the MAP amount would 

decrease from $61.38 to $52.45. The 1 

percent target for outlier payments was 

not achieved in CY 2012. We believe 

using CY 2012 claims data to update the 

outlier MAP and fixed dollar loss 

amounts for CY 2014 will increase 

payments for ESRD beneficiaries 

requiring higher resource utilization in 

accordance with a 1 percent outlier 

percentage. 

• Application of ICD–10–CM 

Diagnosis Codes to the comorbidity 

payment adjustment codes: Effective 

October 1, 2014, CMS will implement 

the 10th revision of the ICD coding 

scheme. We discuss and provide a 

crosswalk from ICD–9–CM to ICD–10– 

CM for codes that are subject to the 

comorbidity payment adjustment. We 

propose that all ICD–10–CM codes to 

which ICD–9–CM codes that are eligible 

for the comorbidity payment adjustment 

crosswalk will be eligible for the 

comorbidity payment adjustment with 

two exceptions. 

2. ESRD QIP 

This proposed rule proposes to 

implement requirements for the ESRD 

QIP. With respect to the PY 2016 ESRD 

QIP, we propose to continue some of the 

previous ESRD QIP measures, add new 

measures, and expand the scope of some 

of the existing measures to cover the 

measure topics as follows: 

• To evaluate anemia management: 

Æ Hemoglobin Greater Than 12 g/dL, 

a clinical measure 

Æ Patient Informed Consent for 

Anemia Treatment, a clinical 

measure* 

Æ Anemia Management, a reporting 

measure†

Æ Pediatric Iron Therapy, a reporting 

measure* 

• To evaluate dialysis adequacy: 

Æ A Kt/V measure for adult 

hemodialysis patients, a clinical 

measure 

Æ A Kt/V measure for adult peritoneal 

dialysis patients, a clinical measure 

Æ A Kt/V measure for pediatric 

hemodialysis patients, a clinical 

measure 

• To determine whether patients are 

treated using the most beneficial 

type of vascular access: 

Æ An arteriovenous fistula measure, a 

clinical measure 

Æ A catheter measure, a clinical 

measure 

• To address effective bone mineral 

metabolism management: 

Æ Hypercalcemia, a clinical measure* 

Æ Mineral Metabolism, a reporting 

measure†

• To address safety: 

Æ National Healthcare Safety Network 

(NHSN) Bloodstream Infection in 

Hemodialysis Outpatients, a 

clinical measure* 

• To assess patient experience: 

Æ ICH CAHPS survey reporting 

measure‡

• To gather data regarding 

comorbidities: 

Æ Comorbidity, a reporting measure* 

* Denotes that this measure is new to 

the ESRD QIP. 

† Denotes that this measure is revised in 

the ESRD QIP. 

‡ Denotes that this measure is expanded 

in the ESRD QIP. 

It also proposes to establish CY 2014 

as the performance period for the PY 

2016 ESRD QIP, establish performance 

standards for each measure, and adopt 

scoring and payment reduction 

methodologies that are similar to those 

finalized for the PY 2015 ESRD QIP. 

3. DMEPOS 

• Definition of routinely purchased 

DME: This rule would clarify the 

definition of routinely purchased DME 

set forth at section § 414.220(a), as well 

as address the classification of and 

payment for expensive items of DME 

and accessories (over $150) as a capped 

rental items in accordance with 

§ 414.229, if the items were not acquired 

by purchase on a national basis at least 

75 percent of the time during the period 

July 1986 through June 1987. 

• Clarification of to the 3-year MLR 

and Related Grandfathering Policy: This 

rule would provide further clarification 

about how we would apply the 3-year 

minimum lifetime requirement (MLR) 

set forth at § 414.202, which must be 

satisfied for an item or device to be 

considered durable medical equipment. 

• Implementation of budget neutral 

fee schedules for splints and casts, and 

IOLs inserted in a physician’s office: For 

CY 2014, we are proposing to 

implement budget neutral fee schedule 

amounts for splints, casts, and IOLs 

inserted in a physician’s office. Section 

1842(s) of the Act authorizes CMS to 

implement fee schedule amounts for 

these items if they established so that 

they are initially budget neutral. In 

2011, total allowed charges for splints 

and casts were $5.6 million, while total 

allowed charges for intraocular lenses 

inserted in a physician’s office were $76 

thousand. 

C. Summary of Costs and Benefits 

In section X.B. of this proposed rule, 

we set forth a detailed analysis of the 

impacts that the proposed changes 

would have on affected entities and 

beneficiaries. The impacts include the 

following: 

1. Impacts of the Proposed ESRD PPS 

The impact chart in section X.B.1. of 

this proposed rule displays the 

estimated change in payments to ESRD 

facilities in CY 2014 compared to 

estimated payments in CY 2013. The 

overall impact of the CY 2014 changes 

is projected to be a 9.4 percent decrease 

in payments. Hospital-based ESRD 

facilities have an estimated 9.3 percent 

decrease in payments compared with 

freestanding facilities with an estimated 

9.4 percent decrease. 

We estimate that the aggregate ESRD 

PPS expenditures would decrease by 

approximately $780 million from CY 

2013 to CY 2014. This reflects a $210 

million increase from the payment rate 

update, a $30 million increase due to 

the updates to the outlier threshold 

amounts, and a $1.02 billion decrease in 

expenditures specifically related to the 

¥12 percent drug utilization adjustment 

required by section 1881(b)(14)(I). The 

estimated 9.4 percent overall payment 

decrease would result in a $190 million 

savings to beneficiaries. 

2. Impacts for ESRD QIP 

The overall economic impact of the 

proposed ESRD QIP is an estimated 

$26.4 million in PY 2016. In PY 2016, 

we expect the total payment reductions 

to be approximately $26.4 million, and 

the costs associated with the collection 

of information requirements for certain 

measures to be approximately $39.5 

thousand. For PY 2017 and future 

payment years, we expect the costs 

associated with the collection of 

information requirements for the 

expanded ICH CAHPS measure in the 

proposed ESRD QIP to be approximately 

$9.7 million. 

The ESRD QIP will continue to 

incentivize facilities to provide higher 


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quality care to beneficiaries. The 

reporting measures associated with the 

collection of information requirements 

are critical to better understanding the 

quality of care beneficiaries receive, 

particularly patients’ experience of care, 

and will be used to incentivize 

improvements in the quality of care 

provided. 

3. Impacts for DMEPOS 

The overall impact of the DMEPOS 

proposal to implement fee schedules for 

splints and casts and IOLs inserted in a 

physician’s office is insignificant. The 

reasonable charge amounts that we 

propose to convert to fee schedule 

amounts would be budget neutral the 

first year and would be updated 

annually thereafter based on the 

consumer price index for all consumers 

(CPI–U) for the 12-month period ending 

June 30 of the previous year and, 

reduced by the productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act. For the 3-year MLR, we 

believe that a vast majority of the 

categories of items that were classified 

as DME before January 1, 2012, did 

function for 3 or more years (76 FR 

70289). The 3-year MLR is designed to 

represent a minimum threshold for 

determination of durability for 

equipment that is consistent with the 

statutory DME payment provisions and 

applies on a prospective basis, effective 

January 1, 2012. CMS recognizes that 

the healthcare industry and 

beneficiaries have come to rely on items 

that have qualified as DME on or prior 

to January 1, 2012, regardless of whether 

those items met the 3-year MLR set forth 

at § 414.202. We note that given that 

reliance and consistent with the 

regulation at § 414.202, CMS will not 

reopen those prior decisions and 

reclassify the equipment in light of the 

new 3-year standard. We believe that 

continuing the Medicare coverage for all 

the items that qualified as DME on or 

prior to January 1, 2012, could avoid 

disrupting the continuity of care for the 

beneficiaries that received these items 

for medical treatment prior to January 1, 

2012, without creating a significant 

fiscal impact on the Medicare Program. 

We expect that the overall impact of 

reaffirming the definition of routinely 

purchased DME and our proposal for 

classifying certain expensive items as 

cap rental would be a decrease in 

expenditures because payment on a 13- 

month capped rental basis rather than a 

lump sum purchase basis for certain, 

very expensive items would lower total 

payments for these items and because 

many beneficiaries would not rent the 

items for as long as 13 months. 

II. Calendar Year (CY) 2014 End-Stage 

Renal Disease (ESRD) Prospective 

Payment System (PPS) 

A. Background on the End-Stage Renal 

Disease (ESRD) Prospective Payment 

System (PPS) 

On August 12, 2010, we published in 

the Federal Register a final rule (75 FR 

49030 through 49214) titled, ‘‘End-Stage 

Renal Disease Prospective Payment 

System’’, hereinafter referred to as the 

CY 2011 ESRD PPS final rule. In the CY 

2011 ESRD PPS final rule, we 

implemented a case-mix adjusted 

bundled PPS for Medicare outpatient 

ESRD dialysis services beginning 

January 1, 2011, in accordance with 

section 1881(b)(14) of the Act, as added 

by section 153(b) of MIPPA. 

On November 10, 2011, we published 

in the Federal Register, a final rule (76 

FR 70228 through 70316) titled, 

‘‘Medicare Program; End-Stage Renal 

Disease Prospective Payment System 

and Quality Incentive Program; 

Ambulance Fee Schedule; Durable 

Medical Equipment; and Competitive 

Acquisition of Certain Durable Medical 

Equipment, Prosthetics, Orthotics and 

Supplies’’ (hereinafter referred to as the 

CY 2012 ESRD PPS final rule). In that 

final rule, for the ESRD PPS, we made 

a number of routine updates for CY 

2012, implemented the second year of 

the transition to the ESRD PPS, made 

several policy changes and 

clarifications, and made technical 

changes. 

On November 9, 2012, we published 

in the Federal Register, a final rule (77 

FR 67450 through 67531) titled, 

‘‘Medicare Program; End-Stage Renal 

Disease Prospective Payment System, 

Quality Incentive Program, and Bad 

Debt Reductions for All Medicare 

Providers’’ (hereinafter referred to as the 

CY 2013 ESRD PPS final rule). In that 

final rule, for the ESRD PPS, we made 

a number of routine updates for CY 

2013, implemented the third year of the 

transition to the ESRD PPS, and made 

several policy changes and reiterations. 

In that rule, we finalized the following: 

• An ESRD PPS base rate of $240.36 

per treatment for renal dialysis services. 

The ESRD PPS base rate applies to the 

ESRD PPS portion of the blended 

payments during the transition and to 

the ESRD PPS payments. This amount 

reflected the CY 2013 ESRD bundled 

(ESRDB) market basket update of 2.9 

percent minus a multifactor 

productivity adjustment of 0.6 percent, 

that is, a 2.3 percent increase. This 

amount also reflected the application of 

the wage index budget-neutrality 

adjustment of 1.000613. 

• A composite base rate of $145.20 

per treatment for renal dialysis services 

that is used in the composite rate 

portion of the ESRD PPS payment for 

ESRD facilities receiving blended 

payments during the transition. This 

amount reflected the application of the 

ESRDB market basket reduced by the 

multifactor productivity adjustment, or 

a 2.3 percent increase. 

• A zero update to the drug add-on 

adjustment and maintaining the $20.33 

per treatment drug add-on amount for 

the composite rate portion of the ESRD 

PPS blended payment. This resulted in 

a 14.0 percent drug add-on adjustment 

to the composite rate portion of the 

ESRD PPS blended payment. 

• A 0.1 percent transition budgetneutrality adjustment factor. 

• A 1.001141 wage index budgetneutrality adjustment factor for the 

composite portion of the ESRD PPS 

blended payment, which is applied to 

the wage index values. 

• A 1.000613 wage index budgetneutrality adjustment factor for the 

ESRD PPS portion of the blended 

payment and for the ESRD PPS, which 

is applied to the ESRD PPS base rate. 

• A 0.05 reduction to the wage index 

floor which resulted in a wage index 

floor of 0.500 under the ESRD PPS. 

• A 0.501 wage index floor under the 

composite rate portion of the blended 

payment (1.500 × 1.001141 = 0.501). 

• Revisions to the outlier policy. 

Specifically, for pediatric beneficiaries, 

a fixed-dollar loss amount of $47.32 and 

a Medicare Allowable Payment (MAP) 

amount of $41.39. For adult 

beneficiaries, a fixed-dollar loss amount 

of $110.22 and a MAP amount of 

$59.42. 

• Eliminating the restriction on 

daptomycin to allow ESRD facilities to 

receive separate payment by appending 

the AY modifier on the claim for 

daptomycin when the diagnosis 

reported on the claim indicates the drug 

was used to treat a non-ESRD related 

condition. 

• Excluding alteplase and other 

thrombolytics from separate payment 

for the composite rate portion of 

blended payments during the remainder 

of the transition. 

• Use of the Average Sales Price 

(ASP) methodology, including any 

modifications finalized in the Physician 

Fee Schedule (PFS) final rules, to 

compute outlier MAP amounts, the drug 

add-on, and any other policy that 

requires the use of payment amounts for 

drugs and biologicals that would be 

separately paid absent the ESRD PPS 

and for the composite rate portion of the 

blended payment during the transition. 


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Finally, in the CY 2013 ESRD PPS 

final rule, we reiterated policies 

regarding the following billing practices 

because we believed that ESRD facilities 

may be billing renal dialysis services for 

separate payment: 

• Any item or service included in the 

composite rate should not be identified 

on ESRD claims. 

• An AY modifier can be appended to 

claims for drugs and laboratory tests 

that are not ESRD-related to allow for 

separate payment. The AY modifier 

should not be used for renal dialysis 

services and we have monitoring efforts 

in place to analyze billing trends. 

B. Routine Updates and Proposed Policy 

Changes to the CY 2014 ESRD PPS 

1. Composite Rate Portion of the ESRD 

PPS Blended Payment 

Section 1881(b)(14)(E)(i) of the Act 

requires a 4-year transition under the 

ESRD PPS. We are proposing to 

implement the fourth year of the 

transition for those ESRD facilities that 

did not elect to receive 100 percent of 

the payment amount under the ESRD 

PPS. For CY 2014, under 42 CFR 

413.239(a)(4), 100 percent of the 

payment amount will be determined in 

accordance with section 1881(b)(14). 

Accordingly, a blended rate will no 

longer be provided, all facilities will be 

paid 100 percent under the ESRD PPS, 

and there will no longer be a transition 

budget neutrality adjustment factor 

applied to these payments starting on 

January 1, 2014. Therefore, facilities that 

participate in the transition will no 

longer receive a portion of their 

payments based on the basic case-mix 

adjusted composite rate payment 

system. Because payments will no 

longer be based on the basic case-mix 

adjusted composite rate, we will not 

update the drug add-on or wage index 

values (which included a budget 

neutrality adjustment factor) that 

comprised that rate. In this proposed 

rule we only discuss updates and policy 

changes that affect the components of 

the ESRD PPS. 

2. ESRD PPS Base Rate 

In the CY 2011 ESRD PPS final rule 

(75 FR 49071 through 49083), we 

discussed the development of the ESRD 

PPS per treatment base rate that is 

codified in the Medicare regulations at 

§ 413.220 and § 413.230. The CY 2011 

ESRD PPS final rule also provides a 

detailed discussion of the methodology 

used to calculate the ESRD PPS base 

rate and the computation of factors used 

to adjust the ESRD PPS base rate for 

projected outlier payments and budgetneutrality in accordance with sections 

1881(b)(14)(D)(ii) and 1881(b)(14)(A)(ii) 

of the Act, respectively. Specifically, the 

ESRD PPS base rate was developed from 

CY 2007 claims (that is, the lowest per 

patient utilization year as required by 

section 1881(b)(14)(A)(ii) of the Act), 

updated to CY 2011, and represented 

the average per treatment Medicare 

Allowable Payment (MAP) for 

composite rate and separately billable 

services. In accordance with section 

1881(b)(14)(D) of the Act and codified in 

regulations at § 413.230, the ESRD PPS 

base rate is adjusted for the patientspecific case-mix adjustments, 

applicable facility adjustments, 

geographic differences in area wage 

levels using an area wage index, as well 

as applicable outlier payments or 

training payments. 

As discussed in section II.B.3., section 

1881(b)(14)(F)(i) of the Act, as added by 

section 153(b) of MIPPA and amended 

by section 3401(h) of the Affordable 

Care Act, provides that, beginning in 

2012, the ESRD PPS payment amounts 

are required to be annually increased by 

the rate of increase in the ESRD market 

basket, reduced by the productivity 

adjustment described in section 

1886(b)(3)(B)(xi)(II). Accordingly, for 

this proposed rule, we applied the 2.5 

percent increase to the CY 2013 ESRD 

PPS base rate of $240.36, which results 

in a proposed CY 2014 ESRD PPS base 

rate of $246.37 ($240.36 × 1.025 = 

$246.37). 

In addition, as discussed in section 

II.B.4.d. of this proposed rule, for CY 

2014 we are applying the wage index 

budget-neutrality adjustment factor of 

1.000411 to the CY 2014 ESRD PPS base 

rate (that is, $246.37), yielding a 

proposed CY 2014 ESRD PPS wageindex budget-neutrality adjusted base 

rate of $246.47 ($246.37 × 1.000411 = 

$246.47). 

a. Proposed Adjustment to the ESRD 

PPS Base Rate to Reflect Change in 

Utilization of ESRD-Related Drugs and 

Biologicals 

Section 1881(b)(14)(I) of the Act, as 

added by section 632(a) of the American 

Taxpayer Relief Act of 2012 (ATRA), 

requires that, for services furnished on 

or after January 1, 2014, the Secretary 

shall make reductions to the single 

payment for renal dialysis services to 

reflect the Secretary’s estimate of the 

change in the utilization of ESRDrelated drugs and biologicals (excluding 

oral-only ESRD-related drugs) by 

comparing per patient utilization data 

from 2007 with such data from 2012. 

Section 1881(b)(14)(I) further requires 

that in making the reductions, the 

Secretary take into account the most 

recently available data on Average Sales 

Prices (ASP) and changes in prices for 

drugs and biologicals reflected in the 

ESRD market basket percentage increase 

factor under section 1881(b)(14)(F). 

Consistent with these requirements, we 

propose to apply a payment adjustment 

to the CY 2014 ESRD PPS base rate that 

reflects the change in utilization of 

ESRD-related drugs and biologicals from 

CY 2007 to CY 2012. 

i. Methodology for Reducing the CY 

2014 ESRD PPS Base Rate 

We are proposing an adjustment that 

would reduce the ESRD PPS base rate. 

Because the ESRD PPS base rate is a per 

treatment base rate, the adjustment 

would be calculated on a per treatment 

basis. We propose to calculate the 

amount of the per treatment adjustment 

by applying CY 2014 prices for ESRDrelated drugs and biologicals to the 

utilization data for CY 2007 and CY 

2012. We note the CY 2014 ESRD PPS 

base rate is reflective of 2007 utilization 

because the base rate is based on CY 

2007 data. We believe using prices for 

drugs and biologicals inflated to 2014 

levels allows us to appropriately 

measure changes that are attributable to 

utilization patterns as opposed to 

differences in pricing for drugs and 

biologicals in 2007 and 2012. In 

addition, we believe that because we are 

proposing to make the reduction in CY 

2014, we should price the ESRD-related 

drugs and biologicals for the year in 

which the adjustment applies. For 

purposes of this analysis, we view 

utilization of drugs and biologicals as 

units of a drug or biological furnished 

to a patient per treatment for ESRD. We 

would take the estimated amount of the 

per treatment difference between the 

estimated spending of drugs and 

biologicals in CY 2007 and CY 2012 and 

reduce this amount by the same 

adjustment factors that were used to 

calculate the ESRD PPS base rate from 

the CY 2007 unadjusted rate per 

treatment, which are the 

standardization, outlier, and the 98 

percent budget-neutrality adjustments. 

A detailed explanation of these 

adjustment factors is provided in the CY 

2011 ESRD PPS final rule (75 FR 49081 

through 49082). We propose to reduce 

the CY 2014 ESRD PPS base rate by the 

resulting amount. 

ii. Determining Utilization of ESRDRelated Drugs and Biologicals 

Section 1881(b)(14)(I) requires the 

single payment amount to be reduced by 

an amount that ‘‘reflects the Secretary’s 

estimate of the change in utilization of 

drugs and biologicals described in 

clauses (ii), (iii), and (iv) of 

subparagraph (B) (other than oral-only 


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ESRD-related drugs, as such term is 

used in the final rule promulgated by 

the Secretary in the Federal Register on 

August 12, 2010 (75 FR 49030))’’. As we 

mentioned above, for purposes of this 

analysis, we view utilization of drugs 

and biologicals as units of a drug or 

biological furnished to a patient per 

treatment. ESRD facilities report this 

information on claims. To calculate this 

adjustment, we analyzed the utilization 

of erythropoiesis stimulating agents 

(ESAs) and any oral forms of such 

agents furnished to individuals for the 

treatment of ESRD. We also analyzed 

the utilization of other injectable drugs 

and biologicals (such as iron sucrose 

and doxercalciferol) and any oral 

equivalent form of such drug or 

biological furnished to individuals for 

the treatment of ESRD that were 

included in the expanded bundle of 

services covered by the ESRD PPS. We 

did not include diagnostic laboratory 

tests or other items and services in the 

comparison analysis because section 

1811(b)(14)(I) only refers to estimating 

the change in utilization of drugs and 

biologicals. 

Section 1881(b)(14)(I) of the Act 

requires the Secretary to compare per 

patient utilization data from 2007 with 

per patient utilization data from 2012. 

For the CY 2007 utilization data for 

ESRD-related drugs and biologicals, we 

propose to use the data analysis 

prepared for the CY 2011 ESRD PPS 

final rule. In the CY 2011 ESRD PPS 

final rule (75 FR 49071 through 49083) 

we discuss in detail the development of 

the ESRD PPS base rate and as we stated 

above, the base rate represents the 

average MAP for composite rate and 

separately billable services which was 

based on 2007 claims data. We explain 

in the CY 2011 ESRD PPS final rule that 

in order to comply with section 

1881(b)(14)(A)(ii) of the Act we 

determined that 2007 was the year with 

the lowest per patient utilization of 

renal dialysis services by Medicare 

ESRD beneficiaries among the years 

2007, 2008, and 2009. Therefore, 

utilization data for ESAs and other 

drugs and biologicals including the oralequivalent forms of those drugs and 

biologicals furnished for the treatment 

of ESRD was readily available for 

purposes of analyzing 2007 utilization. 

For the CY 2012 utilization data for 

ESRD-related drugs and biologicals, we 

propose to use the latest available 

claims data based on the CY 2012 ESRD 

facility claims updated through 

December 31, 2012 (that is, claims with 

dates of service from January 1 through 

December 31, 2012, that were received, 

processed, paid, and passed to the 

National Claims History File as of 

December 31, 2012). For the CY 2014 

ESRD PPS final rule, we will use the CY 

2012 claims file updated through June 

30, 2013, (that is, claims with dates of 

service from January 1 through 

December 31, 2012, that were received, 

processed, paid, and passed to the 

National Claims History File as of June 

30, 2013) to calculate 2012 utilization. 

We solicit comments on the proposed 

use of 2007 and 2012 claims data to 

capture the utilization of ESRD-related 

drugs and biologicals in those years. 

Because section 1881(b)(14)(I) 

requires that we compare per patient 

utilization of ESRD-related drugs and 

biologicals in 2007 with per patient 

utilization in 2012, we believe that this 

would also include utilization of drugs 

and biologicals furnished in ESRD 

facilities located in the United States 

Territories of Guam, American Samoa 

and the Northern Mariana Islands (the 

Pacific Rim), even though facilities in 

the Pacific Rim were not paid under the 

ESRD PPS during these years. Therefore, 

we propose to use 2007 and 2012 

utilization of ESRD-related drugs and 

biologicals (including oral equivalents) 

for ESRD facilities located in these 

territories in our analysis of the 

reduction required by section 

1881(b)(14)(I). For this proposed rule, 

we did not readily have access to the 

2007 utilization data for the ESRD 

facilities located in these areas; 

however, we plan to include these data 

in our calculation for the final rule. 

Because there are very few ESRD 

facilities in this region, we do not 

believe that the inclusion of utilization 

of drugs and biologicals furnished in CY 

2007 at these facilities will have a 

significant impact on the amount of the 

adjustment. We solicit comments on the 

proposal to include data on the 

utilization of drugs and biologicals 

furnished in ESRD facilities located in 

the Pacific Rim when comparing 

utilization of drugs and biologicals in 

CY 2007 with CY 2012. 

iii. Pricing of ESRD-Related Drugs and 

Biologicals 

As we stated above, we are proposing 

to price ESRD-related drugs and 

biologicals to CY 2014 to allow for an 

accurate comparison between utilization 

of those drugs and biologicals furnished 

in CY 2007 with utilization in CY 2012. 

In order to price ESRD-related drugs and 

biologicals based on CY 2014 prices, we 

started with CY 2011 prices as 

established and published in the CY 

2011 ESRD PPS final rule. 

During the development of the ESRD 

PPS base rate, we included the MAP 

amounts for ESRD-related drugs and 

biologicals that were, prior to January 1, 

2011, separately paid under Part B. For 

setting the CY 2011 ESRD PPS base rate, 

for Part B separately billable drugs, we 

used the first two quarters of ASP+6 and 

then used the Producer Price Index (PPI) 

to inflate the prices to CY 2011 (75 FR 

49079). We also included the MAP 

amounts for the ESRD-related oralequivalent drugs and biologicals that 

were, prior to January 1, 2011, 

separately paid under Part D (75 FR 

49080). For setting the CY 2011 ESRD 

PPS base rate for these drugs, we used 

the growth rates for overall prescription 

drug prices that were used in the 

National Health Expenditure Projections 

(NHE) for updating prices for former 

Part D drugs to CY 2011 from CY 2007. 

We propose to inflate the prices 

established in the CY 2011 ESRD PPS 

final rule for ESRD-related drugs and 

biologicals and their oral equivalents to 

CY 2014 by applying the ESRD bundled 

(ESRDB) market basket, the productivity 

adjustment, and the wage index budget 

neutrality adjustment factors. Because 

the base rate and the ESRDB market 

basket account for ESRD-related drugs 

and biologicals, and we have updated 

all components of the base rate annually 

using a market basket minus 

productivity with wage index budget 

neutrality adjustment factor, we believe 

that using these inflation factors are 

consistent with how these services are 

paid under the ESRD PPS. The drug 

component of the ESRDB market basket 

uses the PPI for prescription drugs as a 

proxy for the growth in drug prices. We 

believe using the ESRDB market basket 

to price drugs and biologicals for CY 

2014 complies with the requirement in 

section 1881(b)(14)(I) that the Secretary 

take into account the changes in prices 

for drugs and biologicals reflected in the 

ESRDB market basket percentage 

increase factor. The ESRDB market 

basket minus productivity increase 

factors were 2.1 percent and 2.3 percent 

for CY 2012 and CY 2013, respectively. 

The proposed CY 2014 update is 2.5 

percent. The wage index budget 

neutrality adjustment factors for the 

same years are 1.001520, 1.000613, and 

a proposed factor of 1.000411. 

Therefore, we propose to use a total 

growth update factor of 7.3 percent 

(1.021*1.023*1.025*1.001520* 

1.000613*1.000411 = 1.073) to inflate 

prices for ESRD-related drugs and 

biologicals from CY 2011 levels to CY 

2014 levels. We solicit comments on the 

use of the ESRDB market basket 

percentage increase factor to inflate 

prices for drugs and biologicals to CY 

2014 levels. 


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iv. Calculation of the Amount of the per 

Treatment Reduction 

We applied the 2014 prices to the CY 

2007 and CY 2012 drug and biological 

utilization data to calculate aggregate 

amounts for each year. For drugs and 

biologicals for which we have 

utilization data for CY 2012, but that 

were not present on CY 2007 claims, we 

priced these drugs using the ASP+6 

percent price for 2012, which is an 

average of the four quarter prices, and 

inflated it using the CY 2013 and the CY 

2014 proposed ESRDB market basket, 

productivity, and wage index budget 

neutrality adjustment factors. While 

most of these drugs had minimal 

utilization, we note that Feraheme was 

the only significant exception. 

Specifically, Feraheme was not 

available until January 2010 and once 

the drug was available, the use of the 

drug rose to the top 12th drug furnished 

to ESRD beneficiaries. Next, we divided 

each year’s estimated aggregate amount 

for drugs and biologicals by that year’s 

count of treatments furnished to 

Medicare beneficiaries to get an average 

payment per treatment for the year. This 

resulted in a per treatment amount for 

drugs and biologicals of $83.76 in 2007 

and a per treatment amount for drugs 

and biologicals of $51.42 in 2012. We 

then subtracted the average payment per 

treatment for CY 2012 from the average 

amount per treatment for CY 2007 to get 

a total of $32.34 ($83.76¥$51.42 = 

$32.34). We then reduced this amount 

by the standardization, the outlier, and 

the 98 percent budget neutrality 

adjustments to get a total of $29.52 

($32.34 × .9407 × .99 × .98 = $29.52). We 

would apply these adjustments before 

reducing the base rate because the base 

rate was reduced by these adjustments 

when it was first established, and the 

reduction should be adjusted in the 

same way to make the two figures 

comparable. We would then reduce the 

CY 2014 proposed base rate of $246.47 

by $29.52, resulting in the CY 2014 

proposed base rate of $216.95. A 

reduction of $29.52 from the proposed 

CY 2014 ESRD PPS base rate results in 

a 12 percent reduction in Medicare 

payments. We solicit comments on the 

proposed methodology for the reduction 

to the ESRD PPS base rate to reflect the 

change in the utilization of ESRDrelated drugs and biologicals from CY 

2007 to CY 2012. 

While we propose to implement the 

full reduction in CY 2014, we note that 

we are also concerned that this one-time 

reduction to the ESRD PPS base rate 

could be a significant reduction to ESRD 

facilities for the year and potentially 

impact beneficiary access to care. 

Therefore, we are soliciting comments 

on a potential transition or phase-in 

period of the 12 percent reduction and 

the number of years for such transition 

or phase-in period. 

v. Comparison of ASP Versus PPI 

Section 1881(b)(14)(I) requires the 

Secretary to ‘‘take into account the most 

recently available data on average sales 

prices and changes in prices for drugs 

and biologicals reflected in the ESRDB 

market basket percentage increase 

factor’’ in making the reduction to the 

ESRD PPS base rate to reflect the change 

in utilization of ESRD-related drugs and 

biologicals from CY 2007 to CY 2012. 

While we could have chosen to inflate 

prices for drugs and biologicals to 2014 

levels with more recently available ASP 

data, we believe using a growth based 

on the ESRDB market basket is more 

appropriate because it reflects what 

Medicare is required to pay for the 

drugs and biologicals through the ESRD 

PPS base rate. We performed an 

alternative analysis using prices based 

on the first quarter 2013 ASP+6 percent 

prices and the National Drug Code 

(NDC) prices published on the CMS 

Web site located at http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/ESRDpayment/ 

Outlier_Services.html that are used for 

outlier calculations, and the PPI to 

project to CY 2014. The results are 

minimally different (a difference of 

$29.40 versus $29.52), and we believe 

that the ESRDB market basket approach 

is a more appropriate measure of how 

Medicare pays for these drugs under the 

ESRD PPS. 

We are soliciting comments on the 

potential use of ASP instead of the 

ESRDB market basket to inflate drug 

prices to 2014 levels for purposes of the 

drug utilization adjustment. 

3. ESRD Bundled Market Basket 

a. Overview and Background 

In accordance with section 

1881(b)(14)(F)(i) of the Act, as added by 

section 153(b) of MIPPA and amended 

by section 3401(h) of the Affordable 

Care Act, beginning in 2012, the ESRD 

payment amounts are required to be 

annually increased by an ESRD market 

basket increase factor that is reduced by 

the productivity adjustment described 

in section 1886(b)(3)(B)(xi)(II) of the 

Act. The application of the productivity 

adjustment described may result in the 

increase factor being less than 0.0 for a 

year and may result in payment rates for 

a year being less than the payment rates 

for the preceding year. The statute also 

provides that the market basket increase 

factor should reflect the changes over 

time in the prices of an appropriate mix 

of goods and services used to furnish 

renal dialysis services. 

b. Proposed Market Basket Update 

Increase Factor and Labor-Related Share 

for ESRD Facilities for CY 2014 

As required under section 

1881(b)(14)(F)(i) of the Act, CMS 

developed an all-inclusive ESRDB input 

price index (75 FR 49151 through 

49162). Although ‘‘market basket’’ 

technically describes the mix of goods 

and services used for ESRD treatment, 

this term is also commonly used to 

denote the input price index (that is, 

cost categories, their respective weights, 

and price proxies combined) derived 

from a market basket. Accordingly, the 

term ‘‘ESRDB market basket,’’ as used in 

this document, refers to the ESRDB 

input price index. 

For this proposed rule, we propose to 

use the same methodology and the CY 

2008-based ESRDB market basket 

described in the CY 2011 ESRD PPS 

final rule (75 FR 49151 through 49162) 

to compute the CY 2014 ESRDB market 

basket increase factor and labor-related 

share based on the best available data. 

Consistent with historical practice, we 

estimate the ESRDB market basket 

update based on IHS Global Insight 

(IGI), Inc.’s forecast using the most 

recently available data. IGI is a 

nationally recognized economic and 

financial forecasting firm that contracts 

with CMS to forecast the components of 

the market baskets. 

Using this methodology and the IGI 

forecast for the first quarter of 2013 of 

the CY 2008-based ESRDB market 

basket (with historical data through the 

fourth quarter of 2012), and consistent 

with our historical practice of 

estimating market basket increases 

based on the best available data, the 

proposed CY 2014 ESRDB market basket 

increase factor is 2.9 percent. 

For the CY 2014 ESRD payment 

update, we propose to continue using a 

labor-related share of 41.737 percent for 

the ESRD PPS payment, which was 

finalized in the CY 2011 ESRD final rule 

(75 FR 49161). 

c. Proposed Productivity Adjustment 

Under section 1881(b)(14)(F)(i) of the 

Act, as amended by section 3401(h) of 

the Affordable Care Act, for CY 2012 

and each subsequent year, the ESRD 

market basket percentage increase factor 

shall be reduced by the productivity 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act. The 

statute defines the productivity 

adjustment as equal to the 10-year 

moving average of changes in annual 

economy-wide private nonfarm business 


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40844 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

multifactor productivity (MFP) (as 

projected by the Secretary for the 10- 

year period ending with the applicable 

fiscal year, year, cost reporting period, 

or other annual period) (the ‘‘MFP 

adjustment’’). The Bureau of Labor 

Statistics (BLS) is the agency that 

publishes the official measure of private 

nonfarm business MFP. Please see 

http://www.bls.gov/mfp to obtain the 

BLS historical published MFP data. 

CMS notes that the proposed and final 

methodology for calculating and 

applying the MFP adjustment to the 

ESRD payment update is similar to the 

methodology used in other payment 

systems, as required by section 3401 of 

the Affordable Care Act. 

The projection of MFP is currently 

produced by IGI. The details regarding 

the methodology for forecasting MFP 

and how it is applied to the market 

basket were finalized in the CY 2012 

ESRD PPS final rule (76 FR 70232 

through 70234). Using this method and 

the IGI forecast for the first quarter of 

2013 of the 10-year moving average of 

MFP, the proposed CY 2014 MFP factor 

is 0.4 percent. 

d. Calculation of the ESRDB Market 

Basket Update, Adjusted for Multifactor 

Productivity for CY 2014 

Under section 1881(b)(14)(F) of the 

Act, beginning in CY 2012, ESRD PPS 

payment amounts shall be annually 

increased by an ESRD market basket 

percentage increase factor reduced by 

the productivity adjustment. We are 

proposing to use the same methodology 

for calculating the ESRDB market basket 

updates adjusted for MFP that was 

finalized in the CY 2012 ESRD PPS final 

rule (76 FR 70234). 

Thus, in accordance with section 

1881(b)(14)(F)(i) of the Act, the 

proposed ESRDB market basket 

percentage increase factor for CY 2014 

is based on the 1st quarter 2013 forecast 

of the CY 2008-based ESRDB market 

basket, which is estimated to be 2.9 

percent. This market basket percentage 

is then reduced by the MFP adjustment 

(the 10-year moving average of MFP for 

the period ending CY 2014) of 0.4 

percent, which is based on IGI’s 1st 

quarter 2013 forecast. The resulting 

proposed MFP-adjusted ESRDB market 

basket update for CY 2014 is equal to 

2.5 percent, or 2.9 percent less 0.4 

percentage point. If more recent data is 

subsequently available (for example, a 

more recent estimate of the market 

basket or MFP adjustment), we will use 

such data, if appropriate, to determine 

the CY 2014 market basket update and 

MFP adjustment in the CY 2014 ESRD 

PPS final rule. 

4. The Proposed CY 2014 Wage Index 

Section 1881(b)(14)(D)(iv)(II) of the 

Act provides that the ESRD PPS may 

include a geographic wage index 

payment adjustment, such as the index 

referred to in section 1881(b)(12)(D) of 

the Act. In the CY 2011 ESRD PPS final 

rule (75 FR 49117), we finalized the use 

of the Office of Management and 

Budget’s (OMB) Core-Based Statistical 

Areas (CBSAs)-based geographic area 

designations to define urban and rural 

areas and their corresponding wage 

index values. In the CY 2012 ESRD PPS 

final rule (76 FR 70239) we finalized 

that, under the ESRD PPS, we will 

continue to utilize the ESRD PPS wage 

index methodology, first established 

under the basic case-mix adjusted 

composite rate payment system, for 

updating the wage index values using 

the OMB’s CBSA-based geographic area 

designations to define urban and rural 

areas and corresponding wage index 

values; the gradual reduction of the 

wage index floor during the transition; 

and the policies for areas with no 

hospital data. The CBSA-based 

geographic area designations were 

originally described in OMB bulletin 

03–04, issued June 6, 2003. This 

bulletin, as well as subsequent bulletins, 

is available online at http:// 

www.whitehouse,gov/omb/bulletins. 

OMB publishes bulletins regarding 

CBSA changes, including changes to 

CBSA numbers and titles. In accordance 

with our established methodology, we 

have historically adopted any CBSA 

changes that are published in the OMB 

bulletin that corresponds with the IPPS 

hospital wage index. For FY 2014, we 

use the FY 2013 pre-floor, prereclassified hospital wage index to 

adjust the ESRD PPS payments. On 

February 28, 2013, OMB issued OMB 

Bulletin No. 13–01, which establishes 

revised delineations of statistical areas 

based on OMB standards published in 

the Federal Register on June 28, 2010 

and 2010 Census Bureau data. Because 

the FY 2013 pre-floor, pre-reclassified 

hospital wage index was finalized prior 

to the issuance of this Bulletin, the FY 

2013 pre-floor, pre-reclassified hospital 

wage index does not reflect OMB’s new 

area delineations based on the 2010 

Census and, thus, the FY 2014 ESRD 

PPS wage index will not reflect the 

OMB changes. As stated in the FY 2014 

IPPS/LTCH PPS proposed rule, CMS 

intends to propose changes to the 

hospital wage index based on this OMB 

Bulletin in the FY 2015 IPPS/LTCH PPS 

proposed rule (78 FR 27486 (May 10, 

2013)). Therefore, we anticipate that the 

OMB Bulletin changes will be reflected 

in the FY 2015 hospital wage index. 

Because we base the ESRD PPS wage 

index on the hospital wage index from 

the prior year, we anticipate that the 

OMB Bulletin changes would be 

reflected in the CY 2015 ESRD PPS 

wage index. 

For CY 2014, we will continue to use 

the same methodology as finalized in 

the CY 2011 ESRD PPS final rule (75 FR 

49117), for determining the wage 

indices for ESRD facilities in CY 2014. 

Specifically, we propose to adjust wage 

indices for CY 2014 to account for 

annually updated wage levels in areas 

in which ESRD facilities are located. We 

propose to use the most recent, FY 2014 

inpatient prospective payment system 

(IPPS) pre-floor, pre-reclassified 

hospital wage index. The ESRD PPS 

wage index values are calculated 

without regard to geographic 

reclassifications authorized under 

section 1886(d)(8) and (d)(10) of the Act 

and utilize pre-floor hospital data that 

are unadjusted for occupational mix. 

The proposed CY 2014 wage index 

values for urban areas are listed in 

Addendum A (Wage Indices for Urban 

Areas) and the proposed CY 2014 wage 

index values for rural areas are listed in 

Addendum B (Wage Indices for Rural 

Areas). Addenda A and B are located on 

the CMS Web site at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ESRDpayment/ 

End-Stage-Renal-Disease-ESRDPayment-Regulations-and-Notices.html. 

In the CY 2011 ESRD PPS final rule 

(75 FR 49117), we finalized a policy to 

use the labor-related share of 41.737 for 

the ESRD PPS portion of the payment. 

For the CY 2014 ESRD PPS we are not 

proposing any changes to the laborrelated share of 41.737. Because all 

providers that elected to participate in 

the transition are entering their fourth 

year of the transition and will begin 

being paid 100 percent under the ESRD 

PPS, the 53.711 labor-related share that 

was applied to the composite rate 

portion of the blended payment is no 

longer applicable. We discuss the 

methodology for the ESRD PPS laborrelated share in our CY 2011 ESRD PPS 

final rule (75 FR 49161), where we note 

that the labor-related share is typically 

the sum of Wages and Salaries, Benefits, 

Housekeeping and Operations, 

Professional Fees, Labor-related 

Services, and a portion of the Capitalrelated Building and Equipment 

expenses. For additional discussions on 

the labor-related share please refer to 

section II.B.3.b. of this proposed rule. 


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a. Payment under the ESRD PPS for 

Facilities Located in Guam, American 

Samoa, and the Northern Mariana 

Islands and Proposed Wage Index Value 

for Guam 

It came to our attention after the ESRD 

PPS was implemented that ESRD 

facilities located in the United States 

Territories of Guam, American Samoa 

and the Northern Mariana Islands (the 

Pacific Rim) have been paid on the basis 

of reasonable costs and charges, rather 

than under the ESRD PPS. Because 

section 1881(b)(14)(A)(i) of the Act 

requires the Secretary to implement a 

payment system under which a single 

payment is made to a renal dialysis 

facility for renal dialysis services in lieu 

of any other payment for services 

furnished on or after January 1, 2011, 

ESRD facilities located in the Pacific 

Rim must be paid under the ESRD PPS 

and will be paid under this system 

beginning for services furnished on or 

after January 1, 2014. In order to pay 

these facilities under the ESRD PPS, we 

must identify an appropriate wage index 

value for these areas as required under 

§ 413.231 of the regulations. We propose 

to use the current value calculated 

under the existing methodology, that is, 

the pre-floor, pre-reclassification, 

hospital wage data that is unadjusted for 

occupational mix for the island of Guam 

of 0.9611, which is displayed in 

Addendum B (Wage Indices for Rural 

Areas). In addition, the most recent 

proposed FY 2014 IPPS pre-floor, prereclassified hospital wage data does not 

include wage data for American Samoa 

and the Northern Mariana Islands. 

Accordingly, we propose below to apply 

the wage index value for Guam to 

facilities located in American Samoa 

and the Northern Mariana Islands. 

b. Proposed Policies for Areas with No 

Wage Data 

In the CY 2011 ESRD PPS final rule 

(75 FR 49117), we finalized the use of 

the CBSA-based geographic area 

designations to define urban/rural areas 

and corresponding wage index values 

for the ESRD PPS. In that final rule (75 

FR 49116 through 49117), we also 

discussed and finalized the 

methodologies we use to calculate wage 

index values for ESRD facilities that are 

located in urban and rural areas where 

there is no hospital data. For urban 

areas with no hospital data, we compute 

the average wage index value of all 

urban areas within the State and use 

that value as the wage index. For rural 

areas with no hospital data, we compute 

the wage index using the average wage 

index values from all contiguous CBSAs 

to represent a reasonable proxy for that 

rural area. 

In the case of American Samoa and 

the Northern Mariana Islands, we 

believe that Guam represents a 

reasonable proxy because the islands are 

located within the Pacific Rim and share 

a common status as United States 

Territories. In addition, the Northern 

Mariana Islands and American Samoa 

are rural areas with no hospital data. 

Therefore, we will use our established 

methodology to compute an appropriate 

wage index using the average wage 

index values from contiguous CBSAs, to 

represent a reasonable proxy. While we 

appreciate that the islands of the Pacific 

Rim are not actually contiguous, we 

believe that same principle applies here, 

and that Guam is a reasonable proxy for 

American Samoa and the Northern 

Marianas. We note that if hospital data 

becomes available for any of the islands 

of the Pacific Rim we will use that data 

for the appropriate CBSA’s instead of 

the proxy. As discussed previously, the 

current wage index value using the 

existing methodology for Guam is 

0.9611. Therefore, for CY 2014, we 

propose to apply this wage index value 

of 0.9611 to ESRD facilities located in 

America Samoa and the Northern 

Mariana Islands, which we are 

including in Addendum B. 

For CY 2014, the only urban area 

without wage index data is HinesvilleFort Stewart, GA. As we discussed in 

our CY 2013 ESRD PPS (77 FR 67459), 

we will continue to use the statewide 

urban average based on the average of 

all urban areas within the state for urban 

areas without hospital data. For CY 

2014 the wage index value for CBSA 

#11 (Georgia) is 0.7482 and this is 

included in Addendum A. Accordingly, 

we propose to apply the statewide urban 

average wage index value of 0.7582 to 

Hinesville-Fort Stewart, GA. 

c. Proposed Reduction to the ESRD 

Wage Index Floor 

A wage index floor value has been 

used in lieu of the calculated wage 

index values below the floor in making 

payment for renal dialysis services 

under the ESRD PPS. In the CY 2011 

ESRD PPS final rule (75 FR 49116 

through 49117), we finalized that we 

would continue to reduce the wage 

index floor by 0.05 for each of the 

remaining years of the transition. We 

further specified in the CY 2012 ESRD 

PPS (76 FR 70241) that we finalized the 

0.05 reduction to the wage index floor 

for CYs 2012 and 2013, resulting in a 

wage index floor of 0.550 and 0.500, 

respectively. 

Our intention has been to provide a 

wage index floor only through the 4- 

year transition to 100 percent 

implementation of the ERSD PPS (75 FR 

49116 through 49117; 76 FR 70240 

through 70241). Most recently, in the 

CY 2013 ESRD PPS final rule (77 FR 

67459 through 67461), we discussed the 

elimination of the wage index floor 

beginning in CY 2014, noting that we 

would propose a new methodology in 

CY 2014 to address wages in rural 

Puerto Rico because we would no longer 

be applying a wage index floor. The CY 

2014 wage index values for both urban 

and rural Puerto Rico remain below the 

finalized CY 2013 ESRD PPS wage 

index floor of 0.500 (77 FR 67459), 

however, and we believe that both rural 

and urban facilities in Puerto Rico 

would benefit from continuing the 

gradual reduction of the floor. We 

believe that continuing the wage index 

floor for CY 2014 and CY 2015 will 

allow renal dialysis facilities located in 

Puerto Rico the benefit afforded to other 

geographical areas in the fifty states of 

a gradual and systematic elimination of 

the wage index floor. Therefore, for CY 

2014 and for CY 2015, we propose to 

continue to apply the wage index floor 

to areas with wage indexes below the 

floor. For CY 2014, Puerto Rico is the 

only area with a wage index value 

below the proposed floor; however, to 

the extent that other geographical areas 

fall below the floor in CY 2015 or 

beyond we believe they should have the 

benefit of a gradual reduction in the 

floor as well. We will continue to 

review wage index values and the 

appropriateness of a wage index floor in 

the future. 

For CY 2014 and CY 2015, we also 

propose to continue our policy of 

gradually reducing the wage index floor 

by 0.05 per year. Specifically, we 

propose a wage index floor value of 0.45 

for CY 2014 and a wage index floor 

value of 0.40 for CY 2015. We believe 

that continuing our policy of applying a 

wage index floor for an additional two 

years would allow Puerto Rico to benefit 

from the anticipated and predictable 

phase out of the wage index floor. While 

we would not expect to continue this 

policy past CY 2015, we will review the 

appropriateness of a wage index floor 

for CY 2016 at that time. 

d. Proposed Wage Index BudgetNeutrality Adjustment 

Section 1881(b)(14)(D)(iv)(II) of the 

Act gives us broad discretion to 

implement payment adjustments to the 

ESRD PPS, including an adjustment of 

the ESRD PPS by a geographic index. 

Section 1881(b)(14)(D)(iv)(II) 

specifically refers to section 

1881(b)(12)(D) as an example of such a 

geographic index, and in the CY 2011 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
40846 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

ESRD PPS final rule, we finalized the 

use of the same wage index 

methodology that we utilized under the 

basic case-mix adjusted composite rate 

payment system (75 FR 49116). We had 

applied a wage index budget-neutrality 

adjustment factor under the basic casemix adjusted composite payment 

system, and accordingly, in the CY 2012 

ESRD PPS final rule, we finalized a 

policy for CY 2012 and future years to 

apply wage index budget-neutrality 

adjustment factors to the composite rate 

portion of the ESRD PPS blended 

payments for facilities participating in 

the transition as well as to the base rate 

for the ESRD PPS portion of the blended 

payment and the full ESRD PPS for 

those facilities that elected to receive 

100 percent of their payment under that 

system (76 FR 70241 and 70242). We 

also finalized the methodology for 

computing the wage index budgetneutrality adjustment factors for CY 

2012 and subsequent years (76 FR 

70242). 

For CY 2014, we are not proposing 

any changes to the methodology, but we 

note that we will no longer compute a 

budget neutrality adjustment factor for 

the composite rate portion of the ESRD 

PPS blended payment because all 

facilities will be paid 100 percent under 

the ESRD PPS in CY 2014. For ease of 

reference, we explain the methodology 

for computing the budget-neutrality 

adjustment factor here. For the CY 2014 

wage index budget-neutrality 

adjustment factor, we use the fiscal year 

(FY) 2014 pre-floor, pre-reclassified, 

non-occupational mix-adjusted hospital 

data to compute the wage index values, 

2012 outpatient claims (paid and 

processed as of December 31, 2012), and 

geographic location information for each 

facility, which may be found through 

Dialysis Facility Compare. Dialysis 

Facility Compare (DFC) can be found at 

the DFC Web page on the CMS Web site 

at http://www.medicare.gov/ 

dialysisfacilitycompare/. The FY 2014 

hospital wage index data for each urban 

and rural locale by CBSA may also be 

accessed on the CMS Web site at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/ 

AcuteInpatientPPS/ 

index.html?redirect=/ 

AcuteInpatientPPS/WIFN/list.asp. The 

wage index data are located in the 

section entitled, ‘‘FY 2014 Proposed 

Rule Occupational Mix Adjusted and 

Unadjusted Average Hourly Wage and 

Pre-Reclassified Wage Index by CBSA’’. 

We computed the proposed CY 2014 

wage index budget-neutrality 

adjustment factor using treatment 

counts from the 2012 claims and 

facility-specific CY 2013 payment rates 

to estimate the total dollar amount that 

each ESRD facility would have received 

in CY 2013. The total of these payments 

became the target amount of 

expenditures for all ESRD facilities for 

CY 2014. Next, we computed the 

estimated dollar amount that would 

have been paid for the same ESRD 

facilities using the proposed ESRD wage 

index for CY 2014. The total of these 

payments becomes the new CY 2014 

amount of wage-adjusted expenditures 

for all ESRD facilities. The wage index 

budget-neutrality factor is calculated as 

the target amount divided by the new 

CY 2014 amount. When we multiplied 

the wage index budget-neutrality factor 

by the applicable CY 2014 estimated 

payments, aggregate payments to ESRD 

facilities would remain budget-neutral 

when compared to the target amount of 

expenditures. That is, the wage index 

budget-neutrality adjustment factor 

ensures that wage index adjustments do 

not increase or decrease aggregate 

Medicare payments with respect to 

changes in wage index updates. 

Therefore, we are proposing a wage 

index budget-neutrality adjustment 

factor of 1.000411, which would be 

computed in ESRD PPS base rate 

payment methodology when making 

payment for renal dialysis services in 

CY 2014. 

5. Application of the International 

Classification of Diseases (ICD), Tenth 

Revision, to the Comorbidity Payment 

Adjustment Codes 

In the CY 2011 ESRD PPS final rule 

(75 FR 49094), we explained that 

section 1881(b)(14)(D)(i) of the Act, as 

added by section 153(b) of MIPPA, 

requires that the ESRD PPS include a 

payment adjustment based on case-mix 

that may take into account, among other 

things, patient comorbidities. 

Comorbidities are specific patient 

conditions that coexist with the 

patient’s principal diagnosis that 

necessitates dialysis. The comorbidity 

payment adjustment recognizes the 

increased costs associated with 

comorbidities and provides additional 

payment for certain conditions that 

occur concurrently with the need for 

dialysis. 

To develop the comorbidity payment 

adjustment, we used a stepwise 

regression model to analyze comorbidity 

data and found that certain 

comorbidities are predictors of variation 

in payments for ESRD patients. Details 

on the development of the comorbidity 

categories eligible for the comorbidity 

payment adjustment, including an 

explanation of the stepwise regression 

model that we used to analyze 

comorbidity data, is discussed in the CY 

2011 ESRD PPS final rule (75 FR 49094 

through 49108). We analyzed the 

comorbidity categories and excluded 

those categories from the comorbidity 

payment adjustment that met any of 

three exclusion criteria (75 FR 49095 

through 49100): (1) Inability to create 

accurate clinical definitions; (2) 

potential for adverse incentives 

regarding care; and (3) potential for 

ESRD facilities to directly influence the 

prevalence of the co-morbidity either by 

altering dialysis care, changing 

diagnostic testing patterns, or 

liberalizing the diagnostic criteria. 

We finalized six comorbidity 

categories eligible for the comorbidity 

payment adjustment, each with 

associated International Classification of 

Disease, 9th Revision, Clinical 

Modification (ICD–9–CM) diagnosis 

codes (75 FR 49100). Among these 

categories are three acute, short-term 

diagnostic categories (pericarditis, 

bacterial pneumonia, and 

gastrointestinal tract bleeding with 

hemorrhage) and three chronic 

diagnostic categories (hereditary 

hemolytic anemia with sickle cell 

anemia, myelodysplastic syndrome, and 

monoclonal gammopathy). The 

comorbidity categories eligible for the 

adjustment and their associated ICD–9– 

CM codes were published in the 

Appendix of the CY 2011 ESRD PPS 

final rule as Table E: ICD–9–CM Codes 

Recognized for a Comorbidity Payment 

Adjustment (75 FR 49211). 

In the CY 2012 ESRD PPS final rule 

(76 FR 70252), we clarified that the 

ICD–9–CM codes eligible for the 

comorbidity payment adjustment are 

subject to the annual ICD–9–CM coding 

updates that occur in the hospital 

inpatient PPS final rule and are effective 

October 1st of every year. We explained 

that any updates to the ICD–9–CM codes 

that affect the categories of 

comorbidities and the diagnoses within 

the comorbidity categories that are 

eligible for the comorbidity payment 

adjustment would be communicated to 

ESRD facilities through sub-regulatory 

guidance. Accordingly, Change Request 

(CR) 7476, Transmittal 2255, entitled, 

‘‘Quarterly Update to the End-Stage 

Renal Disease Prospective Payment 

System, was issued on July 15, 2011 to 

update the ICD–9–CM codes eligible for 

the comorbidity payment adjustment in 

accordance with the annual ICD–9–CM 

update effective October 1, 2011. This 

CR can be found on the CMS Web site 

at the following link: http:// 

www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/ 

Downloads/R2255CP.pdf. There have 

not been updates to the ICD–9–CM 

codes eligible for the comorbidity 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 40847 

payment adjustment since October 1, 

2011. 

Effective October 1, 2014, CMS will 

implement the 10th revision of the ICD 

coding scheme—ICD–10–CM. Because 

the transition to ICD–10–CM coding will 

occur during CY 2014, we discuss here 

the crosswalk from ICD–9–CM to ICD– 

10–CM codes for the purpose of 

determining eligibility for the 

comorbidity payment adjustment. 

We crosswalked the ICD–9–CM codes 

that are eligible for the comorbidity 

payment adjustment to ICD–10–CM 

codes using the General Equivalence 

Mappings (GEM) tool, which is the 

authoritative source for crosswalking 

developed by the National Center for 

Health Statistics and CMS. The 

crosswalk from ICD–9–CM to ICD–10– 

CM diagnosis codes resulted in three 

scenarios: One ICD–9–CM code could 

crosswalk to one ICD–10–CM code; one 

ICD–9–CM code crosswalked to 

multiple ICD–10–CM codes; or multiple 

ICD–9–CM crosswalked to one ICD–10– 

CM code. We applied the three 

exclusion criteria listed above to each of 

the ICD–10–CM codes to which the 

ICD–9–CM codes crosswalked. 

In our clinical evaluation, we found 

the ICD–9–CM codes generally 

crosswalked to one ICD–10–CM code 

that codes for the same diagnosis, has 

the same code descriptor, and does not 

meet any of our exclusion criteria. 

Accordingly, with the exceptions noted 

below, we propose that ICD–10–CM 

codes will be eligible for the 

comorbidity payment adjustment where 

they crosswalk from ICD–9–CM codes 

that are eligible for the comorbidity 

payment adjustment. There are, 

however, two instances where ICD–9– 

CM codes crosswalk to ICD–10–CM 

codes that we believe meet one or more 

of the exclusion criteria described 

above, and we propose to exclude these 

codes from eligibility for the 

comorbidity payment adjustment. 

a. One ICD–9–CM Code Crosswalks to 

One ICD–10–CM Code 

Table 1 lists all the instances in which 

one ICD–9–CM code crosswalks to one 

ICD–10–CM code. We propose that all of 

those ICD–10–CM codes will be subject 

to the comorbidity payment adjustment 

with the exception of K52.81 

Eosinophilic gastritis or gastroenteritis. 

Currently, 535.71 Eosinophilic gastritis 

with hemorrhage is one of 40 ICD–9–CM 

diagnosis codes under the acute 

comorbidity category of Gastrointestinal 

(GI) Bleeding. The descriptor of K52.81, 

the ICD–10–CM code to which this ICD– 

9–CM code crosswalks, does not include 

the word ‘‘hemorrhage.’’ In the CY 2011 

ESRD PPS final rule (75 FR 49097), we 

specifically limited the GI bleeding 

category for the comorbidity payment 

adjustment to GI bleed with hemorrhage 

because we believed that the 

gastrointestinal tract bleeding category 

met our first exclusion criterion— 

inability to create accurate clinical 

definitions—because it was overly 

broad. We also believed that use of this 

diagnosis category could lead to gaming 

consistent with the second and third 

exclusion criteria listed above. For these 

reasons, we limited the gastrointestinal 

tract bleeding diagnosis category to 

gastrointestinal tract bleeding with 

hemorrhage, which we believe creates 

accurate clinical definitions and 

mitigates the potential for adverse 

incentives in ESRD care. Accordingly, 

we propose to exclude ICD–10–CM code 

K52.81 Eosinophilic gastritis or 

gastroenteritis from eligibility for the 

comorbidity payment adjustment 

because the code descriptor does not 

indicate the diagnosis of a hemorrhage. 

We propose that all of the other ICD– 

10–CM codes listed in the Table 1 below 

will be eligible for the comorbidity 

payment adjustment. 

TABLE 1—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE

ICD–9 Descriptor ICD–10 Descriptor 

Gastrointestinal Bleeding 

530.21 ............... Ulcer of esophagus with bleeding ............................. K22.11 .............. Ulcer of esophagus with bleeding 

535.71 ............... Eosinophilic gastritis, with hemorrhage ..................... K52.81 .............. Eosinophilic gastritis or gastroenteritis 

537.83 ............... Angiodysplasia of stomach and duodenum with 

hemorrhage.

K31.811 ............ Angiodysplasia of stomach and duodenum with 

bleeding 

569.85 ............... Angiodysplasia of intestine with hemorrhage ........... K55.21 .............. Angiodysplasia of colon with hemorrhage 

Bacterial Pneumonia 

003.22 ............... Salmonella pneumonia .............................................. A02.22 .............. Salmonella pneumonia

482.0 ................. Pneumonia due to Klebsiella pneumonia ................. J15.0 ................. Pneumonia due to Klebsiella pneumoniae 

482.1 ................. Pneumonia due to Pseudomonas ............................. J15.1 ................. Pneumonia due to Pseudomonas 

482.2 ................. Pneumonia due to Hemophilus influenzae [H. 

influenzae].

J14 .................... Pneumonia due to Hemophilus influenzae 

482.32 ............... Pneumonia due to Streptococcus, group B .............. J15.3 ................. Pneumonia due to streptococcus, group B 

482.40 ............... Pneumonia due to Staphylococcus, unspecified ...... J15.20 ............... Pneumonia due to staphylococcus, unspecified 

482.41 ............... Methicillin susceptible pneumonia due to Staphylococcus aureus.J15.211 ............. Pneumonia due to Methicillin susceptible Staphylococcus aureus 

482.42 ............... Methicillin resistant pneumonia due to Staphylococcus aureus.J15.212 ............. Pneumonia due to Methicillin resistant Staphylococcus aureus 

482.49 ............... Other Staphylococcus pneumonia ............................ J15.29 ............... Pneumonia due to other staphylococcus 

482.82 ............... Pneumonia due to escherichia coli [E. coli] .............. J15.5 ................. Pneumonia due to Escherichia coli 

482.83 ............... Pneumonia due to other gram-negative bacteria ..... J15.6 ................. Pneumonia due to other aerobic Gram-negative 

bacteria 

482.84 ............... Pneumonia due to Legionnaires’ disease ................. A48.1 ................ Legionnaires’ disease 

507.0 ................. Pneumonitis due to inhalation of food or vomitus .... J69.0 ................. Pneumonitis due to inhalation of food and vomit 

507.8 ................. Pneumonitis due to other solids and liquids ............. J69.8 ................. Pneumonitis due to inhalation of other solids and 

liquids 

510.0 ................. Empyema with fistula ................................................ J86.0 ................. Pyothorax with fistula 

510.9 ................. Empyema without mention of fistula ......................... J86.9 ................. Pyothorax without fistula 


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TABLE 1—ONE ICD–9–CM CODE CROSSWALKS TO ONE ICD–10–CM CODE—Continued 

ICD–9 Descriptor ICD–10 Descriptor 

Pericarditis 

420.91 ............... Acute idiopathic pericarditis ...................................... I30.0 ................. Acute nonspecific idiopathic pericarditis 

Hereditary Hemolytic and Sickle Cell Anemia 

282.0 ................. Hereditary spherocytosis ........................................... D58.0 ................ Hereditary spherocytosis 

282.1 ................. Hereditary elliptocytosis ............................................ D58.1 ................ Hereditary elliptocytosis 

282.41 ............... Sickle-cell thalassemia without crisis ........................ D57.40 .............. Sickle-cell thalassemia without crisis 

282.43 ............... Alpha thalassemia ..................................................... D56.0 ................ Alpha thalassemia 

282.44 ............... Beta thalassemia ....................................................... D56.1 ................ Beta thalassemia 

282.45 ............... Delta-beta thalassemia .............................................. D56.2 ................ Delta-beta thalassemia 

282.46 ............... Thalassemia minor .................................................... D56.3 ................ Thalassemia minor 

282.47 ............... Hemoglobin E-beta thalassemia ............................... D56.5 ................ Hemoglobin E-beta thalassemia 

282.49 ............... Other thalassemia ..................................................... D56.8 ................ Other thalassemias 

282.61 ............... Hb-SS disease without crisis .................................... D57.1 ................ Sickle-cell disease without crisis 

282.63 ............... Sickle-cell/Hb-C disease without crisis ..................... D57.20 .............. Sickle-cell/Hb-C disease without crisis 

282.68 ............... Other sickle-cell disease without crisis ..................... D57.80 .............. Other sickle-cell disorders without crisis 

Myelodysplastic Syndrome 

238.7 ................. Essential thrombocythemia ....................................... D47.3 ................ Essential (hemorrhagic) thrombocythemia 

238.73 ............... High grade myelodysplastic syndrome lesions ......... D46.22 .............. Refractory anemia with excess of blasts 2 

238.74 ............... Myelodysplastic syndrome with 5q deletion .............. D46.C ............... Myelodysplastic syndrome with isolated del(5q) 

chromosomal abnormality 

238.76 ............... Myelofibrosis with myeloid metaplasia ...................... D47.1 ................ Chronic myeloproliferative disease 

b. One ICD–9–CM Code Crosswalks to 

Multiple ICD–10–CM Codes 

Table 2 lists all of the instances in 

which one ICD–9–CM code crosswalks 

to multiple ICD–10–CM codes. In those 

instances, we propose that all the 

crosswalked ICD–10–CM codes will be 

subject to the comorbidity payment 

adjustment, with the exception of D89.2 

Hypergammaglobulinemia, unspecified. 

ICD–9–CM code 273.1 Monoclonal 

paraproteinemia is the only ICD–9–CM 

code eligible for the comorbidity 

payment adjustment under the chronic 

comorbidity category of Monoclonal 

gammopathy. ICD–9–CM code 273.1 

Monoclonal paraproteinemia crosswalks 

to two ICD–10–CM codes: D47.2 

Monoclonal gammopathy and D89.2 

Hypergammaglobulinemia, unspecified. 

We analyzed both of these ICD–10–CM 

codes and determined that D47.2 

Monoclonal gammopathy should be 

eligible for the comorbidity payment 

adjustment because, like ICD–9–CM 

code 273.1 Monoclonal 

paraproteinemia, it indicates that there 

is an excessive amount of a single 

monoclonal gammaglobulin. When we 

analyzed the comorbidity category for 

the CY 2011 ESRD PPS final rule, single 

monoclonal gammaglobulin was shown 

to have an association with higher 

erythropoiesis stimulating agent (ESA) 

usage, thereby resulting in higher costs 

to dialysis facilities. After clinical 

evaluation of D89.2 

Hypergammaglobulinemia, unspecified, 

however, we determined that this ICD– 

10–CM code should not be eligible for 

the comorbidity payment adjustment 

because D89.2 

Hypergammaglobulinemia, unspecified 

indicates only that 1 or more 

immunoglobulins are elevated, but does 

not identify which immunoglobulin(s) 

are elevated. We believe that the lack of 

specificity of this particular code results 

in an inability to create an accurate 

clinical definition, which is the first of 

the three exclusion criteria. 

Accordingly, we propose that D89.2 

Hypergammaglobulinemia, unspecified 

will not be eligible for the comorbidity 

payment adjustment. We propose that 

all of the other ICD–10–CM codes listed 

in Table 2 below will be eligible for the 

comorbidity payment adjustment. 

TABLE 2—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES

ICD–9 Descriptor ICD–10 Descriptor 

Gastrointestinal Bleeding 

562 .................... Diverticulosis of small intestine with hemorrhage ..... K57.11 .............. Diverticulosis of small intestine without perforation 

or abscess with bleeding. 

K57.51 .............. Diverticulosis of both small and large intestine without perforation or abscess with bleeding. 

562.03 ............... Diverticulitis of small intestine with hemorrhage ....... K57.01 .............. Diverticulitis of small intestine with perforation and 

abscess with bleeding. 

K57.13 .............. Diverticulitis of small intestine without perforation or 

abscess with bleeding. 

K57.41 .............. Diverticulitis of both small and large intestine with 

perforation and abscess with bleeding. 

K57.53 .............. Diverticulitis of both small and large intestine without perforation or abscess with bleeding. 

562.12 ............... Diverticulosis of colon with hemorrhage ................... K57.31 .............. Diverticulosis of large intestine without perforation 

or abscess with bleeding. 


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TABLE 2—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES—Continued 

ICD–9 Descriptor ICD–10 Descriptor 

K57.91 .............. Diverticulosis of intestine, part unspecified, without 

perforation or abscess with bleeding. 

K57.51 .............. Diverticulosis of both small and large intestine without perforation or abscess with bleeding. 

562.13 ............... Diverticulitis of colon with hemorrhage ..................... K57.21 .............. Diverticulitis of large intestine with perforation and 

abscess with bleeding. 

K57.33 .............. Diverticulitis of large intestine without perforation or 

abscess with bleeding. 

K57.41 .............. Diverticulitis of both small and large intestine with 

perforation and abscess with bleeding. 

K57.53 .............. Diverticulitis of both small and large intestine without perforation or abscess with bleeding. 

Bacterial Pneumonia 

513.0 ................. Abscess of lung ......................................................... J85.0 ................. Gangrene and necrosis of lung. 

J85.1 ................. Abscess of lung with pneumonia. 

J85.2 ................. Abscess of lung without pneumonia. 

Pericarditis 

420.0 ................. Acute pericarditis in diseases classified elsewhere .. A18.84 .............. Tuberculosis of heart. 

I32 .................... Pericarditis in diseases classified elsewhere. 

M32.12 ............. Pericarditis in systemic lupus erythematosus. 

420.90 ............... Acute pericarditis, unspecified .................................. I30.1 ................. Infective pericarditis. 

I30.9 ................. Acute pericarditis, unspecified. 

420.99 ............... Other acute pericarditis ............................................. I30.8 ................. Other forms of acute pericarditis. 

I30.9 ................. Acute pericarditis, unspecified. 

Hereditary Hemolytic and sickle cell anemia 

282.2 ................. Anemias due to disorders of glutathione metabolism D55.0 ................ Anemia due to glucose-6-phosphate dehydrogenase [G6PD] deficiency. 

D55.1 ................ Anemia due to other disorders of glutathione metabolism. 

282.3 ................. Other hemolytic anemias due to enzyme deficiency D55.2 ................ Anemia due to disorders of glycolytic enzymes. 

D55.3 ................ Anemia due to disorders of nucleotide metabolism. 

D55.8 ................ Other anemias due to enzyme disorders. 

D55.9 ................ Anemia due to enzyme disorder, unspecified. 

282.42 ............... Sickle-cell thalassemia with crisis ............................. D57.411 ............ Sickle-cell thalassemia with acute chest syndrome. 

D57.412 ............ Sickle-cell thalassemia with splenic sequestration. 

D57.419 ............ Sickle-cell thalassemia with crisis, unspecified. 

282.62 ............... Hb-SS disease with crisis ......................................... D57.00 .............. Hb-SS disease with crisis, unspecified. 

D57.01 .............. Hb-SS disease with acute chest syndrome. 

D57.02 .............. Hb-SS disease with splenic sequestration. 

282.64 ............... Sickle-cell/Hb-C disease with crisis .......................... D57.211 ............ Sickle-cell/Hb-C disease with acute chest syndrome. 

D57.212 ............ Sickle-cell/Hb-C disease with splenic sequestration. 

D57.219 ............ Sickle-cell/Hb-C disease with crisis, unspecified. 

282.69 ............... Other sickle-cell disease with crisis .......................... D57.811 ............ Other sickle-cell disorders with acute chest syndrome. 

D57.812 ............ Other sickle-cell disorders with splenic sequestration. 

D57.819 ............ Other sickle-cell disorders with crisis, unspecified. 

Monoclonal Gammopathy 

273.1 ................. Monoclonal paraproteinemia ..................................... D47.2 ................ Monoclonal gammopathy. 

D89.2 ................ Hypergammaglobulinemia, unspecified. 

Myelodysplastic Syndrome 

238.72 ............... Low grade myelodysplastic syndrome lesions .......... D46.0 ................ Refractory anemia without ring sideroblasts, so stated. 

D46.1 ................ Refractory anemia with ring sideroblasts. 

D46.20 .............. Refractory anemia with excess of blasts, unspecified. 

D46.21 .............. Refractory anemia with excess of blasts 1. 

D46.4 ................ Refractory anemia, unspecified. 

D46.A ................ Refractory cytopenia with multilineage dysplasia. 

D46.B ................ Refractory cytopenia with multilineage dysplasia 

and ring sideroblasts. 

238.75 ............... Myelodysplastic syndrome, unspecified .................... D46.9 ................ Myelodysplastic syndrome, unspecified. 


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40850 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

TABLE 2—ONE ICD–9–CM CODE CROSSWALKS TO MULTIPLE ICD–10–CM CODES—Continued 

ICD–9 Descriptor ICD–10 Descriptor 

D46.Z ................ Other myelodysplastic syndromes. 

c. Multiple ICD–9–CM Codes Crosswalk 

to One ICD–10–CM Code 

Table 3 displays the crosswalk where 

multiple ICD–9–CM codes crosswalk to 

one ICD–10–CM code. For the reasons 

explained above, we propose that all of 

the crosswalked ICD–10–CM codes 

listed below will be eligible for the 

comorbidity payment adjustment. 

TABLE 3—MULTIPLE ICD–9–CM CODES CROSSWALK TO ONE ICD–10–CM CODE

ICD–9 Descriptor ICD–10 Descriptor 

Gastrointestinal Bleeding 

533.20 ............... Acute peptic ulcer of unspecified site with hemorrhage and perforation, without mention of obstruction.K27.2 ................ Acute peptic ulcer, site unspecified, with both hemorrhage and perforation. 

533.21 ............... Acute peptic ulcer of unspecified site with hemorrhage and perforation, with obstruction.

533.40 ............... Chronic or unspecified peptic ulcer of unspecified 

site with hemorrhage, without mention of obstruction.

K27.4 ................ Chronic or unspecified peptic ulcer, site unspecified, 

with hemorrhage. 

533.41 ............... Chronic or unspecified peptic ulcer of unspecified 

site with hemorrhage, with obstruction.

533.60 ............... Chronic or unspecified peptic ulcer of unspecified 

site with hemorrhage and perforation, without 

mention of obstruction.

K27.6 ................ Chronic or unspecified peptic ulcer, site unspecified, 

with both hemorrhage and perforation. 

533.61 ............... Chronic or unspecified peptic ulcer of unspecified 

site with hemorrhage and perforation, with obstruction.

534.00 ............... Acute gastrojejunal ulcer with hemorrhage, without 

mention of obstruction.

K28.0 ................ Acute gastrojejunal ulcer with hemorrhage. 

534.01 ............... Acute gastrojejunal ulcer, with hemorrhage, with obstruction.

534.20 ............... Acute gastrojejunal ulcer with hemorrhage and perforation, without mention of obstruction.K28.2 ................ Acute gastrojejunal ulcer with both hemorrhage and 

perforation. 

534.21 ............... Acute gastrojejunal ulcer with hemorrhage and perforation, with obstruction.

534.40 ............... Chronic or unspecified gastrojejunal ulcer with hemorrhage, without mention of obstruction.K28.4 ................ Chronic or unspecified gastrojejunal ulcer with hemorrhage. 

534.41 ............... Chronic or unspecified gastrojejunal ulcer, with 

hemorrhage, with obstruction.

534.60 ............... Chronic or unspecified gastrojejunal ulcer with hemorrhage and perforation, without mention of obstruction.K28.6 ................ Chronic or unspecified gastrojejunal ulcer with both 

hemorrhage and perforation. 

534.61 ............... Chronic or unspecified gastrojejunal ulcer with hemorrhage and perforation, with obstruction.

Bacterial Pneumonia 

482.30 ............... Pneumonia due to Streptococcus, unspecified ......... J15.4 ................. Pneumonia due to other streptococci. 

482.31 ............... Pneumonia due to Streptococcus, group A.

482.39 ............... Pneumonia due to other Streptococcus.

482.81 ............... Pneumonia due to anaerobes ................................... J15.8 ................. Pneumonia due to other specified bacteria. 

482.89 ............... Pneumonia due to other specified bacteria.

In summary, based on our clinical 

evaluation of the ICD–10–CM codes to 

which the eligible ICD–9–CM codes 

crosswalk, we propose that both D89.2 

Hypergammaglobulinemia, unspecified 

and K52.81 Eosinophilic gastritis or 

gastroenteritis would not be eligible for 

the comorbidity payment adjustment. 

We propose that all other ICD–10–CM 

codes to which eligible ICD–9–CM 

codes crosswalk that are listed in the 

Tables above will be eligible for the 

comorbidity payment adjustment 

effective October 1, 2014. We are 

soliciting comments on the ICD–10–CM 

codes that we propose to exclude and 

those we propose will be eligible for the 

comorbidity payment adjustment. 

6. Proposed Revisions to the Outlier 

Policy 

Section 1881(b)(14)(D)(ii) of the Act 

requires that the ESRD PPS include a 

payment adjustment for high cost 

outliers due to unusual variations in the 

type or amount of medically necessary 

care, including variability in the amount 

of erythropoiesis stimulating agents 

(ESAs) necessary for anemia 

management. Our regulations at 42 CFR 


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§ 413.237(a)(1) provide that ESRD 

outlier services are the following items 

and services that are included in the 

ESRD PPS bundle: (i) ESRD-related 

drugs and biologicals that were or 

would have been, prior to January 1, 

2011, separately billable under 

Medicare Part B; (ii) ESRD-related 

laboratory tests that were or would have 

been, prior to January 1, 2011, 

separately billable under Medicare Part 

B; (iii) 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 (iv) renal dialysis service drugs 

that were or would have been, prior to 

January 1, 2011, covered under 

Medicare Part D, excluding ESRDrelated oral-only drugs. 

In the CY 2011 ESRD PPS final rule 

(75 FR 49142), we stated that for 

purposes of determining whether an 

ESRD facility would be eligible for an 

outlier payment, it would be necessary 

for the facility to identify the actual 

ESRD outlier services furnished to the 

patient by line item on the monthly 

claim. The ESRD-related drugs, 

laboratory tests, and medical/surgical 

supplies that we would recognize as 

outlier services were specified in 

Attachment 3 of Change Request 7064, 

Transmittal 2033 issued August 20, 

2010, rescinded and replaced by 

Transmittal 2094, dated November 17, 

2010. With respect to the outlier policy, 

Transmittal 2094 identified additional 

drugs and laboratory tests that may be 

eligible for ESRD outlier payment. 

Transmittal 2094 was rescinded and 

replaced by Transmittal 2134, dated 

January 14, 2011, which was issued to 

correct the subject on the Transmittal 

page and made no other changes. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70246), we eliminated the 

issuance of a specific list of eligible 

outlier service drugs which were or 

would have been separately billable 

under Medicare Part B prior to January 

1, 2011. However, we use separate 

guidance to continue to identify renal 

dialysis service drugs which were or 

would have been covered under Part D 

for outlier eligibility purposes in order 

to provide unit prices for calculating 

imputed outlier services. We also can 

identify, through our monitoring efforts, 

items and services that are incorrectly 

being identified as eligible outlier 

services in the claims data. Any updates 

to the list of renal dialysis items and 

services that qualify as outlier services 

are made through administrative 

issuances, if necessary. 

Our regulations at 42 CFR 

§ 413.237(a)(2) through (a)(6), (b), and 

(c) specify the methodology used to 

calculate outlier payments. An ESRD 

facility is eligible for an outlier payment 

if its actual or imputed Medicare 

Allowable Payment (MAP) amount per 

treatment for ESRD outlier services 

exceeds a threshold. The MAP amount 

represents the average incurred amount 

per treatment for services that were or 

would have been considered separately 

billable services prior to January 1, 

2011. The threshold is equal to the 

ESRD facility’s predicted ESRD outlier 

services MAP amount per treatment 

(which is case-mix adjusted) plus the 

fixed dollar loss amount. In accordance 

with § 413.237(c) of the regulations, 

facilities are paid 80 percent of the per 

treatment amount by which the imputed 

MAP amount for outlier services (that is, 

the actual incurred amount) exceeds 

this threshold. ESRD facilities are 

eligible to receive outlier payments for 

treating both adult and pediatric 

dialysis patients. 

In the CY 2011 ESRD PPS final rule, 

using 2007 data, we established the 

outlier percentage at 1.0 percent of total 

payments (75 FR 49142 through 49143). 

We also established the fixed dollar loss 

amounts that are added to the predicted 

outlier services MAP amounts. The 

outlier services MAP amounts and fixed 

dollar loss amounts are different for 

adult and pediatric patients due to 

differences in the utilization of 

separately billable services among adult 

and pediatric patients (75 FR 49140). 

As we explained in the CY 2011 ESRD 

PPS final rule (75 FR 49138 and 49139), 

the predicted outlier services MAP 

amounts for a patient are determined by 

multiplying the adjusted average outlier 

services MAP amount by the product of 

the patient-specific case-mix adjusters 

applicable using the outlier services 

payment multipliers developed from the 

regression analysis to compute the 

payment adjustments. The average 

outlier services MAP amount per 

treatment for CY 2011 was based on 

payment amounts reported on 2007 

claims and adjusted to reflect projected 

prices for 2011. For CY 2012, the outlier 

services MAP amounts and fixed dollar 

loss amounts were based on 2010 data 

(76 FR 70250). Thus, for CYs 2011 and 

2012, the MAP and fixed dollar loss 

amounts were computed based on preESRD PPS claims data and utilization. 

For CY 2013, the outlier services MAP 

amounts and fixed dollar loss amounts 

were based on 2011 data (77 FR 67464). 

Therefore, the outlier thresholds for CY 

2013 were based on utilization of ESRDrelated items and services furnished 

under the ESRD PPS. Because of the 

lower utilization of epoetin and other 

outlier services in CY 2011, we lowered 

the MAP amounts and fixed dollar loss 

amounts for both adult and pediatric 

patients for CY 2013 to allow for an 

increase in payments for ESRD 

beneficiaries requiring higher resources. 

a. Impact of Proposed Changes to the 

Outlier Policy 

For CY 2014, we are not proposing 

any changes to the methodology used to 

compute the MAP or fixed dollar loss 

amounts. Rather, in this proposed rule, 

we are updating the outlier services 

MAP amounts and fixed dollar loss 

amounts to reflect the utilization of 

outlier services reported on the 2012 

claims using the December 2012 claims 

file. Accordingly, for CY 2014, the MAP 

and fixed dollar loss amounts are based 

on the ESRD PPS claims and utilization. 

The impact of this update is shown in 

Table 4, which compares the outlier 

services MAP amounts and fixed dollar 

loss amounts used for the outlier policy 

in CY 2013 with the updated estimates 

for this proposed rule. The estimates for 

the proposed outlier CY 2014 outlier 

policy, which are included in Column II 

of Table 4, were inflation-adjusted to 

reflect projected 2014 prices for outlier 

services. 

TABLE 4—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY

Column I 

Final outlier policy for CY2013 

(based on 2011 data price 

inflated to 2013) * 

Column II 

Proposed outlier policy for 

CY2014 (based on 2012 data 

price inflated to 2014) * 

Age 

<18 

Age 

>= 18 

Age 

<18 

Age 

>= 18 

Average outlier services MAP amount per treatment 1 ................................... $38.65 $61.38 $38.65 $52.45 

Adjustments 


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TABLE 4—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY—Continued 

Column I 

Final outlier policy for CY2013 

(based on 2011 data price 

inflated to 2013) * 

Column II 

Proposed outlier policy for 

CY2014 (based on 2012 data 

price inflated to 2014) * 

Age 

<18 

Age 

>= 18 

Age 

<18 

Age 

>= 18 

Standardization for outlier services 2 ........................................................ 1.0927 0.9878 1.0960 0.9893 

MIPPA reduction ....................................................................................... 0.98 0.98 0.98 0.98 

Adjusted average outlier services MAP amount 3 .................................... $41.39 $59.42 $41.51 $50.85 

Fixed dollar loss amount that is added to the predicted MAP to determine 

the outlier threshold 4 ................................................................................... $47.32 $110.22 $54.23 $94.26 

Patient months qualifying for outlier payment ................................................. 7.6% 5.1% 6.2% 5.1% 

* The outlier services MAP amounts and fixed dollar loss amounts were inflation adjusted to reflect updated prices for outlier services (that is, 

2013 prices in Column I and projected 2014 prices in Column II). 1Excludes patients for whom not all data were available to calculate projected payments under an expanded bundle. The outlier services MAP 

amounts are based on 2012 data. The medically unbelievable edits of 400,000 units for EPO and 1,200 mcg for Aranesp that are in place under 

the ESA claims monitoring policy were applied. 2Applied to the average outlier MAP per treatment. Standardization for outlier services is based on existing case mix adjusters for adult and 

pediatric patient groups. 3This is the amount to which the separately billable (SB) payment multipliers are applied to calculate the predicted outlier services MAP for 

each patient. 4The fixed dollar loss amounts were calculated using 2012 data to yield total outlier payments that represent 1% of total projected payments 

for the ESRD PPS. 

As seen in Table 4, the estimated 

fixed dollar loss amount that determines 

the 2014 outlier threshold amount for 

adults (Column II) is lower than that 

used for the 2013 outlier policy 

(Column I). The estimated fixed dollar 

loss amount that determines the 2014 

outlier threshold amount for pediatric 

patients (Column II) is higher than that 

used for the 2013 outlier policy 

(Column I). The main reason for the 

reduction for adult patients is that the 

lower utilization of epoetin and other 

outlier services continued to decline 

during the second year of the PPS. This 

can be seen by comparing the outlier 

service MAP amount per treatment for 

adult patients in Column I ($61.38, 

which is based on 2011 data) with that 

amount in Column II ($52.45, which is 

based on 2012 data). 

For pediatric patients, there was no 

change in the overall average outlier 

service MAP amount between 2011 and 

2012 ($38.65 per treatment in both 

Columns I and II). In addition, there was 

a greater tendency in 2012 for a 

relatively small percentage of pediatric 

patients to account for a 

disproportionate share of the total 

outlier service MAP amounts. The one 

percent target for outlier payments is 

therefore expected to be achieved based 

on a smaller percentage of pediatric 

outlier cases using 2012 data compared 

to 2011 data (6.2 percent of pediatric 

patient months are expected to qualify 

for outlier payments rather than 7.6 

percent). These patterns led to the 

estimated fixed dollar loss amount for 

pediatric patients being higher for the 

outlier policy for CY 2014 compared to 

the outlier policy for CY 2013. 

Generally, there is a relatively higher 

likelihood for pediatric patients that the 

outlier threshold may be adjusted to 

reflect changes in the distribution of 

outlier service MAP amounts. This is 

due to the much smaller overall number 

of pediatric patients compared to adult 

patients, and therefore to the fact that 

the outlier threshold for pediatric 

patients is calculated based on data for 

a much smaller number of pediatric 

patients compared to adult patients. 

We propose to update the fixed dollar 

loss amounts that are added to the 

predicted MAP amounts per treatment 

to determine the outlier thresholds for 

CY 2014 from $110.22 to $94.26 for 

adult patients and from $47.32 to $54.23 

for pediatric patients compared with CY 

2013 amounts. We estimate that the 

percentage of patient months qualifying 

for outlier payments under the current 

policy will be 5.1 percent and 6.2 

percent for adult and pediatric patients, 

respectively, based on the 2012 data. 

The pediatric outlier MAP and fixed 

dollar loss amounts continue to be 

lower for pediatric patients than adults 

due to the continued lower use of 

outlier services (primarily reflecting 

lower use of epoetin and other 

injectable drugs). 

b. Outlier Policy Percentage 

42 CFR 413.220(b)(4) stipulates that 

the per treatment base rate is reduced by 

1 percent to account for the proportion 

of the estimated total payments under 

the ESRD PPS that are outlier payments. 

Based on the 2012 claims, outlier 

payments represented approximately 

0.2 percent of total payments, again 

falling short of the 1 percent target due 

to the continuing decline in use of 

outlier services. Use of 2012 data to 

recalibrate the thresholds, which reflect 

lower utilization of EPO and other 

outlier services, is expected to result in 

aggregate outlier payments close to the 

1 percent target in CY 2014. We believe 

the proposed update to the outlier MAP 

and fixed dollar loss amounts for CY 

2014 will increase payments for ESRD 

beneficiaries requiring higher resource 

utilization and come closer to meeting 

our 1 percent outlier policy. 

We note that recalibration of the fixed 

dollar loss amounts in this proposed 

rule for CY 2014 outlier payments 

results in no change in payments to 

ESRD facilities for beneficiaries with 

renal dialysis items and services that are 

not eligible for outlier payments, but 

increases payments to providers for 

beneficiaries with renal dialysis items 

and services that are eligible for outlier 

payments. Therefore, beneficiary coinsurance obligations would also 

increase for renal dialysis services 

eligible for outlier payments. 

C. Discussion of Self-Dialysis and Home 

Dialysis Training Add-on Adjustment 

and Request for Public Comments 

a. Medicare Policy for Self-Dialysis 

Training, Home Dialysis Training, and 

Retraining 

The existing Medicare policy for 

furnishing self-dialysis training, home 

dialysis training, and retraining was 

finalized in our CY 2011 ESRD PPS final 

rule (75 FR 49062 through 49064) and 

further discussed in the Medicare 

Benefits Policy Manual, (Publication 

100–02, Chapter 11). Self-dialysis or 

home dialysis can only be performed 


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after an ESRD patient has completed an 

appropriate course of training. The 

scope of training services that a certified 

ESRD facility must furnish to ESRD 

patients as a condition of coverage is 

described at 42 CFR 494.100(a). For 

instance, 42 CFR 494.100(a)(2) states 

that the training must be conducted by 

a registered nurse. For additional 

information on the requirements for 

ESRD facilities in furnishing dialysis 

training, see 42 CFR Part 494, and 

additional information regarding home 

dialysis training certification, see the 

State Operations Manual, which may be 

viewed on the Medicare Web site at the 

following link: http://www.cms.gov/ 

Medicare/Provider-Enrollment-andCertification/ 

GuidanceforLawsAndRegulations/ 

Dialysis.html. 

42 CFR 494.70 (Condition: Patients’ 

rights) requires that facilities inform 

patients (or their representatives) of 

their rights and responsibilities when 

they begin their treatment and protect 

and provide for the exercise of those 

rights. Our regulation at 42 CFR 

§ 494.70(7) requires a facility to inform 

patients about all treatment modalities’ 

and settings, including but not limited 

to transplantation, home dialysis 

modalities, and in-facility hemodialysis. 

This includes the patient’s right to 

receive resource materials for dialysis 

modalities not offered by the facility. 

We expect that all ESRD facilities 

comply with this regulation and furnish 

resource information on home 

hemodialysis, even if this modality is 

not offered by the facility. When ESRD 

facilities are certified for home dialysis 

training we expect the facility to 

provide training throughout the selfdialysis or home dialysis experience (42 

CFR 494.100). Self-dialysis or home 

dialysis training services and supplies 

may include but are not limited to 

personnel services; dialysis supplies, 

parenteral items used in dialysis, 

written training manuals and materials, 

and ESRD-related items and services. 

We discuss Medicare’s training 

policies in Table 5 (Medicare’s Self or 

Home Training by Modality) for the 

following dialysis modalities: 

• Home Hemodialysis Training 

• Intermittent Peritoneal Dialysis 

Training 

• Continuous Ambulatory Peritoneal 

Dialysis Training 

• Continuous Cycling Peritoneal 

Dialysis Training 

We would expect that patients who 

elect self-dialysis or home dialysis 

training will be good candidates for 

these modalities and that they will be 

successful in completing the method of 

training. This includes compliance with 

patient assessments as described in 42 

CFR 494.80(a)(9) ‘‘Evaluation of the 

patient’s abilities, interests, preferences, 

and goals, including the desired level of 

participation in the dialysis care 

process; the preferred modality 

(hemodialysis or peritoneal dialysis), 

and setting (for example, home dialysis), 

and the patients expectations of care 

outcomes.’’ 

TABLE 5—MEDICARE’S SELF OR HOME TRAINING BY MODALITY

Home Hemodialysis (HHD) Training .................. HHD training is generally furnished in 4 weeks. Medicare will pay the ESRD facility for up to 

25 HHD training sessions. In some HHD programs, the dialysis caregiver is trained to perform the dialysis treatment in its entirety and the patient plays a secondary role. In other 

programs, the patient performs most of the treatment and is only aided by a helper. 

Intermittent Peritoneal Dialysis (IPD) Training ... IPD training is generally furnished in 4 weeks. Medicare will pay the ESRD facility for up to 15 

PD training sessions. In the IPD program, the patient’s caregiver is usually trained to carry 

out the dialysis care. The patient plays a minimal role, as most are unable to perform selfcare dialysis because of other debilitating conditions. 

Continuous Ambulatory Peritoneal Dialysis 

(CAPD) Training.

CAPD training is generally furnished in 2 weeks. Medicare will pay the ESRD facility for up to 

15 PD training sessions. In CAPD programs both the patient and the caregiver are trained. 

Continuous Cycling Peritoneal Dialysis (CCPD) 

Training.

CCPD training is generally furnished in 2 weeks. Medicare will pay the ESRD facility for up to 

15 PD training sessions. In CCPD programs both the patient and the caregiver are trained. 

b. Payment Methodology 

In our CY 2011 ESRD PPS final rule 

(75 FR 49062 through 49064), we stated 

that the ESRD PPS base rate alone does 

not account for the staffing costs 

associated with training treatments 

furnished by a registered nurse. Thus, 

we finalized the training add-on 

payment adjustment, to be added on to 

the ESRD PPS base rate, when one-onone self or home dialysis training is 

furnished by a nurse, working for a 

Medicare-certified training facility, to a 

Medicare beneficiary for either 

hemodialysis or the peritoneal dialysis 

training modalities listed above. 

Likewise, we noted in our CY 2012 

ESRD PPS final rule (76 FR 70252), that 

‘‘ESRD facilities receive a per-treatment 

payment that accounts for case-mix, 

geographic location, low-volume, and 

outlier payment regardless [of whether] 

the patient receives dialysis at home or 

in the facility, plus the training addon[,]’’ if applicable. 

The add-on payment adjustment is 

also for retraining sessions after a 

patient or caregiver has completed the 

initial training program and if the 

patient continues to be an appropriate 

candidate for self or home dialysis 

modalities. We would expect that most 

Medicare beneficiaries receive 

retraining sessions when they receive 

new equipment, have a change in 

caregiver, or modality change. The 

ESRD facility may not bill Medicare for 

retraining services when they install 

home dialysis equipment or furnish 

monitoring services. For example, an 

ESRD facility nurse may not bill for 

retraining sessions when they update a 

home dialysis patient’s treatment 

record, order monthly supplies, or 

instruct the patient on the use of a new 

medication for the treatment of 

infection. When retraining sessions are 

furnished to a patient or caregiver, there 

is an expectation that the patient or 

caregiver is already knowledgeable of 

the elements of home dialysis, and if 

additional training is being done for a 

change of equipment or a change in 

modality, fewer sessions would be 

necessary because of the transferability 

of certain basic skills for home dialysis. 

We discuss our policy for retraining 

sessions in the Medicare Benefit Policy 

Manual, Publication 100–02, Chapter 

11. If a Medicare beneficiary exceeds the 

maximum amount of training sessions 

based upon their modality, and, if they 

continue to be a good candidate for 

home modalities, additional training 

sessions or retraining sessions may be 

paid by Medicare with medical 

justification. In such cases, the ESRD 

facility must indicate the medical 

justification on the claim for the training 

or retraining session submitted for 

payment. Because the requirement of 

medical justification is specific to the 

patient’s training needs, circumstances 

(such as a change in caregiver), or 

condition (change in modality), we 


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would not expect that an ESRD facility 

would routinely bill Medicare for 

training or retraining sessions on any 

patient. 

For CY 2011, we finalized the amount 

for the training add-on adjustment at 

$33.44 per treatment, and noted that 

this amount would be added to the 

ESRD PPS base rate payment when a 

training treatment is furnished by the 

ESRD facility. In addition, we noted that 

because the training add-on adjustment 

is directly related to nursing salaries 

and that nursing salaries differ greatly 

based on geographic location, we would 

adjust the training add-on payment by 

the geographic area wage index 

applicable to the ESRD facility. (For 

further discussions on wage indexes, 

please see section II.B.4. of this 

proposed rule.) When home dialysis 

training sessions are furnished to a 

Medicare beneficiary by a Medicarecertified training facility, Medicare will 

make the ESRD PPS computed base rate 

payment with all applicable 

adjustments, and then the separate addon payment for self or home dialysis 

training. 

In our CY 2013 ESRD final rule (77 FR 

67468 through 67469), we addressed 

comments on Medicare’s self and home 

dialysis training policies under the 

ESRD PPS. In that final rule, we stated 

that commenters were concerned that 

the payment for home dialysis training 

is insufficient and does not reflect the 

true costs of training and that they 

indicated various ranges of time 

required for home training in terms of 

time per day and number of training 

sessions. At that time, we responded to 

those comments by confirming that 

CMS will continue to monitor and 

analyze trends in home dialysis 

training, but that we believe our 

payment methodology is adequate for 

ESRD facilities furnishing training 

services. 

In this proposed rule we are seeking 

comments on the costs associated with 

furnishing self or home dialysis 

training. We request comments on the 

elements of PD vs. HHD training 

sessions, specifically the costs of 

furnishing such training, the 

appropriate number of training sessions, 

and the duration of the training 

sessions. Lastly, we are also seeking 

comments on a ‘‘holdback’’ payment 

methodology, which we discussed in 

the CY 2011 ESRD PPS final rule (75 FR 

49063). Under this methodology, a 

portion of the training payments would 

be withheld from the ESRD facility until 

the ESRD patient demonstrates that they 

have successfully transitioned to a home 

modality. Specifically, we are seeking 

comments on the length of time 

necessary for a successful transition to 

a home dialysis modality and the 

percentage of the payment that should 

be held back. 

D. Delay of Payment for Oral-Only 

Drugs Under the ESRD PPS 

Section 1881(b)(14)(A)(i) of the Act, as 

added by section 153(b) of the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA), requires 

the Secretary to implement a payment 

system under which a single payment is 

made to a provider of services or a renal 

dialysis facility for ‘‘renal dialysis 

services’’ in lieu of any other payment. 

Section 1881(b)(14)(B) defines renal 

dialysis services, and subclause (iii) of 

that section states that these services 

include ‘‘other drugs and biologicals 

that are furnished to individuals for the 

treatment of ESRD and for which 

payment was (before the application of 

this paragraph) made separately under 

this title, and any oral equivalent form 

of such drug or biological[.]’’ We 

interpreted this provision as including 

not only injectable drugs and biologicals 

(other than ESAs, which are included 

under clause (ii)) used for the treatment 

of ESRD, but also all non-injectable 

drugs furnished under Title XVIII. We 

also concluded that, to the extent ESRDrelated oral-only drugs do not fall 

within clause (iii) of the statutory 

definition of renal dialysis services, 

such drugs would fall under clause (iv), 

and constitute other items and services 

used for the treatment of ESRD that are 

not described in clause (i). Accordingly, 

we defined ‘‘renal dialysis services’’ at 

42 CFR 413.174 as including, among 

other things, ‘‘[o]ther items and services 

that are furnished to individuals for the 

treatment of ESRD and for which 

payment was (prior to January 1, 2011) 

made separately under title XVIII of the 

Act (including drugs and biologicals 

with only an oral form).’’ Although oralonly drugs are included in the 

definition of renal dialysis services, in 

the CY 2011 ESRD PPS final rule, we 

also finalized a policy to delay payment 

for these drugs under the PPS until 

January 1, 2014 (75 FR 49044). We 

stated that there were certain advantages 

to delaying the implementation of 

payment for oral-only drugs, including 

allowing ESRD facilities additional time 

to make operational changes and 

logistical arrangements in order to 

furnish oral-only ESRD-related drugs 

and biologicals to their patients. 

Accordingly, 42 CFR 413.174(f)(6) 

provides that payment to an ESRD 

facility for renal dialysis service drugs 

and biologicals with only an oral form 

is incorporated into the PPS payment 

rates effective January 1, 2014. 

On January 3, 2013, Congress enacted 

the American Taxpayer Relief Act of 

2012 (ATRA). Section 632(b) of ATRA 

states that the Secretary ‘‘may not 

implement the policy under section 

413.176(f)(6) of title 42, Code of Federal 

Regulations (relating to oral-only ESRDrelated drugs in the ESRD prospective 

payment system), prior to January 1, 

2016.’’ Accordingly, payment for oralonly drugs will not be made under the 

ESRD PPS before January 1, 2016, 

instead of on January 1, 2014, which is 

the date originally finalized for payment 

of ESRD-related oral-only drugs under 

the ESRD PPS (75 FR 49044). We 

propose to pay for oral-only drugs 

consistent with section 632(b) of ATRA 

and implement this delay by revising 

the effective date for providing payment 

for oral-only ESRD-related drugs under 

the ESRD PPS at section 42 CFR 

413.174(f)(6) from January 1, 2014 to 

January 1, 2016. 

Because we propose that oral-only 

drugs will be included in the ESRD PPS 

starting in CY 2016, we also propose to 

change the reference to January 1, 2014 

in section 42 CFR 413.237(a)(1)(iv) to 

January 1, 2016. In the CY 2011 ESRD 

PPS final rule (75 FR 49138), we defined 

outlier services as including oral-only 

drugs effective January 1, 2014. In 

addition to modifying the date on which 

oral-only drugs will be eligible for 

outlier payments, we also propose to 

clarify our regulation at 413.237(a)(1)(iv) 

by changing the word ‘‘excluding’’ to 

‘‘including’’ to make clear that oral-only 

drugs are ESRD outlier services for 

purposes of the outlier policy effective 

January 1, 2016, consistent with the 

policy we established in the CY 2011 

final rule (75 FR 49138). 

III. End-Stage Renal Disease (ESRD) 

Quality Incentive Program (QIP) 

A. Background 

For more than 30 years, monitoring 

the quality of care provided to patients 

with end-stage renal disease (ESRD) by 

dialysis facilities has been an important 

component of the Medicare ESRD 

payment system. The ESRD quality 

incentive program (QIP) is the most 

recent step in fostering improved 

patient outcomes by establishing 

incentives for dialysis facilities to meet 

or exceed performance standards 

established by CMS. The ESRD QIP is 

authorized by section 1881(h) of the 

Social Security Act (the Act), which was 

added by section 153(c) of Medicare 

Improvements for Patients and 

Providers Act (MIPPA). CMS 

established the ESRD QIP for payment 

year (PY) 2012, the initial year of the 

program in which payment reductions 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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1 2012 Annual Progress Report to Congress: 

National Strategy for Quality Improvement in 

Health Care, http://www.ahrq.gov/ 

workingforquality/nqs/nqs2012annlrpt.pdf. 

were applied, in two rules published in 

the Federal Register on August 12, 

2010, and January 5, 2011 (75 FR 49030 

and 76 FR 628, respectively). 

Subsequently, on November 10, 2011, 

CMS published a rule in the Federal 

Register outlining the PY 2013 and PY 

2014 ESRD QIP requirements (76 FR 

70228). On November 9, 2012, CMS 

published a rule in the Federal Register 

outlining the ESRD QIP requirements 

for PY 2015 and future payment years 

(77 FR 67450). 

Section 1881(h) of the Act requires 

the Secretary to establish an ESRD QIP 

by (i) selecting measures; (ii) 

establishing the performance standards 

that apply to the individual measures; 

(iii) specifying a performance period 

with respect to a year; (iv) developing a 

methodology for assessing the total 

performance of each facility based on 

the performance standards with respect 

to the measures for a performance 

period; and (v) applying an appropriate 

payment reduction to facilities that do 

not meet or exceed the established Total 

Performance Score (TPS). This proposed 

rule discusses each of these elements 

and our proposals for their application 

to PY 2016 and future payment years of 

the ESRD QIP. As of January 1, 2014, 

ESRD facilities located in Guam, 

American Samoa, and the Northern 

Mariana Islands will be paid under the 

ESRD PPS. Under section 1881(h)(1)(A) 

of the Act, these facilities will receive a 

reduction to their ESRD PPS payments, 

beginning with January 1, 2014 dates of 

service, if they do not meet the 

requirements of the ESRD QIP. 

B. Considerations in Updating and 

Expanding Quality Measures Under the 

ESRD QIP for PY 2016 and Subsequent 

PYs 

1. Value-Based Purchasing (VBP) 

Overview 

Throughout the past decade, Medicare 

has been transitioning from a program 

that pays for healthcare based on 

particular services furnished to a 

beneficiary to a program that ties 

payments to providers and suppliers 

based on the quality of services they 

deliver. By paying for the quality of care 

rather than quantity of care, we believe 

we are strengthening the healthcare 

system by focusing on better care and 

lower costs through improvement, 

prevention and population health, 

expanded healthcare coverage, and 

enterprise excellence—while also 

advancing the National Strategy for 

Quality Improvement in Health Care 

(National Quality Strategy). CMS is 

currently working to update a set of 

domains and specific measures of 

quality for our VBP programs, and to 

link the aims of the National Quality 

Strategy with our payment policies on a 

national scale. We are working in 

partnership with beneficiaries, 

providers, advocacy groups, the 

National Quality Forum (NQF), the 

Measures Application Partnership, 

operating divisions within the 

Department of Health and Human 

Services (HHS), and other stakeholders 

to develop new measures where gaps 

exist, refine measures requiring 

adjustment, and remove measures when 

appropriate. We are also collaborating 

with stakeholders to ensure that the 

ESRD QIP serves the needs of our 

beneficiaries and also advances the 

goals of the National Quality Strategy to 

coordinate healthcare delivery, reduce 

healthcare costs, enhance patient 

satisfaction, promote healthy 

communities, and increase patient 

safety.1

We believe that the development of an 

ESRD QIP that is successful in 

supporting the delivery of high-quality 

healthcare services in dialysis facilities 

is paramount. We seek to adopt 

measures for the ESRD QIP that promote 

better, safer, and more efficient care. 

Our measure development and selection 

activities for the ESRD QIP take into 

account national priorities such as those 

established by the National Priorities 

Partnership (http:// 

www.nationalprioritiespartnership.org/), 

HHS Strategic Plan (http:// 

www.hhs.gov/secretary/about/priorities/ 

priorities.html), the National Strategy 

for Quality Improvement in Healthcare 

(http://www.healthcare.gov/center/ 

reports/quality03212011a.html), and the 

HHS National Action Plan to Prevent 

Healthcare Associated Infections (HAIs) 

(http://www.hhs.gov/ash/initiatives/hai/ 

esrd.html). To the extent feasible and 

practicable, we have sought to adopt 

measures that have been endorsed by a 

national consensus organization, 

recommended by multi-stakeholder 

organizations, and developed with the 

input of providers, beneficiaries, and 

other stakeholders. 

2. Brief Overview of Proposed PY 2016 

Measures 

For the PY 2016 ESRD QIP and future 

payment years, we are proposing a total 

of 14 measures. We believe that the PY 

2016 ESRD QIP proposed measures 

promote high-quality care for patients 

with ESRD, and also strengthen the 

goals of the National Quality Strategy. 

The following measures seek to evaluate 

facilities on the clinical quality of care: 

• To evaluate anemia management: 

Æ Hemoglobin Greater Than 12 g/dL, 

a clinical measure 

Æ Patient Informed Consent for 

Anemia Treatment, a clinical 

measure* 

Æ Pediatric Iron Therapy, a reporting 

measure* 

Æ Anemia Management, a reporting 

measure (revised) 

• To evaluate dialysis adequacy: 

Æ A Kt/V measure for adult 

hemodialysis patients, a clinical 

measure 

Æ A Kt/V measure for adult peritoneal 

dialysis patients, a clinical measure 

Æ A Kt/V measure for pediatric 

hemodialysis patients, a clinical 

measure 

• To determine whether patients are 

treated using the most beneficial type 

of vascular access: 

Æ An arterial venous (AV) fistula 

measure, a clinical measure 

Æ A catheter measure, a clinical 

measure 

• To address effective bone mineral 

metabolism management: 

Æ Hypercalcemia, a clinical measure* 

Æ Mineral Metabolism, a reporting 

measure (revised) 

• To address patient safety: 

Æ National Healthcare Safety Network 

(NHSN) Bloodstream Infection in 

Hemodialysis Outpatients, a 

clinical measure* 

• To address patient-centered 

experience: 

Æ In-Center Hemodialysis Consumer 

Assessment of Healthcare Providers 

and Systems (ICH CAHPS), a 

reporting measure** 

• To gather data regarding 

comorbidities: 

Æ Comorbidity, a reporting measure* 

** Indicates that the measure is new to the 

ESRD QIP. 

*** Indicates that the measure is newly 

expanded or converted to a clinical measure 

in the ESRD QIP. 

At this time, we are not proposing to 

adopt measures that address care 

coordination, efficiency, population and 

community health, or cost of care. 

However, we are soliciting comments in 

this proposed rule on potential 

measures that would cover these areas. 

We welcome further comments on these 

and other potential measures for future 

program years. 

3. Measures Application Partnership 

Review 

Section 1890A(a)(1) of the Act, as 

added by section 3014(b) of the 


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Affordable Care Act, requires the entity 

with a contract under section 1890(a) of 

the Act (currently the NQF) to convene 

multi-stakeholder groups to provide 

input to the Secretary on the selection 

of quality and efficiency measures for 

use in certain programs. Section 

1890A(a)(2) of the Act requires the 

Secretary to make available to the public 

(not later than December 1 of each year) 

a list of quality and efficiency measures 

that are under consideration for use in 

certain programs. Section 1890A(a)(3) of 

the Act requires the entity with a 

contract under section 1890(a) of the 

Act to transmit the input of the multistakeholder groups to the Secretary not 

later than February 1 of each year, 

beginning in 2012. Section 1890A(a)(4) 

of the Act requires the Secretary to take 

into consideration the input of the 

multi-stakeholder groups in selecting 

quality and efficiency measures. The 

Measures Application Partnership is the 

public/private partnership comprised of 

multi-stakeholder groups convened by 

NQF for the primary purpose of 

providing input on measures as required 

by sections 1890A(a)(1) and (3) of the 

Act. The Measures Application 

Partnership’s input on the quality and 

efficiency measures under consideration 

for adoption in CY 2013 was transmitted 

to the Secretary on February 1, 2013, 

and is available at (http:// 

www.qualityforum.org/ 

Setting_Priorities/Partnership/ 

MAP_Final_Reports.aspx). As required 

by section 1890A(a)(4) of the Act, we 

considered these recommendations in 

selecting quality and efficiency 

measures for the ESRD QIP. 

We publicly made available a number 

of measures in accordance with section 

1890A(a)(2) of the Act, and these 

measures were reviewed by the 

Measures Application Partnership. Of 

these measures, a subset is related to a 

number of proposed new measures for 

the PY 2016 ESRD QIP (one each for 

anemia management, hypercalcemia, 

infection monitoring, comorbidity 

reporting, and ESA usage). The 

Measures Application Partnership 

supported the following: 

• NQF-endorsed measure NQF #1454: 

Proportion of patients with 

hypercalcemia 

• NQF-endorsed measure NQF #1433: 

Use of Iron Therapy for Pediatric 

Patients (which forms the basis for the 

proposed Pediatric Iron Therapy 

reporting measure) 

• NQF-endorsed measure NQF #1460: 

National Healthcare Safety Network 

(NHSN) Bloodstream Infection 

Measure (which forms the basis for 

the proposed Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure) 

• NQF-endorsed measure NQF #0369: 

Dialysis Facility Risk-adjusted 

Standardized Mortality Ratio (the 

proposed Comorbidity reporting 

measure may assist in calculating 

performance on this measure, should 

we propose to adopt it in the future) 

The Measures Application Partnership 

supported the direction of the following 

measures: 

• NQF-endorsed measure NQF #1463: 

Standardized Hospitalization Ratio for 

Admissions (the proposed 

Comorbidity reporting measure may 

assist in calculating performance on 

this measure, should we propose to 

adopt it in the future) 

• Measures Application Partnership 

#2774: Blood Transfusion 

Appropriateness (which forms the 

basis for the Patient Informed Consent 

for Anemia Treatment clinical 

measure) 

We have taken comments from the 

Measures Application Partnership and 

the NQF into consideration for the PY 

2016 ESRD QIP. In the measures section 

below, we further discuss these 

considerations, describe our proposals 

for the PY 2016 ESRD QIP, and provide 

rationale for why we believe it is 

appropriate to propose the measures at 

this time. 

C. Proposed Measures for the PY 2016 

ESRD QIP and Subsequent PYs of the 

ESRD QIP 

We previously finalized ten measures 

in the CY 2013 ESRD PPS final rule for 

the PY 2015 ESRD QIP and future PYs 

(77 FR 67471), and these measures are 

summarized in Table 6 below. We are 

proposing to continue to use nine of the 

ten measures for the PY 2016 ESRD QIP 

and future payment years, modifying 

three of the measures as follows: 

• ICH CAHPS (reporting measure): 

Expand 

• Mineral Metabolism (reporting 

measure): Revise 

• Anemia Management (reporting 

measure): Revise 

For the PY 2016 ESRD QIP and future 

payment years, we are also proposing to 

add three new clinical measures (Patient 

Informed Consent for Anemia 

Treatment, Hypercalcemia, and NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients), and two new reporting 

measures (Pediatric Iron Therapy, and 

Comorbidity). (See Table 7) We believe 

that, collectively, these measures will 

continue to promote improvement in 

dialysis care in the PY 2016 ESRD QIP 

and in future payment years. 

TABLE 6—MEASURES ADOPTED FOR THE PY 2015 ESRD QIP AND FUTURE PAYMENT YEARS

NQF No. Measure title and description 

N/A .................... Anemia Management: Hgb >12. 

Percentage of Medicare patients with a mean hemoglobin value greater than 12 g/dL. 

0249 .................. Hemodialysis Adequacy: Minimum delivered hemodialysis dose. 

Percent of hemodialysis patient-months with spKt/V greater than or equal to 1.2. 

0318 .................. Peritoneal Dialysis Adequacy: Delivered dose above minimum. 

Percent of peritoneal dialysis patient-months with spKt/V greater than or equal to 1.7 (dialytic + residual) during the four 

month study period. 

1423 .................. Pediatric Hemodialysis Adequacy: Minimum spKt/V. 

Percent of pediatric in-center hemodialysis patient-months with spKt/V greater than or equal to 1.2. 

0257 .................. Vascular Access Type: Arterial Venous (AV) Fistula. 

Percentage of patient-months on hemodialysis during the last hemodialysis treatment of the month using an autogenous AV 

fistula with two needles. 

0256 .................. Vascular Access Type: Catheter >= 90 days. 

Percentage of patient-months for patients on hemodialysis during the last hemodialysis treatment of month with a catheter 

continuously for 90 days or longer prior to the last hemodialysis session. 

N/A1 .................. National Healthcare Safety Network (NHSN) Dialysis Event Reporting. 

Number of months for which facility reports NHSN Dialysis Event data to the Centers for Disease Control and Prevention 

(CDC). 

N/A2 .................. In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) Survey Administration +. 

Attestation that facility administered survey in accordance with specifications. 


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TABLE 6—MEASURES ADOPTED FOR THE PY 2015 ESRD QIP AND FUTURE PAYMENT YEARS—Continued 

NQF No. Measure title and description 

N/A3 .................. Mineral Metabolism Reporting +. 

Number of months for which facility reports uncorrected serum calcium and phosphorus for each Medicare patient. 

N/A .................... Anemia Management Reporting +. 

Number of months for which facility reports ESA dosage (as applicable) and hemoglobin/hematocrit for each Medicare patient. 

1We note that an NQF-endorsed bloodstream infection measure (NQF#1460) exists. 

2We note that a related measure utilizing the results of this survey has been NQF-endorsed (#0258). It is our intention to use this measure in 

future years of the ESRD QIP. We believe that a reporting measure is a necessary step in reaching our goal to implement NQF#0258. 3We note that this measure is based upon a current NQF-endorsed serum phosphorous measure (#0255), and a calcium monitoring measure 

that NQF had previously endorsed (#0261). + Indicates a measure we are proposing to revise for PY 2016 and future years of the ESRD QIP. 

TABLE 7—NEW MEASURES PROPOSED FOR THE PY 2016 ESRD QIP AND FUTURE PAYMENT YEARS

NQF No. Measure title 

N/A .................... Anemia of chronic kidney disease: Patient Informed Consent for Anemia Treatment. 

N/A1 .................. Use of Iron Therapy for Pediatric Patients Reporting. 

1454 .................. Proportion of Patients with Hypercalcemia. 

N/A2 .................. NHSN Bloodstream Infection in Hemodialysis Outpatients. 

N/A3 .................. Comorbidity Reporting. 

1We note that the NQF has previously endorsed a pediatric iron therapy measure (#1433) upon which this measure is based. 

2We note that the NQF has previously endorsed a National Healthcare Safety Network (NHSN) bloodstream infection measure (#1460) upon 

which this measure is based. 3We note that the NQF has previously endorsed risk-adjusted hospitalization and mortality measures (#1463 and #0369). The proposed Comorbidity reporting measure may assist in calculating performance on these measures, should we propose to adopt them in the future. 

1. PY 2015 Measures Continuing in PY 

2016 and Future Payment Years 

We are continuing using six measures 

adopted in the CY 2013 ESRD PPS final 

rule for the PY 2016 ESRD QIP and 

future payment years of the program. 

We are also continuing to use two 

measure topics adopted. Proposals for 

scoring these measures are discussed in 

sections III.C.5 through III.C.11 and 

III.C.13. For the reasons stated in the CY 

2012 ESRD PPS final rule (76 FR 70262, 

70264 through 70265, 70269) and in the 

CY 2013 ESRD PPS final rule (77 FR 

67478 through 67480, 67487 through 

67490), we will continue using: 

1. (i) The Hemoglobin Greater than 12 

g/dL measure. 

The Dialysis Adequacy measure topic, 

which is comprised of 

2. (a) Hemodialysis Adequacy Clinical 

Performance Measure III: Hemodialysis 

Adequacy—HD Adequacy—Minimum 

Delivered Hemodialysis Dose (NQF 

#0249), 

3. (b) Peritoneal Dialysis Adequacy 

Clinical Performance Measure III— 

Delivered Dose of Peritoneal Dialysis 

Above Minimum (NQF #0318); and 

4. (c) Minimum spKt/V for Pediatric 

Hemodialysis Patients (NQF #1423); and 

The Vascular Access Type measure 

topic, which is comprised of 

5. (a) Vascular Access Type: Arterial 

Venous (AV) Fistula (NQF #0257); and 

6. (b) Vascular Access Type: Catheter 

>= 90 days (NQF #0256). 

The technical specifications for these 

measures can be found at: http:// 

www.dialysisreports.org/ 

ESRDMeasures.aspx. 

2. Proposal To Expand One PY 2015 

Measure and Revise Two PY 2015 

Measures for PY 2016 and Subsequent 

Payment Years 

As stated earlier, we believe it is 

important to continue using measures 

from one payment year to the next 

payment year of the program to 

encourage continued improvements in 

patient care. Therefore, we are 

proposing to expand and revise the 

measures discussed below that we 

finalized in the CY 2013 ESRD PPS final 

rule. For all measures except for ICH 

CAHPS reporting measure, these 

proposed and revised requirements 

would apply to the measures for PY 

2016 and future payment years. For the 

ICH CAHPS measure, certain proposed 

expanded requirements would apply to 

PY 2016, and some additional proposed 

requirements would apply to PY 2017 

and future payment years. 

a. Proposed Expanded ICH CAHPS 

Reporting Measure 

Patient-centered experience is an 

important measure of the quality of 

patient care. It is a component of the 

National Quality Strategy. The NQF 

endorses and the Measures Application 

Partnership supports a clinical measure 

on this topic, NQF #0285: CAHPS InCenter Hemodialysis Survey, which is 

based on how facilities perform on the 

CAHPS survey. In PY 2015, we 

continued to use a reporting measure 

related to the ICH CAHPS survey, 

requiring that facilities attest they had 

administered the survey according to 

the specifications set by the Agency for 

Healthcare Research and Quality 

(AHRQ), but not requiring the 

submission of survey data. We required 

that facilities attest by January 31, 2014 

to administering the ICH CAHPS survey 

during the performance period (77 FR 

67480 through 67481). 

We are taking several steps to develop 

the baseline data necessary to propose 

and implement NQF #0258 as a clinical 

measure in the PY 2018 ESRD QIP. We 

expect to be able to certify ICH CAHPS 

survey vendors beginning in early CY 

2014. We are also building the capacity 

to accept survey data, developing 

detailed specifications for administering 

the ICH–CAHPS survey in light of 

questions vendors asked about previous 

procedures, and developing 

specifications for submitting data to 

CMS, such as file specifications, 

structure and instructions that the 

survey vendors will use. We have taken 

these steps in order to make it possible 

for facilities to contract with third party 

vendors to transfer survey data results to 

CMS, so that we might collect the 

baseline data necessary to propose and 

implement NQF #0258. 

For PY 2016, we are proposing that 

each facility arrange by July 2014 for a 

CMS-approved vendor to conduct the 


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ICH CAHPS survey according to CMS 

(rather than AHRQ) specifications, 

available at the ICH CAHPS Web site 

(https://ichcahps.org). Facilities will 

need to register on the https:// 

ichcahps.org Web site in order to 

authorize the CMS-approved vendor to 

administer the survey and submit data 

on their behalf. Each facility must then 

administer (via its vendor) the survey 

once during the proposed performance 

period and, by 11:59 ET on January 28, 

2015, report the survey data to CMS 

using the specifications on the ICH 

CAHPS Web site. 

For PY 2017 and subsequent payment 

years, we are proposing similar 

requirements except that each facility 

must arrange to have the survey 

administered twice during each 

performance period and must report the 

data (via its CMS-approved vendor) to 

CMS by the date specified on the ICH 

CAHPS Web site. 

Although we have required that other 

types of providers, including home 

health agencies and acute care hospitals, 

administer and submit CAHPS survey 

data on a monthly, continuous basis, we 

recognize that there are generally low 

rates of turnover in dialysis facility 

patient populations. For this reason, we 

do not see the same need to require 

facilities to administer the survey as 

frequently and, as proposed above, 

would require facilities to administer 

the survey once during the performance 

period for PY 2016 (in order to allow 

facilities enough time to select a vendor) 

and twice for subsequent payment 

years. We believe that this frequency of 

survey administration will enable us to 

gather sufficient data to adopt in future 

rulemaking, a clinical version of this 

measure without unduly burdening 

facilities. We request comment on this 

proposal. The technical specifications 

for this measure are located at http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/ICHCAHPS2016NPRM.pdf. 

b. Proposed Revised Mineral 

Metabolism Reporting Measure 

Adequate management of bone 

mineral metabolism and disease in 

ESRD patients continues to be a high 

priority because it can cause severe 

consequences such as osteoporosis, 

osteomalacia, and hyperparathyroidism. 

The PY 2015 ESRD QIP has a reporting 

measure focused on mineral metabolism 

(77 FR 67484 through 67487). We are 

proposing two changes for PY 2016 and 

future payment years. First, when we 

finalized the measure in the CY 2013 

ESRD PPS final rule, we inadvertently 

excluded home peritoneal patients from 

the measure specifications. For PY 2016 

and future payment years, we are now 

proposing to include home peritoneal 

patients in the Mineral Metabolism 

reporting measure. Therefore, we are 

proposing that a qualifying case for this 

measure will be defined as (i) an incenter Medicare patient who had been 

treated at least seven times by the 

facility; and (ii) a home dialysis 

Medicare patient for whom the facility 

submitted a claim at least once per 

month. 

Second, if the proposed 

Hypercalcemia clinical measure 

(described below) is finalized based on 

public comment, then we believe it 

would be redundant, and unduly 

burdensome, for facilities to also 

continue reporting serum calcium levels 

as part of the mineral metabolism 

reporting measure. Accordingly, in light 

of our proposal to adopt the 

hypercalcemia measure, we are 

proposing to change the specifications 

for the mineral metabolism measure 

such that it no longer requires facilities 

to report serum calcium levels. We 

welcome comments on this proposal, 

and in particular on whether we should 

retain the reporting of serum calcium 

levels as part of the mineral metabolism 

reporting measure if we do not finalize 

the proposed hypercalcemia measure. 

As described in more detail below 

(Proposed Minimum Data for Scoring 

Measures), we are also proposing to 

eliminate the 11-case minimum for this 

measure, which was finalized in the CY 

2013 ESRD PPS final rule at 77 FR 

67486. Because of the proposed revised 

case minimum, and because there are 

circumstances that might make it 

challenging for a facility to draw a 

sample from certain patients, such as 

those who are admitted to hospital 

during the month, we are proposing 

that, in order to receive full points on 

this measure, facilities that treat 11 or 

more qualifying cases over the entire 

performance period will have to report 

at the lesser of the 50th percentile of 

facilities in CY 2013 or 97 percent per 

month, on a monthly basis, for each 

month of the performance period. We 

are further proposing that facilities that 

treat fewer than 11 qualifying cases 

during the performance period will have 

to report on a monthly basis the 

specified levels for all but one 

qualifying case. If a facility only has one 

qualifying case during the entire 

performance period, a facility will have 

to attest to that fact in CROWNWeb by 

January 31 of the year following the 

performance period in order to avoid 

being scored on the measure. We make 

this proposal because we seek to ensure 

the highest quality of care regardless of 

facility size, and because we seek to 

mitigate cherry-picking by ensuring that 

one patient does not skew a facility’s 

score (77 FR 67474). 

We welcome comments on this 

proposal. Technical specifications for 

this proposed measure can be found at: 

http://www.dialysisreports.org/pdf/esrd/ 

public-measures/MineralMetabolismHypercalcemia-2016NPRM.pdf. 

c. Proposed Revised Anemia 

Management Reporting Measure 

Section 1881(h)(2)(A)(i) requires 

‘‘measures on anemia management that 

reflect the labeling approved by the 

Food and Drug Administration (FDA) 

for such management.’’ In the CY 2013 

ESRD PPS final rule, we finalized an 

Anemia Management reporting measure 

for the reasons stated in that final rule 

(77 FR 67491 through 67495). However, 

we inadvertently excluded home 

peritoneal patients from the measure 

specifications. For PY 2016 and future 

payment years, we are now proposing to 

include home peritoneal patients in the 

Anemia Management reporting measure. 

Therefore, we are proposing that a 

qualifying case for this measure will be 

defined as (i) an in-center Medicare 

patient who had been treated at least 

seven times by the facility; and (ii) a 

home dialysis Medicare patient for 

whom the facility submitted a claim at 

least once per month. 

We believe that there are 

circumstances that might make it 

challenging to draw a sample from 

certain patients, and therefore, we are 

proposing that, in order to receive full 

points on this measure, facilities that 

treat 11 or more qualifying cases over 

the entire performance period must 

report at the lesser of the 50th percentile 

of facilities in CY 2013 or 99 percent per 

month, on a monthly basis for each 

month of the performance period. In 

addition, we are proposing that, in order 

to receive full points on this measure, 

facilities that treat fewer than 11 

qualifying cases during the performance 

period must report on a monthly basis 

the specified levels for all but one 

qualifying case. If a facility only has one 

qualifying case during the entire 

performance period, a facility will have 

to attest to that fact in CROWNWeb by 

January 31 of the year following the 

performance period in order to avoid 

being scored on the measure. We make 

this proposal because we seek to ensure 

the highest quality of care regardless of 

facility size, and because we seek to 

mitigate cherry-picking by ensuring that 

one patient does not skew a facility’s 

score (77 FR 67474). 

Technical specifications for this 

proposed measure can be found at: 

http://www.dialysisreports.org/pdf/esrd/ 


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2http://www.fda.gov/Drugs/DrugSafety/ 

ucm259639.htm. 

3 Kidney Disease: Improving Global Outcomes 

(KDIGO) Anemia Work Group. KDIGO Clinical 

Practice Guideline for Anemia in Chronic Kidney 

Disease. Kidney inter., Suppl. 2012 (2): 279–335. 

4Wang A, Woo J, Law C, et al. Cardiac Valve 

Calcification as an Important Predictor for AllCause Mortality and Cardiovascular Mortality in 

Long-Term Peritoneal Dialysis Patients: A 

Prospective Study. J Am. S. Nephrology 2011 

(14/1): 159–168. 

5Wang A, Ho S, Wang M, et al. Cardiac Valvular 

Calcification as a Marker of Atherosclerosis and 

Arterial Calcification in End-stage Renal Disease. 

JAMA 2005 (165/3): 327–332. 

public-measures/AnemiaManagementReporting-2016NPRM.pdf. We request 

comment on this proposal to revise the 

Anemia Management reporting measure. 

3. New Measures Proposed for PY 2016 

and Subsequent Payment Years of the 

ESRD QIP 

As the program evolves, we believe it 

is important to continue to evaluate and 

expand the measures selected for the 

ESRD QIP. Therefore, for the PY 2016 

ESRD QIP and future payment years, we 

are proposing to adopt five new 

measures. The proposed new measures 

include two measures on anemia 

management, one measure on mineral 

metabolism, one measure on 

bloodstream infection monitoring, and 

one measure on comorbidities. 

a. Proposed Anemia Management 

Clinical Measure Topic and Measures 

Section 1881(h)(2)(A)(i) of the Act 

states that the measures specified for the 

ESRD QIP are required to include 

measures on ‘‘anemia management that 

reflect the labeling approved by the 

Food and Drug Administration for such 

management.’’ For PY 2016 and future 

payment years, we are proposing to 

create a new anemia management 

clinical measure topic, which consists 

of one measure initially finalized in the 

PY 2012 ESRD QIP final rule and most 

recently finalized for PY 2015 and 

future PYs in the CY 2013 ESRD PPS 

final rule, and one new proposed 

measure, described below. We note that, 

like other measure topics, we are 

proposing that the Anemia Management 

clinical measure topic consist only of 

clinical and not reporting measures. 

i. Anemia Management: Hgb>12 

For the PY 2016 ESRD QIP and future 

payment years of the program, we are 

proposing to include the current 

Hgb>12 measure in a new Anemia 

Management Clinical Measure Topic. In 

the event that the Patient Informed 

Consent for Anemia Treatment measure 

described below is not finalized, we 

would retain the Hgb>12 measure as an 

independent measure. We welcome 

comments on this proposal. 

ii. Anemia of Chronic Kidney Disease: 

Patient Informed Consent for Anemia 

Treatment 

This is a measure of the proportion of 

dialysis patients for whom a facility 

attests that risks, potential benefits, and 

alternative treatment options for anemia 

were evaluated, and that the patient 

participated in the decision-making 

regarding an anemia treatment strategy. 

We believe that this measure is 

consistent with recent changes to the 

FDA-approved labeling 2 for ESAs and 

Kidney Disease: Improving Global 

Outcomes (KDIGO) Anemia 

Management Guidelines 3 that highlight 

the evolving understanding of risks 

associated with ESA therapy, as 

required in section 1881(h)(2)(A)(i) of 

the Act. We believe it is appropriate for 

facilities and physicians to ensure that 

steps are taken to make patients aware 

of those potential risks within the 

context of treatment for anemia. For 

these reasons, we are proposing to adopt 

this measure (Anemia of Chronic 

Kidney Disease: Patient Informed 

Consent for Anemia Treatment) for the 

ESRD QIP in PY 2016 and future 

payment years of the program. In order 

to meet the requirements of this 

proposed measure, facilities must attest 

in CROWNWeb for each qualifying 

patient, on an annual basis, that 

informed consent was obtained from 

that patient, or that patient’s legally 

authorized representative, during the 

performance period. We propose that 

qualifying cases for this measure would 

be defined as patients who received 

dialysis in the facility for 30 days or 

more. The proposed deadline for 

reporting these attestations for the PY 

2016 ESRD QIP will be January 31, 2015 

or, if that is not a regular business day, 

the first business day thereafter. Missing 

attestation data for a patient will be 

interpreted as failure to obtain informed 

consent from that patient. 

We welcome comments on this 

proposed measure. Technical 

specifications for this proposed measure 

can be found at: http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/AnemiaManagementInformedConsent-2016NPRM.pdf. 

b. Hypercalcemia 

Section 1881(h)(2)(A)(iii)(II) of the Act 

states that the measures specified for the 

ESRD QIP shall include other measures 

as the Secretary specifies, including, to 

the extent feasible, measures of bone 

mineral metabolism. Abnormalities of 

bone mineral metabolism are 

exceedingly common, and contribute 

significantly to morbidity and mortality 

in patients with advanced Chronic 

Kidney Disease (CKD). Many studies 

have associated disorders of mineral 

metabolism with mortality, fractures, 

cardiovascular disease, and other 

morbidities. Therefore, we believe it is 

critical to adopt a clinical measure that 

encourages adequate management of 

bone mineral metabolism and disease in 

ESRD patients. 

Elevated serum calcium level (or 

hypercalcemia) has been shown to be 

significantly associated with increased 

all-cause mortality in patients with 

advanced Chronic Kidney Disease 

(CKD). Both KDIGO Clinical Practice 

Guideline for the Diagnosis, Evaluation, 

Prevention, and Treatment of Chronic 

Kidney Disease—Mineral and Bone 

Disorder (CKD—MBD) and the National 

Kidney Foundation’s Kidney Disease 

Outcomes Quality Initiative (KDOQI) 

support maintaining serum calcium 

levels within reference ranges. 

Hypercalcemia is also a proxy for 

vascular and/or valvular calcification 4 5

and subsequent risk for cardiovascular 

deaths. We previously proposed a 

hypercalcemia clinical measure for the 

PY 2015 ESRD QIP (77 FR 40973 

through 40974), but decided not to 

finalize the measure because we lacked 

baseline data that could be used to 

calculate performance standards, 

achievement thresholds, and 

benchmarks (77 FR 67490 through 

67491). We now possess enough 

baseline data to calculate these values. 

Therefore, we are proposing to adopt the 

NQF-endorsed measure NQF #1454: 

Proportion of Patients with 

Hypercalcemia, for PY 2016 and future 

payment years of the ESRD QIP. 

The proposed Hypercalcemia measure 

assesses the number of patients with 

uncorrected serum calcium greater than 

10.2 mg/dL for a 3-month rolling 

average. (‘‘Uncorrected’’ means not 

corrected for serum albumin 

concentration.) In order to enable us to 

calculate this measure, each facility will 

be required to enter in CROWNWeb, on 

a monthly basis, an uncorrected calcium 

level for each in-center and home 

dialysis patient over the age of eighteen. 

Performance on this measure is 

expressed as a proportion of patientmonths for which the 3-month rolling 

average exceeds 10.2 mg/dL. The 

numerator is the total number of eligible 

patient-months where the 3-month 

rolling average is greater than 10.2 mg/ 

dL and the demoninator is the total 

number of eligible patient-months. We 

are proposing that facilities would begin 

to submit data on this measure based on 

January 2014 uncorrected serum 


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40860 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

6Seeherunvong W, Rubio L, Abitbol CL, et al. 

Identification of poor responders to erythropoietin 

among children undergoing hemodialysis. J Pediatr 

2001 (138/5):710–714. 7Warady BA, Zobrist RH, Wu J, Finan E. Sodium 

ferric gluconate complex therapy in anemic 

children on hemodialysis. Pediatr Nephrol 20: 

1320–7, 2005. 8Frankenfield DL, Neu AM, Warady BA, et al. 

Anemia in pediatric hemodialysis patients: Results 

from the 2001 Clinical Performance Measures 

Project. Kidney International 64:1120–4, 2003. 

calcium levels but that we would 

calculate the first 3-month rolling 

average for each eligible patient in 

March 2014 using January, February, 

and March 2014 data. We would then 

calculate a new 3-month rolling average 

each successive eligible patient-month 

(April through December measure 

calculations) by dropping the oldest 

month’s data and using instead the 

newest month’s data in the 3-month 

period. The facility’s performance will 

be determined by calculating the 

proportion of the 3-month averages 

calculated monthly (March through 

December, each time using the latest 

three months of data) for all eligible 

patients that was greater than 10.2 mg/ 

dL. 

Because we are proposing to adopt 

this measure not only for PY 2016, but 

also subsequent payment years, we also 

propose that, beginning with the PY 

2017 program, we would measure 

hypercalcemia beginning in January of 

the applicable performance period. This 

will allow us to have a 3-month rolling 

average for all months in the 

performance period. We propose that 

the 3-month rolling average rate for 

January would be calculated using the 

rates from November and December of 

the previous year as well as January of 

that year. Likewise, we propose that the 

rate for February would be calculated 

using the rates from December, January 

and February to calculate the 3-month 

rolling average, and so on. 

Technical specifications for this 

measure can be found at http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/MineralMetabolismHypercalcemia-2016NPRM.pdf. We 

welcome comments on this proposal. 

c. Use of Iron Therapy for Pediatric 

Patients Reporting Measure 

Section 1881(h)(2)(A)(i) states that the 

ESRD QIP must include measures on 

‘‘anemia management that reflect the 

labeling approved by the Food and Drug 

Administration for such management.’’ 

Appropriate anemia management 

requires the presence of sufficient stores 

of iron.6 Iron deficiency is a leading 

cause of non-response to ESA therapy, 

and several studies suggest that 

providing oral or IV iron is effective in 

correcting iron deficiency in the 

pediatric population.7 8 Pediatric 

patients have previously been excluded 

from all anemia management measures, 

limiting the participation of dialysis 

facilities with substantial numbers of 

pediatric patients in the ESRD QIP. In 

an effort to address this issue, and 

account for the quality of care dialysis 

facilities provide to pediatric patients, 

we are proposing to adopt a pediatric 

iron therapy measure for the ESRD QIP 

in PY 2016 and future payment years of 

the program. 

We considered proposing an NQFendorsed clinical measure on the use of 

iron therapy for pediatric patients as 

part of the proposed Anemia 

Management clinical measure topic 

(NQF #1433: Use of Iron Therapy for 

Pediatric Patients). This measure is an 

assessment of the percentage of all 

pediatric hemodialysis and peritoneal 

dialysis patients who received IV iron or 

were prescribed oral iron within three 

months of attaining the following 

conditions: (i) Patient had hemoglobin 

less than 11.0 g/dL; (ii) patient had 

simultaneous values of serum ferritin 

concentration less than 11.0; and (iii) 

patient’s transferrin saturation (TSAT) 

was less than 20 percent. Upon 

investigation, we discovered that there 

were not enough patients who would 

qualify for this measure to establish 

reliable baseline data that would allow 

us to propose to adopt this measure as 

a clinical measure for PY 2016. We also 

note that the clinical measure currently 

presents other issues related to the 

minimum number of cases that would 

need to be reported for scoring, and we 

are considering the use of an adjuster 

that could be applied where the sample 

size is small. While we continue to 

consider these and other issues related 

to the adoption of a pediatric iron 

therapy clinical measure, we are 

proposing a related reporting measure 

for PY 2016 and future payment years 

in order to acquire a sufficient amount 

of baseline data for the development of 

a clinical measure in the future. 

For PY 2016 and future payment 

years, we are proposing that facilities 

must enter in CROWNWeb on a 

quarterly basis, for each qualifying case 

(defined in the next sentence): (i) 

Patient admit/discharge date; (ii) 

hemoglobin levels; (iii) serum ferritin 

levels; (iv) TSAT percentages; (v) the 

dates that the lab measurements were 

taken for items (ii)–(iv); (vi) intravenous 

IV iron received or oral iron prescribed 

(if applicable); and (vii) the date that the 

IV iron was received or oral iron was 

prescribed (if applicable). We are 

proposing that qualifying cases for this 

measure would be defined as in-center 

and home dialysis patients under the 

age of eighteen. 

As described in more detail below, we 

are proposing that each facility must 

report data on the Use of Iron Therapy 

for Pediatric Patients measure if it treats 

one or more qualifying cases during the 

performance period. Because this 

reporting measure requires that a facility 

enter data in CROWNWeb only once per 

quarter for each patient, we believe that 

the burden is appropriate and will not 

unduly impact small facilities, since it 

is proportionate to the number of 

patients that facilities treat. However, 

for the same reasons stated in the final 

description of the PY 2014 ESRD QIP 

Mineral Metabolism measure (which 

had a one patient minimum) (77 FR 

67472 through 67474), we are proposing 

that, in order to receive full points on 

this measure, facilities that treat 11 or 

more qualifying cases over the 

performance period will have to report 

at the lesser of the 50th percentile of 

facilities in CY 2013 or 97 percent per 

quarter, for each quarter of the 

performance period. We are proposing 

that facilities that treat fewer than 11 

qualifying cases during the performance 

period will have to report on a quarterly 

basis the specified data elements for all 

but one qualifying case. If a facility only 

has one qualifying case during the entire 

performance period, a facility will have 

to attest to that fact in CROWNWeb by 

January 31 of the year following the 

performance period in order to avoid 

being scored on the measure. 

The technical specifications for this 

measure can be found at: http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/AnemiaManagementPediatricIronTherapyReporting2016NPRM.pdf. We welcome comment 

on this proposal. 

d. NHSN Bloodstream Infection in 

Hemodialysis Outpatients Clinical 

Measure 

Healthcare-acquired infections (HAI) 

are a leading cause of preventable 

mortality and morbidity across different 

settings in the healthcare sector, 

including dialysis facilities. 

Bloodstream infections are a pressing 

concern in a population where 

individuals are frequently immunocompromised and depend on regular 

vascular access to facilitate dialysis 

therapy. In a national effort to reduce 

infection rates, CMS has partnered with 

the CDC to encourage facilities to report 

to the NHSN as a way to track and 

facilitate action intended to reduce 

HAIs. The NHSN is a secure, internetbased surveillance system that is 

managed by the Division of Healthcare 


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Quality Promotion at the CDC. NHSN 

has been operational since 2006 and 

tracks data from acute care hospitals, 

long-term care hospitals, psychiatric 

hospitals, rehabilitation hospitals, 

outpatient dialysis centers, ambulatory 

surgery centers, and long-term care 

facilities. We continue to believe that 

accurately reporting dialysis events to 

the NHSN by these facilities supports 

national goals for patient safety, 

particularly goals for the reduction of 

HAIs. In addition, we believe that 

undertaking other activities designed to 

reduce the number of HAIs supports 

national goals for patient safety. For 

further information regarding the 

NHSN’s dialysis event reporting 

protocols, please see http:// 

www.cdc.gov/nhsn/dialysis/index.html. 

We have worked over the past two 

years to help dialysis facilities become 

familiar with the NHSN system through 

the adoption of an NHSN Dialysis Event 

reporting measure. We now believe that 

facilities are sufficiently versed in 

reporting this measure to the NHSN. In 

light of the importance of monitoring 

and preventing infections in the ESRD 

population, and because a clinical 

measure would have a greater impact on 

clinical practice by holding facilities 

accountable for their actual 

performance, we are proposing to 

replace the NHSN Dialysis Event 

reporting measure that we adopted in 

the CY 2013 ESRD PPS final rule (77 FR 

67481 through 67484) with a new 

clinical measure for PY 2016 and future 

payment years. This proposed measure, 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients, is based 

closely NQF #1460, in that it evaluates 

the number of hemodialysis outpatients 

with positive blood cultures per 100 

hemodialysis patient-months. 

We are proposing that facilities must 

submit 12 months of accurately reported 

dialysis event data (defined in the next 

sentence) to NHSN on a quarterly basis. 

In order to ensure that a facility submits 

data that can be used to identify the 

source of bloodstream infections, to 

preserve the internal validity of 

bloodstream infection data, and to help 

prevent future bloodstream infections, 

we propose to define accurately 

reported dialysis event data as data 

reported by facilities that follow the 

NHSN enrollment and training 

guidelines specified by the CDC 

(available at: http://www.cdc.gov/nhsn/ 

dialysis/enroll.html and http:// 

www.cdc.gov/nhsn/Training/dialysis/ 

index.html), according to the reporting 

requirements specified within the 

NHSN Dialysis Event Protocol. (This 

protocol, which facilities are already 

using to meet the requirements of the 

NHSN Dialysis Event reporting measure, 

includes information about IV 

antimicrobial starts and evidence of 

vascular access site infection, as well as 

information about the presence of a 

bloodstream infection.) 

Additionally, we are proposing that 

each quarter’s data would be due 3 

months after the end of that quarter. For 

example, data from January 1 through 

March 31, 2014 would need to be 

entered by June 30, 2014; data from 

April 1 through June 30, 2014 would 

need to be submitted by September 30, 

2014; data from July 1 through 

September 30, 2014 would need to be 

submitted by December 31, 2014; data 

from October 1 through December 31, 

2014 would need to be submitted by 

March 31, 2015. If facilities do not 

report 12 months of these data 

according to the requirements and the 

deadlines specified above, we propose 

that they would receive a score of zero 

on the measure. We also propose that 

facilities with a CCN open date after 

January 1, 2014 will be excluded from 

the measure. We note that in previous 

payment years we have awarded partial 

credit to facilities that submitted less 

than twelve months of data to encourage 

them to enroll in and report data in the 

NHSN system. However, we are 

proposing to require 12 months of data 

on this clinical measure because 

infection rates vary through different 

seasons of the year. 

We note that this proposed measure 

only applies to facilities treating incenter hemodialysis patients (both adult 

and pediatric). We will determine 

whether a facility treats in-center 

patients by referencing the facility’s 

information in the Standard Information 

Management System and CROWNWeb. 

We recognize that the CDC has 

published Core Interventions for BSI 

Prevention in Dialysis, which are listed 

at http://www.cdc.gov/dialysis/ 

prevention-tools/coreinterventions.html. We encourage 

facilities to adopt the nine listed 

interventions in order to help prevent 

infections, but are not proposing to 

require facilities to adopt any of these 

interventions at this time. 

We request comment on this proposal, 

and in particular on the issue of 

whether it is appropriate at this time to 

convert the current NHSN Dialysis 

Event Reporting measure into a clinical 

measure. The technical specifications 

for this measure are located at http:// 

www.dialysisreports.org/ 

ESRDMeasures.aspx. 

e. Comorbidity Reporting Measure 

The NQF endorsed a clinical measure 

for Dialysis Facility Risk-Adjusted 

Standardized Mortality Ratio (#0369) in 

2008, and a clinical measure for 

Standardized Hospitalization Ratio for 

Admissions (#1463) in 2011. We have 

long been interested in adding a 

Standardized Mortality Ratio (SMR) 

measure and a Standardized 

Hospitalization Ratio (SHR) measure to 

the ESRD QIP. As articulated in the CY 

2013 ESRD PPS final rule, ‘‘We believe 

that dialysis facilities own partial 

responsibility for the rate at which their 

patients are hospitalized, in particular 

when that rate is substantially higher 

than at other peer facilities and may not 

be explained by variation in the illness 

of patients’’ (77 FR 67496). Similarly, 

we continue to believe that the ‘‘SMR 

may help distinguish the quality of care 

offered by dialysis facilities as 

determined by mortality, a key health 

care outcome used to assess quality of 

care in other settings, such as hospitals’’ 

(77 FR 67497). 

Although we believe that SHR and 

SMR capture important indicators of 

morbidity and mortality, we are 

considering whether, and how, we 

might be able to adopt them through 

future rulemaking in a way that 

properly takes into account the effect 

that comorbidities have on 

hospitalization and mortality rates for 

the ESRD population. We also 

acknowledge concerns raised by 

commenters in the past that the NQFendorsed SMR and SHR measures are 

not adequately risk adjusted (77 FR 

67496). Currently, information about 

patient comorbidities is collected by 

CMS via the Medical Evidence 

Reporting Form 2728, which is typically 

only submitted by facilities to CMS 

when a new patient first begins to 

receive dialysis treatment. We also use 

Form 2728 to capture the date of first 

dialysis in order to help determine 

patient exclusions for all of the clinical 

measures finalized in the PY 2013 ESRD 

PPS final rule. However, facilities are 

not required to update this form, which 

makes it difficult to capture information 

about comorbidities that develop after 

the initiation of dialysis treatment. We 

acknowledge the concerns of 

commenters who stated that ‘‘there is 

currently no mechanism either for 

correcting or updating patient 

comorbidity data on CMS’ Medical 

Evidence Reporting Form 2728, and 

these comorbidities affect the 

calculation of the measure’’ (76 FR 

70267). 

We are proposing to adopt a 

Comorbidity reporting measure for the 

PY 2016 ESRD QIP and future payment 

years of the ESRD QIP. The purpose of 

this measure is two-fold. First, the 

proposed reporting measure offers a 


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mechanism for collecting annual 

information about patient comorbidities, 

thereby providing a reliable source of 

data that we can use to develop a riskadjustment methodology for the SHR 

and SMR clinical measures, should we 

propose to adopt such measures in the 

future. Second, the reporting measure 

will make it possible to improve our 

understanding of the risk factors that 

contribute to morbidity and mortality in 

the ESRD patient population. The data 

we gather will enable us to develop riskadjustment methodologies for possible 

use in calculating the SHR and SMR 

measures, should we propose to adopt 

those measures in the future, and 

therefore more reliably calculate 

expected hospitalization and mortality 

rates in future payment years of the 

ESRD QIP. When we examine updated 

data on comorbidities, we will 

determine the appropriateness of 

including that data as additional riskadjustment factors for the SMR and SHR 

measures by considering the extent to 

which each comorbidity may be 

influenced by the quality of dialysis 

facility care, as opposed to factors 

outside of a facility’s control. 

Section 1881(h)(2)(B)(i) of the Act 

requires that, unless the exception set 

forth in section 1881(h)(2)(B)(ii) of the 

Act applies, the measures specified for 

the ESRD QIP under section 

1881(h)(2)(A)(iii) of the Act must have 

been endorsed by the entity with a 

contract under section 1890(a) of the 

Act (which is currently NQF). Under the 

exception set forth in section 

1881(h)(2)(B)(ii) of the Act, in the case 

of a specified area or medical topic 

determined appropriate by the Secretary 

for which a feasible and practical 

measure has not been endorsed by the 

entity with a contract under section 

1890(a) of the Act, the Secretary may 

specify a measure that is not so 

endorsed, so long as due consideration 

is given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the Secretary. 

NQF has not endorsed a measure for 

updating comorbidity information for 

patients with ESRD. We have given due 

consideration to endorsed measures, as 

well as those adopted by a consensus 

organization, and we are proposing this 

measure under the authority of 

1881(h)(2)(B)(ii) of the Act. We believe 

that the proposed measure’s potential to 

improve clinical understanding and 

practice outweighs the minimal burden 

it would impose upon facilities. 

Additionally, we believe that this 

measure will provide data that is 

currently unavailable through Form 

2728 because the measure accounts for 

the most recent information about 

patient risk factors, which may change 

over time as a patient continues 

receiving dialysis. 

For this proposed reporting measure, 

we are proposing each facility will 

annually update in CROWNWeb up to 

24 comorbidities, or indicate ‘‘none of 

the above,’’ for each qualifying case. For 

the purposes of this measure, we are 

proposing to define a ‘‘qualifying case’’ 

as a hemodialysis or peritoneal dialysis 

patient being treated at the facility as of 

December 31 of the performance period, 

according to admit and discharge dates 

entered into CROWNWeb. In fulfilling 

this reporting requirement, facilities 

would select one or more of the 

following for each qualifying case: 

• Congestive heart failure. • Diabetes, on oral medications. • Drug dependence. 

• Atherosclerotic heart disease (ASHD). • Diabetes, without medications. • Inability to ambulate. 

• Other cardiac disease. • Diabetic retinopathy. • Inability to transfer. 

• Cerebrovascular disease (CVA, TIA). • Chronic obstructive pulmonary disease. • Needs assistance with daily activities. 

• Peripheral vascular disease. • Tobacco use (current smoker). • Institutionalization—Assisted Living. 

• History of hypertension. • Malignant neoplasm, Cancer. • Institutionalization—Nursing Home. 

• Amputation. • Toxic nephropathy. • Institutionalization—Other Institution. 

• Diabetes, currently on insulin. • Alcohol dependence. • Non-renal congenital abnormality. 

• None of the above. 

Therefore, to receive full points on 

this measure, we are proposing that 

facilities would be required to provide 

the updates in CROWNWeb by January 

31, 2015 or, if that is not a regular 

business day, the first business day 

thereafter. While we are proposing to 

require facilities to report a single 

annual update per patient, we 

encourage facilities to update this 

information more frequently, in order to 

more closely monitor their patients’ risk 

factors, and to improve the quality of 

the data. 

Technical specifications for this 

proposed measure can be found at 

http://www.dialysisreports.org/pdf/esrd/ 

public-measures/ComorbidityReporting2016NPRM.pdf. We welcome comments 

on these proposals. 

4. Other Measures Under Development 

As part of our effort to continuously 

improve the ESRD QIP, we continue to 

work on developing additional robust 

measures that provide valid assessments 

of the quality of care furnished by 

facilities to patients with ESRD. We are 

considering the feasibility of developing 

quality measures in other topic areas 

(for example, blood transfusions, kidney 

transplantation, quality of life, and 

health information technology) for 

quality improvement at the point of care 

as well as for the electronic exchange of 

information in support of care 

coordination across providers and 

settings. Additional areas of potential 

interest include residual renal function, 

complications associated with ESRD, 

and frequently comorbid conditions (for 

example, diabetes and heart disease). 

We request comment on these potential 

areas of future measurement, and 

welcome suggestions on other topics for 

measure development. 

5. Proposed Scoring for the PY 2016 

ESRD QIP and Future Payment Years 

Section 1881(h)(3)(A)(i) of the Act 

requires the Secretary to develop a 

methodology for assessing the total 

performance of each facility based on 

the performance standards established 

with respect to the measures selected for 

the performance period. We believe that 

the methodology set forth in the CY 

2013 ESRD PPS final rule incentivizes 

facilities to meet the goals of the ESRD 

QIP; therefore, with the exception of the 

proposed changes further discussed in 

the applicable section below, we are 

proposing to adopt a scoring 

methodology for the PY 2016 ESRD QIP 

and future payment years that is nearly 

identical to the one finalized in the CY 

2013 ESRD PPS final rule. To the extent 

that the scoring methodology differs, 

those differences are proposed below. 

6. Proposed Performance Period for the 

PY 2016 ESRD QIP 

Section 1881(h)(4)(D) of the Act 

requires the Secretary to establish the 

performance period with respect to a 

year, and that the performance period 

occur prior to the beginning of such 

year. In the CY 2013 ESRD PPS final 

rule, we finalized a performance period 

of CY 2013. We stated our belief that, for 

most measures, a 12-month performance 


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period is the most appropriate for the 

program because this period accounts 

for any potential seasonal variations that 

might affect a facility’s score on some of 

the measures, and also provides 

adequate incentive and feedback for 

facilities and Medicare beneficiaries. 

For the reasons outlined in the CY 2013 

ESRD PPS final rule (77 FR 67500), we 

have determined for PY 2016 that CY 

2014 is the latest period of time during 

which we can collect a full 12 months 

of data and still implement the payment 

reductions beginning with renal dialysis 

services furnished on January 1, 2016. 

Therefore, for the PY 2016 ESRD QIP, 

we are proposing to establish CY 2014 

as the performance period for all of the 

measures. We welcome comments on 

this proposal. 

7. Proposed Performance Standards for 

the PY 2016 ESRD QIP and Future 

Payment Years 

We are proposing to adopt 

performance standards for the PY 2016 

ESRD QIP measures that are similar to 

what we finalized in the CY 2013 ESRD 

PPS final rule. Section 1881(h)(4)(A) 

provides that ‘‘the Secretary shall 

establish performance standards with 

respect to measures selected . . . for a 

performance period with respect to a 

year.’’ Section 1881(h)(4)(B) of the Act 

further provides that the ‘‘performance 

standards . . . shall include levels of 

achievement and improvement, as 

determined appropriate by the 

Secretary.’’ We use the performance 

standards to establish the minimum 

score a facility must achieve to avoid a 

Medicare payment reduction. 

a. Proposed Clinical Measure 

Performance Standards 

For the same reasons stated in the CY 

2013 ESRD PPS final rule (77 FR 67500 

through 76502), we are proposing for PY 

2016 to set the performance standards 

(both achievement and improvement) 

based on the national performance rate 

(that is, the 50th percentile) of facility 

performance in CY 2012, except as 

specified below. 

With respect to the proposed NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure, we are 

proposing to begin data collection 

beginning with CY 2014 events. We do 

not have data prior to CY 2014 for 

purposes of setting a performance 

standard based on the national 

performance rate of facility performance 

in CY 2012. For that reason, we are 

proposing that the performance 

standard for the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure for PY 2016 be the 50th 

percentile of the national performance 

rate on the measure during CY 2014. 

Because we lack the baseline data 

needed to calculate an improvement 

score, we are also proposing that, for PY 

2016, facilities be scored only on 

achievement for this measure, and not 

on the basis of improvement. Although 

we recognize that with other measures 

that lacked baseline data we instituted 

a reporting measure to ensure that both 

an achievement and improvement score 

could be assessed, we believe that it is 

appropriate, in this case, to adopt a 

clinical measure without the baseline 

data necessary for an improvement 

score. Hospital Acquired Infections 

(HAIs) are a leading cause of 

preventable mortality and morbidity 

across different settings in the 

healthcare sector, including dialysis 

facilities, costing patient lives and 

billions of dollars. CMS has recognized 

that reducing HAIs is critically 

important to the Agency’s three main 

goals of improving healthcare, 

improving health, and reducing 

healthcare costs. Because of the 

abnormally great impact HAIs have 

upon patients and the healthcare 

industry, we believe it is important to 

begin assessing facilities on the number 

of these events as soon as possible, 

rather than on merely whether they 

report these events. Additionally, the 

NHSN measure has been a reporting 

measure since PY 2014, which will give 

facilities two years to report data before 

they are scored on the data results. 

Thus, although we do not yet have 

complete baseline data to give 

improvement scores in PY 2016, we 

believe it is appropriate to implement 

this measure using only achievement 

scores because of the urgency in 

reducing these events and the time 

facilities have had to prepare 

themselves for such a measure. Finally, 

we are proposing that facilities would 

receive a score of zero on the NHSN 

clinical measure if they do not submit 

12 months of data, as defined in Section 

III.C.3.d above, and by the deadlines 

specified in Section III.C.3.d above. 

For the proposed Patient Informed 

Consent for Anemia Treatment, we 

believe that facilities should meet the 

standard 100 percent of the time. 

However, we recognize that unexpected 

events might make a 100 percent 

standard difficult to meet, so we are 

proposing that facilities should be 

allowed to meet the standard for less 

than 100 percent of their patients. 

Because prior data are unavailable for 

the establishment of a performance 

standard, benchmark, and achievement 

threshold, we developed a methodology 

to determine appropriate achievement 

standards. As described in Section 

III.C.10, we are proposing that a small 

facility adjuster will be applied to 

facilities with between 11 and 25 

qualifying patients. Since facilities with 

between 11 and 25 patients would be 

subject to the favorable scoring 

modifications applied by the small 

facility adjuster, these facilities would 

have an easier time achieving the 

proposed achievement standards. 

Therefore, the minimum number of 

cases a facility may have and not benefit 

from a small facility adjuster is 26. We 

calculated that if a facility with 26 cases 

failed to obtain consent for two 

qualifying cases, it would have obtained 

consent 92 percent of the time 

(rounded). If the facility failed to obtain 

consent for one case, it would have 

obtained consent 96 percent of the time 

(rounded). We believe that these values 

(92 and 96 percent) encourage a high 

consistency of care for patients with 

ESRD that is reasonably attainable by all 

facilities, while accounting for the 

possibility that facilities would be 

unable to obtain informed consent for 

reasons beyond their control. Therefore, 

we are proposing that the achievement 

threshold be defined as obtaining 

informed consent for 92 percent of 

qualifying cases during the performance 

period, and that the benchmark be 

defined as obtaining informed consent 

for 96 percent of such cases. 

Furthermore, we propose to calculate 

the proposed performance standard 

using the average of the benchmark and 

achievement threshold, which is 94 

percent. We seek comments on this 

performance standard. 

Because we lack the baseline data 

needed to calculate improvement scores 

for the Patient Informed Consent for 

Anemia Treatment measure, we are also 

proposing that for PY 2016, facilities be 

scored only on achievement for this 

measure, and not on the basis of 

improvement. We recognize that with 

other measures that lacked baseline data 

we adopted a reporting measure to 

ensure that both an achievement and 

improvement score could be assessed. 

However, we believe that it is 

appropriate, in this case, to adopt a 

clinical measure without the baseline 

data necessary for an improvement 

score. Anemia management is a topic 

highlighted in the ESRD QIP authorizing 

statute, requiring measures that reflect 

labeling approved by the Food and Drug 

Administration. (See section 

1881(h)(2)(A) of the Act.) The inclusion 

of the topic in statue highlights its 

importance to CMS and to dialysis 

patients. ESA labeling has changed over 

time as additional safety information 


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has become available, and the informed 

consent process is designed to ensure 

that the most current safety information 

is communicated to patients before 

ESAs are administered. In addition, 

obtaining informed consent for anemia 

treatment is a standard of practice that 

should aready be in place at dialysis 

facilities, so facilities should already 

have procedures in place to support the 

measure. Thus, although we do not yet 

have complete baseline data to give 

improvement scores in PY 2016, we 

believe it is appropriate to implement 

this measure using only achievement 

scores because of the importance of 

providing patients with current 

information about the risks and benefits 

of anemia therapy, and because this is 

already a standard clinical practice. 

For the proposed Hypercalcemia 

measure, the first month that we can use 

to establish the baseline is May 2012. 

This is because the hypercalcemia 

measure relies on CROWNWeb as its 

data source, CROWNWeb was first 

rolled out nationally in May 2012, and 

data submitted to CROWNWeb before 

that time is considered test or pilot data. 

For that reason, we are proposing to set 

the performance standard as the 50th 

percentile of national performance from 

May 2012 through November 2012. We 

seek comment on this proposal. 

b. Estimated Performance Standards for 

Proposed Clinical Measures 

At this time, we do not have the 

necessary data to assign numerical 

values to the proposed performance 

standards for the clinical measures, 

because we do not yet have all of the 

data from CY 2012 or the first portion 

of CY 2013. However, we are able to 

estimate these numerical values based 

on the most recent data available. For all 

of the proposed clinical measures 

except Hypercalcemia, this data comes 

from the period of January through 

November 2012. For the Hypercalcemia 

clinical measure, the most recent data 

available comes from the period May 

through November 2012. In Table 8, we 

have provided the estimated 

performance standards for all of the 

measures except for the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure, which 

will be based on data from CY 2014. We 

will publish updated values for all 

measures except the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure in the CY 2014 ESRD 

PPS final rule. 

TABLE 8—ESTIMATED NUMERICAL VALUES FOR THE PERFORMANCE STANDARDS FOR THE PY 2016 ESRD QIP 

CLINICAL MEASURES USING THE

MOST RECENTLY AVAILABLE DATA

Measure Performance 

standard 

Vascular Access 

Type: 

%Fistula ................. 62.4%. 

%Catheter .............. 10.5%. 

Kt/V: 

Adult Hemodialysis 93.6%. 

Adult, Peritoneal 

Dialysis.

85.4%. 

Pediatric Hemodialysis.92.5%. 

Anemia Management: 

Hemoglobin > 12 g/ 

dL.

0%. 

Patient Informed 

Consent for Anemia Treatment 1.

94%. 

Hypercalcemia .......... 2.3%. 

NHSN Bloodstream 

Infection in Hemodialysis Outpatients.

50th percentile of eligible facilities’ performance during 

the performance 

period. 

1As noted above, the performance standard 

for the Patient Informed Consent for Anemia 

Treatment is based on clinical standards, not 

data collected through the ESRD QIP. 

We believe that the ESRD QIP should 

not have lower standards than in 

previous years. In accordance with our 

statements in the CY 2012 ESRD PPS 

final rule (76 FR 70273), if the final 

numerical values for the PY 2016 

performance standards are worse than 

PY 2015 for a measure, then we are 

proposing to substitute the PY 2015 

performance standard for that measure. 

We request comments on this proposal. 

c. Proposed Performance Standards for 

Reporting Measures 

For the proposed ICH CAHPS 

reporting measure, we are proposing to 

set the performance standard for PY 

2016 as the facility’s successful 

submission, by January 28, 2015, of ICH 

CAHPS survey data collected during the 

performance period in accordance with 

the measure specifications to CMS as 

specified at https://ichcahps.org. For PY 

2017 and future payment years, we are 

proposing that the PY 2016 performance 

standard continue, except that in each 

performance period, facilities are 

required to submit data from the two 

surveys conducted during the 

performance period, rather than one, 

and that the survey data must be 

submitted by the dates specified by 

CMS at https://ichcahps.org. 

For the proposed Mineral Metabolism 

reporting measure, we are proposing to 

set the performance standard as 

successfully reporting the measure for 

the number of qualifying cases specified 

in Section III.C.2.b for each month of the 

12-month duration of the performance 

period. 

For the proposed Anemia 

Management reporting measure, we are 

proposing to set the performance 

standard as successfully reporting the 

measure for the number of qualifying 

cases specified in Section III.C.2.c for 

each month of the 12-month duration of 

the performance period. 

For the proposed Anemia 

Management: Pediatric Iron Therapy 

reporting measure, we are proposing to 

set the performance standard as 

successfully reporting for each 

qualifying case each quarter the 

following: (i) Patient admit/discharge 

date; (ii) hemoglobin levels; (iii) serum 

ferritin levels; (iv) TSAT percentages; 

(v) the dates that the lab measurements 

were taken for items (ii)–(iv); (vi) 

intravenous IV iron prescribed or oral 

iron prescribed (if applicable); and (vii) 

the date that the IV iron or oral iron was 

prescribed (if applicable). 

For the proposed Comorbidity 

reporting measure, we are proposing to 

set the performance standard as 

successfully updating in CROWNWeb at 

least once during the performance 

period for each qualifying case, the 

patient’s comorbidities. We are further 

proposing that the update be entered 

into CROWNWeb by the January 31 

following the conclusion of the 

performance period or, if that is not a 

regular business day, the first business 

day thereafter. 

8. Proposed Scoring for the PY 2016 

ESRD QIP Proposed Measures 

In order to assess whether a facility 

has met the performance standards, we 

finalized a methodology for the PY 2014 

ESRD QIP under which we separately 

score each clinical and reporting 

measure. We score facilities based on an 

achievement and improvement scoring 

methodology for purposes of assessing 

their performance on the clinical 

measures (76 FR 70272 through 70273). 

We are proposing to use a similar 

methodology for purposes of scoring 

facility performance on each of the 

clinical measures for the PY 2016 ESRD 

QIP and future payment years, except 

that we are proposing that there will 

only be an achievement score for the 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients and Patient 

Informed Consent for Anemia Treatment 

clinical measures, because data are not 

available to calculate an improvement 

score. 

In determining a facility’s 

achievement score for the PY 2016 


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program and future payment years, we 

are proposing to continue using the 

current methodology described above, 

under which facilities would receive 

points along an achievement range 

based on their performance during the 

proposed performance period for each 

measure, which we define as a scale 

between the achievement threshold and 

the benchmark explained below. We are 

proposing to define the achievement 

threshold for each of the proposed 

clinical measures as the 15th percentile 

of the national performance rate during 

CY 2012, except as otherwise specified 

below for the NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure, the Patient Informed 

Consent for Anemia Treatment clinical 

measure, and Hypercalcemia clinical 

measure. We believe that this 

achievement threshold will provide an 

incentive for facilities to continuously 

improve their performance, while not 

reducing incentives to facilities that 

score at or above the national 

performance rate for the clinical 

measures (77 FR 67503). We are 

proposing to define the benchmark as 

the 90th percentile of the national 

performance rate during CY 2012, 

except as proposed below for the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure and the 

Patient Informed Consent for Anemia 

Treatment clinical measure, because it 

represents a demonstrably high but 

achievable standard of quality that the 

high performing facilities reached. 

For the proposed NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure, we are proposing that 

the achievement threshold and 

benchmark be the 15th and 90th 

percentiles, respectively, of national 

performance during CY 2014. 

For the proposed Patient Informed 

Consent for Anemia Treatment clinical 

measure, and for the reasons described 

in Section III.C.7.a, we are proposing 

that the achievement threshold be 

defined as obtaining informed consent 

for 92 percent of qualifying cases during 

the performance period, and that the 

benchmark be defined as obtaining 

informed consent for 96 percent of such 

cases. 

For the reasons described above, the 

first month that we can use to establish 

the baseline for the proposed 

Hypercalcemia measure is May 2012. 

Therefore, we are proposing to set the 

achievement threshold as the 15th 

percentile of national performance and 

the benchmark as the 90th percentile of 

national performance from May 2012 

through November 2012. We request 

comment on these proposals. 

With the exception of the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients clinical measure and the 

Patient Informed Consent Anemia 

Treatment clinical measure, we are 

proposing that facilities receive points 

along an improvement range, defined as 

a scale running between the 

improvement threshold and the 

benchmark. We are proposing to define 

the improvement threshold as the 

facility’s performance on the measure 

during CY 2013. The facility’s 

improvement score would be calculated 

by comparing its performance on the 

measure during CY 2014 (the proposed 

performance period) to its performance 

rate on the measure during CY 2013. 

Because we lack the baseline data 

needed to calculate improvement scores 

for the NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure and the Patient Informed 

Consent for Anemia Treatment clinical 

measure, we are proposing that facilities 

will not receive improvement scores for 

these measures for PY 2016. 

Like the performance standards, we 

do not have the necessary data at this 

time to assign final numerical values to 

the proposed achievement thresholds 

and benchmarks for the clinical 

measures. However, we are able to 

estimate them based on the most recent 

data available. For all of the clinical 

measures except Hypercalcemia and 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients, this data 

comes from the period between January 

2012 and November 2012. For the 

Hypercalcemia clinical measure, the 

data comes from the period between 

May 2012 and November 2012. In Table 

9, we have provided the estimated 

achievement thresholds and 

benchmarks for each of the measures 

except for NHSN Bloodstream Infection 

in Hemodialysis Outpatients clinical 

measure (which would be based on data 

from January 1, 2014 through December 

31, 2104) and Patient Informed Consent 

for Anemia Treatment (for which the 

achievement threshold and benchmark 

are proposed to be 92 percent and 96 

percent, respectively). 

TABLE 9—ESTIMATED PROPOSED ACHIEVEMENT THRESHOLDS AND BENCHMARKS FOR THE PROPOSED PY 2016 ESRD 

QIP CLINICAL MEASURES USING THE MOST RECENTLY AVAILABLE DATA

Measure Achievement threshold Benchmark 

%Fistula ............................................................. 49.8% ............................................................... 77.1%. 

%Catheter .......................................................... 19.6% ............................................................... 3.0%. 

Kt/V: 

Adult Hemodialysis ..................................... 85.9% ............................................................... 97.5%. 

Adult, Peritoneal Dialysis ............................ 66.7% ............................................................... 94.8%. 

Pediatric Hemodialysis ............................... 83.3% ............................................................... 98.8%.

Anemia Management: 

Hemoglobin > 12 g/dL ....................................... 1.2% ................................................................. 0%. 

Patient Informed Consent for Anemia 

Treatment 1.

92% .................................................................. 96%. 

Hypercalcemia ................................................... 6.1% ................................................................. 0.2%. 

NHSN Dialysis Event Reporting and Clinical 

Bloodstream Infection.

15th percentile of eligible facilities’ performance during the performance period.90th percentile of eligible facilities’ performance during the performance period. 

1As discussed above, the proposed achievement threshold and benchmark for the Patient Informed Consent for Anemia Treatment clinical 

measure are based on clinical standards, not baseline data. 

We believe that the ESRD QIP should 

not have lower standards than previous 

years. In accordance with our 

statements in the CY 2012 ESRD PPS 

final rule (76 FR 70273), if the final PY 

2016 numerical values for the 

achievement thresholds and 

benchmarks are worse than PY 2015 for 

a given measure, we are proposing to 

substitute the PY 2015 achievement 

thresholds and benchmarks for that 

measure. We request comments on these 

proposals. 


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a. Proposals for Scoring Facility 

Performance on Clinical Measures 

Based on Achievement 

Using the same methodology we 

finalized in the CY 2013 ESRD PPS final 

rule, we are proposing to award between 

0 and 10 points for each of the proposed 

clinical measures (77 FR 67504). As 

noted, we are proposing that the score 

for each of these clinical measures will 

be based upon the higher of an 

achievement or improvement score on 

each of the clinical measures, except for 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients clinical 

measure and the Patient Informed 

Consent for Anemia Treatment clinical 

measure, which we are proposing to 

score on achievement alone. For 

purposes of calculating achievement 

scores for the clinical measures, we are 

proposing to base the score on where a 

facility’s performance rate falls relative 

to the achievement threshold and the 

benchmark for that measure. 

(Performance standards do not enter 

into the calculation of improvement or 

achievement scores.) Identical to what 

we finalized in the CY 2013 ESRD PPS 

final rule, we are proposing that if a 

facility’s performance rate during the 

performance period is: 

• Equal to or greater than the 

benchmark, then the facility would 

receive 10 points for achievement; 

• Less than the achievement 

threshold, then the facility would 

receive 0 points for achievement; or 

• Equal to or greater than the 

achievement threshold, but below the 

benchmark, then the following formula 

would be used to derive the 

achievement score: 

[9 * ((Facility’s performance period rate 

¥ achievement threshold)/ 

(benchmark ¥ achievement 

threshold))] + .5, with all scores 

rounded to the nearest integer, with 

half rounded up. 

Using this formula, a facility would 

receive a score of 1 to 9 points for a 

clinical measure based on a linear scale 

distributing all points proportionately 

between the achievement threshold and 

the benchmark, so that the interval in 

the performance between the score for a 

given number of achievement points 

and one additional achievement point is 

the same throughout the range of 

performance from the achievement 

threshold to the benchmark. 

b. Proposals for Scoring Facility 

Performance on Clinical Measures 

Based on Improvement 

Using the same methodology we have 

previously finalized for the ESRD QIP, 

we are proposing that facilities would 

earn between 0 and 9 points for each of 

the clinical measures that will have an 

improvement score (that is, all clinical 

measures except NHSN Bloodstream 

Infection in Hemodialysis Outpatients 

clinical measure and Patient Informed 

Consent for Anemia Treatment), based 

on how much their performance on the 

measure during CY 2014 improved from 

their performance on the measure 

during CY 2013 (77 FR 67504). A 

specific improvement range for each 

measure would be established for each 

facility. We are proposing that if a 

facility’s performance rate on a measure 

during the performance period is: 

• Less than the improvement 

threshold, then the facility would 

receive 0 points for improvement; or 

• Equal to or greater than the 

improvement threshold, but below the 

benchmark, then the following formula 

would be used to derive the 

improvement score: 

[10 * ((Facility performance period rate 

¥ Improvement threshold)/(Benchmark 

¥ Improvement threshold))] ¥ .5, with 

all scores rounded to the nearest integer, 

with half rounded up. 

Note that if the facility score is equal to 

or greater than the benchmark, then it 

would receive 10 points on the measure 

based on the achievement score 

methodology discussed above. We 

request comments on this proposal. 

c. Proposals for Calculating Facility 

Performance on Reporting Measures 

As noted above, reporting measures 

differ from clinical measures in that 

they are not scored based on clinical 

values; rather, they are scored based on 

whether facilities are successful in 

achieving the reporting requirements 

associated with each of these proposed 

measures. The proposed criteria that 

would apply to each reporting measure 

are discussed below. 

With respect to the proposed Anemia 

Management reporting measure and the 

proposed Mineral Metabolism reporting 

measure, we are proposing to award 

points to facilities using the same 

formula that we finalized in the CY 

2013 ESRD PPS final rule for Mineral 

Metabolism and Anemia Management 

(77 FR 67506): 

With respect to the proposed Use of 

Iron Therapy for Pediatric Patients 

reporting measure, using the following 

formula: 

We are proposing to score the Pediatric 

Iron Therapy measure differently than 

the proposed Anemia Management 

reporting measure and the proposed 

Mineral Metabolism reporting measure 

because it requires quarterly rather than 

monthly reporting, and therefore scoring 

based on monthly reporting rates is not 

feasible. 

With respect to the proposed ICH 

CAHPS reporting measure and 

Comorbidity reporting measure, we are 

proposing that a facility receive a score 

of 10 points if it satisfies the 

performance standard for the measure, 

and 0 points if it does not. We are 

proposing to score these reporting 

measures differently than the other 

reporting measures because these 

require annual or biannual reporting, 

and therefore scoring based on monthly 

or quarterly reporting rates is not 

feasible. 

We request comment on the proposed 

methodology for scoring the PY 2016 

ESRD QIP reporting measures. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2EP08JY13.000</GPH> EP08JY13.001</GPH>
Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 40867 

9. Proposals for Weighting the PY 2016 

ESRD QIP Measures and Calculating the 

PY 2016 ESRD QIP Total Performance 

Score 

Section 1881(h)(3)(A)(iii) of the Act 

provides that the methodology for 

calculating the facility TPS shall 

include a process to weight the 

performance scores with respect to 

individual measures to reflect priorities 

for quality improvement, such as 

weighting scores to ensure that facilities 

have strong incentives to meet or exceed 

anemia management and dialysis 

adequacy performance standards, as 

determined appropriate by the 

Secretary. In determining how to 

appropriately weight the PY 2016 ESRD 

QIP measures for purposes of 

calculating the TPS, we considered two 

criteria: (1) The number of measures we 

are proposing to include in the PY 2016 

ESRD QIP; and (2) the National Quality 

Strategy priorities. 

a. Weighting Individual Measures To 

Compute Measure Topic Scores for the 

Kt/V Dialysis Adequacy Measure Topic, 

the Vascular Access Type Measure 

Topic, and the Anemia Management 

Clinical Measure Topic 

In the CY 2013 ESRD PPS final rule, 

we established a methodology for 

deriving the overall scores for measure 

topics (77 FR 67507). For the reasons 

described in the CY 2013 ESRD PPS 

final rule, we are proposing to use the 

same methodology in PY 2016 and 

future payment years to calculate the 

scores for the three measure topics. 

After calculating the individual measure 

scores within a measure topic, we are 

proposing to calculate a measure topic 

score using the following steps: (i) 

Dividing the number of patients in the 

denominator of each measure by the 

sum of the number of patients in each 

denominator for all of the applicable 

measures in the measure topic; (ii) 

multiplying that figure by the facility’s 

score on the measure; (iii) summing the 

results achieved for each measure; and 

(iv) rounding this sum (with half 

rounded up). We are proposing that if a 

facility does not have enough patients to 

receive a score on one of the measures 

in the measure topic (as discussed 

below), then that measure would not be 

included in the measure topic score for 

that facility. Only one measure within 

the measure topic needs to have enough 

cases to be scored in order for the 

measure topic to be scored and included 

in the calculation of the TPS. We are 

also proposing that the measure topic 

score would be equal to one clinical 

measure in the calculation of the TPS. 

For an additional explanation, see the 

examples provided at 77 FR 67507. 

We request comment on the proposed 

method of weighting individual 

measure scores to derive a measure 

topic score. 

b. Proposal for Weighting the Total 

Performance Score 

We continue to believe that weighting 

the clinical measures/measure topics 

equally will incentivize facilities to 

improve and achieve high levels of 

performance across all of these 

measures, resulting in overall 

improvement in the quality of care 

provided to patients with ESRD. We 

also continue to believe that, while the 

reporting measures are valuable, the 

clinical measures evaluate actual patient 

outcomes and therefore justify a higher 

combined weight (77 FR 67506 through 

67508). For the reasons outlined in the 

CY 2013 ESRD PPS final rule, we are 

proposing to continue weighting clinical 

measures as 75 percent and reporting 

measures as 25 percent of the TPS. We 

request comment on this proposed 

methodology for weighting the clinical 

and reporting measures. 

We have also considered the issue of 

awarding a TPS to facilities that do not 

report data on the proposed minimum 

number of cases with respect to one or 

more of the measures or measure topics. 

For the reasons stated in the CY 2013 

ESRD PPS final rule, for PY 2016 and 

future payment years, we are proposing 

to continue to require a facility to have 

at least one clinical and one reporting 

measure score to receive a TPS (77 FR 

67508). We request comment on our 

proposals to require a facility to be 

eligible for a score on at least one 

reporting and one clinical measure in 

order to receive a TPS. 

Finally, we are proposing that the 

TPSs be rounded to the nearest integer, 

with half of an integer being rounded 

up. We request comment on this 

proposal. For further examples 

regarding measure and TPS 

calculations, we refer readers to the 

figures below. 

c. Examples of the Proposed PY 2016 

ESRD QIP Scoring Methodology 

In this section, we provide examples 

to illustrate the proposed scoring 

methodology for PY 2016. Figures 1–3 

illustrate the scoring for a clinical 

measure. Figure 1 shows Facility A’s 

performance on an example clinical 

measure. Note that for this example 

clinical measure, the facility has 

performed very well. The example 

benchmark (the 90th percentile of 

performance nationally in CY 2012) 

calculated for this clinical measure is 77 

percent, and the example achievement 

threshold (which is the 15th percentile 

of performance nationally in CY 2012) 

is 46 percent. Therefore, facility A’s 

performance of 86 percent on the 

clinical measure during the performance 

period exceeds the benchmark of 77 

percent, so Facility A would earn 10 

points (the maximum) for achievement 

for this measure. (Because, in this 

example, Facility A has earned the 

maximum number of points possible for 

this measure, its improvement score is 

irrelevant.) 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
40868 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

Figure 2 shows an example of scoring 

for another facility, Facility B. As 

illustrated below, the facility’s 

performance on the example clinical 

measure improved from 26 percent in 

CY 2013 to 54 percent during the 

performance period. The achievement 

threshold is 50 percent and the 

achievement benchmark is 77 percent. 

Because the facility’s performance 

during the performance period is within 

the achievement range and the 

improvement range, we must calculate 

the improvement and achievement 

scores to determine the example clinical 

measure score. 

To calculate the achievement score, 

we would apply the formula discussed 

above. The result of this formula for this 

example is [9 * ((54¥50)/(77¥50))] + .5, 

which equals 1.83, and we round to the 

nearest integer, which is 2. 

Likewise, to calculate the 

improvement score, we apply the 

improvement formula discussed above. 

The result of this formula for this is 

example is [10 * ((54¥26)/ 

(77¥26))]¥.5, which equals 4.99 and 

we round to the nearest integer, which 

is 5. 

Therefore, for this example clinical 

measure, Facility B’s achievement score 

is 3, and its improvement score is 5. We 

award Facility B the higher of the two 

scores for this clinical measure. Thus, 

Facility B’s score on this example 

measure is 5. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2EP08JY13.002</GPH>
Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 40869 

BILLING CODE 4120–01–P 

In Figure 3, Facility C’s performance 

on the example clinical measure drops 

from 26 percent in CY 2013 to 23 

percent during the performance period, 

a decline of 3 percent. Because Facility 

C’s performance during the performance 

period falls below the achievement 

threshold of 26 percent, it receives 0 

points for achievement. Facility C also 

receives 0 points for improvement 

because its performance during the 

performance period was lower than its 

performance during CY 2013. Therefore, 

in this example, Facility C would 

receive 0 points for the example clinical 

measure. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2EP08JY13.003</GPH>

Figure 2 

, ¥" 

54- , 9 X 11-50 

= Achievement Threshold 

(15th percentile) 

= Benchmark (10th percentile) 

= Improvement Thl1l8hold 

(2013 performance rate) 

= Benchmark (10th percentile) 

Benchmark 

Ii '1 II II 1 a 

+0.5 = 1.83, rounded to 2 

7 II 

= 4.99, rounded to 

r~--·-·-.. :--"-. ~~-"~""'---~""-''''"~-~'.-'''''''''-""",.,..,..",-,,,"--'.~"'''--

!. 11l1s facIlity will earn a VAT - Fi.stula measure scor~~of1 

I

t based on as the higher score derived 

~m the two scoring methods. 

----_. .~ 
40870 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

The method illustrated above would 

be applied to each clinical measure in 

order to obtain a score for each measure. 

Scores for reporting measures are 

calculated based upon their individual 

criteria, as discussed earlier. 

After calculating the scores for each 

measure, we would calculate the TPS. 

As an example, by applying the 

weighting criteria to a facility that 

receives a score on all finalized 

measures, we would calculate the 

facility’s TPS using the following 

formula: 

Total Performance Score = [(.150 * 

Vascular Access Type Measure 

Topic) + (.150 * Kt/V Dialysis 

Adequacy Measure Topic) + (.150 * 

Anemia Management Clinical 

Measure Topic) + (.150 * 

Hypercalcemia Measure) + (.150 * 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients) + (.05 * 

ICH CAHPS Survey Reporting 

Measure) + (.05 * Mineral 

Metabolism Reporting Measure) + 

(.05 * Anemia Management 

Reporting Measure) + (.05 * 

Pediatric Iron Therapy Reporting 

Measure) + (.05 * Comorbidity 

Reporting Measure) ] * 10. 

The TPS would be rounded to the 

nearest integer (and any individual 

measure values ending in .5 would be 

rounded to the next higher integer). 

However, if, for example, a facility 

did not receive a score (that is, did not 

have enough qualifying cases) on the 

proposed Hypercalcemia measure, then 

the facility’s TPS would be calculated as 

follows: 

Total Performance Score = [(.188 * 

Vascular Access Type Measure 

Topic) + (.188 * Kt/V Dialysis 

Adequacy Measure Topic) + (.188 * 

Anemia Management Clinical 

Measure Topic) + (.188 * NHSN 

Bloodstream Infection in 

Hemodialysis Outpatients) + (.05 * 

ICH CAHPS Survey Reporting 

Measure) + (.05 * Mineral 

Metabolism Reporting Measure) + 

(.05 * Anemia Management 

Reporting Measure) + (.05 * 

Pediatric Iron Therapy Reporting 

Measure) + (.05 * Comorbidity 

Reporting Measure) ] * 10. 

Again, the TPS would be rounded to the 

nearest integer (and any individual 

measure values ending in .5 would be 

rounded to the next higher integer). 

Finally, for example, if a facility is 

eligible for only two of the reporting 

measures, then the facility’s TPS would 

be calculated as follows: 

Total Performance Score = [(.150 * 

Vascular Access Type Measure 

Topic) + (.150 * Kt/V Dialysis 

Adequacy Measure Topic) + (.150 * 

Anemia Management Cinical 

Measure Topic) + (.150 * 

Hypercalcemia Measure) + (.150 * 

NHSN Bloodstream Infection in 

Hemodialysis Outpatients) + (.125 * 

Anemia Management Reporting 

Measure) + (.125 * Comorbidity 

Reporting Measure)] * 10. 

Again, the TPS would be rounded to the 

nearest integer (and any individual 

measure values ending in .5 would be 

rounded to the next higher integer). 

10. Proposed Minimum Data for Scoring 

Measures for the PY 2016 ESRD QIP and 

Future Payment Years 

For the same reasons described in the 

CY 2013 ESRD PPS final rule (77 FR 

67510 through 67512), for PY 2016 and 

future payment years, we are proposing 

to only score facilities on clinical and 

reporting measures for which they have 

a minimum number of qualifying cases 

during the performance period. For PY 

2016 and future payment years, we are 

proposing that a facility must have a 

threshold of at least 11 qualifying cases 

for the entire performance period in 

order to be scored on a clinical measure. 

We are proposing that reporting 

measures other than ICH CAHPS will 

have a threshold of one qualifying case 

during the performance period. The 11- 

qualifying case minimum was intended 

to reduce burden on facilities with 

limited qualifying cases for earlier 


tkelley on DSK3SPTVN1PROD with PROPOSALS2EP08JY13.004</GPH>
Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 40871 

reporting measures (77 FR 67480, 

67483, 67486 and 67493). We are 

proposing to set the reporting measure 

case minimums at one because we plan 

to use data to permit future 

implementation of clinical measures. If 

patients in small facilities are 

systematically excluded, then we will 

not be able to gather the robust data we 

need to support the performance 

standard, benchmark, and achievement 

threshold calculations in future 

payment years. For example, if we 

excluded facilities with 10 or fewer 

patients from the Pediatric Iron Therapy 

reporting measure, then very few, if any, 

facilities would be able to report the 

measure, and we would be unable to 

collect meaningful data for future 

measure development. Similarly, if we 

excluded facilities with 10 or fewer 

patients from the comorbidity reporting 

measure, then we would be unable to 

use updated comorbidities for patients 

in these facilities in a risk-adjusment 

calculation should we propose to adopt 

an SHR and/or SMR clinical measure in 

the future. For those reasons, we are 

proposing that the case minimum for all 

reporting measures except for ICH 

CAHPS be one. 

For the proposed expanded ICH 

CAHPS reporting measure, we are 

proposing that facilities with fewer than 

30 qualifying cases during the 

performance period not be scored on the 

measure. In the CY 2013 ESRD PPS final 

rule, we excluded facilities with 10 or 

fewer adult in-center hemodialysis 

patients from the ICH CAHPS measure 

because we recognized that, for many 

small dialysis facilities, hiring a thirdparty administrator to fulfill the ICH 

CAHPS survey requirements would 

have been impractical or prohibitively 

costly (77 FR 67480). As we move 

toward developing a clinical measure, 

we have determined that the survey 

results are more reliable if there are at 

least 30 surveys submitted per facility. 

Therefore, we are proposing that for PY 

2016 and future payment years, 

facilities that treat fewer than 30 

qualifying cases (defined as adult incenter hemodialysis patients) during the 

performance period will be excluded 

from this measure. We further are 

proposing that we will consider a 

facility to have met the 30-patient 

threshold unless it affirmatively attests 

in CROWNWeb by January 31 of the 

year prior to the year in which payment 

reductions will be made (for example, 

January 31, 2015, for the PY 2016 ESRD 

QIP) that it treated 29 or fewer adult incenter hemodialysis patients during the 

performance period. 

For the same reasons described in the 

CY 2013 ESRD PPS final rule (77 FR 

67510 through 67512), for PY 2016 and 

future payment years, we are proposing 

to apply to each clinical measure score 

for which a facility has between 11 and 

25 qualifying cases the same adjustment 

factor we finalized in the CY 2013 ESRD 

PPS final rule (77 FR 67511). We seek 

public comment on these proposals. 

For the PY 2016 ESRD QIP and future 

payment years, we are also proposing to 

continue to begin counting the number 

of months or quarters, as applicable, for 

which a facility is open on the first day 

of the month after the facility’s CCN 

open date. With the exception of the 

ICH CAHPS expanded reporting 

measure, we are proposing that only 

facilities with a CCN open date before 

July 1, 2014, be scored on the proposed 

reporting measures. Under the 

specifications for the proposed ICH 

CAHPS reporting measure, facilities 

would need to administer the survey 

(via a CMS-approved, third-party 

vendor) during the performance period. 

Because arranging such an agreement 

takes time, we are proposing that only 

facilities with a CCN open date before 

January 1 of the performance period to 

be scored on this measure. Additionally, 

we are proposing that facilities with 

CCN open dates after January 1, 2014 

will not be scored on the NHSN. We 

note that in previous payment years we 

have awarded partial credit to facilities 

that submitted less than 12 months of 

data to encourage them to enroll in and 

report data in the NHSN system. 

However, we are proposing to collect 12 

months of data on this clinical measure 

because infection rates vary through 

different seasons of the year. 

As discussed above, we are proposing 

that a facility will not receive a TPS 

unless it receives a score on at least one 

clinical and one reporting measure. We 

note that finalizing this proposal would 

result in facilities not being eligible for 

a payment reduction for the PY 2016 

ESRD QIP and future payment years if 

they have a CCN open date on or after 

July 1 of the performance period (CY 

2014 for the PY 2016 ESRD QIP). We 

request comment regarding these 

proposals. 

11. Proposed Payment Reductions for 

the PY 2016 ESRD QIP and Future 

Payment Years 

Section 1881(h)(3)(A)(ii) of the Act 

requires the Secretary to ensure that the 

application of the scoring methodology 

results in an appropriate distribution of 

payment reductions across facilities, 

such that facilities achieving the lowest 

TPSs receive the largest payment 

reductions. For PY 2016, we are 

proposing that a facility would not 

receive a payment reduction if it 

achieves a minimum TPS that is equal 

to or greater than the total of the points 

it would have received if: (i) It 

performed at the performance standard 

for each clinical measure; (ii) it received 

zero points for each clinical measure 

that did not have a numerical value for 

the performance standard published 

with the PY 2016 final rule; and (iii) it 

received five points for each reporting 

measure. We request comments on these 

proposals. 

Section 1881(h)(3)(A)(ii) of the Act 

requires that facilities achieving the 

lowest TPSs receive the largest payment 

reductions. For PY 2016 and future 

payment years, we are proposing that 

the payment reduction scale be the same 

as the PY 2015 ESRD QIP (77 FR 67514 

through 67516). We are proposing that, 

for each 10 points a facility falls below 

the minimum TPS, the facility would 

receive an additional 0.5 percent 

reduction on its ESRD PPS payments for 

PY 2016 and future payment years, with 

a maximum reduction of 2.0 percent. As 

we stated in the CY 2012 ESRD PPS 

final rule, we believe that such a sliding 

scale will incentivize facilities to meet 

the performance standards established 

and continue to improve their 

performance; even if a facility fails to 

achieve the minimum TPS, such a 

facility will still be incentivized to 

strive for and attain better performance 

rates in order to reduce the percentage 

of its payment reduction (76 FR 70281). 

We request comments on the proposed 

payment reduction scale. 

Because we are not yet able to 

calculate the performance standards for 

each of the clinical measures, we are 

also not able to calculate the minimum 

TPS at this time. Based on the estimated 

performance standards listed above 

using the most recent data available, we 

estimate for PY 2016 that a facility must 

meet or exceed a minimum TPS of 46. 

For all of the clinical measures except 

Hypercalcemia, this data comes from 

the period between January 2012 and 

November 2012. For the Hypercalcemia 

clinical measure, the data comes from 

the period between May 2012 and 

November 2012. We are proposing that 

facilities failing to meet the minimum 

TPS (as will be published in the 

Medicare Program; End-Stage Renal 

Disease Prospective Payment System, 

Quality Incentive Program, and Durable 

Medical Equipment, Prosthetics, 

Orthotics, and Supplies final rule in 

November) will receive payment 

reductions based on the estimated total 

performance score ranges indicated in 

Table 10 below. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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TABLE 10—ESTIMATED PAYMENT REDUCTION SCALE FOR PY 2016 

BASED ON THE MOST RECENTLY

AVAILABLE DATA

Total performance score Reduction 

(Percent) 

100–46 * ................................ 0 

45–36 .................................... 0.5 

35–26 .................................... 1.0 

25–16 .................................... 1.5 

15–0 ...................................... 2.0 

12. Data Validation 

One of the critical elements of the 

ESRD QIP’s success is ensuring that the 

data submitted to calculate measure 

scores and TPSs are accurate. We began 

a pilot data-validation program in CY 

2013 for the ESRD QIP, and we are now 

in the process of procuring the services 

of a data-validation contractor, who will 

be tasked with validating a national 

sample of facilities’ records as they 

report CY 2013 data to CROWNWeb. 

The first priority will be to develop a 

methodology for validating data 

submitted to CROWNWeb under the 

pilot data-validation program; once this 

methodology has been developed, CMS 

will publicize it through a CROWN 

Memo and solicit public comment. As 

part of the CY 2013 ESRD QIP PPS final 

rule (77 FR 67522 through 67523), we 

finalized a requirement to sample 

approximately 10 records from 750 

randomly selected facilities; these 

facilities will have 60 days to comply 

once they receive requests for records. 

We are proposing to extend this pilot 

data-validation program to include 

analysis of data submitted to 

CROWNWeb during CY 2014. For the 

PY 2016 ESRD QIP, sampled facilities 

will be reimbursed by our validation 

contractor for the costs associated with 

copying and mailing the requested 

records. Additionally, we are proposing 

to reduce the annual random sample 

size from 750 to 300. We believe that 

this smaller sample size will still yield 

a sufficiently precise estimate of QIP 

reliability while imposing a smaller 

burden on ESRD QIP-eligible facilities 

and CMS alike. We are also proposing 

to extend our policy that no facility will 

receive a payment reduction resulting 

from the validation process for CY 2014 

during PY 2016. Once we have gathered 

additional information based on these 

initial validation efforts, we will 

propose further procedures for 

validating data submitted in future years 

of the ESRD QIP. These procedures may 

include a method for scoring facilities 

based on the accuracy of the data they 

submit to CROWNWeb, and a method to 

assign penalties for submitting 

inaccurate data. We solicit comments on 

these proposals. 

We are also considering a feasibility 

study for validating data reported to 

CDC’s NHSN Dialysis Event Module, 

which may mirror the process used by 

the Hospital Inpatient Quality Reporting 

Program (77 FR 53539 through 53553). 

Although this is still in the early stages 

of development, we anticipate that this 

study may mirror the validation sample 

by targeting ‘‘candidate HAI events,’’ 

much like the methodology used by 

CMS’s Hospital Inpatient Quality 

Reporting Program. The feasibility study 

will likely: (i) Estimate the burden and 

associated costs to ESRD QIP-eligible 

facilities for participating in an NHSN 

validation program; (ii) assess the costs 

to CMS to implement an NHSN 

validation program on a statistically 

relevant scale; and (iii) develop and test 

a protocol to validate NHSN data in 

nine ESRD QIP-eligible facilities. 

Facilities would be selected on a 

voluntary basis. Based on the results of 

this study, we intend to propose more 

detailed requirements for validating 

NHSN data used in the ESRD QIP in the 

future. 

13. Proposals for Scoring Facilities 

Whose Ownership Has Changed 

During PY 2012 (our first 

implementation year for the ESRD QIP), 

facilities requested guidance regarding 

how a change in ownership affects any 

applicable ESRD QIP payment 

reductions. Starting with the 

implementation of the PY 2015 ESRD 

QIP (which is CY 2013), the application 

of an ESRD QIP payment reduction 

depended on whether the facility 

retained its CCN after the ownership 

transfer. If the facility’s CCN remained 

the same after the facility was 

transferred, then we considered the 

facility to be the same facility (despite 

the change in ownership) for the 

purposes of the ESRD QIP, and we 

applied any ESRD QIP payment 

reductions that would have applied to 

the transferor to the transferee. 

Likewise, as long as the facility retained 

the same CCN, we calculated the 

measure scores using the data submitted 

during the applicable period, regardless 

of whether the ownership changed 

during one of these periods. If, however, 

a facility received a new CCN as a result 

of a change in ownership, then we 

treated the facility as a new facility for 

purposes of the ESRD QIP based on the 

new facility’s CCN open date. We 

believe that these proposals are the most 

operationally efficient and will allow 

facilities the greatest amount of 

certainty when they change ownership. 

We are proposing to continue applying 

these rules during the PY 2016 ESRD 

QIP and future years of the program, 

and we request public comment on this 

proposal. 

14. Proposals for Public Reporting 

Requirements 

Section 1881(h)(6)(A) of the Act 

requires the Secretary to establish 

procedures for making information 

available to the public about facility 

performance under the ESRD QIP, 

including information on the TPS (as 

along with appropriate comparisons of 

facilities to the national average with 

respect to such scores) and scores for 

individual measures achieved by each 

facility. Section 1881(h)(6)(B) of the Act 

further requires that a facility have an 

opportunity to review the information to 

be made public with respect to that 

facility prior to publication. In addition, 

section 1881(h)(6)(C) of the Act requires 

the Secretary to provide each facility 

with a certificate containing its TPS to 

post in patient areas within the facility. 

Finally, section 1881(h)(6)(D) of the Act 

requires the Secretary to post a list of 

facilities and performance-score data on 

a CMS Web site. 

In the PY 2012 ESRD QIP final rule, 

we adopted uniform requirements based 

on sections 1881(h)(6)(A) through 

1881(h)(6)(D) of the Act, thereby 

establishing procedures for facilities to 

review the information to be made 

public and for informing the public 

through facility-posted certificates. We 

are proposing to maintain the public 

reporting requirements as finalized in 

the CY 2013 ESRD PPS final rule, except 

regarding the timing of when facilities 

must post their certificates. 

For PYs prior to PY 2014, we required 

facilities to post certificates within 5 

business days of us making these 

certificates available for download from 

dialysisreports.org in accordance with 

section 1881(h)(6)(C) of the Act. (77 FR 

67516 and 76 FR 637) In the CY 2013 

ESRD PPS final rule, we noted that 

many individuals responsible for 

posting the certificates were away on 

holiday during the December time 

period when certificates typically 

become available, and finalized that, 

beginning in PY 2014, a facility must 

post copies of its certificates by the first 

business day after January 1 of the 

payment year. (77 FR 67517) We also 

noted that certificates are typically 

available for download on or around 

December 15 of each year, and stated 

that we believe that this two week time 

is enough to allow facilites to post them. 

Since the CY 2013 ESRD PPS final 

rule was finalized, we have noted that 

a posting deadline of the first business 

day after January 1 could create 


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difficulties for facilities if it were ever 

the case that certificates were not 

available for download in the typical 

timeframe. We want to ensure that 

facilities have adequate time to post 

certificates as required in this 

circumstance, and that the required 

timing accommodates the December 

holidays. Therefore, we propose that, 

beginning in PY 2014, facilities must 

post certificates within fifteen business 

days of us making these certificates 

available for download from 

dialysisreports.org in accordance with 

section 1881(h)(6)(C) of the Act. We 

request comments on this proposal. 

IV. Clarification of the Definition of 

Routinely Purchased Durable Medical 

Equipment (DME) 

A. Background 

1. Background for DME 

Title XVIII of the Social Security Act 

(the Act) governs the administration of 

the Medicare program. The statute 

provides coverage for broad categories 

of benefits, including, but not limited to, 

inpatient and outpatient hospital care, 

skilled nursing facility care, home 

health care, physician services, and 

DME. ‘‘Medical and other health 

services,’’ which is defined under 

section 1861(s)(6) of the Act to include 

DME, is a separate Medicare Part B 

benefit for which payment is authorized 

by section 1832 of the Act. In 

accordance with section 1861(n) of the 

Act, the term ‘‘durable medical 

equipment’’ includes iron lungs, oxygen 

tents, hospital beds, and wheelchairs 

used in the beneficiary’s home, 

including an institution used as his or 

her home other than an institution that 

meets the requirements of section 

1861(e)(1) or section 1819(a)(1) of the 

Act. 

Section 1834(a) of the Act, as added 

by section 4062 of the Omnibus Budget 

Reconciliation Act of 1987 (OBRA 87), 

Public Law 100–203, sets forth the 

payment rules for DME furnished on or 

after January 1, 1989. The Medicare 

payment amount for a DME item is 

generally equal to 80 percent of the 

lesser of the actual charge or the fee 

schedule amount for the item, less any 

unmet Part B deductible. The 

beneficiary’s coinsurance for such items 

is generally equal to 20 percent of the 

lesser of the actual charge or the fee 

schedule amount for the item once the 

deductible is met. The fee schedule 

amounts are generally calculated using 

average allowed charges from a base 

period and then increased by annual 

update factors. Sections 1834(a)(2) 

through (a)(7) of the Act set forth 

separate classes of DME and separate 

payment rules for each class. The six 

classes of items are: inexpensive and 

other routinely purchased DME; items 

requiring frequent and substantial 

servicing; customized items; oxygen and 

oxygen equipment; other covered items 

(other than DME); and other items of 

DME, also referred to as capped rental 

items. The class for inexpensive and 

other routinely purchased DME also 

includes accessories used in 

conjunction with nebulizers, aspirators, 

continuous positive airway pressure 

devices and respiratory assist devices. 

Items of DME fall under the class for 

other items of DME (capped rental 

items) if they do not meet the 

definitions established in the statute 

and regulations for the other classes of 

DME. 

2. Medicare Guidance and Rulemaking 

Regarding Definition of Routinely 

Purchased DME 

On July 14, 1988, CMS central office 

issued a program memorandum to the 

CMS regional offices containing 

guidance for carriers to follow in 

developing a data base that would be 

used in identifying other routinely 

purchased DME for the purpose of 

implementing section 1834(a)(2)(a)(ii) of 

the Act. For the purpose of identifying 

routinely purchased items, the carriers 

were instructed via the program 

memorandum to ‘‘compute the 

unduplicated count of beneficiaries who 

purchased the item, by HCPCS code, 

and a count of those who only rented 

the item during the 7/1/86–6/30/87 

period.’’ The carriers were instructed to 

include purchase of new and used items 

and beneficiaries who purchased an 

item that was initially rented in the 

count of beneficiaries who purchased 

the item. The carriers made 

determinations regarding whether DME 

furnished during this period would be 

rented (non-capped) or purchased based 

on which payment method was more 

economical. 

In November 1988, CMS revised Part 

3 (Claims Process) of the Medicare 

Carriers Manual (HCFA Pub. 14–3) via 

transmittal number 1279, by adding 

section 5102 and detailed instructions 

for implementation of the fee schedules 

and payment classes for DME mandated 

by section 4062 of OBRA 87. The new 

implementing instructions were 

effective for services furnished on or 

after January 1, 1989. Section 5102.1 

indicated that carriers would be 

provided with a listing of the HCPCS 

(Health Care Financing Administration 

Common Procedure Coding System 

prior to 2003 and Healthcare Common 

Procedure Coding System beginning in 

2003) codes for the equipment in the 

routinely purchased DME category. The 

initial classifications were implemented 

on January 1, 1989, in accordance with 

the program instructions, and included 

a listing of HCPCS codes for base 

equipment such as canes and walkers, 

as well as HCPCS codes for replacement 

accessories such as cane tips, walker leg 

extensions, and power wheelchair 

batteries for use with medically 

necessary, patient-owned base 

equipment (canes, walkers, and power 

wheelchairs). In the case of expensive 

accessories that were not routinely 

purchased during July 1986 through 

June 1987, such as a wheelchair 

attachment to convert any wheelchair to 

one arm drive, these items fell under the 

listing of HCPCS codes for capped rental 

items. Medicare payment for DME 

extends to payment for replacement of 

essential accessories used with patientowned equipment or accessories, 

attachments, or options that modify base 

equipment, such as the addition of 

elevating leg rests to a manual 

wheelchair. 

The Medicare definition of routinely 

purchased equipment is under 42 CFR 

§ 414.220(a)(2) and specifies that 

routinely purchased equipment means 

equipment that was acquired by 

purchase on a national basis at least 75 

percent of the time during the period 

July 1986 through June 1987.’’ This 

definition was promulgated via an 

interim final rule (IFC) on December 7, 

1992 (57 FR 57698), remaining 

consistent with Medicare program 

guidance in effect beginning in 1988 

and discussed above, and finalized on 

July 10, 1995 (60 FR 35492). In the 

preamble of the 1992 IFC (57 FR 57679), 

we discussed how items were classified 

as routinely purchased DME based on 

data from July 1986 through June 1987, 

‘‘in the absence of a statutory directive 

that defines the period for determining 

which items are routinely purchased.’’ 

CMS indicated that it ‘‘selected the 

period July 1, 1986 through June 30, 

1987, because it is the same 12-month 

period required by section 

1834(a)(2)(B)(i) of the Act for calculating 

the base fee schedule amount for 

routinely purchased equipment.’’ This 

period was therefore established as the 

period from which data was used for 

identifying the items that had been 

acquired on a purchase basis 75 percent 

of the time or more under the Medicare 

rent/purchase program. 

3. Payment for Inexpensive or Routinely 

Purchased Items and Capped Rental 

Items 

Pursuant to 42 CFR § 414.220(b) 

payment for inexpensive or routinely 

purchased DME is made on a purchase 


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or rental basis, with total payments 

being limited to the purchase fee 

schedule amount for the item. If an item 

is initially rented and then purchased, 

the allowed purchase charge is based on 

the lower of the actual charge or fee 

schedule amount for purchase of the 

item minus the cumulative allowed 

charge for previously paid rental claims. 

Pursuant to 42 CFR § 414.229(f), 

payment for capped rental items is 

made on a monthly rental basis for up 

to 13 months of continuous use. The 

supplier must transfer title to the 

equipment to the beneficiary on the first 

day following the 13th month of 

continuous use. 

B. Current Issues 

Concerns have been raised about the 

application of the definition of and 

payment for routinely purchased DME, 

as it applies to expensive DME 

accessories. For example, recently one 

manufacturer of a new, expensive 

wheelchair accessory, included under a 

HCPCS code that would result in a 

corresponding Medicare fee schedule 

amount of approximately $3,000, if 

purchased, questioned why the HCPCS 

code describing their product was 

classified as capped rental DME. They 

pointed out that codes added to the 

HCPCS in recent years for other similar 

and more expensive wheelchair 

accessories costing $4,000 to $10,000 

were classified as routinely purchased 

DME even though the items were not 

purchased under Medicare during the 

period specified in § 414.220(b). As a 

result, we began a review of expensive 

items that have been classified as 

routinely purchased equipment since 

1989, that is, new codes added to the 

HCPCS after 1989 for items costing more 

than $150, to address this apparent 

inconsistency. 

As a result of this review, we found 

some codes that are not classified 

consistent with the regulatory definition 

of routinely purchased equipment at 

section § 414.220(a)(2). We found that 

HCPCS codes added after 1989 for 

expensive, durable accessories used 

with base equipment, such as 

wheelchairs, have been classified as 

routinely purchased equipment. While 

section 1834(a)(2)(A)(iii) of the Act and 

42 CFR § 414.220(a)(3) of the regulations 

allow payment for the purchase of 

accessories used in conjunction with 

nebulizers, aspirators, continuous 

positive airway pressure devices 

(CPAP), other items covered under the 

DME benefit including DME other than 

nebulizers, aspirators, CPAP devices, 

respiratory assist devices and 

accessories used in conjunction with 

those items, are paid for in accordance 

with the rules at section 1834(a) of the 

Act and are classified under sections 

1834(a)(3) thru (7) of the Act as 

inexpensive and other routinely 

purchased DME, items requiring 

frequent and substantial servicing, 

certain customized items, oxygen and 

oxygen equipment, other covered items 

other than DME, or other covered items 

of DME. 

Additionally, we found that in some 

cases, expensive items of DME were 

classified as routinely purchased based 

on information suggesting that payers 

other than Medicare were routinely 

making payment for the items on a 

purchase basis. We believe that 

classifying an item as routinely 

purchased equipment based on data and 

information from other payers for the 

purposes of implementing § 414.220(b) 

is inappropriate because other payers do 

not operate under the same payment 

rules as Medicare. Other payers may 

decide to purchase expensive items for 

reasons other than a achieving a more 

economical alternative to rental, the 

basis Medicare contractors used in 

deciding whether to purchase items 

during July 1986 through June 1987. In 

other cases, expensive items of DME 

were classified as routinely purchased 

equipment based on requests from 

manufacturers of equipment primarily 

used by Medicaid beneficiaries. We do 

not believe we should classify an item 

as routinely purchased equipment for 

the purposes of implementing 

§ 414.220(b) of the Medicare regulations 

based on how this might affect other 

payers such as Medicaid state agencies 

because such classifications are not 

consistent with the regulations, which 

for Medicare purposes generally require 

payment on a capped rental basis for 

any item with a purchase cost of greater 

than 150 dollars. After reviewing this 

issue, we do not think the regulation 

supports the classification of expensive 

DME as routinely purchased equipment 

based solely on whether other payers 

routinely pay for the item on a purchase 

basis or how manufacturers would 

prefer that other payers pay for the item. 

The classification of HCPCS codes for 

expensive equipment added after 1989 

as routinely purchased equipment based 

on this kind of information does not 

comply with the Medicare definition of 

routinely purchased equipment and 

defeats a fundamental purpose of the 

capped rental payment methodology to 

avoid paying the full purchase price of 

costly equipment used only a short 

time. 

DME and accessories used in 

conjunction with DME are paid for 

under the DME benefit and in 

accordance with the rules at section 

1834(a) of the Act. We are clarifying the 

existing definition of routinely 

purchased equipment at § 414.220(a)(2) 

and providing notice that certain 

HCPCS codes for DME and DME 

accessories added to the HCPCS after 

1989 that are currently classified as 

routinely purchased equipment should 

be reclassified as capped rental items 

(see Table 11 below). This applies to all 

expensive items for which Medicare 

claims data July 1986 through June 1987 

does not exist or does not indicate that 

the item was acquired by purchase on 

a national basis at least 75 percent of the 

time. In the case of expensive 

accessories that are furnished for use 

with complex rehabilitative power 

wheelchairs, the purchase option for 

complex rehabilitative power 

wheelchairs at section 1834(a)(7)(A)(iii) 

of the Act would also apply to these 

accessories. For any wheelchair 

accessory classified as a capped rental 

item and furnished for use with a 

complex rehabilitiave power wheelchair 

(that is, furnished to be used as part of 

the complex rehabilitative power 

wheelchair), the supplier must give the 

beneficiary the option of purchasing 

these accessories at the time they are 

furnished. These items would be 

considered as part of the complex 

rehabilitative power wheelchair and 

associated purchase option set forth at 

§ 414.229(a)(5). 

We are soliciting comments on the 

effective date(s) for reclassifying items 

previously classified as routinely 

purchased equipment to the capped 

rental payment class in order to be in 

compliance with current regulations. 

Given that some items (HCPCS codes) 

may be included in the Round 2 and/ 

or Round 1 Recompete phases of the 

competitive bidding program, we do not 

believe we can change the classification 

for items furnished under these 

programs until the contracts awarded 

based on these competitions expire on 

July 1, 2016, and January 1, 2017, 

respectively, regardless of whether the 

item is provided in an area subject to 

competitive bidding or not. We propose 

that the reclassification of items 

previously classified as routinely 

purchased equipment to the capped 

rental payment class be effective 

January 1, 2014, for all items that are not 

included in either a Round 2 or Round 

1 Recompete competitive bidding 

program (CBP) established in 

accordance with § 414.400. For any item 

currently under a Round 2 CBP, instead 

of a January 1, 2014, effective date we 

propose July 1, 2016, for these 

reclassifications, which would apply to 

all items furnished in all areas of the 


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country, with the exception of items 

furnished in a Round 1 Recompete CBP. 

For items furnished in a Round 1 

Recompete CBP, we propose an effective 

date of January 1, 2017, which would 

only apply to items furnished in the 

nine Round 1 Recompete areas. 

Therefore, we propose to generally base 

the effect dates on when the competitive 

bidding programs end. To summarize, 

the proposed effective dates for the 

reclassifications of these items from the 

routinely purchased DME class to the 

capped rental DME class would be: 

• January 1, 2014, for items furnished 

in all areas of the country if the item is 

not included in Round 2 or Round 1 

Recompete CBP; 

• July 1, 2016, for items furnished in 

all areas of the country if the item is 

included in a Round 2 CBP and not a 

Round 1 Recompete CBP and for items 

included in a Round 1 Recompete CBP 

but furnished in an area other than one 

of the 9 Round 1 Recompete areas; and 

• January 1, 2017, for items included 

in a Round 1 Recompete CBP and 

furnished in one of the nine Round 1 

Recompete areas. 

With the exception of the items 

described in the fourth bullet, this 

implementation strategy would allow 

the item to be moved to the payment 

class for capped rental items at the same 

time in all areas of the country without 

disrupting CBPs currently underway. 

For Round 1 Recompete items furnished 

in nine areas of the country for the sixmonth period from July 1, 2016, thru 

December 31, 2016, Medicare payment 

would be on a capped rental basis in all 

parts of the country other than these 

nine areas. 

Alternatively, the effective date for 

the reclassifications could be January 1, 

2014, for all items paid under the fee 

schedule. In other words, the 

reclassification would not affect 

payments for items furnished under the 

Round 2 or Round 1 Recompete CBPs in 

the respective CBAs until the contract 

entered into under these programs 

expire on July 1, 2016, and January 1, 

2017, respectively. However, this 

alternative would result in an extensive 

two and a half year period from Janary 

2014 through June 2016, where 

Medicare payment would be on a 

capped rental basis for the items in half 

of the country (non-competitive bidding 

areas) and on a purchase basis in the 

other half of the country (109 Round 2 

and/or Round 1 Recompete competitive 

bidding areas). We believe that this 

bifurcation in payment classifications 

would create confusion and would be 

difficult to implement, and we are 

soliciting comments on this alternative 

implementation strategy. 

We have identified approximately 80 

HCPCS codes requiring reclassification 

from the inexpensive or routinely 

purchased DME payment class to the 

capped rental DME payment class. The 

codes are shown in Table 11 below. The 

impacts of our changes are included in 

the discussion of impacts in section X 

of this rule. 

As shown in Table 11, Column A of 

the table shows the type of DME. 

Columns B and C indicate the HCPCS 

level II codes and the short descriptor. 

The long descriptor for each code is 

available at http://www.cms.gov/ 

Medicare/Coding/ 

HCPCSReleaseCodeSets/AlphaNumeric-HCPCS.html. 

As shown in Column A, the majority 

of codes relate to manual wheelchairs 

and wheelchair accessories. In the case 

of accessories that are only used with 

complex rehabilitative power 

wheelchairs classified as capped rental 

items, the purchase option for complex 

rehabilitative power wheelchairs 

applies to these accessories because 

they are part of the capped rental 

wheelchair that the supplier is required 

to offer to the beneficiary on a lump 

sum purchase basis. We have displayed 

in Column B the items that would be 

associated with the purchase option set 

forth at section § 414.229(a)(5). 

Wheelchair accessories that are also 

used with manual wheelchairs or 

standard power wheelchairs would also 

be subject to the purchase option if they 

are furnished for use with a complex 

rehabilitative power wheelchair. 

TABLE 11—ROUTINELY PURCHASED ITEMS RECLASSIFIED TO CAPPED RENTAL

Group category HCPCS Descriptor 

Automatic External Defibrillator ................................................. K0607 ............... Repl battery for AED. 

Canes/Crutches ......................................................................... E0117 ............... Underarm spring assist crutch. 

Glucose Monitor ........................................................................ E0620 ............... Capillary blood skin piercing device laser. 

High Frequency Chest Wall Oscillation Device (HFCWO) ....... A7025 ............... Replace chest compress vest. 

Hospital Beds/Accessories ........................................................ E0300 ............... Enclosed ped crib hosp grade. 

Misc. DMEPOS .......................................................................... A4639 ............... Infrared ht sys replacement pad. 

E0762 ............... Trans elec jt stim dev sys. 

E1700 ............... Jaw motion rehab system. 

Nebulizers & Related Drugs ...................................................... K0730 ............... Ctrl dose inh drug deliv system. 

Osteogenesis Stimulator ........................................................... E0760 ............... Osteogenesis ultrasound stimulator. 

Other Neuromuscular Stimulators ............................................. E0740 ............... Incontinence treatment system. 

E0764 ............... Functional neuromuscular stimulation. 

Pneumatic Compression Device ............................................... E0656 ............... Segmental pneumatic trunk. 

E0657 ............... Segmental pneumatic chest. 

Power Operated Vehicles (POV) .............................................. E0984 ............... Add pwr tiller. 

Respiratory Equipment .............................................................. E0457 ............... Chest shell. 

Speech Generating Devices ...................................................... E2500 ............... SGD digitized pre-rec <=8min. 

E2502 ............... SGD prerec msg >8min <=20min. 

E2504 ............... SGD prerec msg >20min <=40min. 

E2506 ............... SGD prerec msg > 40 min. 

E2508 ............... SGD spelling phys contact. 

E2510 ............... SGD w multi methods messg/access. 

Support Surfaces ....................................................................... E0197 * ............. Air pressure pad for mattress. 

E0198 ............... Water pressure pad for mattress. 

Traction Equipment ................................................................... E0849 ............... Cervical pneum traction equip. 

E0855 ............... Cervical traction equipment. 

E0856 ............... Cervical collar w air bladder. 

Walkers ...................................................................................... E0140 * ............. Walker w trunk support. 

E0144 ............... Enclosed walker w rear seat. 

E0149 * ............. Heavy duty wheeled walker. 

Wheelchairs Manual .................................................................. E1161 ............... Manual adult wc w tiltinspac. 


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TABLE 11—ROUTINELY PURCHASED ITEMS RECLASSIFIED TO CAPPED RENTAL—Continued 

Group category HCPCS Descriptor 

E1232 ............... Folding ped wc tilt-in-space. 

E1233 ............... Rig ped wc tltnspc w/o seat. 

E1234 ............... Fld ped wc tltnspc w/o seat. 

E1235 ............... Rigid ped wc adjustable. 

E1236 ............... Folding ped wc adjustable. 

E1237 ............... Rgd ped wc adjstabl w/o seat. 

E1238 ............... Fld ped wc adjstabl w/o seat. 

Wheelchairs Options/Accessories ............................................. E0985 * ............. W/c seat lift mechanism. 

E0986 ............... Man w/c push-rim pow assist. 

E1002 ∧ ............. Pwr seat tilt. 

E1003 ∧ ............. Pwr seat recline. 

E1004 ∧ ............. Pwr seat recline mech. 

E1005 ∧ ............. Pwr seat recline pwr. 

E1006 ∧ ............. Pwr seat combo w/o shear. 

E1007 ∧ ............. Pwr seat combo w/shear. 

E1008 ∧ ............. Pwr seat combo pwr shear. 

E1010 ∧ ............. Add pwr leg elevation. 

E1014 ............... Reclining back add ped w/c. 

E1020 * ............. Residual limb support system. 

E1028 * ............. W/c manual swingaway. 

E1029 ............... W/c vent tray fixed. 

E1030 ∧ ............. W/c vent tray gimbaled. 

E2227 ............... Gear reduction drive wheel. 

E2228 * ............. Mwc acc, wheelchair brake. 

E2310 ∧ ............. Electro connect btw control. 

E2311 ∧ ............. Electro connect btw 2 sys. 

E2312 ∧ ............. Mini-prop remote joystick. 

E2313 ∧ ............. PWC harness, expand control. 

E2321 ∧ ............. Hand interface joystick. 

E2322 ∧ ............. Mult mech switches. 

E2325 ∧ ............. Sip and puff interface. 

E2326 ∧ ............. Breath tube kit. 

E2327 ∧ ............. Head control interface mech. 

E2328 ∧ ............. Head/extremity control interface. 

E2329 ∧ ............. Head control interface nonproportional. 

E2330 ∧ ............. Head control proximity switch. 

E2351 ∧ ............. Electronic SGD interface. 

E2368 * ............. Pwr wc drivewheel motor replace. 

E2369 * ............. Pwr wc drivewheel gear box replace. 

E2370 * ............. Pwr wc dr wh motor/gear comb. 

E2373 ............... Hand/chin ctrl spec joystick. 

E2374 ∧ ............. Hand/chin ctrl std joystick. 

E2375 * ............. Non-expandable controller. 

E2376 ∧ ............. Expandable controller, replace. 

E2377 ∧ ............. Expandable controller, initial. 

E2378 ............... Pw actuator replacement. 

K0015 * ............. Detach non-adjus hght armrst. 

K0070 * ............. Rear whl complete pneum tire. 

Wheelchairs Seating .................................................................. E0955 * ............. Cushioned headrest. 

* Effective July 1, 2016. If the item is furnished in CBAs in accordance with contracts entered into as part of the Round 1 Recompete of 

DMEPOS CBP, then effective January 1, 2017. ∧ Item billable with Complex Rehabilitative Power Wheelchair codes K0835–K0864. 

In summary, we are providing notice 

of certain HCPCS codes that would be 

reclassified as capped rental items (see 

Table 11 of codes). We invite comments 

on this section. 

V. Clarification of the 3-Year Minimum 

Lifetime Requirement (MLR) for DME 

DME is covered by Medicare based, in 

part, upon section 1832(a) of the Act, 

which describes the scope of benefits 

under the supplementary medical 

insurance program (Medicare Part B), to 

include ‘‘medical and other health 

services,’’ which is further defined 

undersection 1861(s)(6) of the Act to 

include DME. In addition, section 

1861(m)(5) of the Act specifically 

includes DME in the definition of the 

term ‘‘home health services.’’ In 

accordance with section 1861(n) of the 

Act, the term ‘‘durable medical 

equipment’’ includes iron lungs, oxygen 

tents, hospital beds, and wheelchairs 

used in the patient’s home whether 

furnished on a rental basis or 

purchased. The patient’s home includes 

an institution used as his or her home 

other than an institution that meets the 

requirements of section 1861(e)(1) or 

section 1819(a)(1) of the Act. Besides 

being subject to this provision, the 

coverage of DME must meet the 

requirements of section 1862(a)(1)(A) of 

the Act, which in general excludes from 

payment any items or services that are 

not reasonable and necessary for the 

diagnosis or treatment of illness or 

injury or to improve the functioning of 

a malformed body member, and section 

1862(a)(6) of the Act, which (except for 

certain specified exceptions) precludes 

payment for personal comfort items. 

Section 414.202 defines DME as 

equipment furnished by a supplier or a 


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home health agency that meets the 

following conditions: (1) Can withstand 

repeated use; (2) effective with respect 

to items classified as DME after January 

1, 2012, has an expected life of at least 

3 years; (3) is primarily and customarily 

used to serve a medical purpose; (4) 

generally is not useful to an individual 

in the absence of an illness or injury; 

and is appropriate for use in the home. 

Prior to 2012, the definition for DME 

did not contain a 3-year minimum 

lifetime requirement (MLR) although 

Section 110.1 of chapter 15 of the 

Medicare Benefit Policy Manual (CMSPub. 100–02) provided further guidance 

with regard to the definition of DME 

and durability of an item that is when 

an item is considered durable. 

B. Current Issues 

On November 10, 2011, CMS issued a 

final rule in which it revised the 

definition of DME at § 414.200 by 

adding a 3-year MLR effective January 1, 

2012, that must be met by an item or 

device in order to be considered durable 

for the purpose of classifying the item 

under the Medicare benefit category for 

DME (76 FR 70228 (November 10, 

2011)). Specifically, an additional 

condition under § 414.200 is that DME 

must be equipment furnished by a 

supplier or a home health agency that, 

effective with respect to items classified 

as DME after January 1, 2012, has an 

expected life of at least 3 years. The 

change to the regulation was designed to 

further clarify the meaning of the term 

‘‘durable’’ and provide an interpretation 

of the statute generally consistent with 

the DME payment and coverage 

provisions, including, Medicare 

program guidance at section 280.1 of 

chapter 1, part 4 of the Medicare 

National Coverage Determinations 

Manual (Pub. 100–03) which specifies 

that an item can withstand repeated use 

means that the item could normally be 

rented and used by successive patients. 

The 3-year MLR is intended to specify 

that durable equipment is equipment 

that can withstand repeated use over an 

extended period of time. Since the vast 

majority of items covered under the 

DME benefit over the years last for 3 or 

more years, the MLR is intended to 

clarify the scope of the DME benefit 

primarily for new items coming on the 

market or in the process of being 

developed. The standard set forth in 

regulations gives manufacturers and the 

public a clear understanding of how 

long an item would need to withstand 

repeated use in order the meet the 

durability requirement for DME. The 

rule also provides clear guidance to 

CMS and other stakeholders for making 

consistent informal benefit category 

determinations and national coverage 

determinations for DME. 

The 3-year MLR is designed to 

represent a minimum threshold for a 

determination of durability for a piece 

of equipment. The 3-year MLR is not an 

indication of the typical or average 

lifespan of DME, which in many cases 

is far longer than 3 years. The 3-year 

MLR does not apply to disposable 

supplies or accessories covered for use 

with DME such as masks, tubing, and 

blood glucose test strips. The 3-year 

MLR is prospective only and does not 

apply to equipment classified as DME 

before the regulation was effective, that 

is, January 1, 2012. 

We also determined that the 3-year 

MLR should not apply to equipment 

classified as DME before the effective 

date to allow for continued coverage of 

such equipment that healthcare industry 

and beneficiaries have come to rely on, 

regardless of whether those items met 

the 3-year MLR set forth at 42 CFR 

414.202 (76 FR 70288). Given that 

reliance, we did not intend to reopen 

those prior decisions and reclassify the 

equipment in light of the 3-year 

standard. We believe that continuing 

Medicare coverage for items that 

qualified as DME prior to the effective 

date, helps avoid disrupting the 

continuity of care for the beneficiaries 

that received these items for medical 

treatment prior to January 1, 2012. 

Beneficiaries have been relying on 

these items for their treatment to the 

extent that the items have been covered 

as DME under Medicare and applying 

the 3-year MLR to these items could 

impact the continuity of care for these 

beneficiaries. Furthermore, we believed 

that a vast majority of the categories of 

items that were classified as DME before 

January 1, 2012, did function for 3 or 

more years. We also noted that the 3- 

year durability rule would only apply to 

new products, and, to the extent that a 

modified product is not a new product, 

the 3-year MLR would not be 

applicable. 

In response to the public comments 

that requested further clarification on 

the application of the grandfathering 

provision for the 3-year MLR, we noted 

that we would consider issuing 

additional guidance to provide further 

clarification, if necessary (76 FR 70290). 

For purposes of providing additional 

guidance on the scope of the 

grandfathered items under the 

provision, we invite public comments 

on this issue. 

C. Scope of the 3-Year MLR for DME 

Under § 414.202, effective with 

respect to items classified as DME after 

January 1, 2012, an item is not 

considered durable unless it has an 

expected life of at least 3 years. 

Therefore, the 3-year MLR applies to 

new items after January 1, 2012, and 

does not apply to items covered under 

the DME benefit on or prior to January 

1, 2012. Items classified as DME on or 

before January 1, 2012, are considered 

‘‘grandfathered items’’ for the purpose 

of this requirement, regardless of 

whether they meet the 3-year rule. 

For the purpose of providing further 

guidance on the scope of the 3-year 

MLR, we are providing clarification 

about how we would regard 

grandfathered items covered as DME 

prior to the effective date and we 

request comments on that clarification. 

If the product is modified (upgraded, 

refined, reengineered, etc.) after January 

1, 2012, the item would still be 

classified as DME as a grandfathered 

item unless the modified product now 

has an expected life that is shorter than 

the expected lifetime for the item 

covered as DME prior to January 1, 

2012, In this case, we consider the item, 

as modified, to be a new item that is 

subject to the 3-year MLR. For example, 

equipment covered prior to January 1, 

2012, and described by code X has a life 

of at least 2 years. If, after January 1, 

2012, that item is modified such that it 

no longer lasts 2 years, such 

modification would render the item 

‘‘new’’ and it would be subject to the 3- 

year MLR. Therefore, since the new 

(modified) product does not last 3 years, 

it would not meet the definition of DME 

under the regulation and could not be 

covered or be billed using the code that 

described the item before it was 

modified. 

We seek comments on this proposed 

clarification. 

VI. Implementation of Budget-Neutral 

Fee Schedules for Splints, Casts and 

Intraocular Lenses (IOLs) 

A. Background 

1. Payment Under Reasonable Charges 

Payment for most items and services 

furnished under Part B of the Medicare 

program is made through contractors 

known as Medicare Administrative 

Contractors (MACs). These contractors 

were previously referred to as carriers. 

Prior to 1988, in accordance with 

section 1842(b) of the Act, payment for 

most of these items and services was 

made on a reasonable charge basis by 

these contractors, with the criteria for 

determining reasonable charges set forth 

at 42 CFR part 405, subpart E of our 

regulations. 

Under this general methodology, 

several factors or ‘‘charge screens’’ were 

developed for determining the 


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reasonable charge for an item or service. 

In accordance with § 405.503, each 

supplier’s ‘‘customary charge’’ for an 

item or service, or the 50th percentile of 

charges for an item or service over a 12- 

month period, was one factor used in 

determining the reasonable charge. In 

accordance with § 405.504, the 

‘‘prevailing charge’’ in a local area, or 

the 75th percentile of suppliers’ 

customary charges for the item in the 

locality, was also used in determining 

the reasonable charge. For the purpose 

of calculating prevailing charges, a 

‘‘locality’’ is defined at § 405.505 of our 

regulations and ‘‘may be a State 

(including the District of Columbia, a 

territory, or a Commonwealth), a 

political or economic subdivision of a 

State, or a group of States.’’ The 

regulation further specifies that the 

locality ‘‘should include a cross section 

of the population with respect to 

economic and other characteristics.’’ In 

accordance with § 405.506, for certain 

items, such as parenteral and enteral 

nutrients, supplies, and equipment, an 

additional factor referred to as the 

‘‘lowest charge level’’ was used in 

determining the reasonable charge for 

an item or service. In accordance with 

section 5025 of the Medicare Carriers 

Manual (HCFA Pub. 14–3) and 

§ 405.509 of our regulations, effective 

for items furnished on or after October 

1, 1985, an additional factor, the 

‘‘inflation-indexed charge (IIC),’’ was 

added to the factors taken into 

consideration in determining the 

reasonable charge for certain items and 

services. The IIC is defined in 

§ 405.509(a) as the lowest of the fee 

screens used to determine reasonable 

charges for items and services, 

including supplies, and equipment 

reimbursed on a reasonable charge basis 

(excluding physicians’ services) that is 

in effect on December 31 of the previous 

fee screen year, updated by the inflation 

adjustment factor. The inflation 

adjustment factor is based on the 

current percentage change in the 

consumer price index for all urban 

consumers (United States city average) 

(CPI–U) for the 12-month period ending 

June 30. The reasonable charge is 

generally set based on the lowest of the 

actual charge for the item or service or 

the factors described above. 

2. Payment Under Fee Schedules 

Specific provisions have been added 

to the Act mandating replacement of the 

reasonable charge payment 

methodology with fee schedules for 

most items and services furnished under 

Part B of the Medicare program. The 

phase in of fee schedules to replace 

reasonable charges for Medicare 

payment purposes began with the fee 

schedule for clinical diagnostic 

laboratory tests in 1988. As of 1997, 

very few items and services were still 

paid on a reasonable charge basis, 

which is a very time consuming and 

laborious process. Contractors must 

collect new charge data each year, 

perform the various calculations, and 

maintain pricing files and claims 

processing edits for the various charge 

screens. For each item that is paid on a 

reasonable charge basis, administrative 

funding must be provided to contractors 

for the purpose of performing these 

calculations and maintaining these 

pricing files. Therefore, replacing 

reasonable charge payments with fee 

schedules eliminates the need to fund 

these efforts and saves money that can 

be used to implement other parts of the 

program. Section 4315 of the Balanced 

Budget Act of 1997 (BBA) amended the 

Act at section 1842 by adding a new 

subsection (s). Section 1842(s) of the Act 

provides authority for implementing 

statewide or other area wide fee 

schedules to be used for payment of the 

following services that were previously 

on a reasonable charge basis: 

• Medical supplies. 

• Home dialysis supplies and 

equipment (as defined in section 

1881(b)(8) of the Act). 

• Therapeutic shoes. 

• Parenteral and enteral nutrients, 

equipment, and supplies (PEN). 

• Electromyogram devices. 

• Salivation devices. 

• Blood products. 

• Transfusion medicine. 

For Medicare payment purposes, we 

interpret the category ‘‘medical 

supplies’’ under section 1842(s) of the 

Act to include all other items paid on 

a reasonable charge basis as of 1997 that 

do not fall under any of the other 

categories listed in section 1842(s) of the 

Act. We believe that section 1842(s) of 

the Act is intended to provide authority 

for establishing fee schedules for all of 

the remaining, and relatively small 

number of items and services still paid 

for on a reasonable charge basis at the 

time of enactment in 1997. In light of 

this provision, we generally consider 

‘‘intraocular lenses’’ to be paid as 

‘‘medical supplies.’’ Therefore, in 

addition to including splints and casts 

under this category, we also propose to 

include intraocular lenses inserted in a 

physician’s office for the purpose of 

implementing this specific section. 

Although we recognize the terms 

‘‘intraocular lenses’’ and ‘‘medical 

supplies’’ are separately identified 

under § 414.202, we note that such 

terms are listed for purposes of defining 

what constitutes orthotic and prosthetic 

devices (that is, these terms are 

excluded from such definition), and not 

intended to suggest these are mutually 

exclusive things. Accordingly, we do 

not believe we are precluded from 

establishing fee schedules for IOLs 

under the category of medical supplies 

under section 1842(s) of the Act. 

Nevertheless, we are specifically 

requesting comments on this issue. 

Section 1842(s)(1) of the Act provides 

that the fee schedules for the services 

listed above are to be updated on an 

annual basis by the percentage increase 

in the CPI–U (United States city 

average) for the 12-month period ending 

with June of the preceding year, reduced 

by the productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act. Total payments for the initial 

year of the fee schedules must be 

budget-neutral, or approximately equal 

to the estimated total payments that 

would have been made under the 

reasonable charge payment 

methodology. As explained below, we 

used this authority to establish fee 

schedules for parental and enteral 

nutrition (PEN) items and services for 

use in paying claims with dates of 

service on or after January 1, 2002. 

On July 27, 1999, we published a 

notice of proposed rulemaking (64 FR 

40534) to establish fee schedules for 

PEN items and services, splints and 

casts, intraocular lenses (IOLs) inserted 

in a physician’s office, and various other 

items and services for which section 

1842(s) of the Act provided authority for 

replacing the reasonable charge 

payment methodology with fee 

schedules. After reviewing public 

comments on the proposed rule, we 

decided to move ahead with a final rule 

establishing fee schedules for the 

Parenteral and Enteral Nutrition (PEN) 

items and services, but not the other 

items and services, primarily related to 

concerns regarding data used for 

calculating fee schedule amounts for 

items and service that are no longer paid 

on a reasonable charge basis. The final 

rule for implementing the fee schedules 

for PEN items and services was 

published on August 28, 2001 (66 FR 

45173). For splints and casts, national 

reasonable charge amounts, updated on 

an annual basis by the IIC, have been 

used to pay for the splint and cast 

materials. Converting these amounts to 

national fee schedule amounts that are 

updated by the same index factor used 

in updating the reasonable charge 

amounts would result in no change in 

payment, or 100 percent budgetneutrality. Currently, very few IOLs are 

inserted in a physician’s office 

nationally. In 2011, total allowed 

charges for 437 IOLs furnished to 287 


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beneficiaries equaled $75,914. Since 

IOLs are considerably low volume items 

furnished by very few suppliers 

nationally, there are some states where 

none of these items are furnished; 

therefore, charge data for use in 

calculating prevailing charges, even at 

the state level, are not available and 

budget-neutrality is not an issue. If the 

national average allowed amount for 

these items is used as the fee schedule 

amount for the few IOLs that are still 

inserted in a physician’s office, we do 

not believe that total allowed charges in 

the first year of the fee schedule would 

be significantly different than what 

would otherwise be paid nationally 

under the current reasonable charge 

payment methodology. For 2011, the 

national average allowed charge for 

covered claims for the 287 beneficiaries 

receiving IOLs inserted in a physician’s 

office was $174 ($75,914 ÷ 437). In some 

cases, the allowed charge for specific 

claims in 2011 was less than $174 and 

in other cases the allowed charge was 

more than $174. However, given the low 

volume of items furnished nationally, 

the budget impact of paying all of the 

approximately 437 claims based on the 

national average allowed amount would 

be negligible. We believe establishing 

budget-neutral fee schedule amounts for 

splints and casts, and IOLs inserted in 

a physician’s office will save 

government resources in calculating the 

reasonable charge payment for the low 

volume items. We are proposing to 

establish fee schedules for these items 

effective for paying claims with dates of 

service on or after January 1, 2014. 

B. Provisions of the Proposed 

Regulations 

For the reasons we articulated above, 

we propose, under section 1842(s) of the 

Act, to implement fee schedules for 

splints and casts, and IOLs inserted in 

a physician’s office falling under the 

category of medical supplies. In 

addendum C of this proposed rule, we 

have inserted the current 2013 

reasonable charge amounts for splints, 

casts and IOLs inserted in a physician’s 

office. The splints and casts are 

payment amount limits updated by the 

CPI–U factor ending with June of the 

preceding year, in this case June 2012. 

The IOLs inserted in physician’s office 

estimates the 2012 average allowed 

charge. We would not have the entire 

calendar year estimates for 2013 average 

allowed charge for IOLs inserted in a 

physician’s office in order to implement 

the fee schedule amounts for these items 

effective for paying claims with dates of 

service on or after January 1, 2014; 

therefore, we are using the estimate of 

the 2012 average allowed charge. The 

final fee schedule amount will be 

specified in the final rule. We currently 

do not have the percentage change in 

the CPI–U for the 12-month period 

ending with June of 2013 to update the 

fee-schedule amounts for splints and 

casts. Specifically, we are proposing to 

amend 42 CFR § 414.106 and § 414.100 

to include the general rule for updating 

the fee schedules for splints, casts and 

IOLs inserted in a physician’s office. We 

are also proposing to add § 414.106 and 

§ 414.108 to set forth the fee schedule 

methodology and updates as explained 

above for splints, casts, and IOLs 

inserted in a physician’s office. Subject 

to coinsurance and deductible rules, 

Medicare payment for these services is 

to be equal to the lower of the actual 

charge for the item or the amount 

determined under the applicable fee 

schedule payment methodology. 

For splints and casts, we propose 

national fee schedule amounts for items 

furnished from January 1, 2014, thru 

December 31, 2014, based on 2013 

reasonable charges updated by the 

percentage increase in the consumer 

price index for all urban consumers 

(United States city average) for the 12- 

month period ending with June 2013. 

For subsequent years, the fee schedule 

amounts would be updated by the 

percentage increase in the consumer 

price index for all urban consumers 

(United States city average) for the 12- 

month period ending with June of the 

preceding year, reduced by the 

productivity adjustment as described in 

section 1886(b)(3)(B)(xi)(II) of the Act. 

For IOLs inserted in a physician’s 

office, we propose national fee schedule 

amounts for items furnished from 

January 1, 2014, thru December 31, 

2014, based on the national average 

allowed charge for the item from 

January 1, 2012 through December 31, 

2012, updated by the percentage 

increase in the consumer price index for 

all urban consumers (United States city 

average) for the 24-month period ending 

with June 2013. For subsequent years, 

the fee schedule amounts would be 

updated by the percentage increase in 

the consumer price index for all urban 

consumers (United States city average) 

for the 12-month period ending with 

June of the preceding year, reduced by 

the productivity adjustment as 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act. 

VII. DMEPOS Technical Amendments 

and Corrections 

A. Background 

Medicare pays for various DMEPOS 

items and services based on payment 

rules that are set forth in section 1834 

of the Act and 42 CFR Part 414, Subpart 

D. We propose to make three minor, 

conforming technical amendments to 

the existing DMEPOS payment 

regulations (the title of Subpart D and 

42 CFR § 414.200 and § 414.226). 

B. Proposed Technical Amendments 

and Corrections 

Below are the proposed technical 

amendments. 

• We propose to modify the title of 

‘‘Subpart D—Payment for Durable 

Medical Equipment, Prosthetic and 

Orthotic Devices’’ to read ‘‘Subpart D— 

Payment for Durable Medical 

Equipment, Prosthetic and Orthotic 

Devices, and Surgical Dressings’’ to 

reflect that payment for surgical 

dressings is addressed under this 

subpart at § 414.220(g). 

• In subpart § 414.200, we propose to 

modify the phrase ‘‘This subpart 

implements sections 1834 (a) and (h) of 

the Act by specifying how payments are 

made for the purchase or rental of new 

and used durable medical equipment 

and prosthetic and orthotic devices for 

Medicare beneficiaries.’’ as follows: 

‘‘This subpart implements sections 1834 

(a),(h), and (i) of the Act by specifying 

how payments are made for the 

purchase or rental of new and used 

durable medical equipment, prosthetic 

and orthotic devices, and surgical 

dressings for Medicare beneficiaries.’’ 

The Omnibus Budget Reconciliation Act 

of 1993 amended section 1834 of the 

Act by adding subsection (i), mandating 

payment on a fee schedule basis for 

surgical dressings. Although 

§ 414.220(g) addresses this requirement, 

the regulation at § 414.200 was not 

updated to indicate that this subpart 

implements section 1834(i) in addition 

to sections 1834(a) and (h) of the Act. 

• Section 1834(a)(9)(D) of the Act 

provides authority for creating separate 

classes of oxygen and oxygen 

equipment. Section 1834(a)(9)(D)(ii) of 

the Act prohibits CMS from creating 

separate classes of oxygen and oxygen 

equipment that result in expenditures 

for any year that are more or less than 

expenditures which would have been 

made if the separate classes had not 

been created. In other words, the new 

classes and payment amounts for 

oxygen and oxygen equipment must be 

established so that creating the new 

classes is annually budget-neutral. In 

November 2006, we published a final 

rule establishing separate classes for 

oxygen and oxygen equipment and 

included a methodology for meeting the 

requirements of section 1834(a)(9)(D)(ii) 

of the Act by applying annual 

reductions to the monthly fee schedule 

amounts for the stationary oxygen 


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9We note that this total represents an 

underestimate of the overall burden because it does 

not include time costs for patients. 

equipment class at § 414.226(c)(1)(i) in 

order to establish budget neutrality for 

total oxygen and oxygen expenditures 

for all oxygen classes. Increases in 

expenditures for oxygen and oxygen 

equipment that are attributed to higher 

payment amounts established for new 

classes of oxygen and oxygen equipment 

are off set by reducing the monthly 

payment amount for stationary oxygen 

equipment. Due to a drafting error in the 

regulation text portion of the November 

2006 final rule, CMS–1304–F (71 FR 

65933), 42 CFR § 414.226(c)(6) needs to 

be corrected. The regulation text at 

§ 414.226(c)(6) mistakenly states that 

budget neutrality should be achieved by 

adjusting all oxygen class rates. Section 

414.226(c)(6) should read that only the 

stationary oxygen equipment rate 

should be adjusted to achieve budget 

neutrality. Therefore, we propose that 

§ 414.226(c)(6) be revised to read as 

follows: ‘‘Beginning in 2008, CMS 

makes an annual adjustment to the 

national limited monthly payment rate 

for items described in paragraph (c)(1)(i) 

of this section to ensure that such 

payment rates do not result in 

expenditures for any year that are more 

or less than the expenditures that would 

have been made if such classes had not 

been established.’’ 

• We are also making a technical 

correction to existing 42 CFR 

§ 414.102(c) to conform the regulation 

governing parenteral and enteral (PEN) 

nutrients, equipment and supplies 

covered item fee schedule update with 

the statute. Although section 

1842(s)(1)(B)(ii) of the Act is selfimplementing, the PEN nutrients, 

equipment and supplies payment 

regulations at 42 CFR 414 Subpart C 

were not updated to reflect the 

application of the multifactor 

productivity adjustment to the CPI–U 

update factor for 2011 and subsequent 

calendar years. Therefore, we are 

revising § 414.102(c) of our regulations 

to specify that for years 2003 through 

2010, the PEN items and services fee 

schedule amounts of the preceding year 

are updated by the percentage increase 

in the CPI–U for the 12-month period 

ending with June of the preceding year. 

For each year subsequent to 2010, the 

PEN items and services fee schedule 

amounts of the preceding year are 

updated by the percentage increase in 

the CPI–U for the 12-month period 

ending with June of the preceding year, 

reduced by the productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act. 

VIII. Collection of Information 

Requirements 

A. Legislative Requirement for 

Solicitation of Comments 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

requirement should be approved by 

OMB, section 3506(c)(2)(A) of the 

Paperwork Reduction Act of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

B. Requirements in Regulation Text 

In section II.D. of this proposed rule, 

we are proposing changes to regulatory 

text for the ESRD PPS in CY 2014. 

However, the changes that are being 

proposed do not impose any new 

information collection requirements. 

C. Additional Information Collection 

Requirements 

This proposed rule does not impose 

any new information collection 

requirements in the regulation text, as 

specified above. However, this proposed 

rule does make reference to several 

associated information collections that 

are not discussed in the regulation text 

contained in this document. The 

following is a discussion of these 

information collections. 

1. ESRD QIP 

a. Proposed Expanded ICH CAHPS 

Reporting Measure for PY 2016 and 

Future Payment Years of the ESRD QIP 

As stated above in section III.C.2.a of 

this proposed rule, we proposed to 

include in the PY 2016 ESRD QIP an 

expanded ICH CAHPS reporting 

measure, which assesses facility usage 

of the ICH CAHPS survey. Unlike the 

ICH CAHPS reporting measure finalized 

in the CY 2013 ESRD PPS final rule (77 

FR 67480 through 67481), the proposed 

expanded ICH CAHPS reporting 

measure would require facilities to 

report (via a CMS-approved vendor) 

survey data to CMS once for PY 2016, 

and, for PY 2017 and beyond, to 

administer (via a CMS-approved 

vendor) a second ICH CAHPS survey 

and report the second set of survey data 

to CMS. Therefore, for PY 2016, we 

estimate the burden associated with this 

requirement to be the time and effort 

necessary for facilities to submit (via a 

CMS-approved vendor) survey results to 

CMS. For PY 2017 and future payment 

years, we estimate the burden associated 

with this requirement is the time and 

effort necessary for facilities to 

administer (via a CMS-approved 

vendor) a second ICH CAHPS survey 

and submit (via a CMS-approved 

vendor) the survey results to CMS. 

We estimate that approximately 5,506 

facilities will treat adult, in-center 

hemodialysis patients in PY 2016 and, 

therefore, will be eligible to receive a 

score on this measure. We further 

estimate that all 5,506 facilities will 

report (via a CMS-approved vendor) 

survey results to CMS, and that it will 

take each vendor approximately 5 

minutes to do so. Therefore, the 

estimated total annual burden 

associated with meeting the measure 

requirements in PY 2016 is 459 hours 

[(5/60) hours × 5,506 facilities). 

According to the Bureau of Labor 

Statistics, the mean hourly wage of a 

registered nurse is $32.66/hour. Since 

we anticipate nurses (or administrative 

staff who would be paid at a lower 

hourly wage) will submit this data to 

CMS, we estimate that the aggregate cost 

of this requirement for PY 2016 will be 

$14,991 (459 hours × $32.66/hour). 

We estimate that approximately 5,693 

facilities will treat adult, in-center 

hemodialysis patients in PY 2017 and, 

therefore, will be eligible to receive a 

score on this measure. We estimate that 

all 5,693 facilities will administer the 

ICH CAHPS survey through a thirdparty vendor and arrange for the vendor 

to submit the data to CMS. We estimate 

that it would take each patient 30 

minutes to complete the survey (to 

account for variability in education 

levels) and that approximately 103 

surveys per year would be taken per 

facility. Interviewers from each vendor 

would therefore spend a total of 

approximately 52 hours per year with 

patients completing these surveys (0.5 

hours * 103 surveys) or $1,698 (52 hours 

× $32.66) for an estimated annual 

burden of $9,666,714 ($1,698 per facility 

× 5,693 facilities).9 We previously 

estimated that the aggregate cost of 

submitting survey data to CMS is 

$14,991. Therefore, we estimate that the 


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total annual burden for ESRD facilities 

to comply with the collection of 

information requirements associated 

with the proposed expanded ICH 

CAHPS measure for PY 2017 and future 

payment years would be approximately 

$9,681,705 ($9,666,714 + $14,991) 

across all ESRD facilities. 

b. Proposed Data Validation 

Requirements for the PY 2016 ESRD QIP 

Section III.C.13 of the proposed rule 

outlines our data validation proposals. 

We proposed to randomly sample 

records from 300 facilities; each 

sampled facility would be required to 

produce up to 10 records; and the 

sampled facilities will be reimbursed by 

our validation contractor for the costs 

associated with copying and mailing the 

requested records. The burden 

associated with this validation 

requirement is the time and effort 

necessary to submit validation data to a 

CMS contractor. We estimate that it will 

take each facility approximately 2.5 

hours to comply with these 

requirements. If 300 facilities are tasked 

with providing the required 

documentation, the estimated annual 

burden for these facilities across all 

facilities would be 750 hours (300 

facilities × 2.5 hours) at a total of 

$24,495 (750 hours × $32.66/hour) or 

$81.65 ($24,495/300 facilities) per 

facility in the sample. 

2. The discussion on clarifying the 

definition of routinely purchased DME 

does not contain any new information 

collection requirements. 

3. The clarification of the the 3-year 

Minimum Lifetime Requirement for 

DME does not contain any new 

information collection requirements. 

4. The proposed implementation of 

Budget-Neutral Fee Schedules for 

Splints, Casts and Intraocular Lenses 

does not contain any new information 

collection requirements. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collections 

referenced above, access CMS’ Web site 

at http://www.cms.gov/ 

PaperworkReductionActof1995/PRAL/ 

list.asp#TopOfPage. 

If you comment on these information 

collection and recordkeeping 

requirements, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

[CMS–1526–P], Fax: (202) 395–6974; or 

Email: OIRA_submission@omb.eop.gov. 

IX. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

X. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We examined the impacts of this 

proposed rule as required by Executive 

Order 12866 (September 30, 1993, 

Regulatory Planning and Review) and 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011). Executive Orders 

12866 and 13563 direct agencies to 

assess all costs and benefits of available 

regulatory alternatives and, if regulation 

is necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated economically 

significant under section 3(f)(1) of 

Executive Order 12866. Accordingly, 

the rule has been reviewed by the Office 

of Management and Budget. We have 

prepared a Regulatory Impact Analysis 

that to the best of our ability presents 

the costs and benefits of the proposed 

rule. We solicit comments on the 

regulatory impact analysis provided. 

2. Statement of Need 

This rule proposes a number of 

routine updates for renal dialysis 

services in CY 2014, proposes to 

implement the fourth year of the ESRD 

PPS transition, and proposes to make 

several policy changes to the ESRD PPS. 

These include proposed updates and 

changes to the ESRD PPS base rate, 

wage index values, the wage index 

budget-neutrality adjustment factor, and 

the outlier payment policy. This rule 

will also implement section 

1881(b)(14)(I), which requires the 

Secretary, by comparing per patient 

utilization from 2007 with such data 

from 2012, to reduce the single payment 

amount to reflect the Secretary’s 

estimate of the change in the utilization 

of ESRD-related drugs and biologicals. 

Failure to publish this proposed rule 

would result in ESRD facilities not 

receiving appropriate payments in CY 

2014. 

This rule proposes to implement the 

ESRD QIP for PY 2016 and beyond by 

proposing to adopt measures, scoring, 

and payment reductions to incentivize 

improvements in dialysis care as 

directed by section 1881(h) of the Act. 

Failure to propose requirements for the 

PY 2016 ESRD QIP would prevent 

continuation of the ESRD QIP beyond 

PY 2015. 

3. Overall Impact 

We estimate that the proposed 

revisions to the ESRD PPS will result in 

a decrease of approximately $970 

million in payments to ESRD facilities 

in CY 2014, which includes the amount 

associated with the increase in the 

ESRDB market basket reduced by the 

productivity adjustment, updates to 

outlier threshold amounts, the inclusion 

of the Pacific Rim ESRD facilities, 

updates to the wage index, and the drug 

utilization adjustment required by 

section 1881(b)(14)(I), as added by 

section 632(a) of ATRA. 

For PY 2016, we estimate that the 

proposed requirements related to the 

ESRD QIP will cost approximately $39.5 

thousand and the predicted payment 

reductions will equal about $26.4 

million to result in a total impact from 

the proposed ESRD QIP requirements of 

$26.4 million. For PY 2017 and future 

payment years, we expect the costs 

associated with the collection of 

information requirements for the 

expanded ICH CAHPS measure in the 

proposed ESRD QIP to be approximately 

$9.7 million. 

We estimate that the proposed 

changes for implementing the fee 

schedule amounts from reasonable 

charge payments will be budget neutral 

and will have no impact to DMEPOS 

providers of splints, casts and 

intraocular lenses inserted in a 

physician’s office. 

We estimate that our proposed 

clarification of the definition of 

routinely purchased DME and reclassification of certain items as cap 

rental items would impact certain 

DMEPOS providers. We estimate that 

the clarification of the 3-year minimum 

lifetime requirement for DME would 

have no impact on DMEPOS suppliers. 


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B. Detailed Economic Analysis 

1. CY 2014 End-Stage Renal Disease 

Prospective Payment System 

a. Effects on ESRD Facilities 

To understand the impact of the 

changes affecting payments to different 

categories of ESRD facilities, it is 

necessary to compare estimated 

payments in CY 2013 to estimated 

payments in CY 2014. To estimate the 

impact among various types of ESRD 

facilities, it is imperative that the 

estimates of payments in CY 2013 and 

CY 2014 contain similar inputs. 

Therefore, we simulated payments only 

for those ESRD facilities for which we 

are able to calculate both current 

payments and new payments. 

For this proposed rule, we used the 

December 2012 update of CY 2012 

National Claims History file as a basis 

for Medicare dialysis treatments and 

payments under the ESRD PPS. We 

updated the 2012 claims to 2013 and 

2014 using various updates. The 

updates to the ESRD PPS base rate are 

described in section II.B of this 

proposed rule. Table 12 shows the 

impact of the estimated CY 2014 ESRD 

payments compared to estimated 

payments to ESRD facilities in CY 2013. 

TABLE 12—IMPACT OF PROPOSED CHANGES IN PAYMENTS TO ESRD FACILITIES FOR CY 2014 PROPOSED RULE

Facility type Number of 

facilities 

Number of 

treatments 

(in millions) 

Effect of 2014 

changes in 

outlier policy 4

(percent) 

Effect of 2014 

changes in 

wage indexes 

(percent) 

Effect of 2014 

changes in 

market 

basket 

minus 

productivity 

update 

(percent) 

Effect of 2014 

changes in 

base rate due 

to drug 

utilization 

(percent) 

Effect of 

total 2014 

changes 5

(percent) 

A B C D E F G 

All Facilities .............................. 5,771 38.1 0.4 0.0 2.5 ¥12.0 ¥9.4 

Type: 

Freestanding ..................... 5,270 35.4 0.4 0.0 2.5 ¥12.0 ¥9.4 

Hospital based .................. 501 2.7 0.3 0.1 2.5 ¥11.9 ¥9.3 

Ownership Type: 

Large dialysis organization 3,769 25.9 0.4 0.0 2.5 ¥12.0 ¥9.4 

Regional chain .................. 885 6.1 0.4 0.0 2.5 ¥12.0 ¥9.4 

Independent ...................... 614 3.9 0.2 0.1 2.5 ¥12.0 ¥9.5 

Hospital based 1 ................ 400 2.1 0.2 0.1 2.5 ¥11.9 ¥9.4 

Unknown ........................... 103 0.2 0.3 ¥0.2 2.5 ¥12.0 ¥9.6 

Geographic Location: 

Rural ................................. 1,257 6.3 0.4 ¥0.1 2.5 ¥12.0 ¥9.5 

Urban ................................ 4,514 31.8 0.4 0.0 2.5 ¥12.0 ¥9.4 

Census Region: 

East North Central ............ 946 5.7 0.4 ¥0.2 2.5 ¥11.9 ¥9.5 

East South Central ........... 477 2.9 0.5 ¥0.2 2.5 ¥11.9 ¥9.5 

Middle Atlantic .................. 634 4.6 0.4 0.5 2.5 ¥12.0 ¥9.0 

Mountain ........................... 340 1.8 0.3 0.1 2.5 ¥12.0 ¥9.4 

New England .................... 170 1.3 0.4 0.2 2.5 ¥12.0 ¥9.2 

Pacific 2 ............................. 684 5.3 0.1 0.4 2.5 ¥12.0 ¥9.3 

Puerto Rico and Virgin Islands .............................. 41 0.3 0.4 ¥2.3 2.5 ¥11.9 ¥11.5 

South Atlantic .................... 1,288 8.8 0.5 ¥0.3 2.5 ¥12.0 ¥9.6 

West North Central ........... 416 2.0 0.4 ¥0.1 2.5 ¥12.0 ¥9.5 

West South Central .......... 775 5.5 0.5 ¥0.1 2.5 ¥11.9 ¥9.5 

Facility Size: 

Less than 4,000 treatments 3 .......................... 1,044 2.6 0.4 0.0 2.5 ¥12.0 ¥9.4 

4,000 to 9,999 treatments 2,157 10.4 0.4 ¥0.1 2.5 ¥12.0 ¥9.5 

10,000 or more treatments 2,400 24.7 0.4 0.0 2.5 ¥12.0 ¥9.4 

Unknown ........................... 170 0.4 0.4 ¥0.1 2.5 ¥12.0 ¥9.5 

Percentage of Pediatric Patients: 

Less than 2% .................... 5,662 37.7 0.4 0.0 2.5 ¥12.0 ¥9.4 

Between 2% and 19% ...... 44 0.3 0.3 0.0 2.5 ¥11.9 ¥9.5 

Between 20% and 49% .... 6 0.0 0.1 ¥0.3 2.5 ¥12.0 ¥9.9 

More than 50% ................. 59 0.1 0.0 0.1 2.5 ¥12.0 ¥9.7 

1 Includes hospital-based ESRD facilities not reported to have large dialysis organization or regional chain ownership. 

2 Includes ESRD facilities located in Guam, American Samoa, and the Northern Mariana Islands. 

3Of the 1,044 ESRD facilities with less than 4,000 treatments, only 375 qualify for the low-volume adjustment. The low-volume adjustment is 

mandated by Congress, and is not applied to pediatric patients. The impact to these low-volume facilities is a 9.5 percent decrease in payments. 4 Includes the effect of including the Pacific Rim ESRD facilities of Guam, American Samoa, and the Northern Mariana Islands into the PPS. 

5 Includes the effect of Market Basket minus productivity increase of 2.5 percent to the ESRD PPS base rate and the effect of the $29.52 decrease in the base rate due to the drop in drug utilization. 

Note:Totals do not necessarily equal the sum of rounded parts, as percentages are multiplicative, not additive. 

Column A of the impact table 

indicates the number of ESRD facilities 

for each impact category and column B 

indicates the number of dialysis 

treatments (in millions). The overall 

effect of the proposed changes to the 

outlier payment policy described in 

section II.B.6. of this proposed rule is 

shown in column C. For CY 2014, the 


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impact on all facilities as a result of the 

changes to the outlier payment policy 

would be a 0.4 percent increase in 

estimated payments. The estimated 

impact of the changes to outlier 

payment policy ranges from a 0.0 

percent to a 0.5 percent increase. Nearly 

all ESRD facilities are anticipated to 

experience a positive effect in their 

estimated CY 2014 payments as a result 

of the proposed outlier policy changes. 

Column D shows the effect of the 

wage index on ESRD facilities and 

reflects the CY 2014 wage index values 

for the ESRD PPS payments. Facilities 

located in the census region of Puerto 

Rico and the Virgin Islands would 

receive a 2.3 percent decrease in 

estimated payments in CY 2014. Since 

most of the facilities in this category are 

located in Puerto Rico, the decrease is 

primarily due to the reduction in the 

wage index floor, (which only affects 

facilities in Puerto Rico in CY 2014). 

The other categories of types of facilities 

in the impact table show changes in 

estimated payments ranging from a 0.3 

percent decrease to a 0.5 percent 

increase due to the update of the wage 

index. 

Column E shows the effect of the 

ESRDB market basket increase minus 

productivity adjustment. The impact on 

all facilities would be a 2.5 percent 

increase. 

Column F shows the effect of the drug 

utilization adjustment required by 

section 1881(b)(14)(I). For CY 2014, the 

impact on all facilities as a result of the 

$29.52 decrease to the base rate, as 

described in section II.B.2.a., would be 

a 12 percent decrease in estimated 

payments. The estimated impact ranges 

from 11.9 percent to 12 percent 

decrease. 

Column G reflects the overall impact 

(that is, the effects of the proposed 

outlier policy changes, the proposed 

wage index, the effect of the ESRDB 

market basket increase minus 

productivity adjustment, and the effect 

of the drug utilization adjustment 

required by section 1881(b)(14)(I). We 

expect that overall, ESRD facilities will 

experience a 9.4 percent decrease in 

estimated payments in 2014. ESRD 

facilities in Puerto Rico and the Virgin 

Islands are expected to receive an 11.5 

percent decrease in their estimated 

payments in CY 2014. This larger 

decrease is primarily due to the negative 

impact of the wage index. The other 

categories of types of facilities in the 

impact table show negative impacts 

ranging from a decrease of 9.9 percent 

to 9.0 percent in their 2014 estimated 

payments. 

b. Effects on Other Providers 

Under the ESRD PPS, ESRD facilities 

are paid directly for the renal dialysis 

bundle and other provider types such as 

laboratories, DME suppliers, and 

pharmacies, may no longer bill 

Medicare directly for renal dialysis 

services. Rather, effective January 1, 

2011, such other providers can only 

furnish renal dialysis services under 

arrangements with ESRD facilities and 

must seek payment from ESRD facilities 

rather than Medicare. Under the ESRD 

PPS, Medicare pays ESRD facilities one 

payment for renal dialysis services, 

which may have been separately paid to 

suppliers by Medicare prior to the 

implementation of the ESRD PPS. 

Therefore, in CY 2014, the fourth year 

of the ESRD PPS, we estimate that the 

proposed ESRD PPS will have zero 

impact on these other providers. 

c. Effects on the Medicare Program 

We estimate that Medicare spending 

(total Medicare program payments) for 

ESRD facilities in CY 2014 will be 

approximately $8 billion. This estimate 

takes into account a projected increase 

in fee-for-service Medicare dialysis 

beneficiary enrollment of 3.8 percent in 

CY 2014. 

d. Effects on Medicare Beneficiaries 

Under the ESRD PPS, beneficiaries are 

responsible for paying 20 percent of the 

ESRD PPS payment amount. As a result 

of the projected 9.4 percent overall 

decrease in the proposed ESRD PPS 

payment amounts in CY 2014, we 

estimate that there will be a decrease in 

beneficiary co-insurance payments of 

9.4 percent in CY 2014, which translates 

to approximately $190 million. 

e. Alternatives Considered 

For this proposed rule, we proposed 

to implement the full reduction required 

by section 1881(b)(14)(I) in CY 2014. In 

particular, we proposed a one-time 

reduction of $29.52 to the ESRD PPS 

base rate. We considered proposing to 

implement the reduction using a 

transition. For example, we considered 

transitioning the reduction over a 2 or 

3-year period. We chose to implement 

the full reduction by reducing the ESRD 

PPS base rate by an adjustment to reflect 

change in the utilization of ESRDrelated drugs and biologicals by 

comparing utilization data from 2007 

with such data from 2012. 

2. End-Stage Renal Disease Quality 

Incentive Program 

a. Effects of the PY 2016 ESRD QIP 

The ESRD QIP provisions are 

intended to prevent possible reductions 

in the quality of ESRD dialysis facility 

services provided to beneficiaries as a 

result of payment changes under the 

ESRD PPS by implementing a ESRD QIP 

that reduces ESRD PPS payments by up 

to 2 percent for dialysis facilities that 

fail to meet or exceed a TPS with 

respect to performance standards 

established by the Secretary with 

respect to certain specified measures. 

The methodology that we are proposing 

to determine a facility’s TPS is 

described in section III.C.11 of this 

proposed rule. Any reductions in ESRD 

PPS payments as a result of a facility’s 

performance under the PY 2016 ESRD 

QIP would begin with services 

furnished on January 1, 2016. 

As a result, based on the ESRD QIP 

outlined in this proposed rule, we 

estimate that, of the total number of 

dialysis facilities (including those not 

receiving an ESRD QIP TPS), 

approximately 36 percent or 2,069 of the 

facilities would likely receive a payment 

reduction in PY 2016. Facilities that do 

not receive a TPS are not eligible for a 

payment reduction. 

The ESRD QIP impact assessment 

assumes an initial count of 5,771 

dialysis facilities paid through the PPS. 

Table 13 shows the overall estimated 

distribution of payment reductions 

resulting from the PY 2016 ESRD QIP. 

TABLE 13—ESTIMATED DISTRIBUTION

OF PY 2016 ESRD QIP PAYMENT

REDUCTIONS

Payment 

reduction 

percent 

Number of 

facilities 

Percent of 

facilities 

0.0 ..................... 3,417 62.3 

0.5 ..................... 994 18.1 

1.0 ..................... 583 10.6 

1.5 ..................... 280 5.1 

2.0 ..................... 212 3.9 

Note:This table excludes 285 facilities that 

did not receive a score because they did not 

have enough data to receive a Total Performance Score. 

To estimate whether or not a facility 

would receive a payment reduction 

under the proposed approach, we 

scored each facility on achievement and 

improvement on several measures we 

have previously finalized and for which 

there were available data from 

CROWNWeb and Medicare claims. 

Measures used for the simulation are 

shown in Table 14. 


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TABLE 14—DATA USED TO ESTIMATE PY 2016 ESRD QIP PAYMENT REDUCTIONS

Measure 

Period of time used to calculate achievement thresholds, 

performance standards, benchmarks, and improvement 

thresholds 

Performance period 

Hemoglobin Greater Than 12 g/dL ........................................ Jan 2012–Jun 2012 .............................................................. July 2012–Dec 2012. 

Vascular Access Type: 

% Fistula ......................................................................... Jan 2011–Dec 2011 .............................................................. Jan 2012–Dec 2012. 

% Catheter ...................................................................... Jan 2011–Dec 2011 .............................................................. Jan 2012–Dec 2012. 

Kt/V: 

Adult HD ......................................................................... Jan 2011–Dec 2011 .............................................................. Jan 2012–Dec 2012. 

Adult PD ......................................................................... Jan 2011–Dec 2011 .............................................................. Jan 2012–Dec 2012. 

Pediatric HD ................................................................... Jan 2011–Dec 2011 .............................................................. Jan 2012–Dec 2012. 

Hypercalcemia ....................................................................... Jan 2011–Dec 2011 .............................................................. May 2012–Dec 

2012. 

Clinical measures with less than 11 

cases for a facility were not included in 

that facility’s Total Performance Score. 

Each facility’s Total Performance Score 

was compared to the estimated 

minimum Total Performance Score and 

the payment reduction table found in 

section III.C.11 of this proposed rule. 

Facilities were required to have a score 

on at least one clinical measure to 

receive a Total Performance Score. For 

these simulations, the NHSN 

Bloodstream Infection in Hemodialysis 

Outpatients and Patient Informed 

Consent for Anemia Treatment clinical 

measures, as well as the reporting 

measures were not included due to lack 

of data availability. Therefore, the 

simulated facility Total Performance 

Scores were calculated using only some 

of the clinical measure scores. 

To estimate the total payment 

reductions in PY 2016 for each facility 

resulting from this proposed rule, we 

multiplied the total Medicare payments 

to the facility during the one year period 

between January 2012 and December 

2012 by the facility’s estimated payment 

reduction percentage expected under 

the ESRD QIP, yielding a total payment 

reduction amount for each facility: 

(Total ESRD payment in January 2012 

through December 2012 times the 

estimated payment reduction 

percentage). For PY 2016 the total 

payment reduction for all of the 2,069 

facilities expected to receive a reduction 

is approximately $26.4 million 

($26,355,878). Further, we estimate that 

the total costs associated with the 

collection of information requirements 

for PY 2016 described in section VII.B.2 

of this proposed rule would be 

approximately $15 thousand for all 

ESRD facilities. As a result, we estimate 

that ESRD facilities will experience an 

aggregate impact of $26.4 million 

($39,486 + $26,355,878= $26,395,364) in 

PY 2016, as a result of the PY 2016 

ESRD QIP. 

Table 15 below shows the estimated 

impact of the finalized ESRD QIP 

payment reductions to all ESRD 

facilities for PY 2016. The table details 

the distribution of ESRD facilities by 

facility size (both among facilities 

considered to be small entities and by 

number of treatments per facility), 

geography (both urban/rural and by 

region), and by facility type (hospital 

based/freestanding facilities). Given that 

the time periods used for these 

calculations will differ from those we 

propose to use for the PY 2016 ESRD 

QIP, the actual impact of the PY 2016 

ESRD QIP may vary significantly from 

the values provided here. 

TABLE 15—IMPACT OF PROPOSED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2016Q

Number of 

facilities 

Number of 

Medicare 

treatments 

2012 

(in millions) 3

Number of 

facilities with 

QIP score 

Number of 

facilities 

expected to 

receive a 

payment 

reduction 

Payment 

reduction 

(percent 

change 

in total ESRD 

payments) 

All Facilities .......................................................................... 5,771 38.1 5,486 2,069 ¥0.35 

Facility Type: 

Freestanding ................................................................. 5,270 35.4 5,116 1,854 ¥0.32 

Hospital-based .............................................................. 501 2.7 370 215 ¥0.67 

Ownership Type: 

Large Dialysis ............................................................... 3,769 25.9 3,710 1,228 ¥0.29 

Regional Chain ............................................................. 885 6.1 849 355 ¥0.36 

Independent .................................................................. 614 3.9 572 292 ¥0.52 

Hospital-based (non-chain) ........................................... 400 2.1 289 169 ¥0.66 

Unknown ....................................................................... 103 0.2 66 25 ¥0.47 

Facility Size: 

Large Entities ................................................................ 4,654 32.0 4,559 1,583 ¥0.30 

Small Entities 1 .............................................................. 1,014 5.9 861 461 ¥0.57 

Unknown ....................................................................... 103 0.2 66 25 ¥0.47 

Urban/Rural Status: 

Rural ............................................................................. 1,257 6.3 1,191 416 ¥0.31 

Urban ............................................................................ 4,514 31.8 4,295 1,653 ¥0.35 

Census Region: 

Northeast ...................................................................... 786 5.8 741 309 ¥0.40 

Midwest ......................................................................... 1,325 7.7 1,233 478 ¥0.37 

South ............................................................................. 2,501 17.1 2,440 923 ¥0.34 

West .............................................................................. 998 7.0 966 302 ¥0.27 


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TABLE 15—IMPACT OF PROPOSED QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR PY 2016Q—Continued 

Number of 

facilities 

Number of 

Medicare 

treatments 

2012 

(in millions) 3

Number of 

facilities with 

QIP score 

Number of 

facilities 

expected to 

receive a 

payment 

reduction 

Payment 

reduction 

(percent 

change 

in total ESRD 

payments) 

US Territories 2 ............................................................. 161 0.5 106 57 ¥0.66 

Census Division: 

Pacific Rim .................................................................... 7 0.1 7 5 ¥0.92 

East North Central ........................................................ 946 5.7 868 354 ¥0.38 

East South Central ....................................................... 477 2.9 465 147 ¥0.27 

Middle Atlantic .............................................................. 634 4.6 595 254 ¥0.42 

Mountain ....................................................................... 340 1.8 325 82 ¥0.21 

New England ................................................................ 170 1.3 154 58 ¥0.28 

Pacific ........................................................................... 677 5.2 652 224 ¥0.30 

South Atlantic ................................................................ 1,288 8.8 1,245 490 ¥0.37 

West North Central ....................................................... 416 2.0 383 129 ¥0.34 

West South Central ...................................................... 775 5.5 754 298 ¥0.34 

US Territories 2 ............................................................. 41 0.3 38 28 ¥0.86 

Facility Size (# of total treatments): 

Less than 4,000 treatments .......................................... 1,044 2.6 853 273 ¥0.36 

4,000–9,999 treatments ................................................ 2,157 10.4 2,136 730 ¥0.30 

Over 10,000 treatments ................................................ 2,400 24.7 2,384 1,027 ¥0.38 

Unknown ....................................................................... 170 0.4 113 39 ¥0.41 

1Small Entities include hospital-based and satellite facilities and non-chain facilities based on DFC self-reported status. 

2 Includes Puerto Rico and Virgin Islands. 

3Based on claims data through December 2012. 

b. Alternatives Considered for the PY 

2016 ESRD QIP 

In the proposed PY 2016 ESRD QIP, 

we selected measures that we believe 

are important indicators of patient 

outcomes and quality of care as 

discussed in section III.C of this 

proposed rule. Poor management of 

anemia, for example, can lead to 

avoidable hospitalizations, decreased 

quality of life, and death. In order to 

provide strong incentives to improve 

patient outcomes in this clinically 

important area, we considered 

proposing a clinical measure for 

Pediatric Iron Therapy. However, upon 

further review we recognized that we 

lacked the necessary baseline data to 

establish achievement thresholds, 

performance standards, and 

benchmarks. We, therefore, proposed a 

reporting measure in order to gather the 

data we will need to introduce a clinical 

measure in the future. In the case of the 

NHSN Bloodstream Event in 

Hemodialysis Outpatient measure, we 

considered proposing a reporting 

measure instead of a clinical measure, 

because we lacked the necessary 

baseline data to establish achievement 

thresholds, performance standards, and 

benchmarks. However, we decided not 

to do so. Due to the great impact 

hospital acquired infections have upon 

patients and the industry, we believe it 

is important to begin assessing facilities 

on the number of these events rather 

than on merely whether they report 

these events as soon as possible. 

Similarly, in the case of the Patient 

Informed Consent for Anemia Treatment 

measure, we considered proposing a 

reporting measure instead of a clinical 

measure, because we lacked the 

necessary baseline data to establish 

achievement thresholds, performance 

standards, and benchmarks. We decided 

not to do because we believe that 

providing counseling on the risks and 

benefits of anemia treatment, and 

seeking informed consent for such 

treatment, is already a standard of 

clinical care in the ESRD provider 

community. We also considered 

proposing the Standardized 

Hospitalization Ratio Admissions (SHR) 

measure and the Standardized Mortality 

Ratio (SMR) measure as reporting 

measures for the PY 2016 ESRD QIP. We 

decided not to do so due to outstanding 

concerns about the measures’ validity 

and reliability. As an alternative, we 

proposed the Comorbidity reporting 

measure to provide a reliable source of 

data that we can use to properly riskadjust SHR and SMR clinical measures 

(should we propose to adopt such 

measures in the future), and to improve 

our understanding of the risk factors 

that contribute to morbidity and 

mortality in the ESRD patient 

population. 

In developing the proposed scoring 

methodology for the PY 2016 ESRD QIP, 

we considered several alternatives. For 

example, we considered weighting the 

clinical measures at 80 percent and the 

reporting measures at 20 percent of the 

Total Performance Score. We ultimately 

decided to propose the weighting 

methodology used in the PY 2015 ESRD 

QIP because the ratio of clinical to 

reporting measures did not change 

significantly, and also because we 

wanted to retain a strong incentive for 

facilities to meet the requirements for 

the reporting measures. We also 

considered a number of ways to 

establish achievement thresholds and 

benchmarks for the NHSN clinical 

measure. For example, we considered 

using baseline data from CYs 2012 

through 2013 to set achievement 

thresholds and benchmarks. However, 

we ultimately decided to propose to use 

data from CY 2014 when establishing 

baseline data for scoring purposes, 

because facilities were not required to 

submit twelve full months of NHSN 

data during CY 2012–2013, and rates of 

healthcare-acquired infections are 

susceptible to seasonal variability. In 

light of the importance of monitoring 

and preventing infections in the ESRD 

population, we decided that it would be 

preferable to propose a clinical measure 

with equivalent baseline and 

performance periods, rather than a 

reporting measure that would have less 

of a direct impact on clinical practice. 

We also considered a number of ways to 

score the Patient Informed Consent for 

Anemia Treatment clinical measure. In 

this case, we lacked baseline data that 

could be used to establish achievement 

thresholds and benchmarks, so we 

considered proposing a reporting 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
40886 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

measure in place of the clinical 

measure. In light of the importance of 

the measure, however, we ultimately 

decided to propose a clinical measure in 

order to provide a stronger incentive for 

facilities to obtain informed consent 

from patients receiving anemia 

treatment. In considering possible 

scoring methodologies for the measure, 

we specifically considered setting the 

achievement threshold at 100 percent 

because we believe that facilities should 

always obtain informed consent from 

patients receiving ESA. However, we 

recognized that unexpected events in 

the clinical setting might preclude the 

possibility of obtaining informed 

consent in every instance, so we 

ultimately decided to propose to set the 

achievement threshold for the measure 

at 92 percent. We selected 92 percent 

because this would allow facilities with 

26 patients to meet the achievement 

threshold if they failed to obtain 

informed consent from 2 patients (see 

section III.C.8 for more details). 

3. DMEPOS Provisions 

a. Effects of the Implementation of Fee 

Schedules for Splints, Casts and IOLs 

The implementation of fee schedules 

for use in paying claims for splints, 

casts, and IOLs inserted in a physician’s 

office would result in administrative 

savings associated with determining and 

implementing the Medicare allowed 

payment amounts for these items. As a 

result, the agency would save 

approximately $94,000 in annual 

administrative expenses for calculating 

reasonable charge payment amounts and 

maintaining multiple pricing files 

necessary for making payment on a 

reasonable charge basis. 

b. Clarification of the 3-Year MLR for 

DME 

We expect no significant impact 

regarding application of the 3-year MLR 

for DME. As we noted in the final 

regulation for the 3-year MLR, we 

believe that a vast majority of the 

categories of items that were classified 

as DME before January 1, 2012, did 

function for 3 or more years (76 FR 

70289). The 3-year MLR is designed to 

represent a minimum threshold for 

determination of durability for 

equipment that is consistent with the 

statutory DME payment provisions and 

applies on a prospective basis, effective 

January 1, 2012. CMS recognizes that 

the healthcare industry and 

beneficiaries have come to rely on items 

that have qualified as DME prior to 

January 1, 2012, regardless of whether 

those items met the 3-year MLR set forth 

at § 414.202. We note that given that 

reliance and consistent with the 

regulation at § 414.202, CMS will not 

reopen those prior decisions and 

reclassify the equipment in light of the 

new 3-year standard. We believe that 

continuing the Medicare coverage for all 

the items that qualified as DME on or 

prior to January 1, 2012, would avoid 

disrupting the continuity of care for the 

beneficiaries that received these items 

for medical treatment prior to January 1, 

2012. As noted in the final rule (76 FR 

70301, 70311) it is difficult to predict 

how many different types of new 

devices will be introduced in the market 

in the future that may or may not meet 

the 3-year MLR. However, even absent 

the 3-year MLR, it is likely that new 

products which do not meet the 3-year 

MLR will not qualify as DME based 

upon our current interpretation of the 

criteria for DME. It is possible that with 

the clarification of the 3-year MLR, we 

will limit what can be covered as DME 

compared to what we would have 

covered as DME absent this regulatory 

clarification. Additionally, to the extent 

the regulatory change is binding to some 

new products, there may be reduced 

program cost. The final rule does apply 

to items that were classified as DME on 

or before January 1, 2012 which tends 

to lessen the overall impact to the 

program. In general, we expect that the 

final rule (76 FR 70311) and 

clarification we are now proposing of 

the 3-year MLR would have a minimal, 

if any, savings impact on the 

expenditures under program. This is 

because the vast majority if items 

classified as DME in the past have had 

lifetimes of 3 years or more and so there 

would be very few instances, if any, 

where this clarification will have any 

impact on classification of items as 

DME. 

c. Definition of Routinely Purchased 

DME 

As discussed in section IV of this rule, 

this rule would clarify the definition of 

routinely purchased equipment set forth 

at section § 414.220(a) and would 

classify an expensive item of DME or 

accessory (over $150) as a capped rental 

item if it was not acquired by purchase 

on a national basis at least 75 percent of 

the time during the period July 1986 

through June 1987. Because concerns 

were brought to our attention on the 

application of the definition of routinely 

purchased DME, we performed a review 

of the approximately 250 HCPCS codes 

assigned to the routinely purchased 

category of DME in excess of $150. 

Based on our review, and given the 

definition of routinely purchased 

equipment set forth at section § 414.220, 

we would classify such items in the 

capped rental category if the items were 

not acquired by purchase on a national 

basis at least 75 percent of the time 

during the period July 1986 through 

June 1987. 

As shown in Table 11 of section IV of 

the preamble, our review identified 80 

current HCPCS codes requiring 

reclassification from routinely 

purchased DME to capped rental DME. 

The majority of codes relate to manual 

wheelchairs and wheelchair accessories. 

We have displayed in Column B 

accessories of complex rehabilitative 

power wheelchairs that would be 

classified as capped rental items and for 

which suppliers must also offer to the 

beneficiary on a lump sum purchase 

basis in accordance with § 414.229(h)(3) 

of the regulations. In addition, we have 

displayed in Table 16 below and 

Column B of Table 11 of section IV of 

the preamble approximately 14 codes 

which would be reclassified in two 

stages effective July 1, 2016, rather than 

January 1, 2014, for all items included 

in competitive bidding programs other 

than those furnished in the Round 1 

Recompete programs and areas; and on 

January 1, 2017, for those items 

furnished as part of the Round I 

Recompete competitive bidding 

programs. 

TABLE 16—ITEMS RECLASSIFIED TO CAPPED RENTAL DME CATEGORY EFFECTIVE JULY 1, 2016 * 

HCPCS category HCPCS 

Support Surfaces ......................................................... E0197 

Walkers ........................................................................ E0140 E0149 

Wheelchairs Options/Accessories ............................... E0985 E1020 E1028 E2228 E2368 E2369 E2370 E2375 K0015 K0070 

Wheelchair Seating ...................................................... E0955 

* Items furnished in accordance with Round 1 Recompete contracts would be reclassified effective January 1, 2017. 


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In Table 17 below, we show estimated 

savings associated with making 

payment on a capped rental basis rather 

than a lump sum purchase basis for 

items that would be reclassified. 

TABLE 17—IMPACT OF ITEMS RECLASSIFIED TO CAPPED RENTAL DME 

CATEGORY

FY 

Impact to the federal 

government 

(in $ millions) 

2014 ...................... ¥20 

2015 ...................... ¥20 

2016 ...................... ¥20 

2017 ...................... ¥30 

2018 ...................... ¥40 

The decrease in expenditures is 

expected because the changes would 

eliminate the lump sum purchase 

method for the certain items, and 

instead payment would be made under 

the monthly rental method resulting in 

lower aggregate payments because many 

beneficiaries do not rent items for as 

long as 13 months. In order to prepare 

our impact on the Medicare program, 

we reviewed claims data and utilization 

for all items currently classified as 

capped rental items from 2009 through 

2011 and determined that the weighted 

average number of allowed monthly 

rental services for beneficiaries 

receiving capped rental items during 

that period was 8 months. We therefore 

used 8 months as the estimated number 

of months beneficiaries would rent 

items in Table 11 of section IV of the 

preamble that would not have a 

purchase option. All anticipated savings 

include the price growth for the covered 

item fee schedule update factors for 

DME mandated by section 1834(a)(14) of 

the Act. In addition, our estimate takes 

into account projected changes in DME 

beneficiary enrollment. Furthermore, we 

reflected the savings for these items that 

are currently included under any 

existing competitive bidding program 

and which will be reclassified from 

routinely purchased to capped rental 

effective July 1, 2016. 

From table 11 of section IV of the 

preamble above, entitled Routinely 

Purchased Items Reclassified to Capped 

Rental, for items that would be paid on 

a capped rental basis with no purchase 

option, the highest volume items in 

terms of 2012 allowed charges are: 

TABLE 18—THREE HIGHEST VOLUME ROUTINELY PURCHASED ITEMS RECLASSIFIED TO CAPPED RENTAL

HCPCS Item Purchase fee Allowed 

charges Code added 

E0760 ...................... Ultrasonic Bone Growth Stimulator ....................................................... $3,514 $21,370,310 1997 

E2510 ...................... Speech Generating Device .................................................................... 7,356 20,170,162 2001 

E1161 ...................... Tilt In Space Manual Wheelchair .......................................................... 2,571 18,666,674 2003 

The allowed charges in 2012 for these 

three items combined were 

approximately $60 million, which 

makes up almost half of approximately 

$130 million in allowed charges for 

items that would no longer be eligible 

for purchase. Under the capped rental 

payment rules, these items would be 

rented for up to 13-continuous months, 

following which title to the equipment 

would transfer from the supplier to the 

beneficiary. 

C. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/ 

circulars_a004_a-4), in Table 19 below, 

we have prepared an accounting 

statement showing the classification of 

the transfers and costs associated with 

the various provisions of this proposed 

rule. 

TABLE 19—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS

Category Transfers 

ESRD PPS for CY 2014 

Annualized Monetized Transfers. .................................................................................... $¥780 million. 

From Whom to Whom ..................................................................................................... Federal government to ESRD providers. 

Increased Beneficiary Co-insurance Payments ............................................................... $¥190 million. 

From Whom to Whom ..................................................................................................... Beneficiaries to ESRD providers. 

ESRD QIP for PY 2016 

Annualized Monetized Transfers ..................................................................................... ¥$26.4 million * 

From Whom to Whom ..................................................................................................... Federal government to ESRD providers. 

Category Costs 

Annualized Monetized ESRD Provider Costs ................................................................. $39.5 thousand ** 

DME Definition of Routinely Purchased DME 

Category Transfers 

Annualized Monetized Transfer Payments ................................. ¥$25.3 million .......

¥$25.7 million .......

2013 

2013 

7% 

3% 

2014–2018 

2014–2018 

From Whom to Whom ................................................................. Federal government to Medicare providers. 

* It is the reduced payment to the ESRD facilities, which fall below the quality standards as stated in section III.C.11 of this proposed rule. 

** It is the cost associated with the collection of information requirements for all ESRD facilities. 


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40888 Federal Register / Vol. 78, No. 130 / Monday, July 8, 2013 / Proposed Rules 

XI. Regulatory Flexibility Act Analysis 

The Regulatory Flexibility Act 

(September 19, 1980, Pub. L. 96–354) 

(RFA) requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. 

Approximately 18 percent of ESRD 

dialysis facilities are considered small 

entities according to the Small Business 

Administration’s (SBA) size standards, 

which classifies small businesses as 

those dialysis facilities having total 

revenues of less than $35.5 million in 

any 1 year. Individuals and States are 

not included in the definitions of a 

small entity. For more information on 

SBA’s size standards, see the Small 

Business Administration’s Web site at 

http://www.sba.gov/content/smallbusiness-size-standards (Kidney 

Dialysis Centers are listed as 621492 

with a size standard of $35.5 million). 

We do not believe ESRD facilities are 

operated by small government entities 

such as counties or towns with 

populations of 50,000 or less, and 

therefore, they are not enumerated or 

included in this estimated RFA analysis. 

Individuals and States are not included 

in the definition of a small entity. 

For purposes of the RFA, we estimate 

that approximately 18 percent of ESRD 

facilities are small entities as that term 

is used in the RFA (which includes 

small businesses, nonprofit 

organizations, and small governmental 

jurisdictions). This amount is based on 

the number of ESRD facilities shown in 

the ownership category in Table 12. 

Using the definitions in this ownership 

category, we consider the 614 facilities 

that are independent and the 400 

facilities that are shown as hospitalbased to be small entities. The ESRD 

facilities that are owned and operated 

by LDOs and regional chains would 

have total revenues of more than $35.5 

million in any year when the total 

revenues for all locations are combined 

for each business (individual LDO or 

regional chain), and are not, therefore, 

included as small entities. 

For the ESRD PPS updates proposed 

in this rule, a hospital-based ESRD 

facility (as defined by ownership type) 

is estimated to receive a 9.4 percent 

decrease in payments for CY 2014. An 

independent facility (as defined by 

ownership type) is estimated to receive 

a 9.5 percent decrease in payments for 

CY 2014. 

Based on the proposed QIP payment 

reduction impacts to ESRD facilities for 

PY 2016, we estimate that of the 2,069 

ESRD facilities expected to receive a 

payment reduction, 461 ESRD small 

entity facilities would experience a 

payment reduction (ranging from 0.5 

percent up to 2.0 of total payments), as 

presented in Table 13 (‘‘Estimated 

Distribution of PY 2016 ESRD QIP 

Payment Reductions’’) and Table 15 

(‘‘Impact of Proposed QIP Payment 

Reductions to ESRD Facilities for PY 

2016’’) above. We anticipate the 

payment reductions to average 

approximately $12,738 per facility 

among the 2,069 facilities receiving a 

payment reduction, with an average of 

$13,810 per small entity facilities 

receiving a payment reduction. Using 

our projections of facility performance, 

we then estimated the impact of 

anticipated payment reductions on 

ESRD small entities, by comparing the 

total payment reductions for the 461 

small entities expected to receive a 

payment reduction, with the aggregate 

ESRD payments to all small entities. We 

estimate that there are a total of 1,014 

small entity facilities. For this entire 

group of 1,014 ESRD small entity 

facilities, a decrease of 0.57 percent in 

aggregate ESRD payments is observed. 

Splints, casts and intraocular lenses 

(IOLs) affected by this rule are generally 

furnished by physicians. Approximately 

95 percent of physicians are considered 

to be small entities for the purposes of 

the RFA. Individuals and states are not 

included in the definition of a small 

entity. The reasonable charge payment 

amounts for splints and casts are based 

on national reasonable charge amounts 

increased each year by the 12-month 

percentage change in the CPI–U ending 

June of the previous year. These 

national inflation-indexed charges can 

easily be converted to fee schedule 

amounts with no impact on the national 

Medicare payment amounts for these 

items. Therefore, the fee schedule 

amounts that would take effect on 

January 1, 2014, for splints and casts 

would be the same as the reasonable 

charge amounts that would take effect 

on January 1, 2014, for these items. This 

rule would have no impact on small 

businesses that furnish these items. 

Given that Medicare pays for very few 

intraocular lenses inserted in a 

physician’s office, these entities do not 

rely on Medicare payment for these 

items to support their businesses. 

Because the fee schedule amounts that 

would take effect on January 1, 2014, for 

intraocular lenses inserted in a 

physician’s office would be based on the 

national average allowed charge for the 

item, the payment amounts these 

entities would receive under the fee 

schedule will be, on average, the same 

amounts they are currently paid for 

these items when considering the small 

national volume of claims as a whole. 

For example, in 2011, the average 

allowed charge for an IOL inserted in a 

physician’s office was $174 for just 287 

cases nationwide. If a particular 

physician office is a small business that 

charges less than $174 per IOL, a 

national fee schedule amount of $174 

could increase payment for this small 

business for this item. Alternatively, if 

a particular physician office is a small 

business that charges more than $174 

per IOL, a national fee schedule amount 

of $174 could decrease payment for this 

small business for this item. However, 

with only 287 cases nationwide, 

implementing a national fee of $174 

would not have a significant impact on 

any physician office that is a small 

business because the volume of claims 

indicates that the small businesses are 

not relying on payment for these items 

to fund their businesses (physician 

practices) as a whole. Therefore, we 

expect that the overall impact of this 

rule on small businesses that are 

physician offices that insert IOLs 

covered by Medicare would be minimal. 

Approximately 85 percent of suppliers 

of DMEPOS in general are considered to 

be small entities for the purposes of the 

RFA. We expect that the impact of 

moving certain expensive DME items 

from the routinely purchased payment 

class to the capped rental payment class 

on small business will be minimal since 

the suppliers would still receive 105 

percent of the purchase fee for items 

that are rented for the full 13-month 

capped rental period. In addition, the 

supplier would retain ownership of 

equipment that is not used for 13 

months and can furnish the equipment 

to another beneficiary, beginning a new, 

separate 13-month capped rental period 

for the same item. 

Therefore, the Secretary has 

determined that this proposed rule will 

have a significant economic impact on 

a substantial number of small entities. 

We solicit comment on the RFA analysis 

provided. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. Any such regulatory impact 

analysis must conform to the provisions 

of section 603 of the RFA. For purposes 

of section 1102(b) of the Act, we define 

a small rural hospital as a hospital that 

is located outside of a metropolitan 

statistical area and has fewer than 100 

beds. We do not believe this proposed 

rule will have a significant impact on 


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operations of a substantial number of 

small rural hospitals because most 

dialysis facilities are freestanding. 

While there are 159 rural hospital-based 

dialysis facilities, we do not know how 

many of them are based at hospitals 

with fewer than 100 beds. However, 

overall, the 159 rural hospital-based 

dialysis facilities will experience an 

estimated 10.1 percent decrease in 

payments. As a result, this proposed 

rule is estimated to have a significant 

impact on small rural hospitals. 

Therefore, the Secretary has determined 

that this proposed rule will have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. 

XII. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

(Pub. L. 104–4) also requires that 

agencies assess anticipated costs and 

benefits before issuing any rule whose 

mandates require spending in any 1 year 

$100 million in 1995 dollars, updated 

annually for inflation. In 2013, that 

threshold is approximately $141 

million. This proposed rule does not 

include any mandates that would 

impose spending costs on State, local, or 

Tribal governments in the aggregate, or 

by the private sector, of $141 million. 

XIII. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. We have reviewed this 

proposed rule under the threshold 

criteria of Executive Order 13132, 

Federalism, and have determined that it 

will not have substantial direct effects 

on the rights, roles, and responsibilities 

of States, local or Tribal governments. 

XIV. Congressional Review Act 

This proposed rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801 et seq.) and has been 

transmitted to the Congress and the 

Comptroller General for review. 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget. 

XV. Files Available to the Public via the 

Internet 

This section lists the Addenda 

referred to in the preamble of this 

proposed rule. Beginning in CY 2012, 

the Addenda for the annual ESRD PPS 

proposed and final rulemakings will no 

longer appear in the Federal Register. 

Instead, the Addenda will be available 

only through the Internet. We will 

continue to post the Addenda through 

the Internet. 

Readers who experience any problems 

accessing the Addenda that are posted 

on the CMS Web site at http:// 

www.cms.gov/ESRDPayment/PAY/ 

list.asp, should contact Michelle Cruse 

at (410) 786–7540. 

List of Subjects 

42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 414 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medicare, 

and Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as follows: 

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END-STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

■ 1. The authority citation for part 413 

is revised to read as follows: 

Authority: Secs. 1102, 1812(d), 1814(b), 

1815, 1833(a), (i), and (n), 1861(v), 1871, 

1881, 1883 and 1886 of the Social Security 

Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 

1395g, 1395l(a), (i), and (n), 1395x(v), 

1395hh, 1395rr, 1395tt, and 1395ww); and 

sec. 124 of Pub. L. 106–113 (113 Stat. 1501A– 

332), sec. 3201 of Pub. L. 112–96 (126 Stat. 

156), and sec. 632 of Pub. L. 112–240 (126 

Stat. 2354). 

§ 413.174 [Amended] 

■ 2. Section 413.174 (f)(6) is amended 

by removing ‘‘January 1, 2014’’ and by 

adding in its place ‘‘January 1, 2016. 

§ 413.237 [Amended] 

■ 3. Section 413.237(a)(1)(iv) is 

amended by removing ‘‘excluding’’ and 

by adding in its place ‘‘including’’; and 

by removing ‘‘January 1, 2014’’ and 

adding in its place ‘‘January 1, 2016’’. 

PART 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES 

■ 4. The authority citation for part 414 

continues to read as follows: 

Authority: Secs. 1102, 1871, and 1881(b)(1) 

of the Social Security Act (42 U.S.C. 1302, 

1395hh, and 1395rr(b)(1)). 

■ 5. The heading for subpart C is revised 

to read as follows: 

Subpart C—Fee Schedules for 

Parenteral and Enteral Nutrition (PEN) 

Nutrients, Equipment and Supplies, 

Splints, Casts, and Certain Intraocular 

Lenses (IOLs) 

■ 6. Section 414.100 is revised to read 

as follows: 

§ 414.100 Purpose. 

This subpart implements fee 

schedules for PEN items and services, 

splints and casts, and IOLs inserted in 

a physician’s office as authorized by 

section 1842(s) of the Act. 

■ 7. Section 414.102 is amended by 

revising paragraphs (a) introductory 

text, (a)(2), (b)(1), and (c) to read as 

follows: 

§ 414.102 General payment rules. 

(a) General rule. For PEN items and 

services furnished on or after January 1, 

2002, and for splints and casts and IOLs 

inserted in a physician’s office on or 

after January 1, 2014, Medicare pays for 

the items and services as described in 

paragraph (b) of this section on the basis 

of 80 percent of the lesser of— 

* * * * * 

(2) The fee schedule amount for the 

item or service, as determined in 

accordance with §§ 414.104 thru 

414.108. 

(b) * * * 

(1) CMS or the carrier determines fee 

schedules for parenteral and enteral 

nutrition (PEN) nutrients, equipment, 

and supplies, splints and casts, and 

IOLs inserted in a physician’s office, as 

specified in §§ 414.104 thru 414.108. 

* * * * * 

(c) Updating the fee schedule 

amounts. For the years 2003 through 

2010 for PEN items and services, the fee 

schedule amounts of the preceding year 

are updated by the percentage increase 

in the CPI–U for the 12-month period 

ending with June of the preceding year. 

For each year subsequent to 2010 for 

PEN items and services and for each 

year subsequent to 2014 for splints and 

casts, and IOLs inserted in a physician’s 

office, the fee schedule amounts of the 

preceding year are updated by the 

percentage increase in the CPI–U for the 

12-month period ending with June of 


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the preceding year, reduced by the 

productivity adjustment described in 

section 1886(b)(3)(B)(xi)(II) of the Act. 

■ 8. Section 414.106 is added to read as 

follows: 

§ 414.106 Splints and casts. 

(a) Payment rules. Payment is made in 

a lump sum for splints and casts. 

(b) Fee schedule amount. The fee 

schedule amount for payment for an 

item or service furnished in 2014 is the 

reasonable charge amount for 2013, 

updated by the percentage increase in 

the CPI–U for the 12-month period 

ending with June of 2013. 

■ 9. Section 414.108 is added to read as 

follows: 

§ 414.108 IOLs inserted in a physician’s 

office. 

(a) Payment rules. Payment is made in 

a lump sum for IOLs inserted in a 

physician’s office. 

(b) Fee schedule amount. The fee 

schedule amount for payment for an IOL 

furnished in 2014 is the national 

average allowed charge for the IOL 

furnished from in calendar year 2012, 

updated by the percentage increase in 

the CPI–U for the 24-month period 

ending with June of 2013. 

■ 10. Revise the heading to Subpart D to 

read as follows: 

Subpart D—Payment for Durable 

Medical Equipment, Prosthetic and 

Orthotic Devices, and Surgical 

Dressings 

* * * * * 

■ 11. Section § 414.200 is revised to 

read as follows: 

§ 414.200 Purpose. 

This subpart implements sections 

1834(a), (h) and (i) of the Act by 

specifying how payments are made for 

the purchase or rental of new and used 

durable medical equipment, prosthetic 

and orthotic devices, and surgical 

dressings for Medicare beneficiaries. 

■ 12. Section 414.226 is amended by 

revising paragraph (c)(6) to read as 

follows: 

§ 414.226 Oxygen and oxygen equipment. 

* * * * * 

(c) * * * 

(6) Beginning in 2008, CMS makes an 

annual adjustment to the national 

limited monthly payment rate for items 

described in paragraph (c)(1)(i) of this 

section to ensure that such payment 

rates do not result in expenditures for 

any year that are more or less than the 

expenditures that would have been 

made if such classes had not been 

established. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: June 19, 2013. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: June 26, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–16107 Filed 7–1–13; 4:15 pm] 

BILLING CODE 4120–01–P 


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