Federal Register / Vol. 75, No. 155 / Thursday, August 12, 2010 / Proposed Rules 49215 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 413 

[CMS–3206–P] 

RIN 0938–AP91 

Medicare Program; End-Stage Renal 

Disease Quality Incentive Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule proposes 

to 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)). The proposed 

ESRD QIP would reduce ESRD 

payments by up to 2.0 percent for 

dialysis providers and facilities that fail 

to meet or exceed a total performance 

score for performance standards 

established with respect to certain 

specified measures. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. eastern standard time (EST) 

on September 24, 2010. 

ADDRESSES: In commenting, please refer 

to file code CMS–3206–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

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

the instructions under the ‘‘More Search 

Options’’ tab. 

2. By regular mail. You may mail 

written comments to the following 

address only: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: 

CMS–3206–P, P.O. Box 8010, Baltimore, 

MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address only: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–3206–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. This 

document does not propose any 

paperwork requirements in the 

‘‘Collection of Information 

Requirements’’ section in this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Lynn Riley, (410) 786–1286. 

SUPPLEMENTARY INFORMATION: Inspection 

of Public Comments: All comments 

received before the close of the 

comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

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

appointment to view public comments, 

phone 1–800–743–3951. 

Table of Contents 

I. Background 

A. Evolution of Quality Monitoring 

Initiatives 

B. Statutory Authority for ESRD QIP 

C. Selection of the ESRD QIP Measures 

II. Provisions of the Proposed Rule 

A. Overview of the Proposed ESRD QIP 

B. Performance Standards for the ESRD 

QIP Measures 

C. Performance Period for the ESRD QIP 

Measures 

D. Methodology for Calculating the Total 

Performance Score for the ESRD QIP 

Measures 

E. Payment Reductions Using the Total 

Performance Score 

F. 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 

III. Future QIP Considerations 

A. Program Monitoring and Evaluation 

B. QIP Changes and Updates 

IV. Collection of Information Requirements 

V. Response to Comments 

VI. Regulatory Impact Analysis 

A. Overall Impact 

B. Anticipated Effects 

C. 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 


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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. Evolution of Quality Monitoring 

Initiative 

Monitoring the quality of care 

provided to ESRD patients and 

provider/facility accountability are 

important components of the Medicare 

ESRD payment system and have been 

priorities for over 30 years. We will 

describe the evolution of our ESRD 

quality monitoring initiatives by 

category below. 

1. ESRD Network Organization Program 

In the End-Stage Renal Disease 

Amendments of 1978 (Pub. L. 95–292), 

Congress required the formation of 

ESRD Network Organizations to further 

support the ESRD program. CMS 

currently contracts with 18 ESRD 

Networks throughout the United States 

to perform oversight activities and to 

assist dialysis providers and facilities in 

providing appropriate care for their 

dialysis patients. The Networks’ 

responsibilities include monitoring the 

quality of care provided to ESRD 

patients, providing technical assistance 

to patients who have ESRD and to 

providers/facilities that treat ESRD 

patients to assist them in improving 

care, addressing patient complaints and/ 

or grievances, and emergency 

preparedness. In 1994, CMS and the 

ESRD Networks, with input from the 

renal community, established the ESRD 

Core Indicators Project (CIP). The ESRD 

CIP was CMS’s first nationwide 

population-based study designed to 

assess and identify opportunities to 

improve the care of patients with ESRD. 

This project established the first 

consistent clinical ESRD database. 

Information in this database included 

clinical measures thought to be 

indicative of key components of care 

provided to individuals who required 

dialysis. The initial Core Indicators 

focused on adult hemodialysis patients 

who received care in dialysis facilities. 

The Core Indicators included measures 

related to anemia management, 

adequacy of hemodialysis, nutritional 

status and blood pressure control. On 

March 1, 1999, the ESRD CIP was 

merged with the ESRD Clinical 

Performance Measures (CPM) Project 

(described below). 

2. Clinical Performance Measures (CPM) 

Project 

Section 4558(b) of the Balanced 

Budget Act of 1997 required CMS to 

develop and implement, by January 1, 

2000, a method to measure and report 

the quality of renal dialysis services 

furnished under the Medicare program. 

To implement this legislation, CMS 

developed the ESRD Clinical 

Performance Measures (CPM) Project 

based on the National Kidney 

Foundation’s Dialysis Outcome Quality 

Initiative (NKF–DOQI) Clinical Practice 

Guidelines. The purpose of collecting 

and reporting the ESRD CPMs was to 

enable us to provide comparative data to 

ESRD providers/facilities to assist them 

in assessing and improving the care 

furnished to ESRD patients. 

3. Dialysis Facility Compare (DFC) 

Also in response to the Balanced 

Budget Act of 1997, CMS created 

Dialysis Facility Compare (DFC) as a 

new feature on http:// 

www.medicare.gov that was modeled 

after Nursing Home Compare and 

continues to be used by CMS today. 

CMS worked with a contractor and a 

consumer workgroup to identify dialysis 

facility-specific measures that could be 

provided to the public for consumer 

choice and information purposes. This 

tool was launched in January 2001 on 

the http://www.medicare.gov/Dialysis 

Web site to provide information to the 

public for comparing the quality of 

dialysis facilities across the country, 

including specific information about 

services available and the quality of care 

furnished by a specific dialysis facility/ 

provider. DFC captures administrative 

and quality related data submitted by 

dialysis facilities and providers. 

The quality measures initially 

reported on DFC were measures of 

anemia control, adequacy of 

hemodialysis treatment and patient 

survival. Medicare claims data were 

used to calculate the anemia 

management and hemodialysis 

adequacy rates, and administrative data 

(non-clinically based data such as 

demographic data, and data acquired 

from the Social Security Administration 

(SSA) and obtained from the CMS forms 

2728 and 2746) were used to determine 

patient survival rates. The anemia 

measure assessed the percentage of 

Medicare patients receiving an 

erythropoiesis-stimulating agent (ESA) 

at a given provider/facility whose 

anemia (low red blood cell count) was 

not controlled. More specifically, the 

anemia measure when DFC was 

launched in January 2001 assessed the 

percentage of Medicare patients whose 

hematocrit levels were at 33 percent (33 

percent out of 100 percent) or more (or 

hemoglobin levels of 11 g/dL or more). 

Since that time, evidence about 

increased risk of certain adverse events 

associated with the use of ESAs, which 

are used to treat anemia, raised concerns 

about patients who have hemoglobin 

levels that are too high, as well as 

patients whose hemoglobin levels are 

too low. The Food and Drug 

Administration (FDA) responded by 

requiring manufacturers to develop a 

Medication Guide (http://www.fda.gov/

Drugs/DrugSafety/PublicHealth

Advisories/ucm054716.htm) and to 

ensure that this information is provided 

to patients. The labeling guideline for 

ESAs states ‘‘The dosing 

recommendations for anemic patients 

with chronic renal failure have been 

revised to recommend maintaining 

hemoglobin levels within 10 g/dL to 12 

g/dL’’. As a result of this guideline, in 

November 2008 DFC was revised to 

include two anemia measures: one 

measure shows the percentage of 

patients whose hemoglobin levels are 

considered too low (that is, below 10 g/ 

dL), and a second measure shows the 

percentage of patients whose 

hemoglobin levels are too high (that is, 

above 12 g/dL). The dialysis adequacy 

measure assesses the percentage of incenter hemodialysis Medicare patients 

treated by the facility who had enough 

wastes removed from their blood during 

dialysis. More specifically, the measure 

is the percentage of Medicare patients 

with urea reduction ratio (URR) levels of 

65 percent or more. The patient survival 

measure indicates general facility 

survival as better than expected, as 

expected, or worse than expected. These 

measures are updated annually on the 

DFC Web site, usually at the end of the 

year, using Medicare claims data from 

the previous year for the hemodialysis 

adequacy and anemia measures and 

Medicare administrative data from the 

past 4 years for the patient survival 

measure. 

4. ESRD Quality Initiative 

In 2004, the ESRD Quality Initiative 

was launched and continues today. The 

objective is to stimulate and support 

significant improvements in the quality 

of dialysis care. The initiative aims to 

refine and standardize dialysis care 

measures, ESRD data definitions, and 

data transmission to support the needs 

of the ESRD program; empower patients 

and consumers by providing access to 

facility service and quality information; 

provide quality improvement support to 

dialysis facilities and providers; assure 

compliance with conditions of coverage; 

and build strategic partnerships with 


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patients, providers/facilities, 

professionals, and other stakeholders. 

Components of this Quality Initiative 

include the DFC, and the CPM Project. 

5. ESRD Conditions for Coverage 

On April 15, 2008, we published in 

the Federal Register, the updated ESRD 

Conditions for Coverage final rule, 

which contains revised requirements 

that dialysis providers and facilities 

must meet in order to be approved by 

Medicare and receive payment (73 FR 

20370 April 15, 2008). As part of the 

revised requirements, dialysis providers 

and facilities are each required to 

implement their own quality assessment 

and performance improvement program. 

In addition, providers and facilities are 

required to submit electronically the 

CPMs developed under the ESRD CPM 

Project for all Medicare patients on an 

annual basis. The CPMs were updated 

and expanded in April 2008. The 

current CPMs include 26 measures in 

the areas of anemia management; 

hemodialysis adequacy; peritoneal 

dialysis adequacy; mineral metabolism; 

vascular access; patient education/ 

perception of care/quality of life; and 

patient survival. 

6. CROWNWeb 

CMS has developed a new web-based 

system, Consolidated Renal Operations 

in a Web-Enabled Network 

(CROWNWeb) for the purposes of 

electronically collecting information 

about patients, facilities, providers, and 

clinical data to support the CPM Project. 

CROWNWeb supports the mineral 

metabolism, anemia management, 

hemodialysis adequacy, peritoneal 

dialysis adequacy, survival, and type of 

vascular access CPMs. Use of the 

CROWNWeb system will increase the 

efficiency of data collection for both 

CMS and providers/facilities, improve 

data quality, and provide a more stable 

and accessible platform for continual 

improvements in functionality. In 

February 2009, for Phase one, we began 

implementing the CROWNWeb system 

with a number of providers/facilities 

testing the system and expanded 

reporting to additional providers/ 

facilities in July 2009 for Phase two. 

During these initial phases, nearly 200 

dialysis providers/facilities 

(representing a cross section of small 

independent facilities and large dialysis 

organizations (LDOs)) were selected to 

enter data into CROWNWeb. These 

providers/facilities worked closely with 

CMS, their respective ESRD Networks, 

and CROWNWeb development and 

support contractors to understand the 

requirements of CROWNWeb, and to 

refine the internal business processes 

and procedures used to submit data 

effectively and efficiently into the 

system. 

The successful launch of both Phase 

One and Phase Two and helpful 

feedback provided by users has enabled 

CMS to work on additional upgrades to 

CROWNWeb that address both the 

technical and usability elements of the 

system. We continue to further refine 

the system as an additional tool for 

quality improvement. 

7. QIP Conceptual Model 

On September 29, 2009, we published 

in the Federal Register (74 FR 49922), 

the ESRD Prospective Payment System 

(PPS) proposed rule, describing how the 

Agency proposes to implement the new 

ESRD PPS in 2011. As part of that 

proposed rule, we outlined a conceptual 

model of the initial ESRD QIP design 

and solicited public comments. We 

received and reviewed many helpful 

comments regarding the design of the 

QIP that contributed to the development 

of this proposed rule. 

B. Statutory Authority for the ESRD QIP 

Congress required in section 153 of 

MIPPA that the Secretary implement an 

ESRD quality incentive program (QIP). 

We believe that the QIP is the next step 

in the evolution of the ESRD quality 

program because it measures provider/ 

facility performance rather than simply 

reporting outcomes data. 

Specifically, section 1881(h) of the 

Social Security Act (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 services and dialysis 

facilities that do not meet or exceed a 

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 2.0 

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 initially 

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 quality incentive 

program, 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 with respect to 

the measures for a performance period; 

and (5) apply an appropriate payment 

reduction to 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. 

C. Selection of the ESRD QIP Measures 

As required by section 

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

the measures for the initial year of the 

QIP to include two-anemia management 

measures that reflect the labeling 

approved by the Food and Drug 

Administration (FDA) for the 

administration of erythropoesis 

stimulating agents (ESAs), and onehemodialysis adequacy measure in the 

Medicare End-Stage Renal Disease 

Prospective Payment System Final Rule 

(CMS–1418–F) published on August 12, 

2010. The following are the three 

finalized measures for the initial year of 

the ESRD QIP: 

• Percentage of Medicare patients 

with an average Hemoglobin <10.0 g/dL 

• Percentage of Medicare patients 

with an average Hemoglobin >12.0 g/dL 

• Percentage of Medicare patients 

with an average Urea Reduction Ratio 

(URR) >65 percent. 

Data for these measures are collected 

from ESRD claims submitted to CMS for 

payment purposes. We have publicly 

reported anemia and adequacy of 

hemodialysis data on DFC since January 

2001. The quality measure selection is 

limited to these three measures for the 

first year of the QIP because they are 

measures for which we already have 

complete data available to us. We are 

working to develop additional quality 

measures that we can adopt for the 

ESRD QIP in subsequent years. 

The ESRD QIP is the first Medicare 

program that links any provider or 

facility payments to performance based 

on outcomes as assessed through 

specific quality measures. The three 

measures that we adopted for the initial 

year of the ESRD QIP are important 

indicators of patient outcomes because 

poor management of anemia and 

inadequate dialysis can lead to 


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avoidable hospitalizations, decreased 

quality of life, and death. These 

measures are at the core of medical 

management of ESRD patients. 

As noted previously, data for these 

three measures are collected through 

ESRD claims submitted to CMS. The 

process used to ensure accuracy of 

claims coding and measure calculation 

has been used and refined since our 

implementation of the DFC. A full 

description of the methodologies used 

for the calculation of the measures can 

be reviewed at: http:// 

www.dialysisreports.org/pdf/esrd/ 

public/DFRGuide.pdf under the 

‘‘Facility Modality, Hemoglobin, and 

Urea Reduction Ratio’’ section. 

As we have previously stated, we are 

committed to adding additional quality 

measures as soon as complete data 

sources become available to us. For 

example, we are considering the 

possibility of adopting measures such as 

Kt/V, vascular access rates, bone and 

mineral metabolism, and access 

infection rates to the ESRD QIP for 

future years. CMS is committed to 

further development of quality measures 

for future years of the QIP in order to 

better assess the quality of care provided 

by ESRD facilities. 

II. Provisions of the Proposed Rule 

A. Overview of the Proposed ESRD QIP 

This proposed rule proposes to 

implement a quality incentive program 

for Medicare ESRD dialysis providers 

and facilities with payment reductions 

beginning January 1, 2012, in 

accordance with the statutory 

provisions set forth in section 1881(h) of 

the Act. This proposed rule was 

developed based on the conceptual 

model set forth in the September 29, 

2009 proposed rule (74 FR 49922) and 

on comments received on this model. In 

general, we propose to calculate 

individual total performance scores 

ranging from 0–30 points for providers 

and facilities based on the three 

finalized measures. We propose to 

weigh the total performance score for 

each provider/facility such that the 

percentage of Medicare patients with an 

average Hemoglobin <10 g/dL measure 

makes up 50 percent of the score, and 

the other hemoglobin measure and the 

hemodialysis adequacy measure will 

each be 25 percent of the score. 

Providers/facilities that do not meet or 

exceed a certain total performance score 

would receive a payment reduction 

ranging from 0.5 percent to 2.0 percent. 

We also propose below how we plan to 

implement the public reporting 

requirements in section 1881(h)(6) of 

the Act. 

B. 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 

propose to establish a performance 

standard for the two anemia 

management and one hemodialysis 

adequacy measures based on the special 

rule in section 1881(h)(4)(E) of the Act. 

This provision requires the Secretary to 

‘‘initially’’ use as a performance standard 

for the anemia management and 

hemodialysis adequacy measures 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 such measures in a 

period determined by the Secretary. We 

are not proposing 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 plan to 

propose performance standards under 

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

standards will include levels of 

achievement and improvement, as 

required under section 1881(h)(4)(B) of 

the Act, and are discussed below in 

section III.B QIP Changes and Updates. 

As stated above, to implement the 

special rule for the anemia management 

and hemodialysis adequacy measures, 

we propose to select 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 terms of establishing a performance 

standard based on national performance 

rates, we propose 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 Web site. We propose 

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 

(discussed below). Specifically, the rates 

for the anemia management and 

hemodialysis adequacy measures were 

posted on DFC in November 2009, and 

are as follows: 

• For the anemia management 

measure (referred to in this proposed 

rule as ‘‘Hemoglobin Less Than 10 g/ 

dL’’)—the national performance 

percentage of Medicare patients who 

have an average hemoglobin value less 

than 10.0 g/dL: The national 

performance rate is 2 percent. 

• For the anemia management 

measure (referred to in this NPRM as 

‘‘Hemoglobin More Than 12 g/dL’’)—the 

national performance percentage of 

Medicare patients who have an average 

hemoglobin value greater than 12.0 g/ 

dL: The national performance rate is 26 

percent. 

• For the proposed hemodialysis 

adequacy measure (referred to in this 

NPRM as ‘‘Hemodialysis Adequacy 

Measure’’)—the percentage of Medicare 

patients who have an average URR level 

above 65 percent: The national 

performance rate is 96 percent. 

This means that, for the purpose of 

implementing the special rule for the 

anemia management and hemodialysis 

adequacy measures, we propose that the 

performance standard for each of the 

three measures for the initial 

performance period with respect to 2012 

payment would be the lesser of (1) the 

provider/facility-specific rate for each of 

these measures in 2007, or (2) the 2008 

national average rates for each of these 

measures. 

C. 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 propose to select all of CY 2010 

as the initial performance period for the 

three finalized measures. We believe 

that this is the performance period that 

best balances the need to collect 

sufficient data, analyze the data, allows 

us sufficient time to calculate the 

provider/facility-specific total 

performance scores, determine whether 

providers and facilities meet the 


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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 (discussed in section II.D. of 

this proposed rule). We emphasize that 

providers/facilities are already required 

to submit all the necessary data needed 

to calculate the measures as part of their 

Medicare claims, so this proposal will 

not create any new requirements. We 

seek public comments about the 

selection of CY 2010 as the initial 

performance period. 

D. 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. 

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

states that the 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 reductions in payments 

to providers and facilities, with 

providers and facilities achieving the 

lowest total performance scores 

receiving the largest reductions. 

We propose to calculate the total 

performance of each provider and 

facility with respect to the measures we 

have adopted for the initial performance 

period by assigning 10 points to each of 

the three measures. That is, if a provider 

or facility meets or exceeds the 

performance standard for one measure, 

then it would receive 10 points for that 

measure. We propose to award points 

on a 0 to 10 point scale because this 

scale is commonly used in a variety of 

settings and we believe it can be easily 

understood by stakeholders. We also 

believe that the scale provides sufficient 

variation to show meaningful 

differences in performance between 

providers/facilities. 

We propose that a provider or facility 

that does not meet or exceed the initial 

performance standard for a measure 

based on its 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. Specifically, we propose to 

implement a scoring methodology that 

subtracts 2 points for every 1 percentage 

point the provider or facility’s 

performance falls below the initial 

performance standard. For example, if 

under the special rule, the initial 

performance standard for a particular 

provider or facility for the Hemoglobin 

More Than 12 g/dL is set under section 

1881(h)(4)(E)(ii) as the 2008 national 

average rate (26 percent), then if that 

provider/facility had 28 percent of 

Medicare patients with hemoglobin 

levels greater than 12 g/dL during 2010 

(the initial performance period), the 

provider/facility would receive 6 points 

for its performance on the measure 

because 28 percent is 2 percentage 

points below the performance standard 

(see Table 1, which also illustrates how 

the scoring would work if the 

Hemoglobin Less Than 10 g/dL was set 

under section 1881(h)(4)(E)(ii) as the 

2008 national average rate (2 percent)). 

However, if the initial performance 

standard for the provider/facility is set 

under section 1881(h)(4)(E)(i) as the 

provider or facility’s actual performance 

during 2007 (for purposes of this 

example, 30 percent), the provider/ 

facility would receive 10 points for this 

measure so long as its performance 

during 2010 (the initial performance 

period) was not worse than 30 percent 

(see Table 2, which also illustrates how 

the scoring would work if the 

Hemoglobin Less Than 10 g/dL was set 

under section 1881(h)(4)(E)(i) as the 

facility’s actual performance during 

2007 (for purposes of the example, 4 

percent)). Tables 3 and 4 illustrate how 

scores would be assigned for the 

Hemodialysis Adequacy Measure. 

BILLING CODE 4120–01–P 


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We note that our proposed 

methodology—that is, subtracting 2 

points for every 1 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. For example, based 

on 2008 data, a 1 percentage point 

difference under the Hemoglobin Less 

Than 10 g/dL measure would affect a 

greater proportion of facilities and 

providers than a 1 percentage point 

difference under the Hemoglobin More 

Than 12 g/dL measure. The table below 

highlights the variability in performance 

associated with each measure. (We note 

that lower scores on the anemia 

measures reflect better performance.) 


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Despite this difference in variability 

in performance among the measures, we 

are proposing to apply the straightforward methodology we have described 

above in a manner that is consistent 

across all three measures adopted in this 

rule. In designing the scoring 

methodology for the first year, CMS 

wanted to adopt a clear-cut approach 

(that is, subtracting two points for each 

percentage point providers and facilities 

fell below their performance standard) 

consistent with the conceptual model 

published in the End-Stage Renal 

Disease Prospective Payment System 

Final Rule (CMS–1418–F) on August 12, 

2010 in the Federal Register. We seek 

public comment on our proposal to 

apply the score reductions in this 

manner, as opposed to a methodology 

which takes into account the relative 

variation in performance that exists for 

each measure. 

We recognize that this straightforward approach may not be 

appropriate in future years of the QIP as 

we adopt new measures for inclusion in 

the program that may have a wider 

variability in performance. Moreover, 

we may need to reevaluate this 

approach for the three measures 

adopted in this rule, depending on how 

providers and facilities perform in 

future years on these measures. If this 

approach is finalized, we will continue 

to evaluate the applicability and 

appropriateness of such an approach in 

future years of the QIP. As we have 

stated, we want to ensure that 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 seek 

comment on potential methodologies 

that would take into account variation 

in performance amongst all measures 

included in the QIP. For example, under 

one possible methodology, a provider or 

facility’s performance could be awarded 

10 points for achieving a higher level of 

performance (for example, the 90th 

percentile). The remaining points could 

then be assigned according to a linear 

distribution, where a provider/facility 

might receive 0 points for a lower level 

of performance (for example, 1 standard 

deviation below the mean). 

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, such as 

weighting scores to ensure that 

providers/facilities have strong 

incentives to meet or exceed the 

performance standards. In the 

development of our conceptual model, 

we initially considered that the initial 

scoring method would weight each of 

the three proposed measures equally. 

After further examination and based on 

the public comments received, we 

propose to give greater weight to the 

Hemoglobin Less Than 10 g/dL 

measure. Low hemoglobin levels below 

10 g/dL can lead to serious adverse 

health outcomes for ESRD patients such 

as increased hospitalizations, need for 

transfusions, and mortality. Giving more 

weight to the Hemoglobin Less Than 10 

g/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 undertreat patients with 

anemia by underutilizing ESAs. 

Specifically, we propose to weight the 

Hemoglobin Less Than 10 g/dL measure 

as 50 percent of the total performance 

score. The remaining 50 percent of the 

total performance score would be 

divided equally between the 

Hemoglobin More Than 12 g/dL 

measure and the Hemodialysis 

Adequacy Measure. 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 (.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. 

An example of how the proposed 

scoring methodology would work 

follows below. The example assumes 

that the performance standard for 

Facility A during the initial 

performance period is based on the 2008 

national average rates under section 

1881(h)(4)(E)(ii) of the Act (which are 

set forth above) (because Facility A’s 

base utilization year results were higher 

than the 2008 national average) and that 

Facility A achieves the following results 

in 2010: 

1. Hemoglobin Less Than 10 g/dL: 2 

percent. 

2. Hemoglobin More Than 12 g/dL: 26 

percent. 

3. Hemodialysis Adequacy: 93 

percent. 

The total performance score for 

Facility A would be 26 points. Facility 

A would receive 10 points for achieving 

the 2008 national average rate for the 

Hemoglobin Less Than 10 g/dL measure 

(see Table 1); 10 points for achieving the 

2008 national average rate for the 

Hemoglobin More Than 12 g/dL 

measure (see Table 1); and 4 points for 

performing 3 percentage points below 

the 2008 national average rate for the 

Hemodialysis Adequacy Measure in 

2010. Next, we would multiply each 

individual measure’s score by its 

assigned weight: 10 × .5 = 5; 10 × .25 

= 2.5; 4 × .25 = 1. Then, all three scores 

would be added together and multiplied 

by three: (5 + 2.5 + 1) × 3 = 25.5. Finally, 

we would round Facility A’s score to 

the nearest whole number, resulting in 

a total performance score of 26 points 

(see Table 6 below). 


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It is important to note that this 

example assumes that Facility A’s 

facility specific performance in 2007 

(the base utilization year) on each of the 

three measures was better than or equal 

to the national performance average in 

2008. If however, Facility A’s 

performance in 2007 on the 

Hemodialysis Adequacy Measure had 

been 92 percent, then its performance 

standard for that measure would have 

been set according to section 

1881(h)(4)(E)(i), therefore setting a lower 

performance standard for Facility A (see 

Table 4). In that case, Facility A’s score 

of 93 percent during the performance 

period would have earned it a score of 

10 points, resulting in a total 

performance score of 30 points (see 

Table 7 below). 

As we stated above, we believe that 

this proposed weighting methodology 

will ensure that providers/facilities have 

the incentive to adequately maintain 

patients’ hemoglobin levels, particularly 

considering concerns about appropriate 

ESA use that could arise when the new 

bundled ESRD payment system is 

implemented. We believe this proposed 

weighting methodology is appropriate 

for the initial year of the QIP. However, 

consistent with our desire to improve 

the quality of care provided to ESRD 

patients, we solicit comments on 

potential weighting methodologies that 

could be incorporated to the QIP in 

future years as new measures are 

introduced. 


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As previously discussed, 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 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 seek public 

comments about the proposed scoring 

methodology for the ESRD QIP. 

E. 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 propose 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 26 points. 

Providers/facilities that score between 

21–25 points would receive a 0.5 

percent payment reduction, between 

16–20 points a 1.0 percent payment 

reduction, between 11–15 points a 1.5 

percent payment reduction, and 

between 0–10 points the full 2.0 percent 

payment reduction (see Table 8). 

Applying this payment reduction scale 

to the example of Facility A above, 

Facility A’s total performance score of 

26 would result in it receiving no 

payment reduction. 

In developing the proposed payment 

reduction scale, we carefully considered 

the size of the incentive to providers/ 

facilities to provide high quality care 

and range of total performance scores to 

which the payment incentive 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. For example, 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. At the same time, we want 

poorly performing providers/facilities to 

receive a more significant payment 

reduction. Our analysis suggests that 

use of payment differentials of 0.5 

percent for the total performance score 

ranges we are proposing differentiates 

between providers/facilities with fair to 

good performance and providers/ 

facilities with poor performance. We 

will consider smaller 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 

2.0 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 2.0 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 2.0 

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 and avoid a 

payment reduction the following year. 

We seek public comments about how 

the proposed payment reduction scale 

will 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 per 

treatment 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 in the End-Stage Renal 

Disease Prospective Payment System 

Final Rule (CMS–1418–F) published on 

August 12, 2010. 

In keeping with this practice, we 

propose 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, including case-mix, 

wage index, outlier, etc, were made. 

(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 (and 

Medicare pays 80 percent). With respect 


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to dialysis services furnished by ESRD 

facilities to individuals with ESRD, 

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 seek public 

comment on the impact of this effect. 

We propose to incorporate the 

statutory requirements of the QIP 

payment reduction set forth in proposed 

§ 413.177. 

F. 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 DFRs is 

sensitive and as such, most of that 

information is made available through a 

secure Web site only to 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 DFC Web site, which allows 

Medicare beneficiaries and others to 

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 provided 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 in the DFC Web 

site. 

We propose to use the abovedescribed procedures, including the 

DFRs framework, to allow dialysis 

providers/facilities to preview their 

quality data under the QIP before they 

are 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. 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. Any 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 requirement 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 propose 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 

propose 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 seek 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. 

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 propose 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 propose 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 


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system would allow CMS to transmit 

performance score certificates to 

providers/facilities in a secure manner. 

CMS will 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 expect that 

dialysis providers/facilities would have 

the capability to download and print 

their certificates from the secure Web 

site. We propose 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. 

Once printed, we propose 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 propose 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 will 

update the certificates annually with 

new performance information, and 

providers/facilities must post the 

updated certificate within 5 business 

days of the day that we transmit it. 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 propose 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 are: 

• 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 score 

average; 

• 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 

score average for each quality measure. 

We considered several options for 

making QIP performance score data 

available via certificates. 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 seek 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 are 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 seek 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 seek 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. 

4. Informing the Public Through 

Medicare’s 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 

that 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, CMS hosts 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 4,700 dialysis providers/facilities 

approved by 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. 

Because DFC is a current component 

of the Medicare suite of Compare tools, 

we propose to use DFC as the 

mechanism for meeting the Web-based 


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public information requirement under 

section 1881(h)(6)(D) of the Act. DFC is 

a consumer-focused 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 Medicareapproved 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 propose 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 score 

average; 

• 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 

score average for each quality measure. 

We note that this is the same 

information that we are proposing to 

include on the certificates that we will 

provide to providers/facilities. We seek 

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.hhs.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 seek public comment on the 

advisability of using DFC as our 

mechanism for making QIP information 

available over the Internet. We also seek 

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 seek 

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. 

III. Future QIP Considerations 

A. Program Monitoring and Evaluation 

CMS plans to monitor and evaluate 

the new ESRD Prospective Payment 

System (PPS) and 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 QIP, we observe 

changes in access to and quality of care, 

especially within the vulnerable 

populations. We will be evaluating the 

effects of the new PPS and the QIP in 

areas such as: 

• Access to care for beneficiaries 

including categories or subgroups of 

beneficiaries. 

• Changes in care practices that could 

adversely impact on the quality of care 

for beneficiaries. 

• 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 

provide 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 

also will 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 welcome public comments 

about an approach to monitoring and 

evaluating the PPS and the QIP. 

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 10 

g/dL—2 percent; Hemoglobin More 

Than 12 g/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 reduced 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 quality of care, once we 

have a historical perspective on how the 


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measure performs. While we will 

consider use of national performance 

rates, we also will take into 

consideration future performance 

measures 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 

(i.e. for calcium and phosphorus), and 

vascular access. CMS is currently 

developing measures in each of the 

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

of the Act and is also 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 most measures, 

CMS will use a collection process that 

has been determined appropriate by the 

Secretary to obtain this data. For 

collection of calcium and phosphorus 

levels, however, we intend to collect 

information on facility and provider 

ESRD claims as soon as practicable. 

Additional detail on submission of the 

calcium and phosphorus levels will be 

provided as soon as it is available. 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 seek public comments on how we 

might best incorporate both 

improvement and achievement 

standards as specified by the Act. We 

also seek comments on performance 

standards for future years of the QIP. We 

are committed to adopting additional 

quality measures for the QIP as soon is 

practicable. While we are evaluating 

measures for inclusion in future years of 

the QIP, we also seek public comment 

on setting performance standards for the 

first year a new measure is included in 

the QIP. 

IV. 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. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements 

(ICRs): 

Section VIII.C. of the preamble of this 

proposed rule discusses a disclosure 

requirement. As stated earlier in the 

preamble, 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, 

CMS will be issuing QIP certificates to 

providers and facilities via a generally 

accessible electronic file format. We 

propose that each provider and facility 

would prominently display the QIP 

certificate in patient areas. In addition, 

we propose that each provider and 

facility will take the necessary measures 

to ensure the security of the certificate 

in the patient areas. Finally, we propose 

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. 

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 estimate that 4,311 providers and 

facilities will receive QIP certificates 

and will be required to display them. 

We also estimate 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 estimate that 

approximately one-third of ESRD 

patients will ask a question about the 

QIP certificate. We further estimate that 

it will take each provider/facility 5 

minutes to answer each patient question 

about the QIP certificate, or 1.65 hours 

per provider or facility each year. The 

total estimated annual burden 

associated with this requirement is 

7,121 hours. The total estimated annual 

burden for both displaying the QIP 

certificates and answering patient 

questions about the certificates is 7,839 

hours. While the total estimated annual 

burden associated with both of these 

requirements as discussed is 7,839 

hours, we do not believe that there will 

be a significant cost associated with 

these requirements because we are not 

requiring facilities to complete new 

forms. As discussed in Section VI. of the 

preamble of this proposed rule, we 

estimate that the total cost for all ESRD 

facilities to comply with the collection 

of information requirements would be 

less than $200,000. 

If you wish to comment on these 

information collection and 

recordkeeping requirements, please do 

either of the following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

[CMS–3206–P]. 

Fax: (202) 395–6974; or 

E-mail: 

OIRA_submission@omb.eop.gov. 

V. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

VI. Regulatory Impact Statement 

A. Overall Impact 

We have examined the impact of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review, 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 

(March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999) and the Congressional 

Review Act (5 U.S.C. 804(2)). 


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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). As explained in the 

analysis that follows, we have 

determined that this proposed rule is 

not economically significant since it 

does not have effects of $100 million or 

more. Furthermore, it is not considered 

a major rule under the Congressional 

Review Act. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers or 

facilities are small entities, either by 

nature of their nonprofit status or by 

having revenues of $7.0 million to $34.5 

million in any 1 year. Individuals and 

States are not included in the definition 

of a small entity. Based on our review 

of 2007–2008 DFC quality performance 

data, we estimate that approximately 19 

percent of ESRD facilities are small 

entities according to the Small Business 

Administration’s (SBA) size standard of 

those dialysis facilities having total 

revenues of $34.5 million or less in any 

one year, and that 19 percent of dialysis 

facilities are nonprofit organizations. 

For more information on SBA’s size 

standards, see the SBA Web site at 

http://sba.gov/idc/groups/public/

documents/sba_homepage/ 

serv_sstd_tablepdf.pdf. (Kidney Dialysis 

Centers are listed as North American 

Industry Classification System (NAICS) 

Code 621492 with a size standard of 

$34.5 million.) 

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 9 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). 

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BILLING CODE 4120–01–C 

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 3 to 5 percent 

or more of total revenue or total costs. 


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Under the proposed 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 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). We expect 

payment reductions received would 

average approximately $18,000 per 

facility, regardless of facility size. 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 

initial analysis for the RFA because the 

Secretary has determined that this 

proposed rule will not have a significant 

economic impact on a substantial 

number of 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. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area for 

Medicare payment regulations and has 

fewer than 100 beds. We do not believe 

this proposed rule has a significant 

impact on operations of a substantial 

number of small rural hospitals because 

most dialysis facilities are freestanding. 

Therefore, we are not preparing an 

analysis for section 1102(b) of the Act 

because the Secretary has determined 

that this proposed rule will not have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2010, that threshold is approximately 

$135 million. This rule will not have a 

consequential effect on State, local, or 

tribal governments in the aggregate, or 

by the private sector of $135 million. 

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. 

Since this regulation does not impose 

any costs on State or local governments, 

the requirements of Executive Order 

13132 are not applicable. 

B. Anticipated Effects 

This proposed 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 quality incentive 

program (QIP) that would reduce ESRD 

payments by up to 2 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. 

The methodology that we are proposing 

to determine a provider/facility’s 

performance score is described in 

section VI (Methodology for Calculating 

the Total Performance Score for the 

ESRD QIP Measures). Any reductions in 

ESRD payment would begin on January 

1, 2012 for services furnished on or after 

January 1, 2012. 

The End-Stage Renal Disease 

Prospective Payment System Final Rule 

(CMS–1418–F) published on August 12, 

2010 estimates payments to ESRD 

facilities in 2012 to be $8.5 billion. 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 10 shows 

the overall estimated distribution of 

payment reductions resulting from the 

2012 QIP. 

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 (before 

an adjustor is applied) to arrive at a total 

ESRD payment for each facility: 

((Number of patients treated at each 

facility × 3 treatments per week) × base 

rate) 

Finally, we applied the estimated 

payment reduction percentage expected 

under the 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 


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of information requirements described 

in Section IV. of the preamble of this 

proposed 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. 

C. Alternatives Considered 

As stated above, this proposed rule 

proposes to implement 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. In 

developing the proposed QIP, 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 

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 More Than 

12 (Hgb <10–0%–3%; Hgb >12–8%– 

38%; URR 94%–100%). As the bundled 

payment will likely reverse the 

incentive that may be leading to the 

wider range for the Hgb>12, the 

differences in the performance did not 

warrant moving from the use of a 

national average for performance. 

• CMS has seen great improvement in 

the rates for these measures over the 

past several years in part due to public 

reporting and continuous oversight and 

monitoring. The rate for Hemoglobin 

Less Than 10 has improved and 

maintained improvement, while 

Hemoglobin More Than 12 improved 

from 44% in 2007 to 26% 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 10 began to drop, CMS could 

propose to require a rate of 2% 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 period of performance 

for the first payment year has already 

begun. We anticipate the final rule will 

be published near the end of the 

performance period. Therefore, 

introduction of a new performance 

standard after the period of performance 

has nearly ended was not appropriate. 

We also considered alternatives for 

applying payment reductions. Our main 

alternatives considered varying point 

reductions based on each 1 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 ask 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 propose to amend 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 a provider of 

services or a renal dialysis 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 under 

this subpart for renal dialysis services 

will be reduced by up to 2.0 percent, as 

determined appropriate by the 

Secretary. 

(b) Any payment reduction will apply 

only to services provided in 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: March 18, 2010. 

Marilyn Tavenner, 

Acting Administrator and Chief Operating 

Officer, Centers for Medicare & Medicaid 

Services. 

Approved: July 19, 2010. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2010–18465 Filed 7–26–10; 4:15 pm] 

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jlentini on DSKJ8SOYB1PROD with PROPOSALS2