628 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 413 

[CMS–3206–F] 

RIN 0938–AP91 

Medicare Program; End-Stage Renal 

Disease Quality Incentive Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule will implement 

a quality incentive program (QIP) for 

Medicare outpatient end-stage renal 

disease (ESRD) dialysis providers and 

facilities with payment consequences 

beginning January 1, 2012, in 

accordance with section 1881(h) of the 

Act (added on July 15, 2008 by section 

153(c) of the Medicare Improvements 

for Patients and Providers Act (MIPPA)). 

Under the ESRD QIP, ESRD payments 

made to dialysis providers and facilities 

under section 1881(b)(14) of the Social 

Security Act will be reduced by up to 

two percent if the providers/facilities 

fail to meet or exceed a total 

performance score with respect to 

performance standards established with 

respect to certain specified measures. 

DATES: These regulations are effective 

on February 4, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Shannon Kerr, (410) 786–3039. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

A. Overview of Quality Monitoring 

Initiatives 

B. Statutory Authority for the ESRD QIP 

C. Finalized Anemia Management and 

Dialysis Adequacy Measures 

II. Provisions of the Proposed Regulations 

III. Analysis of and Responses to Public 

Comments 

A. Performance Standards for the ESRD 

QIP Measures 

B. Performance Period for the ESRD QIP 

Measures 

C. Methodology for Calculating the Total 

Performance Score for the ESRD QIP 

Measures 

D. Payment Reductions Using the Total 

Performance Score 

E. Public Reporting Requirements 

1. Introduction 

2. Notifying Providers/Facilities of Their 

QIP Scores 

3. Informing the Public Through FacilityPosted Certificates 

4. Informing the Public Through 

Medicare’s Web site 

F. Excluded Providers 

G. Additional Comments 

IV. Future QIP Considerations 

A. ESRD Services Monitoring and 

Evaluation 

B. Potential QIP Changes and Updates 

V. Collection of Information Requirements 

VI. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impact 

C. Anticipated Effects 

D. Alternatives Considered 

Acronyms 

Because of the many terms to which 

we refer by acronym in this proposed 

rule, we are listing the acronyms used 

and their corresponding meanings in 

alphabetical order below: 

CIP Core Indicators Project 

CMS Centers for Medicare & Medicaid 

Services 

CPM Clinical performance measure 

CROWNWeb Consolidated Renal 

Operations in a Web-Enabled Network 

DFC Dialysis Facility Compare 

DFR Dialysis Facility Report 

ESA Erythropoiesis-stimulating agent 

ESRD End-stage renal disease 

FDA Food and Drug Administration 

Kt/V A measure of dialysis adequacy where 

K is dialyzer clearance, t is dialysis time, 

and V is total body water volume 

LDO Large dialysis organization 

MIPPA Medicare Improvements for Patients 

and Providers Act of 2008 (Pub. L. 110– 

275) 

NQF National Quality Forum 

PPS Prospective payment system 

QIP Quality incentive program 

REMIS Renal management information 

system 

RFA Regulatory Flexibility Act 

SIMS Standard information management 

system 

SSA Social Security Administration 

the Act Social Security Act 

URR Urea reduction ratio 

I. Background 

A. Overview of Quality Monitoring 

Initiatives 

For over 30 years, monitoring the 

quality of care provided to end-stage 

renal disease (ESRD) patients and 

provider/facility accountability have 

been important components of the 

Medicare ESRD payment system. In the 

proposed rule, we described the 

evolution of our ESRD quality 

monitoring initiatives by category: The 

ESRD Network Organization Program, 

the Clinical Performance Measures 

(CPM) Project, Dialysis Facility 

Compare (DFC), the ESRD Quality 

Initiative, the ESRD Conditions for 

Coverage, and CROWNWeb (75 FR 

49216–49217). Most recently, we 

finalized three quality measures that we 

will use for the initial year of the QIP 

(see ‘‘End-Stage Renal Disease 

Prospective Payment System final rule 

(referred to in this final rule as the 

‘‘ESRD PPS final rule’’), which appeared 

in the Federal Register on August 12, 

2010 (75 FR 49030, 49182–49190)). We 

also proposed to implement other 

components of the QIP in a notice of 

proposed rulemaking entitled ‘‘EndStage Renal Disease Quality Incentive 

Program’’ proposed rule, which 

appeared in the Federal Register on 

August 12, 2010 (75 FR 49215–49232). 

We received and reviewed many helpful 

comments regarding the design of the 

QIP that contributed to the development 

of this ESRD QIP final rule. 

We view the ESRD QIP, required by 

section 1881(h) of the Social Security 

Act (the Act), as the next step in the 

evolution of the ESRD quality program 

that began more than three decades ago. 

Our vision is to implement a robust, 

comprehensive ESRD QIP that builds on 

the foundation that has already been 

established. 

B. Statutory Authority for the ESRD QIP 

Congress required in section 153 of 

MIPPA that the Secretary implement an 

ESRD quality incentive program (QIP). 

Specifically, section 1881(h) of the Act, 

as added by section 153(c) of MIPPA, 

requires the Secretary to develop a QIP 

that will result in payment reductions to 

providers of dialysis services and 

dialysis facilities that do not meet or 

exceed an established total performance 

score with respect to performance 

standards established for certain 

specified measures. As provided under 

this section, the payment reductions, 

which will be up to two percent of 

payments otherwise made to providers 

and facilities under section 1881(b)(14) 

of the Act, will apply to payment for 

renal dialysis services furnished on or 

after January 1, 2012. The total 

performance score that providers and 

facilities must meet or exceed in order 

to receive their full payment in 2012 

will be based on a specific performance 

period prior to this date. Under section 

1881(h)(1)(C) of the Act, the payment 

reduction will only apply with respect 

to the year involved for a provider/ 

facility and will not be taken into 

account when computing future 

payment rates for the impacted 

provider/facility. 

For the ESRD QIP, section 1881(h) of 

the Act generally requires the Secretary 

to: (1) Select measures; (2) establish the 

performance standards that apply to the 

individual measures; (3) specify a 

performance period with respect to a 

year; (4) develop a methodology for 

assessing the total performance of each 

provider and facility based on the 

performance standards established with 

respect to the measures for a 

performance period; and (5) apply an 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 629 

appropriate payment reduction to 

providers and facilities that do not meet 

or exceed the established total 

performance score. 

C. Finalized Anemia Management and 

Hemodialysis Adequacy Measures 

In accordance with section 

1881(h)(2)(A)(i) of the Act, we finalized 

in the ESRD PPS final rule the following 

three measures for the initial year of the 

ESRD QIP: 

• Percentage of Medicare patients 

with an average Hemoglobin Less Than 

10.0g/dL; 

• Percentage of Medicare patients 

with an average Hemoglobin Greater 

Than 12.0g/dL; 

• Percentage of Medicare 

hemodialysis patients with an average 

Urea Reduction Ratio (URR) > 65 

percent. 

(75 FR 49182). However, we received 

some questions on the measures during 

the public comment period for this rule 

and are, therefore, providing clarifying 

information in this final rule. 

As we stated in the ESRD PPS final 

rule, pediatric patients (those < 18 years 

of age) will not be included in the final 

calculation of the anemia management 

measures (75 FR 49185). However, we 

want to emphasize that providers/ 

facilities do not need to submit any new 

data on the measures we are using for 

the first year of the QIP. This population 

will be excluded from the final 

calculation of the measure during the 

first year (75 FR 49185). 

We also want to reiterate that the 

patient population for the anemia 

management measures will include 

hemodialysis and peritoneal dialysis 

patients who are receiving ESAs. To be 

eligible for inclusion in the patient 

population for these measures, the 

patient must have four or more eligible 

claims from the provider/facility within 

the performance period. Data from 

patients whose first ESRD maintenance 

dialysis started less than 90 days after 

diagnosis or who have hemoglobin 

values of less than 5g/dL or greater than 

20g/dL will be excluded from the 

calculation (75 FR 49182). Also, patients 

not receiving ESAs are excluded from 

these measures (75 FR 49184). 

We would like to clarify that as we 

stated in the ESRD PPS final rule, the 

hemodialysis adequacy measure will be 

calculated as the percentage of patients 

with a URR greater than or equal to 65 

percent (75 FR 49190). 

Additionally, providers/facilities do 

not need to submit any additional data 

with respect to the measures for the first 

year of the ESRD QIP. We will calculate 

the measures using claims data, which 

we will collect, as we do for DFC, in 

accordance with the technical 

specifications outlined in the Dialysis 

Facility Reports, which can be accessed 

for reference at: http:// 

www.dialysisreports.org/ 

Methodology.aspx. For the hemodialysis 

adequacy measure, home hemodialysis 

patients and peritoneal dialysis patients, 

as well as pediatric patients, are 

excluded from the calculation (75 FR 

49185). 

We also note that the laboratory 

values we will use to calculate the three 

finalized measures are included on the 

Medicare ESRD claim form and, thus, 

are submitted by providers/facilities 

along with their claims. For guidance on 

how those values should be obtained 

and submitted, please see the Medicare 

Claims Processing Manual (Medicare 

Publication 100.04, Chapter 8— 

Outpatient ESRD Hospital, Independent 

Facility, and Physician/Supplier Claims, 

Section 50.3). 

Requirements for Issuance of 

Regulations 

Section 902 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) 

amended section 1871(a) of the Act and 

requires the Secretary, in consultation 

with the Director of the Office of 

Management and Budget, to establish 

and publish timelines for the 

publication of Medicare final 

regulations based on the previous 

publication of a Medicare proposed or 

interim final regulation. Section 902 of 

the MMA also states that the timelines 

for these regulations may vary, but shall 

not exceed three years after publication 

of the preceding proposed or interim 

final regulation except under 

exceptional circumstances. 

This final rule finalizes provisions set 

forth in the Notice of Proposed 

Rulemaking, entitled ‘‘End-Stage Renal 

Disease Quality Incentive Program’’, 

published on August 12, 2010 in the 

Federal Register (75 FR 49215 through 

49232). In addition, this final rule has 

been published within the three-year 

time limit imposed by section 902 of the 

MMA. Therefore, we believe that this 

final rule is being published in 

accordance with the statutory 

requirements of section 902 to ensure 

the timely publication of final 

regulations. 

II. Provisions of the Proposed 

Regulations 

On August 12, 2010, we published in 

the Federal Register a proposed rule 

entitled ‘‘Medicare Program; End-Stage 

Renal Disease Quality Incentive 

Program’’ (75 FR 49215). In that 

proposed rule, we proposed that under 

the ESRD QIP, ESRD payments for 

facilities/providers would be reduced by 

up to two percent if they failed to meet 

or exceed the total performance score 

for performance standards established 

with respect to certain quality measures. 

As stated above, the three quality 

measures we will use for payment 

consequence year 2012 are Hemoglobin 

Less Than 10.0g/dL, Hemoglobin More 

Than 12.0g/dL and Hemodialysis 

Adequacy ≥ 65 percent (URR). As 

detailed below, we received numerous 

comments on the various portions of the 

proposed rule, which we analyze and 

respond to below. After consideration of 

these comments and responses, we are 

finalizing the ESRD QIP as proposed. 

III. Analysis of and Responses to Public 

Comments 

The proposed rule was published on 

August 12, 2010 (75 FR 49215 through 

49232) in the Federal Register with a 

comment period that ended on 

September 24, 2010. We received 

approximately 71 public comments. 

Interested parties that submitted 

comments included dialysis facilities, 

the national organizations representing 

dialysis facilities, nephrologists, nurses, 

nutritionists, home health agencies, the 

major chain dialysis facilities, clinical 

laboratories, pharmaceutical 

manufacturers, hospitals and their 

representatives, individual dialysis 

patients, advocacy groups, and the 

Medicare Payment Advisory 

Commission (MedPAC). In this final 

rule, we provide a summary of each 

proposed provision, a summary of the 

public comments received, our 

responses, and any changes to the 

proposed ESRD QIP contained in this 

final rule. 

A. Performance Standards for the ESRD 

QIP Measures 

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

requires the Secretary to establish 

performance standards with respect to 

the measures selected for the QIP for a 

performance period with respect to a 

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

provides that the performance standards 

shall include levels of achievement and 

improvement, as determined 

appropriate by the Secretary. However, 

for the first performance period, we 

proposed to use for the three selected 

measures the performance standard 

required by the special rule in section 

1881(h)(4)(E) of the Act. Under this 

provision, the Secretary is required to 

‘‘initially use’’, as a performance 

standard, the lesser of a provider/ 

facility-specific performance rate in the 

year selected by the Secretary under the 

second sentence of section 


kgrant on DSKGBLS3C1PROD with BILLS
630 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

1881(b)(14)(A)(ii) of the Act, or a 

standard based on the national 

performance rates for such measures in 

a period determined by the Secretary. 

We did not propose to include in this 

initial performance standard levels of 

achievement or improvement because 

we do not believe that section 

1881(h)(4)(E) of the Act requires that we 

include such levels. In addition, we 

interpret the term ‘‘initially’’ to apply 

only to the performance period 

applicable for payment consequence 

calendar year 2012. For subsequent 

performance periods, we will propose 

performance standards under section 

1881(h)(4)(A) of the Act. 

As stated above, to implement the 

special rule for the anemia management 

and hemodialysis adequacy measures, 

we proposed to use as the performance 

standard the lesser of the performance 

of a provider or facility on each measure 

during 2007 (the year selected by the 

Secretary under the second sentence of 

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

referred to as the base utilization year), 

or the national performance rates of all 

providers/facilities for each measure in 

2008. 

In setting the performance standard 

based on national performance rates, we 

proposed to adopt a standard that is 

equal to the national performance rates 

of all dialysis providers and facilities 

based on 2008 data as calculated and 

reported on the Dialysis Facility 

Compare (DFC) Web site. We proposed 

to use 2008 data because it is the most 

recent year for which data is publicly 

available prior to the beginning of the 

proposed performance period. 

Specifically, the national performance 

rates for the anemia management and 

hemodialysis adequacy measures were 

posted on DFC in November 2009, as 

follows: 

• For the anemia management 

measure (referred to in this final rule as 

the ‘‘Hemoglobin Less Than 10g/dL 

Measure’’)—the percentage of Medicare 

patients who have an average 

hemoglobin value less than 10.0g/dL: 

the national performance rate is two 

percent. 

• For the anemia management 

measure (referred to in this final rule as 

the ‘‘Hemoglobin Greater Than 12g/dL 

Measure’’)—the percentage of Medicare 

patients who have an average 

hemoglobin value greater than 12.0g/dL: 

the national performance rate is 26 

percent. 

• For the proposed hemodialysis 

adequacy measure (referred to in this 

final rule as ‘‘Hemodialysis Adequacy 

Measure’’)—the percentage of Medicare 

patients who have an average URR level 

greater than or equal to 65 percent: the 

national performance rate is 96 percent. 

For purposes of implementing the 

special rule, we proposed that the 

performance standard for each of the 

three measures for the initial 

performance period with respect to 

payment consequence year 2012 would 

be the lesser of (1) the provider/facilityspecific rate for each of these measures 

in 2007, or (2) the 2008 national 

performance rates for each of these 

measures. 

We received several comments on our 

proposed selection of performance 

standards. Summaries of the comments 

received and our responses are set forth 

below. 

Comment: Several commenters 

objected to setting the performance 

standards based on previous provider/ 

facility performance in 2007 and 2008 

because they believe that those years 

provide an inaccurate picture of the 

quality of care furnished to ESRD 

patients today. Specifically, these 

commenters noted that changes have 

been made since 2007 in anemia 

management clinical practice and 

suggested that CMS set the initial 

performance standards based on more 

current data, such as data from 2009. 

Response: As stated above, under 

section 1881(h)(4)(E) of the Act, the 

Secretary is required to ‘‘initially use’’ as 

a performance standard the lesser of a 

provider/facility-specific performance 

rate in the year selected by the Secretary 

under the second sentence of section 

1881(b)(14)(A)(ii) of the Act, or a 

standard based on the national 

performance rate for each measure in a 

period determined by the Secretary. In 

the ESRD PPS final rule we determined 

that 2007 was the year representing the 

lowest per-patient utilization of the 

renal dialysis services which comprise 

the ESRD payment bundle as required 

by section 1881(b)(14)(A)(ii) of the Act. 

(75 FR 49065). Therefore, in accordance 

with section 1881(h)(4)(E)(i), we must 

use the 2007 provider/facility 

performance rates. 

In setting the performance standard 

based on national performance rates 

under section 1881(h)(4)(E)(ii), we 

sought to balance the importance of 

using the most recent available data 

with the desire to use data that was 

publicly available at the time we issued 

the proposed rule. At the time we issued 

the proposed rule, the most recent 

national performance rate data that was 

publicly available on DFC was from 

2008. 

We agree with the commenters that 

the initial performance standard should 

be based on the most contemporary data 

and as close to the performance period 

as possible. However, we also believe 

that it is important for providers/ 

facilities, beneficiaries and the public to 

know exactly what the performance 

standards are as soon as possible. 

Comment: One commenter noted that 

the proposed initial performance 

standard based on the 2008 national 

performance rate of two percent for the 

Hemoglobin Less Than 10g/dL measure 

would be extremely difficult for 

providers/facilities to meet and would 

likely lead to overuse of ESAs. The 

commenter noted that the 2008 data 

reflects practices that were furnished 

prior to recent studies and FDA 

warnings regarding the danger of high 

hemoglobin levels, and that at the time, 

providers/facilities were unaware of the 

danger of high hemoglobin levels. 

Additionally, the commenter suggested 

setting the initial performance standards 

for the anemia management measures at 

10 percent for Hemoglobin Less than 

10g/dL and Hemoglobin Greater than 

12g/dL. 

Response: We disagree with the 

commenter’s suggestion that the anemia 

management measures performance 

standards should be set at 10 percent. 

We have made providers/facilities 

aware of the dangers of high hemoglobin 

levels related to use of ESAs since as 

early as 2005, when we changed our 

policy regarding ESAs and the 

monitoring of high hemoglobin levels 

(see CMS Manual System, Pub 100–04 

Medicare Claims Processing, 

Transmittal 751 (November 10, 2005)). 

Since that time and with the release of 

the FDA guidelines in 2008, the 

historical data demonstrate that the 

number of patients with high 

hemoglobin levels has decreased and 

the number of patients with Hemoglobin 

Less than 10 g/dL has not increased. We 

believe that lowering the standard to 10 

percent does not move quality forward. 

We also believe that most providers/ 

facilities are capable of meeting the 

initial 2 percent performance standard, 

and note that the 2008 national 

performance rates for the anemia 

management measures will only be used 

as the initial performance standard for 

those providers/facilities whose 2007 

specific rates are lower than these 

national performance rates. For 

providers/facilities that had 2007 

specific rates that were higher than the 

2008 national performance rates their 

specific performance rates will be used 

as the initial performance standard. We 

also note that analysis of historical data 

for all three measures shows 

improvements in the average provider/ 

facility performance of each measure, 

and therefore more facilities should 

receive maximum performance scores 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 631 

for these measures in future years of the 

ESRD QIP. 

Comment: One commenter requested 

that the initial performance standard for 

the hemodialysis adequacy measure be 

recalculated to reflect that home 

hemodialysis patients are excluded from 

the measure. 

Response: As stated in the ESRD PPS 

final rule (75 FR 49186), home 

hemodialysis patients are not part of the 

measure population for the 

hemodialysis adequacy measure for 

purposes of the ESRD QIP. Therefore, 

home hemodialysis patients will not be 

included in the measure calculation. 

After consideration of the public 

comments, we are finalizing the 

performance standards as proposed. 

B. Performance Period for the ESRD QIP 

Measures 

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

requires the Secretary to establish a 

performance period with respect to a 

year, and for that performance period to 

occur prior to the beginning of such 

year. Because we are required under 

section 1881(h)(1)(A) of the Act to 

implement the payment reduction 

beginning with renal dialysis services 

furnished on or after January 1, 2012, 

the first performance period would need 

to occur prior to that date. 

We proposed to select all of CY 2010 

as the initial performance period for the 

three finalized measures (42 FR 49218). 

We believe that this is the performance 

period that best balances the need to 

collect sufficient data, analyze the data, 

calculate the provider/facility-specific 

total performance scores, determine 

whether providers and facilities meet 

the performance standards, prepare the 

pricing files needed to implement 

applicable payment reductions 

beginning on January 1, 2012, and allow 

providers and facilities time to preview 

their performance scores and inquire 

about their scores prior to finalizing 

their scores and making performance 

data public (75 FR 49218). We requested 

public comments about the selection of 

CY 2010 as the initial performance 

period. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: Many commenters 

suggested that calendar year 2010 

should not be selected as the 

performance period. Some commenters 

suggested that the QIP was created to 

ensure that patient outcomes are not 

negatively affected as an unintended 

consequence of the new prospective 

payment system for ESRD care, and for 

that reason, they believe that the initial 

performance period should be calendar 

year (CY) 2011, when the new 

prospective payment system for ESRD 

care is effective, rather than CY 2010. 

Recognizing the time constraints that 

CMS is under with respect to the use of 

data from a performance period, one 

commenter suggested that CMS select 

the first half of 2011 as the performance 

period and conduct data processing 

during the final six months of 2011, if 

this final rule is published in 2010. 

Response: Although an important goal 

of the ESRD QIP is to assess whether 

patient outcomes are negatively affected 

as a result of the new ESRD PPS, the 

primary purpose of the QIP is to 

incentivize providers/facilities to 

continuously improve their performance 

in the care of ESRD patients. In addition 

to the reasons we gave for selecting CY 

2010 as the performance period in the 

proposed rule (42 FR 49218–19), we 

believe that selecting CY 2010 as the 

initial performance period will enable 

us to do two things: (1) Determine the 

first set of performance scores prior to 

the change in the ESRD payment system 

which, as indicated, may affect 

provider/facility practice especially as it 

relates to medication management, 

laboratory testing and other patient 

management practices that now come 

under the bundled payment; and (2) use 

this first set of performance scores to 

evaluate whether the new ESRD PPS has 

created positive or negative 

consequences. We also believe that 

using all of CY 2010 as the initial 

performance period will provide us 

with a more complete picture of 

provider and facility performance than 

we would get if we set a six month 

performance period, which will enable 

us to conduct a more robust evaluation 

of provider/facility performance. We 

also plan to implement a monitoring 

program in 2011 for the purpose of 

tracking the impact of the new ESRD 

PPS and observing any changes to 

access to and quality of care for 

beneficiaries. 

Comment: Other commenters stated 

that using CY 2010 as the initial 

performance period would not serve as 

an incentive because dialysis providers 

and facilities would be judged on 

outcomes based on care provided to 

patients before the performance 

standards were established. 

Commenters also observed that data 

used for the QIP score will be over a 

year old by the time providers/facilities 

receive payments affected by that data. 

Response: We agree that it is 

important to use up-to-date quality data 

for the ESRD QIP, which is why we are 

working on the feasibility of using such 

data in future years. Currently, claims 

are the most complete data source for 

the selected measures, but we need a 

sufficient time period to collect and 

analyze the data before we can use it to 

make payment determinations. For this 

reason, we do not believe that we can 

select a performance period more recent 

than CY 2010 for the initial year of the 

ESRD QIP. As other data sources or 

accurate and reliable methodologies for 

faster analysis of claims data become 

available, we will seek to use those 

resources to reduce the gap between the 

performance period and payment 

implementation. 

Comment: Several commenters 

objected to the proposed 2010 

performance period, claiming that CMS 

should have established the 

performance standards (by issuing this 

final rule) by the end of 2009 if it 

wanted to set 2010 as the performance 

period. Specifically, commenters 

reference section 1881(h)(4)(C), which 

requires the Secretary to ‘‘establish the 

performance standards * * * prior to 

the beginning of the performance period 

for the year involved.’’ 

Response: We acknowledge that 

section 1881(h)(4)(C) requires the 

Secretary to establish performance 

standards under subparagraph (A) prior 

to the beginning of the performance 

period for the year involved. However, 

we are establishing the performance 

standard that will affect ESRD payments 

in CY 2012 in accordance with section 

1881(h)(4)(E), which does not impose 

the limitation suggested by the 

commenters. As we have stated, we 

believe that setting a CY 2010 

performance period for the initial ESRD 

QIP will ensure that the performance 

scores are based on a robust set of data, 

and will allow us sufficient time to 

analyze that data, determine whether 

provider/facilities met the performance 

standards, implement the applicable 

payment reductions for CY 2012, and 

provide providers/facilities with an 

opportunity to preview their 

performance scores and submit related 

inquiries. For these reasons, we are 

finalizing calendar year 2010 as the 

performance period for the 2012 ESRD 

QIP. 

After consideration of the public 

comments, we are finalizing the 

performance period as proposed. 

C. Methodology for Calculating the 

Total Performance Score for the ESRD 

QIP Measures 

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

requires the Secretary to develop a 

methodology for assessing the total 

performance of each provider and 

facility based on the performance 

standards with respect to the measures 

selected for a performance period. 


kgrant on DSKGBLS3C1PROD with BILLS
632 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

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

states that the scoring methodology 

must also 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 

providers/facilities have strong 

incentives to meet or exceed anemia 

management and dialysis adequacy 

performance standards, as determined 

appropriate by the Secretary. In 

addition, section 1881(h)(3)(B) of the 

Act requires the Secretary to calculate 

separate performance scores for each 

measure. Finally, under section 

1881(h)(3)(A)(ii) of the Act, for those 

providers and facilities that do not meet 

(or exceed) the total performance score, 

the Secretary is directed to ensure that 

the application of the scoring 

methodology results in an appropriate 

distribution of payment reductions to 

providers and facilities, with those 

achieving the lowest total performance 

scores receiving the largest reductions. 

We proposed to calculate the total 

performance of each provider and 

facility with respect to the measures 

adopted for the initial performance 

period by assigning 10 points to each of 

the three measures (75 FR 49219). If a 

provider or facility meets or exceeds the 

performance standard for one measure, 

then it would receive 10 points for that 

measure. We proposed to award points 

on a 0 to 10 point scale, because this 

scale is commonly used in a variety of 

settings and is easily understood by 

stakeholders. We also believe that the 

scale provides sufficient variation to 

show meaningful differences in 

performance between providers/ 

facilities. 

We proposed that a provider or 

facility that does not meet or exceed the 

initial performance standard for a 

measure based on its CY 2010 data 

would receive fewer than 10 points for 

that measure, with the exact number of 

points corresponding to how far below 

the initial performance standard the 

provider/facility’s actual performance 

falls (75 FR 49219). Specifically, we 

proposed to implement a scoring 

methodology that subtracts two points 

for every one percentage point the 

provider/facility performance falls 

below the initial performance standard. 

In the proposed rule, we discussed 

various examples of how this proposed 

methodology would work (75 FR 

49219). 

TABLE 1—PROPOSED SCORING METHODOLOGY FOR ANEMIA MANAGEMENT MEASURES USING NATIONAL PERFORMANCE

RATES IN 2008 AS THE PERFORMANCE STANDARD FOR 2010 FACILITY-SPECIFIC COMPARISON

Anemia management measures 

Percentage of Medicare patients whose average hemoglobin levels are less than 

10 g/dL 

Percentage of Medicare patients whose average hemoglobin levels are greater than 

12 g/dL 

POINTS Percentage Percentage 

10 points 2 percent or less 26 percent or less 

8 points 3 percent 27 percent 

6 points 4 percent 28 percent 

4 points 5 percent 29 percent 

2 points 6 percent 30 percent 

0 point 7 percent or more 31 percent or more 

Note that the bolded rows show the performance standard for the applicable measure. 

TABLE 2—PROPOSED SCORING METHODOLOGY FOR ANEMIA MANAGEMENT MEASURES USING FACILITY-SPECIFIC RATES

IN 2007 AS THE PERFORMANCE STANDARD AND 2010 FACILITY-SPECIFIC RATE FOR COMPARISON

Anemia management measures 

Percentage of Medicare patients whose average hemoglobin levels are less than 

10 g/dL 

Percentage of Medicare patients whose average hemoglobin levels are greater than 

12 g/dL 

POINTS Percentage Percentage 

4 percent (Example of a 2007 facilityspecific score) 30 percent 

(Example of a 2007 facility-specific score) 

10 points 4 percent or less 30 percent or less 

8 points 5 percent 31 percent 

6 points 6 percent 32 percent 

4 points 7 percent 33 percent 

2 points 8 percent 34 percent 

0 points 9 percent or more 35 percent or more 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 633 

TABLE 3—PROPOSED SCORING METHODOLOGY FOR HEMODIALYSIS ADEQUACY MEASURE USING NATIONAL

PERFORMANCE RATES IN 2008 AS

THE PERFORMANCE STANDARD FOR

2010 FACILITY-SPECIFIC COMPARISON

POINTS 

Hemodialysis adequacy 

measure 

Percentage of Medicare 

patients whose average 

URR levels are greater than 

or equal to 65 percent 

10 points 96 percent or more 

8 points 95 percent 

6 points 94 percent 

4 points 93 percent 

2 points 92 percent 

0 points 91 percent or less 

TABLE 4—PROPOSED SCORING METHODOLOGY FOR HEMODIALYSIS ADEQUACY MEASURE USING FACILITYSPECIFIC RATES IN 2007 AS THE

PERFORMANCE STANDARD AND

2010 FACILITY-SPECIFIC RATE FOR

COMPARISON

POINTS 

Hemodialysis adequacy 

measure 

Percentage of Medicare 

patients whose URR levels 

are greater than or equal to 

65 percent 

92 Percent 

(Example of a 2007 facilityspecific score) 

10 points 92 percent or more 

8 points 91 percent 

6 points 90 percent 

4 points 89 percent 

2 points 88 percent 

0 points 87 percent or less 

We noted that our proposed 

methodology—subtracting two points 

for every one percentage point the 

provider or facility’s performance falls 

below the performance standard—does 

not take into account the relative 

variability in performance associated 

with each measure. Despite the 

difference in variability in performance 

among the measures, we proposed to 

apply the straightforward methodology 

we described in the proposed rule (75 

FR 49219) in a consistent manner across 

all three measures. We stated that in 

designing the scoring methodology for 

the first year, we wanted to adopt a 

clear-cut approach (subtracting two 

points for each percentage point 

providers and facilities fell below the 

performance standard) consistent with 

the conceptual model that we discussed 

in the End-Stage Renal Disease 

Prospective Payment System Proposed 

Rule (CMS–1418–P)(74 FR 50010). We 

requested public comment on our 

proposal to apply the score reductions 

in this manner, as opposed to a 

methodology which takes into account 

the relative variations in performance 

that exists for each measure. 

We recognize that this straightforward 

approach may not be appropriate in 

future years of the ESRD QIP as we 

adopt new measures for inclusion in the 

program which may have a wider 

variability in performance. Moreover, 

we may need to reevaluate this 

approach depending on how providers 

and facilities perform in future years on 

the current measures. As we have 

stated, we want to ensure the 

performance measures included in the 

QIP will result in meaningful quality 

improvement for patients at both the 

national and individual facility/ 

provider level. Therefore, we requested 

comment on potential methodologies 

that would take into account variations 

in performance amongst all measures 

included in the QIP. 

In calculating the total performance 

score, section 1881(h)(3)(A)(iii) of the 

Act requires the agency to weight the 

performance scores with respect to 

individual measures to reflect priorities 

for quality improvement. In developing 

the conceptual model, we originally 

considered that the initial scoring 

method would weight each of the three 

proposed measures equally. After 

further examination and based on 

public comments, we proposed to give 

greater weight to the Hemoglobin Less 

Than 10g/dL measure. Low hemoglobin 

levels below 10g/dL can lead to serious 

adverse health outcomes for ESRD 

patients such as increased 

hospitalizations, need for transfusions, 

and mortality. Assigning greater weight 

to the Hemoglobin Less Than 10g/dL 

measure ensures that providers/facilities 

are incentivized to continue to properly 

manage and treat anemia. We believe 

that this is important in light of 

concerns that have been raised that the 

new bundled ESRD payment system 

could improperly incentivize providers/ 

facilities to under-treat patients with 

anemia by underutilizing ESAs. 

Specifically, we proposed to weight 

the Hemoglobin Less Than 10g/dL 

measure as 50 percent of the total 

performance score (75 FR 49222). The 

remaining 50 percent of the total 

performance score would be divided 

equally between the Hemoglobin 

Greater Than 12g/dL measure (25 

percent) and the Hemodialysis 

Adequacy Measure (25 percent) (75 FR 

49222). When calculating the total 

performance score for a provider/ 

facility, we would first multiply the 

score achieved by that provider/facility 

on each measure (0–10 points) by that 

measure’s assigned weight (either .50 or 

.25). Then we would add each of the 

three numbers together, resulting in a 

number (although not necessarily an 

integer) between 0–10. Lastly, this 

number would be multiplied by the 

number of measures (three) and 

rounded to the nearest integer (if 

necessary). In rounding, any fractional 

portion 0.5 or greater would be rounded 

up to the next integer, while fractional 

portions less than 0.5 are rounded 

down. Thus, a score of 27.4 would 

round to 27, while 27.6 would round to 

28. 

In the proposed rule, we discussed 

our rationale and provided examples of 

how the proposed scoring methodology 

would work for calculating the total 

performance score (75 FR 49222). As 

discussed in the proposed rule (75 FR 

49219), we believe this proposed total 

performance score methodology is 

appropriate for the initial performance 

period in the new ESRD QIP, but 

recognize that it will be important to 

monitor the impact and potentially 

reevaluate this methodology as provider 

and facility performance changes, and 

as new measures are added in future 

years of the ESRD QIP. We requested 

public comment on the proposed 

scoring methodology for the ESRD QIP. 

We also solicited comment on potential 

weighting methodologies that could be 

incorporated into the QIP in future years 

as new measures are introduced. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: Many commenters 

supported our proposal to weight the 

three measures. A few commenters 

recommended that CMS re-evaluate the 

weights assigned to each performance 

measure. Several commenters suggested 

that the weight of the anemia 

management measure (Hemoglobin Less 

Than 10g/dL) was too high. Another 

commenter recommended a weighting 

schema of 35 percent (Low 

Hemoglobin), 30 percent (High 

Hemoglobin) and 35 percent (Dialysis 

Adequacy), while another suggested a 

weighting schema of 40 percent (Low 

Hemoglobin), 20 percent (High 

Hemoglobin) and 40 percent (Dialysis 

Adequacy), to highlight the significant 

impact inadequate dialysis can have on 

patient morbidity and mortality. Some 

commenters that supported the 

proposed weighting methodology for the 

initial year also asked CMS to revisit the 

issue in subsequent years, especially if 

additional measures are adopted for the 


kgrant on DSKGBLS3C1PROD with BILLS
634 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

QIP or our quality improvement 

priorities change. 

Response: The purpose of giving 

greater weight to the Hemoglobin Less 

Than 10g/dL Measure was twofold: (1) 

To provide a disincentive to providers/ 

facilities to under-treat patients for 

anemia, particularly in light of the 

implementation of the new ESRD PPS; 

and (2) to reflect the clinical importance 

of this measure. Low hemoglobin levels 

that are not appropriately managed can 

lead to increased morbidity and 

mortality. In terms of giving greater 

weight to the Hemodialysis Adequacy 

(URR) Measure, we agree that 

inadequate dialysis contributes to what 

should otherwise be avoidable negative 

patient outcomes. As we have noted 

earlier in this final rule, we eventually 

intend to propose to replace the 

Hemodialysis Adequacy Measure with 

Kt/V, which is a more precise measure 

of dialysis adequacy. Further, unlike 

URR values, which are only reported for 

patients above the age of 18 years 

receiving in-center hemodialysis, Kt/V 

values can be reported for all ESRD 

beneficiaries. If we propose to replace 

the Hemodialysis Adequacy Measure 

with a measure that uses Kt/V values, 

we will re-evaluate our weighting 

methodology in light of the change. We 

also note that as the QIP evolves and as 

new measures are adopted in the 

program, we will reexamine the overall 

weighting methodology to ensure that it 

aligns with our quality improvement 

priorities. However, for the reasons 

discussed above, we believe that the 

proposed weighting methodology 

reflects our current quality goals. 

Comment: One commenter suggested 

that CMS adopt a scoring system that 

will not unduly penalize providers/ 

facilities for small deviations from the 

QIP performance standards. 

Response: Based on our evaluation of 

historical data, we believe that the 

initial performance standards are 

achievable by most providers/facilities. 

We also considered whether providers/ 

facilities would be unduly penalized for 

small deviations from the ESRD 

performance standards and used 

historical data to model various 

outcomes that could occur under the 

proposed scoring methodology. We 

concluded that because provider/facility 

performance will be initially evaluated 

based on the lower of the 2008 national 

performance rates or provider/facility 

specific performance in 2007, the 

proposed scoring methodology allows 

for flexibility in meeting ESRD QIP 

standards and will not result in undue 

penalties for providers/facilities. We 

appreciate the commenter’s concern that 

providers/facilities not be unduly 

penalized; however, we believe that the 

methodology carefully balances this 

concern with the need to adequately 

incentivize meaningful quality 

improvement. After consideration of the 

comments, we are finalizing the scoring 

methodology as proposed. 

D. Payment Reductions Using the Total 

Performance Score 

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 

reductions in payments among 

providers and facilities achieving 

different levels of total performance 

scores; with providers and facilities 

achieving the lowest total performance 

scores receiving the largest reductions. 

We proposed to implement a sliding 

scale of payment reductions for 

payment consequence year 2012, where 

the minimum total performance score 

that providers/facilities would need to 

achieve in order to avoid a payment 

reduction would be a score of 26 out of 

30 points (75 FR 49224). Providers/ 

facilities that score between 21–25 

points would receive a 0.5 percent 

payment reduction; between 16–20 

points a one percent payment reduction; 

between 11–15 points a 1.5 percent 

payment reduction; and between 0–10 

points a two percent payment reduction 

(75 FR 49224). 

In developing the proposed payment 

reduction scale, we carefully considered 

the size of the incentive to providers/ 

facilities to provide high quality care 

and the range of total performance 

scores to which the payment reduction 

applies, recognizing that this would be 

the first year of a new program. Our goal 

is to avoid situations where small 

deficiencies in a provider/facility’s 

performance results in a large payment 

reduction. We noted that we want to 

avoid imposing a large payment 

reduction on providers/facilities whose 

performance on one or more measures 

falls just slightly below the performance 

standard (75 FR 49224). At the same 

time, poorly performing providers/ 

facilities should receive a more 

significant payment reduction. Our 

analysis suggests that using payment 

differentials of 0.5 percent for the total 

performance score ranges distinguishes 

between providers/facilities with fair to 

good performance and providers/ 

facilities with poor performance. We 

will consider other differentials between 

payment levels for future years of the 

QIP, which we believe will further 

differentiate providers/facilities based 

on their performance. Additionally, 

section 1881(h)(1)(A) of the Act requires 

that the Secretary implement payment 

reductions of up to two percent, and 

section 1881(h)(3)(A)(ii) requires that 

the application of the total performance 

score methodology result in an 

appropriate distribution of reductions in 

payment among providers/facilities. 

Consistent with these requirements, we 

believe that Medicare beneficiaries will 

be best served if the full two percent 

payment reduction is initially applied 

only to those providers/facilities whose 

performance falls well below the 

performance standards. We believe that 

applying a payment reduction of two 

percent to providers/facilities whose 

performance falls significantly below 

the performance standards, coupled 

with applying 0.5 payment differential 

reductions to providers/facilities based 

on lesser degrees of performance 

deficiencies, will incentivize all 

providers/facilities to improve the 

quality of their care in order to avoid or 

reduce the size of a payment reduction. 

We requested public comments about 

how the proposed payment reduction 

scale would incentivize providers/ 

facilities to meet or exceed the 

performance standards for the first year 

of the QIP, and whether it is an 

appropriate standard to use in future 

years. 

In general, ESRD facilities are paid 

monthly by Medicare for the ESRD 

services they furnish to a beneficiary 

even though payment is on a pertreatment basis. In finalizing the new 

bundled payment system starting on 

January 1, 2011, we elected to continue 

the practice of paying ESRD facilities 

monthly for services furnished to a 

beneficiary 

We proposed to apply any payment 

reduction under the QIP for payment 

consequence year 2012 to the monthly 

payment amount received by ESRD 

facilities and providers. The payment 

reduction would be applied after any 

other applicable adjustments to an 

ESRD facility’s payment were made, 

including case-mix, wage index, outlier, 

etc. (This includes providers/facilities 

being paid a blended amount under the 

transition and those that had elected to 

be excluded from the transition and 

receive its payment amount based 

entirely on the payment amount under 

the ESRD PPS.) 

Section 1833 of the Act governs 

payments of benefits for Part B services 

and the cost-sharing amounts for 

services that are considered medical and 

other health services. In general, many 

Part B services are subject to a payment 

structure that requires beneficiaries to 

be responsible for a 20 percent coinsurance after the deductible (while 

Medicare pays 80 percent). With respect 

to dialysis services furnished by ESRD 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 635 

facilities, under section 1881(b)(2)(a) of 

the Act, payment amounts are 80 

percent (and 20 percent by the 

individual). 

Under the proposed approach for 

implementing the QIP payment 

reductions, the beneficiary co-insurance 

amount would be 20 percent of the total 

Medicare ESRD payment, after any 

payment reductions are applied. To the 

extent a payment reduction applies, we 

note that the beneficiary’s co-insurance 

amount would be calculated after 

applying the proposed payment 

reduction and would thus lower the coinsurance amount. 

We proposed to incorporate the 

statutory requirements of the QIP 

payment reduction set forth in proposed 

§ 413.177. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: Several commenters 

recommended that CMS set the 

maximum first-year penalty (that is, 

payment reduction) in the QIP at one 

percent. The commenters characterized 

section 1881(h)(1)(A) of the Act as 

saying that ‘‘[p]ayment consequences of 

QIP should be up to two percent,’’ and 

believe that the Secretary has some 

latitude in setting the maximum 

payment reduction as an amount lower 

than two percent. Commenters noted 

that some provider/facilities have a 

case-mix (for example, nursing home 

patients, patients with complex 

conditions) that may make meeting the 

performance standards difficult. One of 

the commenters suggested that the 

lower penalty be used in the first year 

to allow for establishment of standards. 

A few commenters further suggested 

that payment reductions be 

implemented in increments of one 

quarter percent to support a one percent 

maximum reduction. 

Response: We understand the 

importance of implementing the ESRD 

QIP in a manner that does not unfairly 

penalize providers/facilities, and we 

believe that the performance standards 

we are initially setting will be 

achievable by the majority of providers/ 

facilities. However, we also believe that 

a full 2 percent payment reduction is 

appropriate for the lowest performers 

and that it will incentivize them to 

improve the quality of care they furnish 

to ESRD beneficiaries. We acknowledge 

the commenters’ concern that some 

providers/facilities face increased 

challenges due to the population they 

serve (for example, nursing home 

patients, higher number of patients with 

complex conditions). Below, we discuss 

the monitoring plan we intend to 

implement for the ESRD QIP to monitor, 

in part, the distribution of measure 

outcomes that show a possible pattern 

of concern. 

Comment: Many commenters 

suggested that any funds withheld from 

provider/facility payments be used as 

additional incentive payments to other 

providers/facilities. Several commenters 

expressed strong concern that the 

quality incentive program would 

function only as a disincentive program 

and should not be used as a mechanism 

to achieve financial savings in the 

system. Specifically, some commenters 

requested any funds withheld from 

providers/facilities that failed to meet 

the national performance standards 

should be redistributed to providers/ 

facilities that exceeded the national 

performance standards. 

Response: We appreciate the 

commenters’ concerns; however, we 

interpret section 1881(h)(1)(A) of the 

Act to require the Secretary to make 

payment reductions of up to 2 percent 

with respect to payments that would 

otherwise be made to providers/ 

facilities if those providers/facilities do 

not meet the requirements of the ESRD 

QIP. The statute that establishes the QIP 

does not provide authority to issue 

bonus payments for performance above 

the standards selected for the QIP. 

Comment: One commenter 

recommended that CMS apply the 

maximum penalty of a two percent 

payment reduction to any provider/ 

facility whose performance on the 

Hemoglobin Less Than 10g/dL Measure 

falls six percent or more below the 

performance standard. 

Response: We agree with the 

commenter about the higher relative 

importance of the Hemoglobin Less 

Than 10g/dL Measure and for that 

reason, we proposed to weight that 

measure more heavily in calculating the 

total performance score. However, we 

also believe that the maximum penalty 

should initially be applied only to those 

providers/facilities whose performance 

falls well below the performance 

standards for all three measures. We 

believe that instituting an automatic 

payment reduction along the lines 

suggested by the commenter would 

dilute the importance of the other 

measures. A score-based system 

provides an incentive for providers/ 

facilities to track their progression over 

time while not neglecting outcomes on 

other measures. We would not want to 

apply such a reduction to provider/ 

facilities that had achieved high scores 

on the other two measures, thereby 

removing any incentive for them to 

perform well on those measures in the 

future. 

Comment: One commenter suggested 

that a two percent payment reduction is 

not a large enough deduction to ensure 

the quality and safety of dialysis 

patients. 

Response: Section 1881(h)(1)(A) of the 

Act does not permit the Secretary to 

make payment reductions greater than 

two percent for ESRD providers/ 

facilities. In determining the potential 

impact on facilities of all sizes, it was 

important to identify a maximum 

percentage level of payment reduction 

that provides an incentive, yet is not 

overly burdensome. 

Comment: A few comments discussed 

the impact of lower beneficiary coinsurance amounts as a result of a 

payment reduction. One commenter 

expressed concern that higher coinsurance costs at high-performing 

ESRD facilities might serve as a 

disincentive for patients and that lower 

income patients may not be able to pay 

higher out-of-pocket costs, reducing 

patients’ access to quality care. Another 

commenter agreed with CMS’ proposal 

to calculate beneficiary co-insurance 

after applicable quality payment 

reductions are made, arguing that 

beneficiaries should not have to pay 

higher co-insurance for care delivered 

by facilities that perform below quality 

standards. 

Response: Under section 

1881(h)(1)(A), the Secretary is required 

to make reductions to the ‘‘payments 

otherwise made’’ to a provider/facility 

that furnishes ESRD services to an 

individual with ESRD. We interpret the 

phrase ‘‘payments otherwise made’’ to be 

the payments for ESRD services that 

would otherwise be made after applying 

all applicable adjustments, such as casemix, wage index, and outlier. We note 

that there will be no increase in 

beneficiary co-insurance and that any 

changes to beneficiary co-insurance 

resulting from the QIP will likely be 

minimal. As such, we do not believe 

that resulting changes in co-insurance 

amounts will significantly affect 

beneficiary selection of providers/ 

facilities. 

After consideration of the public 

comments, we are finalizing the 

proposed methodology for 

implementing the QIP payment 

reductions as proposed. We are also 

finalizing our proposed addition of 42 

CFR 413.77, which states that ESRD 

facilities that do not meet the 

requirements of the ESRD QIP will be 

subject to up to a 2 percent reduction in 

their payments otherwise made under 

section 1814(b)(14) of the Act. 


kgrant on DSKGBLS3C1PROD with BILLS
636 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

E. Public Reporting Requirements 

1. Introduction 

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

requires the Secretary to establish 

procedures for making information 

regarding performance under the ESRD 

QIP available to the public, including 

information on the total performance 

score (as well as appropriate 

comparisons of providers and facilities 

to the national average with respect to 

such scores) and performance scores for 

individual measures achieved by each 

provider and facility. Section 

1881(h)(6)(B) further requires that a 

provider or facility has an opportunity 

to review the information to be made 

public with respect to it prior to its 

publication. 

In addition, section 1881(h)(6)(C) of 

the Act requires the Secretary to provide 

each provider and facility with a 

certificate containing its total 

performance score to post in patient 

areas within their facility. Finally, 

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

the Secretary to post a list of providers/ 

facilities and performance-score data on 

a CMS-maintained Web site. 

2. Notifying Providers/Facilities of Their 

QIP Scores 

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

requires CMS to establish procedures 

that include giving providers/facilities 

an opportunity to review the 

information that is to be made public 

with respect to the provider or facility 

prior to such data being made public. 

CMS currently uses a secure, Webbased tool to share confidential, facilityspecific, quality data with providers, 

facilities, and select others. Specifically, 

we provide annual Dialysis Facility 

Reports (DFRs) to dialysis providers/ 

facilities, ESRD Network Organizations, 

and State Survey Agencies. The DFRs 

provide valuable facility-specific and 

comparative information on patient 

characteristics, treatment patterns, 

hospitalizations, mortality, and 

transplantation patterns. In addition, the 

DFRs contain actionable practice 

patterns such as dose of dialysis, 

vascular access, and anemia 

management. We expect providers and 

facilities to use the data included in the 

DFRs as part of their ongoing clinical 

quality improvement projects. 

The information contained in the 

DFRs is sensitive and, as such, most of 

that information is made available 

through a secure Web site accessible 

only by that provider/facility and its 

ESRD Network Organization, State 

Survey Agency, and the applicable CMS 

Regional Office. However, select 

measures based on DFR data are made 

available to the public through the 

Dialysis Facility Compare (DFC) Web 

site, which allows Medicare 

beneficiaries and others to publically 

review and compare characteristics and 

quality information on dialysis 

providers and facilities in the United 

States. To allow dialysis providers/ 

facilities a chance to ‘‘preview’’ these 

data before they are released publicly, 

we supply draft DFRs to providers/ 

facilities in advance of every annual 

DFC update. Dialysis providers and 

facilities are generally given 30 days to 

review their facility-specific data and 

submit comments if the provider/facility 

has any questions or concerns regarding 

the report. A provider/facility’s 

comment is evaluated and researched. If 

a provider/facility makes us aware of an 

error in any DFR information, a 

recalculation of the quality 

measurement results for that provider/ 

facility is conducted, and the revised 

results are displayed on the DFC Web 

site. 

We proposed to use the abovedescribed procedures, including the 

DFR framework, to allow dialysis 

providers/facilities to preview their 

quality data under the QIP before a 

payment reduction is applied and that 

data is reported publicly. Specifically, 

the quality data available for preview 

through the Web system will include a 

provider/facility’s performance score 

(both in total and by individual quality 

measure) as well as a comparison of 

how well the provider/facility’s 

performance scores compare to national 

averages for total performance and 

individual quality measure performance 

(75 FR 49225). We believe that adapting 

these existing procedures for purposes 

of the ESRD QIP will create minimum 

expense and burden for providers/ 

facilities because they will not need to 

familiarize themselves with a new 

system or process for obtaining and 

commenting upon their preview reports. 

We also note that under these 

procedures, dialysis providers and 

facilities would have an opportunity to 

submit performance score inquiries and 

to ask questions of CMS data experts 

about how their performance scores 

were calculated on a facility-level basis. 

This performance score inquiry process 

would also give providers/facilities the 

opportunity to submit inquiries, 

including what they believe to be errors 

in their performance score calculations, 

prior to the public release of the 

performance scores. Every provider/ 

facility that submits an inquiry will 

receive a response. 

While we believe that the DFR 

process is the most logical solution for 

meeting the data preview requirements 

at this time, we may decide to revise 

this approach in the future. Should we 

decide to make changes, or should we 

find a more administratively feasible or 

cost-effective solution, we proposed to 

use sub-regulatory processes to revise 

our approach for administering the QIP 

performance score preview process in a 

way that maintains our compliance with 

section 1881(h)(6)(B) of the Act. We also 

proposed to use sub-regulatory 

processes to determine issues such as 

the length of the preview period and the 

process we will use to address inquiries 

received from dialysis providers/ 

facilities during the preview period. 

We requested public comments on 

our proposal to use the DFR process and 

suggestions for other options that will 

allow dialysis providers/facilities to 

preview the information that is to be 

made public with respect to the 

provider or facility in advance of such 

information being made public. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: Although one commenter 

agreed with our proposal to use the 

existing DFR process to allow providers/ 

facilities to preview their QIP data and 

make performance score inquiries, it 

suggested that CMS extend the review 

period from 30 days to 60 days. 

Response: We believe the 30-day 

preview period is an adequate 

timeframe for providers/facilities to 

review their performance information 

and submit questions regarding their 

performance scores. Because the initial 

measures have been collected by ESRD 

providers/facilities since 2001, we 

believe that providers/facilities should 

be familiar with how they are 

calculated. We have also worked to 

make the calculation of the measures 

and the scoring methodology as 

transparent as possible to facilitate 

review by providers/facilities. 

Comment: Another commenter 

recommended that there be a method to 

allow providers/facilities to post 

comments related to their scores. 

Response: We appreciate the 

suggestion and will explore the 

possibility of allowing providers/ 

facilities to post comments related to 

their scores on an appropriate venue (for 

example, a secure Web site). 

Comment: One commenter suggested 

that there be a formal appeals process so 

that providers may appeal a payment 

determination if they believe it was 

made in error. 

Response: As part of the preview 

process we discuss above, providers/ 

facilities may submit inquiries related to 

what they believe to be one or more 

errors in their performance score 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 637 

calculations, and we will respond to 

those inquiries. We note, however, that 

under section 1881(h)(5)(A), there is ‘‘no 

administrative or judicial review under 

section 1869, section 1878, or otherwise 

of * * * the determination of the 

amount of the payment reduction under 

paragraph (1).’’ 

After consideration of the public 

comments, we are finalizing the 

proposed methodology for notifying 

providers/facilities of their QIP Scores 

as proposed. 

3. Informing the Public Through 

Facility-Posted Certificates 

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

requires the Secretary to provide 

certificates to dialysis providers and 

facilities about their total performance 

scores under the QIP. This section also 

requires each provider/facility that 

receives a QIP certificate to display it 

prominently in patient areas. 

We proposed to meet this requirement 

by providing providers and facilities 

with an electronic file in a generally 

accessible format (for example, 

Microsoft Word and/or Adobe Acrobat). 

We proposed to disseminate these 

certificates to providers and facilities 

once per year after the preview period 

for the QIP performance scores has been 

completed. We would use a secure, 

Web-based system, similar to the system 

used to allow facilities to preview their 

QIP performance scores, to disseminate 

certificates. The secure Web-based 

system would allow CMS to transmit 

performance score certificates to 

providers/facilities in a secure manner. 

We stated that we would make every 

effort to synchronize the release of the 

certificates for provider/facility display 

with the release of performance score 

information on the Internet. 

Under our proposal, each provider/ 

facility would be required to display the 

certificate no later than 5 business days 

after CMS sends it. We stated that we 

expect that dialysis providers/facilities 

would have the capability to download 

and print their certificates from the 

secure Web site. We proposed that 

providers/facilities would be prohibited 

from altering the content of the 

certificates and that they must print the 

certificates on plain, blank, white or 

light-colored paper, no smaller than 81⁄2

inches by 11 inches (a standard-sized 

document). In addition, providers/ 

facilities may not reduce or otherwise 

change the font size on the certificate. 

We proposed that each provider/ 

facility must post at least one copy of 

the certificate prominently in a patient 

area of the dialysis provider/facility. 

Specifically, we proposed that 

providers/facilities must post the 

certificate in a conspicuous place where 

they post other patient-directed 

materials so that it is in plain view for 

all patients (or their parents/guardians 

or representatives) to inspect. We stated 

that we would update the certificates 

annually with new performance 

information, and that providers/ 

facilities would be required to post the 

updated certificate within 5 business 

days of the day that we transmit it. We 

stated that we expect that providers/ 

facilities will take steps to prevent 

certificates from being altered, defaced, 

stolen, marred, or covered by other 

material. In the event that a certificate 

is stolen or destroyed while it is posted, 

providers/facilities would be 

responsible for replacing the stolen or 

destroyed certificate with a fresh copy 

by re-printing the certificate file they 

have received from CMS. The provider/ 

facility would also be responsible for 

answering patient questions about the 

certificate in an understandable manner, 

taking into account that some patients 

might have limited English proficiency. 

We proposed to include on the 

certificate of each provider/facility all of 

the information that we are also making 

available to the public under sections 

1881(h)(6)(A) and 1881(h)(6)(D) with 

respect to the provider/facility. These 

data elements include: 

• The total performance score 

achieved by the provider/facility under 

the QIP with respect to the year 

involved; 

• Comparative data that shows how 

well the provider/facility’s total 

performance score compares to the 

national total performance rate; 

• The performance score that the 

provider/facility achieved on each 

individual measure with respect to the 

year involved; and 

• Comparative data that shows how 

well the provider/facility’s individual 

quality measure performance scores 

compare to the national performance 

rate for each quality measure. (75 FR 

49226). 

We considered several options for 

making the QIP performance score data 

available via certificate. Regarding the 

content of the certificates, we 

considered including not just 

information for the ESRD QIP-related 

quality measures, but additional quality 

measure information that CMS has at its 

disposal from the DFC Web site that is 

not related to the QIP, such as riskadjusted survival information. 

Ultimately, we determined that an 

electronic method of disseminating 

certificates was the easiest way for CMS 

to deliver certificates directly to 

providers/facilities because it is the 

least burdensome and most cost 

effective way of providing the 

certificates. We also determined that the 

information posted on the certificates 

should be restricted only to QIP 

information. We believe that limiting 

the information on the certificate to QIPspecific data will make the certificate 

easier for Medicare beneficiaries to read 

and understand. 

We requested public comments on 

how to make the information contained 

on the certificate as user friendly and 

easy to understand as possible, and how 

to make the information available to 

Medicare beneficiaries who may be 

unable to read the certificates due to a 

physical disability or because of limited 

or no reading proficiency in the English 

language. We stated that we were 

particularly interested in comments on 

how we can educate Medicare 

beneficiaries and their families about 

the presence of certificates in dialysis 

providers/facilities and how the 

information can be used to engage in 

meaningful conversations with their 

dialysis caregivers and the clinical 

community about the quality of 

America’s kidney dialysis care. 

Furthermore, we requested public 

comments on the proposal to use the 

DFR distribution process to provide the 

certificates to providers/facilities under 

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

Specifically, we requested comments on 

the feasibility and advisability of using 

the DFR system to provide the 

certificates to providers/facilities in a 

generally available format such as 

Microsoft Word or Adobe Acrobat. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: A few commenters offered 

recommendations about how to help 

patients interpret the certificates 

(including considerations for 

beneficiaries with limited English 

proficiency and low health literacy and/ 

or numeracy) as well as provider/facility 

survey reports. One of the commenters 

recommended that the State survey 

reports and any complaint 

investigations by CMS or the ESRD 

Networks be posted in dialysis facilities 

along with the QIP certificates. Another 

commenter suggested that the 

certificates account for various levels of 

reading ability as well as cultural and 

language diversity. In addition, another 

commenter viewed the posting of the 

certificate as an opportunity to educate 

ESRD patients on quality and 

recommended including data on 

beneficiary-specific results (for example, 

hospitalizations, infections, UFR (UltraFiltration Rate) (ml/kg/hr), measures of 

bone health, Kt/V, and hemoglobin) in 

the context of the provider/facility’s 


kgrant on DSKGBLS3C1PROD with BILLS
638 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

results (and in the context of state, 

Network area, national results), as well 

as CMS guidance on how to use the 

information. The commenter also 

offered that of the three finalized 

measures, only the Hemoglobin Less 

Than 10g/dL should be displayed. 

Response: We appreciate the 

comments on how to make the QIP 

certificates useful and easy to 

understand for beneficiaries and other 

dialysis facility visitors. We will 

consider the suggestions from the 

commenters as we craft the certificates’ 

visual display and language. Whenever 

possible, we will share draft designs 

with the public and seek a broad range 

of stakeholder input. We will consider 

including additional information on the 

certificates in future years. Also, we 

plan to include on the 2012 certificates 

quality data related to all three measures 

that we use to calculate the provider/ 

facility’s total performance score 

because we believe that this information 

is critical to inform beneficiaries and the 

public about the quality of care that the 

facility/provider is delivering, and that 

Medicare beneficiaries deserve. We 

believe that including on the certificates 

information related to all three 

measures, rather than just the 

Hemoglobin Less Than 10g/dL Measure, 

will provide a better picture of ESRD 

provider/facility care. Lastly, it is 

important to note that we have proposed 

to make enhancements to the DFC Web 

site so that it includes the same 

information that appears on the 

certificates, which we believe will 

provide more robust and meaningful 

information to beneficiaries. With 

access to more useful information, we 

hope that this will encourage more 

effective communication between 

patients and their providers. 

Comment: One commenter 

recommended that performance scores 

be eliminated from the public 

certificate. The commenter stated that, 

‘‘without appropriate individualized 

counseling as to the ‘scores,’ the 

document may lead to more confusion 

than what its intent originally was 

meant to accomplish.’’ One of the 

commenters also noted that wherever 

CMS reports quality, consistency in its 

reporting is the most important decision 

CMS can make in public reporting. The 

commenter stated that patients need to 

be able to see the same quality 

information on the certificates that they 

see on the DFC Web site. 

Response: Although we understand 

the commenter’s concern, section 

1881(h)(5)(C) of the Act requires that 

each certificate indicate the total 

performance score achieved by the 

provider/facility. We appreciate the 

commenter’s concern that the 

information be put into context for the 

reader. As previously mentioned, we are 

working to design the certificate so that 

it is a useful tool for beneficiaries. We 

are also working on a strategy for 

educating ESRD beneficiaries and their 

caregivers about what the certificates 

say and their implications for the 

quality of care ESRD beneficiaries can 

expect to receive from their provider/ 

facility. We also will assure that 

information on the certificates matches 

what is contained on the DFC Web site. 

After consideration of the public 

comments, we are finalizing the 

proposed methodology for informing the 

public through facility-posted 

certificates as proposed. 

4. Informing the Public Through a 

Medicare Web Site 

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

requires the Secretary to use a CMSmaintained Web site for the purpose of 

establishing a list of dialysis providers/ 

facilities that furnish renal dialysis 

services to Medicare beneficiaries and 

indicates the total performance score 

and the performance score for 

individual measures achieved by the 

provider or facility. 

We currently use the DFC Web site (a 

CMS-maintained Web site) to publish 

information about the availability of 

dialysis providers/facilities across the 

United States, as well as data about how 

well each of these providers/facilities 

has performed on existing dialysisrelated quality of care measures. DFC is 

part of a larger suite of ‘‘Compare’’ tools, 

all of which are available online at 

http://www.medicare.gov. In addition to 

DFC, the suite of Compare sites include 

Nursing Home Compare, Home Health 

Compare, and Hospital Compare, as 

well as tools that allow users to compare 

prescription drug plans, health plans, 

and Medigap policies. 

DFC links Medicare beneficiaries with 

detailed information about each of the 

over 5400 dialysis providers/facilities 

certified to participate in Medicare, and 

allows them to compare providers/ 

facilities in a geographic region. Users 

can review information about the size of 

the provider/facility, the types of 

dialysis offered, the provider/facility’s 

ownership, and whether the provider/ 

facility offers evening treatment shifts. 

Beneficiaries can also compare dialysis 

providers/facilities based on three key 

quality measures—how well patients at 

a provider/facility have their anemia 

managed, and how well patients at a 

provider/facility have waste removed 

from their blood during dialysis, and 

whether the patients treated at a 

provider/facility generally live as long 

as expected. DFC aims to help 

beneficiaries decide which dialysis 

provider/facility would best serve their 

care needs, as well as to encourage 

conversations among beneficiaries and 

their caregivers about the quality of care 

at dialysis providers/facilities, thus 

providing an additional incentive for 

dialysis providers/facilities to improve 

the quality of care they furnish. Lastly, 

DFC links beneficiaries to resources that 

support family members, as well as 

beneficiary advocacy groups. 

We proposed to use DFC as the 

mechanism for meeting the Web-based 

public information requirement under 

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

noted that the DFC is a consumerfocused tool, and the implementation of 

the QIP will not change this focus. We 

recognize that sharing information with 

the public about the QIP is not only a 

statutory requirement, it is also a 

function of open and transparent 

government. Ultimately, the intent of 

DFC is to provide beneficiaries with the 

information they need to be able to 

make proper care choices. 

We believe that DFC already provides 

accurate and trusted information about 

the characteristics of all Medicare 

certified dialysis providers/facilities, as 

well as information about the quality of 

care furnished by these providers/ 

facilities. Furthermore, CMS already has 

the information technology 

infrastructure in place to support DFC 

and its public reporting functions; 

therefore, adding new QIP-related data 

to the DFC Web site would not create 

additional significant expenditures or 

overly burden agency resources. 

We proposed to update the DFC Web 

site once per year at a minimum with 

the following data elements for every 

provider/facility listed on DFC (that is, 

every Medicare-approved provider/ 

facility): 

• The total performance score 

achieved by each provider/facility 

under the QIP with respect to the year 

involved; 

• Comparative data that shows how 

well the provider/facility’s total 

performance score compares to the 

national total performance rate; 

• Scores for each of the individual 

measures that comprise the overall QIP 

performance score for the provider/ 

facility with respect to the year 

involved; and 

• Comparative data that shows how 

well the provider/facility’s individual 

quality measure performance scores 

compare to the national performance 

rate for each quality measure. 

We note that this is the same 

information we proposed to include on 

the certificates that we will provide to 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 639 

providers/facilities. We also note that 

for the 2012 payment year, we do not 

propose to include comparative 

information on DFC about how the 

provider’s or the facility’s performance 

has changed from year to year, since the 

2012 total performance score calculation 

does not provide any differential scoring 

for improvement versus achievement. 

However, we will consider including 

this data on DFC in future program 

years. 

We requested public comments about 

whether the total performance score and 

the individual measure performance 

scores should be integrated into the 

design of the DFC tool itself or whether 

we should alternatively implement 

section 1881(h)(6)(D) by making a file 

available to the public on the CMS Web 

site (at http://www.cms.gov). We are 

sensitive to the need to balance our 

interest in making QIP performance 

score information public with our need 

to provide beneficiaries with easy-tounderstand, non-technical information 

about providers/facilities that they can 

use to make decisions about where to 

receive dialysis care. 

We also requested public comment on 

the advisability of using DFC as our 

mechanism for making QIP information 

available over the Internet. We also 

requested comment on the presentation 

of QIP information on the Web site and 

the breadth of detail that we should 

make publicly available regarding QIP 

performance scores. Lastly, we 

requested comment on how DFC could 

be redesigned to make QIP information 

useful to Medicare beneficiaries as they 

compare the quality of care available at 

the nation’s Medicare-approved dialysis 

providers/facilities. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: A few commenters 

recommended that the total 

performance score and the individual 

measure performance scores be 

integrated into the design of the DFC 

Web site. 

Response: We appreciate the 

suggestion and are currently reviewing 

strategies for increasing the usefulness 

of DFC, especially for reporting 

information from the ESRD QIP. CMS is 

committed to providing beneficiaries 

and ESRD stakeholders with 

information that is accessible and 

useful. 

After consideration of the public 

comments, we are finalizing the 

proposed methodology for informing the 

public through a Medicare Web site as 

proposed. 

F. Applicability of the QIP 

We received a number of comments 

asking if certain types of providers/ 

facilities would be excluded from the 

first year of the QIP. These comments 

and our responses are set forth below. 

Comment: Several commenters noted 

their concern that for providers/ 

facilities that treat small numbers of 

patients, one or a few patients that 

achieve poor outcomes could 

dramatically affect the provider/ 

facility’s overall performance score. One 

of the commenters also recommended 

that CMS develop a statistically valid 

methodology for evaluating the 

performance of small dialysis providers/ 

facilities. 

Response: We agree with the 

commenter’s concern regarding the 

potential impact on small providers/ 

facilities, recognizing that one or two 

poor patient outcomes could greatly 

skew their performance scores for 

reasons unrelated to the quality of care 

they have furnished. Therefore, as we 

proposed, we are using for purposes of 

the CY 2012 QIP the specifications for 

the three finalized measures that are 

also used for DFC, each of which 

requires that a provider/facility have a 

minimum of 11 cases that meet the 

reporting criteria for the measure in 

order for us to calculate it. We believe 

that this minimum case threshold will 

help prevent the possibility that a small 

number of poor outcomes artificially, 

and for reasons unrelated to the quality 

of care, skews a small provider/facility’s 

performance score. Also, eleven cases is 

a statistically valid threshold that will 

give us confidence that a provider/ 

facility’s total performance score is an 

accurate reflection of the quality of care 

it furnishes. As a result, this threshold 

will help preserve beneficiary access to 

care at much needed small providers/ 

facilities in rural and/or under-served 

areas. We will also be closely 

monitoring to determine if the 

implementation of the QIP has any 

adverse impact on beneficiary access to 

care, including by looking at the rate of 

facility closures, and particularly small 

facility closures. We will also continue 

to examine how to best treat small 

providers/facilities and intend to 

address this issue in future years of the 

ESRD QIP. 

Comment: Several commenters 

suggested that CMS exclude from the 

QIP provider/facilities that treat nursing 

home patients because the complex 

nature of the health problems faced by 

these patients will make it difficult for 

these facilities to achieve the 

performance standards. 

Response: We understand that certain 

patients present a challenge in terms of 

their clinical management due to comorbidities and other factors that add to 

the complexity of care. However, we do 

not believe that providers/facilities that 

treat patients with complex health 

problems should be subject to a 

different standard than other providers/ 

facilities. 

Comment: One commenter asked if 

the ESRD QIP would affect home health 

agencies that provide dialysis supplies 

and medicine. 

Response: We believe that the 

commenter’s question is in reference to 

the provision of dialysis supplies and 

medicine under Method II. Effective 

January 1, 2011 Method II home dialysis 

will be eliminated. Medicare will no 

longer make payments directly to 

DMEPOS suppliers of home dialysis 

equipment and supplies. All Medicare 

payments for home dialysis services 

(including equipment and supplies) will 

be made to the dialysis provider/facility 

(75 FR 49056). Thus, the concern raised 

by the commenter will be moot by the 

time the QIP incentive payments are 

made. 

Comment: Several commenters 

questioned how home dialysis providers 

will be evaluated under the QIP. 

Specifically, they asked how the 

absence of a relevant hemodialysis 

adequacy measure would affect the 

calculation of their total performance 

score and potential payment reductions. 

Response: The commenters are correct 

that home hemodialysis patients (as 

well as peritoneal dialysis patients and 

pediatric patients) are excluded from 

the patient population for purposes of 

calculating the hemodialysis adequacy 

measure (URR) for payment 

consequence year 2012. As such, a very 

small provider/facility may not have a 

sufficient number of in-center dialysis 

patients to receive a score on the 

hemodialysis adequacy measure (URR), 

but could have enough patient data to 

be scored on the anemia management 

measures. For these providers/facilities 

that do not have enough data to assign 

a score on all three measures, we will 

not assign a total performance score for 

the CY 2012 ESRD QIP and will also not 

reduce their payment. As stated 

previously, we believe that requiring a 

minimum number of cases that meets 

the measure reporting criteria for the 

three finalized measures will help 

prevent the possibility that a small 

provider/facility’s performance score 

could be greatly skewed for reasons 

unrelated to the quality of care it 

furnishes. We are also concerned about 

the impact of the QIP on small facilities, 

and particularly how that impact may 


kgrant on DSKGBLS3C1PROD with BILLS
640 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

affect beneficiary access to these much 

needed facilities in rural or underserved areas. For these reasons, we will 

be closely monitoring to determine if 

the ESRD QIP has any adverse impact 

on beneficiary access to care, especially 

at small providers/facilities. We intend 

to examine alternative methodologies to 

address this situation for future years of 

the ESRD QIP. 

Comment: Several commenters asked 

how new providers/facilities would be 

treated under the QIP. Some 

commenters asked what performance 

standards they would have to meet 

while others recommended that new 

providers/facilities, or those not in 

operation for 12 months, or those not in 

operation for 24 months, be exempt 

from any potential payment reductions. 

Response: Under the special rule in 

section 1881(h)(4)(E), we will be setting 

the initial performance standard as the 

lesser of the provider’s/facility’s 

performance during 2007 or the 2008 

national performance rates. If a 

provider/facility was not in existence in 

2007, we will assign a score of zero for 

purposes of assessing which of the two 

standards applies to the provider/ 

facility. The provider/facility’s 

performance in 2010 will then be 

compared against that initial 

performance standard. 

G. Additional Comments 

Additional comments and our 

responses are set forth below. 

Comment: One commenter asked that 

CMS utilize formal rulemaking 

procedures for future changes to the 

QIP, including changes to the measures, 

weighting, and scoring methodologies. 

Response: We interpret the comment 

to be asking about the notice and 

comment rulemaking process (informal 

rulemaking versus where an agency is 

required by law to make a decision on 

the record after the opportunity for an 

agency hearing). We agree that the 

informal rulemaking process is the best 

approach for making changes to the 

ESRD QIP in the future and will use that 

approach whenever possible. We note 

that procedural guidance that does not 

impact measures, weighting, or scoring 

methodologies may be issued separate 

from the rulemaking process. We also 

note that section 1881(h) of the Act does 

not require us to establish the ESRD QIP 

rules via formal rulemaking procedures. 

Comment: One commenter suggested 

that CMS solicit the participation of 

private insurance companies and 

Medicare Advantage Plans to develop a 

quality incentive program similar to the 

ESRD QIP. 

Response: Medicare is currently 

conducting the Evaluation of the ESRD 

Disease Management Demonstration to 

study the effectiveness of disease 

management for patients enrolled in 

Medicare Advantage plans. The 

demonstration will assess participating 

plans’ clinical and financial impact to 

determine whether integrated disease 

management programs can minimize 

treatment complications and improve 

complications while reducing costs. 

We are also exploring the feasibility of 

implementing a number of other 

programs that will attempt to align 

financial incentives with the quality of 

care delivered. These initiatives will 

touch on a wide variety of health care 

settings, including physician offices, 

inpatient rehabilitation facilities, 

inpatient psychiatric hospitals, longterm care hospitals, cancer hospitals, 

ambulatory surgery centers, hospice 

providers, and hospitals. Within the 

Medicare Advantage program, section 

3201 of the Affordable Care Act requires 

CMS to provide for enhanced payments 

based on a Medicare Advantage plan’s 

overall quality rating. CMS looks 

forward to working with payers, 

advocacy groups, patients, and other 

stakeholders in developing important 

initiatives aimed at transforming 

Medicare from a passive payer of claims 

to an active purchaser of quality health 

care. 

Comment: Several commenters 

stressed the need to encourage greater 

use of home modalities. Another 

commenter suggested that CMS make all 

forms of dialysis equally profitable by 

equalizing profit margins across all 

forms of dialysis treatments and monitor 

recommended treatments to assess 

whether one treatment is being 

recommended over another because of 

the potential to receive a higher profit 

margin. 

Response: Medicare currently pays 

one rate for all forms of dialysis. We 

agree with commenters that home 

dialysis is an important modality for 

ESRD patients that should be 

encouraged if clinically appropriate. 

Home modalities can enable patients to 

continue with employment and other 

activities that may be difficult with incenter dialysis. In an effort to promote 

patient-centered care, we want to ensure 

there are incentives to provide ESRD 

patients with options that fit their 

clinical needs and personal preferences. 

We will be monitoring whether the 

implementation of both the ESRD PPS 

and the ESRD QIP leads to shifts in 

modality and, if so, whether those shifts 

affect the quality of care furnished to 

ESRD beneficiaries. 

Comment: One commenter was 

concerned about the potential burden 

on small dialysis providers/facilities if 

they have to manually record and 

maintain data for the ESRD QIP. 

Response: The measures we have 

adopted for the initial year of the ESRD 

QIP are claims-based measures, and we 

can calculate them using information 

contained on Medicare FFS claims. To 

the extent we want to adopt QIP 

measures in the future for which 

providers/facilities would need to 

submit additional data, we will 

carefully consider any impacts that such 

data submission might have on 

providers/facilities. 

Comment: One commenter suggested 

that CMS ensure that facilities/providers 

submit valid, reliable data and take 

steps to ensure that they don’t misreport 

data. 

Response: We agree that having 

reliable data is crucial in evaluating 

provider/facility performance for the 

QIP and intend to implement a formal 

validation process in the future. We also 

intend to monitor the ESRD QIP, 

including identifying whether certain 

patterns or trends warrant further 

investigation or response. We anticipate 

that these activities will help to ensure 

that providers/facilities are submitting 

complete and accurate data. 

Comment: One commenter, a former 

dialysis patient, expressed support for 

the QIP. 

Response: We appreciate the support 

the commenter expressed. 

Comment: One commenter suggested 

that CMS involve more beneficiaries in 

committees and study groups. 

Response: We appreciate the 

importance of beneficiary input. 

Beneficiaries are considered one of the 

most important stakeholder groups, and 

we plan to continue our outreach efforts 

to gather the feedback of beneficiaries 

and patient advocates when making 

decisions regarding the QIP. 

IV. Future ESRD QIP Considerations 

A. Monitoring and Evaluation 

CMS plans to monitor and evaluate 

the new ESRD PPS and ESRD QIP as 

part of our ongoing effort to ensure that 

Medicare beneficiaries with ESRD 

receive high quality care. The 

monitoring will focus on whether, 

following implementation of the new 

PPS and the ESRD QIP, we observe 

changes in access to and quality of care, 

especially within vulnerable 

populations. We will be evaluating the 

effects of the new ESRD PPS and the 

QIP and focusing on areas such as: 

• Access to care for beneficiaries, 

including categories or subgroups of 

beneficiaries; 

• Changes in care practices that could 

adversely impact the quality of care for 

beneficiaries; 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 641 

• Patterns of care suggesting 

particular effects of the new PPS—for 

example, whether there are increases/ 

decreases in utilization of injectable 

ESRD drugs and the use of home 

modalities for certain groups of ESRD 

beneficiaries; 

• Best practices of high-performing 

providers/facilities that might be 

adopted by other providers/facilities. 

CMS currently collects detailed 

claims data on patients’ hemoglobin 

levels and adequacy of dialysis, and also 

collects information on other facets of 

ESRD care, including treatments 

provided, drugs, hospitalizations, and 

deaths. In addition, we collect 

beneficiary enrollment data which 

provides important demographic and 

other information related to Medicare 

ESRD beneficiaries. These data and 

other data sources will provide the basis 

for early examination of overall trends 

in care delivery, access, and quality. We 

will also use the data to assess more 

fully the quality of care furnished to 

Medicare beneficiaries under the new 

PPS, and to help inform possible 

refinements to the PPS and QIP moving 

forward. We requested public comments 

about an approach to monitoring and 

evaluating the ESRD PPS and the ESRD 

QIP. 

The comments we received on this 

monitoring approach and our responses 

are set forth below. 

Comment: A number of commenters 

addressed the issue of monitoring and 

our plan to evaluate the impact of both 

the new ESRD PPS and the QIP on 

beneficiary access to, and the quality of, 

care. Many commenters expressed 

support for this plan and urged CMS to 

closely monitor whether the new ESRD 

PPS and QIP impact the quality of care 

furnished by ESRD providers/facilities 

to vulnerable populations and at-risk 

populations. Citing a March 2010 report 

issued by the Government 

Accountability Office (GAO), one 

commenter recommended that CMS 

specifically monitor whether injectable 

drug usage increases or decreases after 

the new ESRD PPS and QIP go into 

effect. Other commenters raised the 

concern that the QIP could lead to 

increased ‘‘cherry picking’’ in the 

practice of patient referrals, increased 

involuntary discharges, and other 

barriers to dialysis care for difficult-totreat patients or those patients who 

might negatively affect provider/facility 

performance metrics. One commenter 

recommended the universal 

implementation of CROWNWeb for 

monitoring the PPS and the QIP. 

Another commenter suggested that CMS 

establish a national database that tracks 

the number, demographics and reasons 

why a provider/facility involuntarily 

discharged/released a patient. Another 

commenter requested that CMS set forth 

specific details on how it plans to 

monitor the effects of the QIP on 

beneficiaries, that CMS provide details 

on how it plans to engage the ESRD 

community to ensure that special needs 

are met, and that the agency provide an 

opportunity for public comment on the 

monitoring plan. One commenter 

recommended that facilities provide 

easier methods for patients to return 

satisfaction surveys. Finally, one 

commenter requested that the results of 

studies evaluating the QIP be made 

public. 

Response: Beginning in 2009, we 

conducted a series of town hall 

meetings, listening sessions, and other 

outreach efforts to assess reaction to 

upcoming changes to the Medicare 

ESRD program. CMS had identified a 

need to monitor the impact of both the 

new ESRD PPS and the QIP, and 

through these interactions sought the 

feedback of the ESRD community, 

including facilities, providers, and 

patient advocates. 

In its March 2010 report, entitled 

‘‘End-Stage Renal Disease: CMS Should 

Monitor Access to and Quality of 

Dialysis Care Promptly after 

Implementation of New Bundled 

Payment System’’ (GAO–10–295), GAO 

recommended that CMS monitor 

whether beneficiary access to, and the 

quality of, dialysis care is diminished or 

degraded following implementation of 

the newly expanded ESRD bundled 

payment system, especially for certain 

groups of Medicare ESRD beneficiaries 

who may be more vulnerable. 

Specifically, the GAO report highlighted 

a concern that the new ESRD PPS might 

affect access to and quality of dialysis 

care for ‘‘certain groups of beneficiaries, 

such as those who receive above average 

doses of injectable ESRD drugs.’’ 

In response to these concerns and as 

part of fulfilling our mission to ensure 

effective, up-to-date healthcare coverage 

and quality care for beneficiaries, we 

will launch an ESRD services 

monitoring program to identify changes 

in beneficiary access to and quality of 

care following implementation of the 

ESRD PPS in January 2011 and the QIP 

in January 2012. The ESRD services 

monitoring program will enable CMS to 

identify whether there are access-to-care 

and quality concerns requiring further 

examination and response, as well as 

help to drive continuous improvement 

by identifying best practices and 

providing constructive feedback to 

ESRD facilities and providers. Findings 

from the monitoring program will also 

be used to design longer-term evaluation 

studies assessing relationships between 

program policies and outcomes. While 

monitoring alone cannot determine the 

cause of observed changes, certain 

events identified through the 

monitoring program will be used to alert 

CMS of the need for further review and 

investigation. 

In addition to conducting monitoring 

activities, CMS will be evaluating the 

impact of the new program on access to 

and quality of care for Medicare ESRD 

beneficiaries. Evaluation takes a longterm focus, examining relationships 

between ESRD PPS and/or QIP policies 

and patient outcomes for vulnerable 

subpopulations of ESRD beneficiaries 

over a study period. 

In developing the ESRD services 

monitoring and evaluation program, we 

sought input from a broad array of 

stakeholders, including ESRD 

providers/facilities, the ESRD Network 

Organizations, and patient advocates. 

We also took into account the 

recommendations of a study that looked 

at whether particular segments of the 

ESRD population, including racial and 

ethnic minorities and other populations 

that we consider to be vulnerable or atrisk, could be disproportionately 

affected by the new ESRD PPS. 

As part of the planned ESRD services 

monitoring and evaluation program, we 

will also examine a number of 

indicators and available data sources to 

ascertain whether any disruptions in 

access or quality occur following 

implementation of the QIP. We intend 

to track monitoring indicators of 

facility/provider practice, including 

patient loss rates, facility closures, and 

other areas of concern to determine if 

there are any changes that may need 

further study. We plan to utilize 

available data sources, including 

CROWNWeb, claims data, patient 

activity reports, provider forms, and 

other quantitative and qualitative data 

sources in the monitoring and 

evaluation program. As we continue to 

refine and develop the monitoring and 

evaluation program in 2011 and beyond, 

we will consider the commenters’ 

suggestions. 

As the ESRD services monitoring 

effort continues to expand and mature 

in 2012 and beyond, we expect to gain 

insight into how the ESRD PPS and QIP 

are affecting the quality of care 

furnished to individuals with ESRD, 

and with that insight in mind, we 

expect to design additional evaluation 

studies and make information available 

to the public, including the ESRD 

community and researchers. 


kgrant on DSKGBLS3C1PROD with BILLS
642 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

B. Potential QIP Changes and Updates 

As noted above, section 1881(h)(4)(B) 

of the Act provides that the performance 

standards established under section 

1881(h)(4)(A) shall include levels of 

achievement and improvement, as 

determined appropriate by the 

Secretary. We anticipate that we will 

propose to adopt performance standards 

under section 1881(h)(4)(A) of the Act 

that include levels of achievement and 

improvement for the 2013 QIP. 

In addition, we anticipate 

strengthening the performance standard 

for each measure in future years of the 

QIP, including potentially moving away 

from using the national performance 

rate as the performance standard and 

instead identifying absolute standards 

that reflect performance goals widely 

recognized by the ESRD medical 

community as demonstrating high 

quality care for ESRD patients. For 

instance, we may seek to raise the 

performance standard for each of the 

three measures finalized for the 2012 

QIP above the proposed or finalized 

level (that is, Hemoglobin Less Than 

10g/dL—two percent; Hemoglobin More 

Than 12g/dL—26 percent; and 

Hemodialysis Adequacy Measure—96 

percent). 

Additionally, for these initial three 

finalized measures, we intend to 

establish the national performance rates 

of each of these measures as ‘‘floors’’, 

such that the performance standards 

will never be lower than those set for 

the previous year, even if provider/ 

facility performance—and therefore the 

national performance rate—fails to 

improve, or even declines, over time. 

The performance standard to which 

facilities and providers will be held for 

these measures will not be lowered from 

one year to the next. This will better 

ensure that the quality of ESRD patient 

care will continue to improve over time. 

Establishing such floors for performance 

standards, however, will in no way 

prohibit the Secretary from establishing 

performance standards that are higher 

than the floors if the Secretary 

determines that higher performance 

standards are appropriate. 

In establishing new measures for the 

QIP in future years, we intend that the 

concept of ‘‘floors’’ described above 

would be established for each new 

measure and applied to these new 

measures in order to better ensure 

improvement in the quality of care, once 

we have a historical perspective on how 

the measure performs. While we will 

consider the use of national 

performance rates, we also will take into 

consideration future performance 

standards that reflect performance goals 

widely recognized by the ESRD medical 

community as demonstrating high 

quality care for ESRD patients, should 

such a consensus be reached. 

As noted above, section 1881(h)(2)(A) 

of the Act also requires that the 

measures include, to the extent feasible, 

measures on patient satisfaction, as well 

as such other measures that the 

Secretary specifies, including iron 

management, bone mineral metabolism 

(that is, calcium and phosphorus), and 

vascular access. We are currently 

developing measures in each of the 

areas specified in section 1881(h)(2)(A) 

of the Act and are also moving forward 

with developing additional measures 

such as Kt/V, access infection rate, fluid 

weight management, and pediatric 

measures. As part of the process of 

developing these new measures, where 

necessary data are not currently being 

collected, we intend to require 

providers to submit data needed to 

establish a baseline for each of the 

measures under consideration, as listed 

above, as soon as is practicable. For QIP 

measures, we will use a collection 

process that has been determined 

appropriate by the Secretary to obtain 

this data. We anticipate proposing 

additional measures, such as those 

listed above under section 1881(h)(2)(A) 

of the Act, in future rulemaking for the 

QIP. 

We requested public comments on 

how we might best incorporate both 

improvement and achievement 

standards as specified by the Act. We 

also requested comments on 

performance standards for future years 

of the QIP. We are committed to 

adopting additional quality measures for 

the QIP as soon as practicable. While we 

are evaluating measures for inclusion in 

future years of the QIP, we also 

requested public comment on setting 

performance standards for the first year 

a new measure is included in the QIP. 

The comments we received on these 

issues and our responses are set forth 

below. 

Comment: A few commenters 

encouraged CMS to measure 

improvement as well as achievement 

under the QIP. One of the commenters 

expressed disappointment that CMS has 

chosen not to address improvement in 

the first year of the QIP. 

Response: We believe that levels of 

achievement and improvement are 

important components of the future QIP 

performance standards, and we 

anticipate proposing to adopt such 

levels for the 2013 QIP program year. 

Comment: Several commenters 

expressed support for our concept of 

establishing ‘‘floors’’ for the performance 

standards, to ensure that a measure’s 

performance standards will never be 

lowered in future years even if provider/ 

facility performance fails to improve or 

even declines. Other commenters 

expressed concern that when measures 

change (for example, from URR to Kt/V), 

it would be necessary to establish new 

floors, and believe that CMS should 

remain open to changes based on 

scientific evidence and best practices. 

Response: We appreciate the 

comments supportive of establishing 

performance standard floors for future 

years of the QIP, and will continue to 

examine the benefits of establishing 

them. We also share the commenters’ 

belief that we must be open to 

establishing new floors in the event that 

the scientific evidence or best practice 

changes with respect to a measure. 

Comment: Many commenters offered 

suggestions regarding the inclusion of 

additional measures in future years of 

the QIP. Most commenters strongly 

advocated for the inclusion of new 

measures such as Kt/V, transplant 

referrals, access infection rates, fluid 

weight management, iron management, 

bone mineral metabolism, vascular 

access, patient satisfaction, and 

measures for pediatric and home 

hemodialysis patients as soon as 

possible. 

Response: We plan to continuously 

work to improve the ESRD QIP, 

including adopting robust measures that 

provide valid assessments of the quality 

of care delivered to ESRD beneficiaries 

by providers and facilities. To that end, 

we are in the process of developing 

measures that can be applied to all 

modalities (that is, home and in-center) 

as well as the pediatric population. 

Measures that we are considering 

proposing to adopt include measures on 

mineral metabolism, vascular access 

infections, vascular access type, 

pediatric anemia (for example, iron 

targets), pediatric dialysis adequacy (Kt/ 

V), and fluid management. Additionally, 

we are currently testing the feasibility of 

using claims data to calculate some of 

these measures. We are also considering 

establishing all or part of 2011 as the 

performance period for the 2013 QIP. 

As the ESRD QIP continues to evolve, 

we realize the importance of assuring 

that the measures are reviewed and 

refined to confirm that they continue to 

align with currently accepted clinical 

practices. Further, we will review any 

needs for risk adjustment for measures 

that currently do not have this 

specification. As we consider the 

feasibility of adopting new measures for 

the QIP, we intend to seek the input of 

the ESRD community to ensure that the 

measures we seek to adopt are 

appropriate, scientifically acceptable, 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 643 

and valuable to continuous quality 

improvement. 

We are also focused on identifying 

QIP patient-centered measures such as 

patient satisfaction, access to nutrition 

services, referral to transplant, and 

training for those on home modalities. 

Patient perceptions of care and support 

services that contribute to dialysis 

outcomes are critical. Again, 

collaboration with beneficiaries as well 

as the renal community will be 

important for identifying key issues for 

measurement. CMS is dedicated to 

making the measure development and 

selection process as transparent and 

inclusive as possible so that it 

continuously advances the goals of the 

ESRD QIP to ensure that individuals 

with ESRD have access to quality care. 

Lastly, as we work toward identifying 

and proposing to adopt new measures 

for the QIP, we understand the 

importance of collecting real-time data 

for more timely measurement of 

performance. We are working to expand 

the scope of the CROWNWeb project 

and intend to explore the feasibility of 

using the CROWNWeb system to collect 

QIP data. 

V. Collection of Information 

Requirements 

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 

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. 

Therefore, we solicited public 

comment on each of these issues for the 

following sections of this document that 

contain information collection 

requirements (ICRs): 

In the proposed rule, we discussed a 

disclosure requirement (75 FR 49226). 

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

the Secretary to provide certificates to 

dialysis care providers and facilities 

about their total performance scores 

under the QIP. This section also 

requires each provider and facility that 

receives a QIP certificate to display it 

prominently in patient areas. 

To comply with this requirement, we 

proposed to issue QIP certificates to 

providers and facilities via a generally 

accessible electronic file format. We 

proposed that each provider and facility 

would prominently display the QIP 

certificate in patient areas. In addition, 

we proposed that each provider and 

facility will take the necessary measures 

to ensure the security of the certificate 

in the patient areas. Finally, we 

proposed that each provider/facility 

would have staff available to answer 

questions about the certificate in an 

understandable manner, taking into 

account that some patients might have 

limited English proficiency. 

We finalized these requirements in 

this final rule. 

We stated in the proposed rule that 

the burden associated with the 

aforementioned requirements is the time 

and effort necessary for providers and 

facilities to print the QIP certificates, 

display the certificate prominently in 

patient areas, ensure the safety of the 

certificate, and respond to patient 

inquiries in reference to the certificates. 

We estimated that 4,311 providers and 

facilities will receive QIP certificates 

and will be required to display them. 

We also estimated that it will take each 

provider or facility 10 minutes to print, 

prominently display and secure the QIP 

certificate, for a total estimated annual 

burden of 719 hours. We estimated that 

approximately one-third of ESRD 

patients will ask a question about the 

QIP certificate. We further estimated 

that it will take each provider/facility 

five minutes to answer each patient 

question about the QIP certificate, or 

1.65 hours per provider or facility each 

year. We estimated that the total annual 

burden associated with this requirement 

would be 7,121 hours. We also 

estimated that the total annual burden 

for both displaying the QIP certificates 

and answering patient questions about 

the certificates would be 7,840 hours. 

While the total estimated annual burden 

associated with both of these 

requirements would be 7,840 hours, we 

stated that we did not believe that there 

would be a significant cost associated 

with these requirements because we 

would not be requiring providers/ 

facilities to complete new forms. As 

discussed in the proposed rule (75 FR 

49228), we estimated the total cost for 

all ESRD facilities to comply with the 

collection of information requirements 

would be less than $200,000. 

We did not receive any comments 

related to this information collection 

and are finalizing these burdens. 

VI. Regulatory Impact Analysis 

A. Statement of Need 

This final rule implements a QIP for 

Medicare ESRD dialysis providers and 

facilities with payment reductions 

beginning January 1, 2012. Under 

section 1881(h) of the Act, after 

selecting measures, establishing 

performance standards that apply to 

each of the measures, specifying a 

performance period, and developing a 

methodology for assessing the total 

performance of each provider and 

facility based on the specified 

performance standards, the Secretary is 

required to apply an appropriate 

reduction to ESRD providers and 

facilities that do not meet or exceed the 

established total performance score. We 

view the ESRD QIP required by section 

1881(h) of the Act as the next step in the 

evolution of the ESRD quality program 

that began more than 30 years ago. Our 

vision is to implement a robust, 

comprehensive ESRD QIP that builds on 

the foundation that has already been 

established. 

B. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Order 12866 directs 

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). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). This final rule is not an 

economically significant rule because 

we estimate that the effects of the rule 

will fall well below the economic 

threshold of $100 million (see analysis 

below). In addition, given this estimated 

impact, this final rule also is not a major 

rule under the Congressional Review 

Act. We requested comments on the 

economic analysis. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses if a rule has a significant 

impact on a substantial number of small 


kgrant on DSKGBLS3C1PROD with BILLS
644 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

entities. For purposes of the RFA, 

approximately 19 percent of ESRD 

dialysis facilities are considered small 

entities according to the Small Business 

Administration’s size standards, which 

consider small businesses those dialysis 

facilities having total Medicare revenues 

of $34.5 million or less in any one year, 

and 19 percent of dialysis facilities are 

nonprofit organizations. For more 

information on SBA’s size standards, 

see the Small Business Administration’s 

Web site at http://sba.gov/idc/groups/ 

public/documents/sba_homepage/ 

serv_sstd_tablepdf.pdf (Kidney Dialysis 

Centers are listed as 621492 with a size 

standard of $34.5 million). 

For purposes of the RFA, using DFC 

performance data based on Medicare 

claims from 2007 and 2008, we consider 

the 802 independent facilities and 

hospital-based facilities to be small 

entities. The ESRD facilities that are 

owned and operated by a Large Dialysis 

Organization (LDO) and/or regional 

chain, comprising approximately 3,509 

facilities, would have total revenues in 

excess of $34.5 million in any year 

when the total revenues for all locations 

are combined for each business 

(individual LDO or regional chain). 

Table 5 below shows the estimated 

impact of the QIP on small entities for 

payment consequence year 2012. The 

distribution of ESRD providers/facilities 

by facility size (both among facilities 

considered to be small entities for 

purposes of this analysis and by number 

of treatments per facility), geography 

(both urban/rural and by region), and by 

facility type (hospital based/ 

freestanding facilities). 

TABLE 5—IMPACT OF ESRD QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR CY 2012 INCLUDES ESTIMATED

IMPACT ON SMALL ENTITIES FOR REGULATORY FLEXIBILITY ACT (RFA) ANALYSIS

Facility type Number of 

facilities 

Number of facilities expected to 

receive a payment reduction 

Payment reduction (percent 

change in total 

ESRD payments) 

All Facilities ................................................................................................................ 4,311 1,106 ¥0.19 

Type: 

Freestanding ....................................................................................................... 3,916 977 ¥0.18 

Hospital Based ................................................................................................... 167 47 ¥0.25 

Unknown 1 ........................................................................................................... 228 82 ¥0.30 

Facility Size: 2

Small entities ...................................................................................................... 802 252 ¥0.27 

Large entities ...................................................................................................... 3,509 854 ¥0.17 

Urban/Rural status: 

Urban .................................................................................................................. 3,159 788 ¥0.19 

Rural ................................................................................................................... 924 236 ¥0.18 

Unknown 3 ........................................................................................................... 228 82 ¥0.30 

Geographic Region: 

Northeast ............................................................................................................ 652 182 ¥0.22 

South .................................................................................................................. 2,048 521 ¥0.18 

Midwest ............................................................................................................... 871 237 ¥0.22 

West .................................................................................................................... 705 158 ¥0.16 

Other 4 ................................................................................................................. 35 8 ¥0.23 

Facility Size (number of treatments): 

Less than 3,000 treatments ................................................................................ 261 77 ¥0.28 

3,000–9,999 treatments ...................................................................................... 2,566 675 ¥0.20 

Over 10,000 treatments ...................................................................................... 1,484 354 ¥0.18 

1Based on DFC self-reported status. 

2 ‘‘Small entities’’ include hospital-based facilities and non-chain facilities based on DFC self-reported status. 3Based on DFC self-reported status. 

4 Includes American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and Virgin Islands. 

Source: Analysis of DFC/Medicare claims data (2007–2008) for ESRD providers/facilities reporting data on all three measures. 

We note that guidance issued by the 

Department of Health and Human 

Services interpreting the RFA considers 

effects to be economically significant if 

they reach a threshold of three to five 

percent or more of total revenue or total 

costs. Under the final rule, the 

maximum payment reduction applied to 

providers/facilities, regardless of its 

size, is 2.0 percent of aggregate 

Medicare payments for dialysis services. 

This falls below the 3.0 percent 

threshold for economic significance 

established by HHS. To further ascertain 

the impact on small entities for 

purposes of the RFA, we projected 

provider/facility performance based on 

DFC performance data from 2007 and 

2008. For the 2012 ESRD QIP, of the 

1,106 ESRD facilities expected to 

receive a payment reduction, 252 small 

entities would be expected to receive a 

payment reduction (ranging from 0.5 

percent up to 2.0 of total payments). The 

average payment reduction for the 252 

small facilities receiving a payment 

reduction is approximately $18,000 per 

facility. Using our projections of 

provider/facility performance, we next 

estimated the impact of expected 

payment reductions on small entities by 

comparing the total payment reduction 

for the 252 small entities expected to 

receive a payment reduction with 

aggregate ESRD payments to all small 

entities. For the entire group of 802 

small entities, a minor decrease of 0.27 

percent in aggregate ESRD payments is 

observed. 

Therefore, we are not preparing an 

analysis for the RFA because the 

Secretary has determined that this final 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Comment: In reviewing Table 9 in the 

proposed rule (75 FR 49230) for the 

estimated impact of payment 

reductions, one commenter noted that 

31 percent of small entities will be 

affected by this proposed rule as 

opposed to only 24 percent of large 

entities. The commenter further noted 

that this disproportionately affects 

smaller entities, which do not have the 

inherent volume discounts and diverse 

purchasing powers that large entities 

typically have. The payment reduction 

(percent changes in aggregate ESRD 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 645 

payments), though considered minor, is 

estimated to be 0.10 percent higher for 

smaller entities. 

Response: The technical 

specifications for each of the finalized 

measures require that a provider/facility 

has a minimum of 11 cases meeting the 

measure criteria in order to report it. We 

believe that these specifications will 

minimize the rule’s economic burden on 

small entities. Second, we note that for 

purposes of RFA analysis in 

determining whether agencies must 

perform an initial or final regulatory 

flexibility analysis, agencies must 

determine whether the regulation is 

expected to have a significant economic 

impact on small entities. Though the 

rule may have a disproportionate, but 

not economically significant, impact on 

small entities, it is not relevant for 

purposes of the analysis. Third, we 

expect all facilities to provide quality 

care, particularly in the important areas 

of anemia management and dialysis 

adequacy, regardless of size. Finally, we 

intend to monitor and evaluate the 

impact of the ESRD QIP on access to 

and quality of care for ESRD 

beneficiaries, including indicators of 

facility financial health, to identify any 

disruptions or to make future 

improvements in the program. 

Comment: Another commenter noted 

that CMS has provided an estimate of 

the number and geographic region of 

other facilities it projects will receive 

reductions based on other 

characteristics (such as small versus 

large and rural versus urban) but would 

like to understand the impact of the 

proposed payment reductions safety-net 

and other not-for-profit providers. The 

commenter also stated that it is 

important to estimate the influence of 

payment reductions by facility type (for 

example, large dialysis organizations 

(LDOs) versus independent facilities). 

Response: As stated, we estimate 19 

percent of ESRD facilities to be 

nonprofit for purposes of RFA analysis. 

These entities are included in the 

estimates of the impact of payment 

reductions on small entities. 

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 604 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 final rule 

has a significant impact on operations of 

a substantial number of small rural 

hospitals because most dialysis facilities 

are freestanding. Overall, we estimate 

that the hospital-based dialysis facilities 

will experience an average 0.25 percent 

decrease in payments. As a result, this 

rule will not have a significant impact 

on small rural hospitals. Therefore, the 

Secretary has determined that this final 

rule will not have a significant impact 

on the operations of a substantial 

number of small rural hospitals. 

Finally, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any one year $100 

million in 1995 dollars, updated 

annually for inflation. In 2010, that 

threshold is approximately $135 

million. We do not believe that this rule 

includes any mandates that would 

impose spending costs on State, local, or 

Tribal governments in the aggregate, or 

by the private sector, of $135 million or 

more in 2010. 

Executive Order 13132 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 do not believe this final rule will 

have a substantial direct effect on State 

or local governments, preempt State 

law, or otherwise have Federalism 

implications. 

C. Anticipated Effects 

This final rule is intended to mitigate 

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 QIP that would reduce 

ESRD payments by up to two percent to 

dialysis providers/facilities that fail to 

meet or exceed a total performance 

score with respect to performance 

standards established by the Secretary 

with respect to certain specified 

measures. Any reductions in ESRD 

payment would begin on January 1, 

2012 for services furnished on or after 

January 1, 2012. 

The calculations used to determine 

the impact of this proposed rule reveal 

that approximately 27 percent, or 1,106, 

ESRD dialysis facilities would likely 

receive some kind of payment reduction 

for 2012. Again using DFC/Medicare 

claims data from 2007–2008, Table 6 

shows the overall estimated distribution 

of payment reductions resulting from 

the 2012 ESRD QIP. 

TABLE 6—ESTIMATED DISTRIBUTION

OF CY 2012 ESRD QIP PAYMENT

REDUCTIONS

Payment reduction 

Number of 

ESRD 

facilities 

No Payment Reduction ............ 3,205 

0.5% Payment Reduction ......... 709 

1.0% Payment Reduction ......... 183 

1.5% Payment Reduction ......... 184 

2.0% Payment Reduction ......... 30 

To estimate the total payment 

reductions in 2012 resulting from the 

proposed rule for each facility, we 

multiplied the number of patients 

treated at each facility receiving a 

reduction times an average of three 

treatments per week. We then 

multiplied this product by a base rate of 

$229.63 per dialysis treatment (the 

finalized 2011 rate, before an adjustor is 

applied) to arrive at a total ESRD 

payment for each facility: 

((Number of patients treated at each 

facility × three treatments per week) 

× base rate) 

Finally, we applied the estimated 

payment reduction percentage expected 

under the ESRD QIP, yielding a total 

payment reduction amount for each 

facility: 

(Total ESRD payment × estimated 

payment reduction percentage) 

Totaling all of the payment reductions 

for each of the 1,106 facilities expected 

to receive a reduction leads to a total 

payment reduction of approximately 

$17.3 million for payment consequence 

year 2012. Further, we estimate that the 

total costs associated with the collection 

of information requirements described 

in section IV of this final rule would be 

less than $200,000 for all ESRD 

facilities. As a result, the estimated 

aggregate $17.5 million impact for 2012 

does not reach the $100 million 

threshold for an economically 

significant rule. 

D. Alternatives Considered 

In developing this final rule, we 

considered a number of alternatives. We 

carefully considered the size of the 

incentive to providers and facilities to 

provide high-quality care. We also 

selected the measures adopted for the 

2012 ESRD QIP because these measures 

are important indicators of patient 

outcomes and quality of care. Poor 

management of anemia and inadequate 

dialysis, for example, can lead to 

avoidable hospitalizations, decreased 

quality of life, and death. Thus, we 

believe the measures selected will allow 

CMS to continue focusing on improving 

the quality of care that Medicare 


kgrant on DSKGBLS3C1PROD with BILLS
646 Federal Register / Vol. 76, No. 3 / Wednesday, January 5, 2011 / Rules and Regulations 

beneficiaries receive from ESRD dialysis 

providers and facilities. 

We considered alternatives for 

identifying the performance standard, 

including the mean, median, and mode. 

However, we determined that the 

national average would be appropriate 

for the first payment year for the reasons 

listed below: 

• CMS believes that the legislative 

intent was to set the performance 

standard at the ‘‘average,’’ as this is the 

performance standard that has been 

publicly reported on the Dialysis 

Facility Compare Web site (DFC) for the 

past ten years and was the standard in 

effect when the language was crafted; 

• Recognizing, however, that there 

was some flexibility, CMS reviewed 

other possible standards and noted that 

there was little difference in the range 

of performance, with the exception of 

performance for Hemoglobin Greater 

Than 12g/dL (Hemoglobin < 10g/dL: 0 

percent–3 percent; Hemoglobin > 12g/ 

dL: 8 percent–38 percent; URR ≥ 65 

percent: 94 percent–100 percent). As the 

bundled payment will likely reverse the 

incentive that may be leading to the 

wider range for this measure, the 

differences in the performance did not 

warrant moving from the use of a 

national performance rate for 

performance. 

• CMS has seen great improvement in 

the rates for these measures over the 

past several years as reported in DFC, in 

part due to public reporting and 

continuous oversight and monitoring. 

The rate for Hemoglobin Less Than 10g/ 

dL has improved and maintained 

improvement, while Hemoglobin 

Greater Than 12g/dL improved from 44 

percent in 2007 to 26 percent in 2008 

as demonstrated below. Should it 

become evident that the rates begin to 

move in the wrong direction due to the 

bundled payment, different performance 

standards can be proposed through 

future rulemaking. For example, if the 

national average for Hemoglobin Less 

Than 10g/dL began to drop, CMS could 

propose to require a rate of two percent 

or less regardless of the national 

average. 

• The national average was also 

selected because of the rapid 

implementation date for the first year 

and because the proposed rule was 

published more than halfway into the 

period of performance for the first 

payment year. Especially for this first 

year of the QIP, we did not believe 

introduction of a new performance 

standard after the period of performance 

has nearly ended was appropriate. 

We also considered alternatives for 

applying payment reductions. Our main 

alternatives considered varying point 

reductions based on each one 

percentage point a facility or provider 

was below the performance standard. 

We did not propose alternatives that 

applied payment reductions that 

accounted for the variability seen within 

each measure, and as noted above, we 

asked for public comment on such 

alternatives. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

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 

continues 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), 

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

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

sec. 124 of Public Law 106–113 (133 stat. 

1501A–332). 

Subpart H—Payment for End-Stage 

Renal Disease (ESRD) Services and 

Organ Procurement Costs 

■ 2. Section 413.177 is added to subpart 

H to read as follows: 

§ 413.177 Quality Incentive Program 

Payment. 

(a) With respect to renal dialysis 

services as defined under § 413.171 of 

this part, in the case of an ESRD facility 

that does not meet the performance 

requirements described in section 

1881(h)(1)(B) of the Act for the 

performance year, payments otherwise 

made to the provider or facility section 

1881(b)(14) of the Act for renal dialysis 

services will be reduced by up to two 

percent, as determined appropriate by 

the Secretary. 

(b) Any payment reduction will apply 

only to the payment year involved and 

will not be taken into account in 

computing the single payment amount 

under this subpart for services provided 

in a subsequent payment year. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: November 18, 2010. 

Donald Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: December 15, 2010. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2010–33143 Filed 12–29–10; 11:15 am] 

BILLING CODE 4120–01–P 


kgrant on DSKGBLS3C1PROD with BILLS