Vol. 77 Friday, 

No. 218 November 9, 2012 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 413 and 417 

Medicare Program; End-Stage Renal Disease Prospective Payment 

System, Quality Incentive Program, and Bad Debt Reductions for All 

Medicare Providers; Final Rule 


tkelley on DSK3SPTVN1PROD with RULES2
67450 Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 413 and 417 

[CMS–1352–F] 

RIN 0938–AR13 

Medicare Program; End-Stage Renal 

Disease Prospective Payment System, 

Quality Incentive Program, and Bad 

Debt Reductions for All Medicare 

Providers 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule updates and 

makes revisions to the end-stage renal 

disease (ESRD) prospective payment 

system (PPS) for calendar year (CY) 

2013. This rule also sets forth 

requirements for the ESRD quality 

incentive program (QIP), including for 

payment year (PY) 2015 and beyond. In 

addition, this rule implements changes 

to bad debt reimbursement for all 

Medicare providers, suppliers, and 

other entities eligible to receive 

Medicare payment for bad debt and 

removes the cap on bad debt 

reimbursement to ESRD facilities. (See 

the Table of Contents for a listing of the 

specific issues addressed in this final 

rule.) 

DATES: Effective Date: These regulations 

are effective on January 1, 2013. 

Applicability Date: The regulations 

setting forth the reductions in Medicare 

bad debt pursuant to section 3201 of the 

Middle Class Tax Extension and Job 

Creation Act of 2012 (Pub. L. 112–96) 

are applicable for cost reporting periods 

beginning October 1, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Michelle Cruse, (410) 786–4533, for 

issues related to ESRD. 

Heidi Oumarou, (410) 786–7942, for 

issues related to the ESRD market 

basket. 

Anita Segar, (410) 786–4614, for 

issues related to the QIP. 

Kellie Shannon, (410) 786–0416 for 

information regarding Medicare bad 

debt. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

To assist readers in referencing 

sections contained in this preamble, we 

are providing a Table of Contents. Some 

of the issues discussed in this preamble 

affect the payment policies, but do not 

require changes to the regulations in the 

Code of Federal Regulations (CFR). 

I. Executive Summary 

A. Purpose 

1. End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) 

2. ESRD QIP 

3. Reductions to Bad Debt Payments for All 

Medicare Providers and Elimination of 

the Cap on Bad Debt Reimbursement to 

ESRD Facilities 

B. Summary of Major Provisions 

1. ESRD PPS 

2. ESRD QIP 

3. Reductions to Bad Debt Payments for All 

Medicare Providers and Elimination of 

the Cap on Bad Debt Reimbursement to 

ESRD Facilities 

C. Summary of Cost and Benefits 

1. Impacts of the Final ESRD PPS 

2. ESRD QIP 

3. Impacts of Bad Debt Provisions 

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

Disease (ESRD) Prospective Payment 

System (PPS) 

A. Background on the End-Stage Renal 

Disease (ESRD) Prospective Payment 

System (PPS) 

B. Summary of the Proposed Provisions 

and Responses to Comments on the CY 

2013 ESRD PPS 

C. Routine Updates and Proposed Policy 

Changes to the CY 2013 ESRD PPS 

1. Composite Rate Portion of the ESRD PPS 

Blended Payment 

a. Update to the Drug Add-on to the 

Composite Rate Portion of the ESRD 

Blended Payment Rate 

i. Estimating Growth in Expenditures for 

Drugs and Biologicals in CY 2013 

ii. Estimating Per Patient Growth 

iii. Applying the Growth Update to the 

Drug Add-On Adjustment 

iv. Update to the Drug Add-On Adjustment 

for CY 2013 

2. ESRD PPS Base Rate 

3. ESRD Bundled Market Basket 

a. Overview and Background 

b. Market Basket Update Increase Factor 

and Labor-Related Share for ESRD 

Facilities for CY 2013 

c. Productivity Adjustment 

d. Calculation of the ESRDB Market Basket 

Update Adjusted for Multifactor 

Productivity for CY 2013 

4. Transition Budget-Neutrality 

Adjustment for CY 2013 

5. Updates to the Wage Index Values and 

Wage Index Floor for the Composite Rate 

Portion of the Blended Payment and the 

ESRD PPS Payment 

a. Reduction to the ESRD Wage Index Floor 

b. Policies for Areas With No Wage Data 

c. Wage Index Budget-Neutrality 

Adjustment 

d. ESRD PPS Wage Index Tables 

6. Drug Policy Changes 

a. Daptomycin 

b. Alteplase and Other Thrombolytics 

c. Part B Drug Pricing 

7. Revisions to the Outlier Policy 

a. Impact of Changes to the Outlier Policy 

b. Outlier Policy Percentage 

D. Clarifications Regarding the ESRD PPS 

1. Reporting Composite Rate Items and 

Services 

2. ESRD Facility Responsibilities for ESRDRelated Drugs and Biologicals 

3. Use of AY Modifier 

E. Miscellaneous Comments 

III. End-Stage Renal Disease (ESRD) Quality 

Incentive Program (QIP) for Payment 

Year (PY) 2015 

A. Background 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

ESRD QIP for PY 2015 

C. Considerations in Updating and 

Expanding Quality Measures Under the 

ESRD QIP for PY 2015 and Subsequent 

PYs 

1. Value-Based Purchasing (VBP) Overview 

2. Brief Overview of Proposals 

3. Measures Application Partnership 

Review 

4. PY 2014 Mineral Metabolism Measure 

D. Proposed Measures for the PY 2015 

ESRD QIP and Subsequent PYs of the 

ESRD QIP 

1. PY 2014 Measures Continuing for PY 

2015 and Subsequent PYs 

a. Hemoglobin Greater Than 12 g/dL 

b. Vascular Access Type (VAT) Measure 

Topic 

c. In-Center Hemodialysis Consumer 

Assessment of Healthcare Providers and 

Systems (ICH CAHPS) 

2. Expansion of Two PY 2014 Measures for 

PY 2015 and Subsequent PYs 

a. Expanded National Healthcare Safety 

Network (NHSN) Dialysis Event 

Reporting Measure 

b. Expanded Mineral Metabolism 

Reporting Measure 

3. New Measures for PY 2015 and 

Subsequent PYs of the ESRD QIP 

a. Kt/V Dialysis Adequacy Measure Topic 

i. Adult Hemodialysis Adequacy 

ii. Peritoneal Dialysis Adequacy 

iii. Pediatric, In-center Hemodialysis 

Adequacy 

b. Hypercalcemia 

c. Anemia Management Reporting Measure 

4. Measures Under Consideration for 

Future PYs of the ESRD QIP 

a. Standardized Hospitalization Ratio 

(SHR) 

b. Standardized Mortality Ratio (SMR) 

c. Public Reporting of SHR and SMR 

Measures 

5. Other Potential Future Measures Under 

Development 

a. Thirty-Day Hospital Readmissions 

b. Efficiency 

c. Population/Community Health 

6. Scoring Background and General 

Considerations for the PY 2015 ESRD 

QIP 

7. Performance Period for the PY 2015 

ESRD QIP 

8. Performance Standards for the PY 2015 

ESRD QIP 

a. Clinical Measure Performance Standards 

b. Performance Standards 

c. Performance Standards for the PY 2015 

Reporting Measures 

9. Scoring for the PY 2015 ESRD QIP 

Measures 

a. Scoring Facility Performance on Clinical 

Measures Based on Achievement 

b. Scoring Facility Performance on Clinical 

Measures Based on Improvement 

c. Calculating the Reporting Measure 

Scores 


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10. Weighting the PY 2015 ESRD QIP 

Measures and Calculation of the PY 2015 

ESRD QIP Total Performance Score 

a. Weighting Individual Measures To 

Compute Measure Topic Scores for the 

Kt/V Dialysis Adequacy Measure Topic 

and the Vascular Access Type Measure 

Topic 

b. Weighting the Total Performance Score 

c. Examples of the PY 2015 ESRD QIP 

Scoring Methodology 

11. Minimum Data for Scoring Measures 

for the PY 2015 ESRD QIP 

a. Minimum Data for Scoring Clinical 

Measures for the PY 2015 ESRD QIP 

b. Minimum Data Requirements for 

Reporting Measures by New Facilities 

12. Payment Reductions for the PY 2015 

ESRD QIP 

13. Data Validation 

14. Scoring Facilities Whose Ownership 

has Changed 

15. Public Reporting Requirements 

IV. Limitation on Payments to All Providers, 

Suppliers and Other Entities Entitled to 

Bad Debt 

A. Background 

B. Section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012 

(Pub. L. No. 112–96) 

C. Summary of Provisions of This Final 

Rule 

1. Section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012 

(Pub. L. No. 112–96) 

2. ESRD Bad Debt Cap and Remove and 

Reserve § 413.178 

3. Technical Corrections 

D. Changes to Medicare Bad Debt Policy 

1. Changes to 42 CFR 413.89(h) 

2. Rationale for Removing 42 CFR 413.178 

3. Technical Corrections to 42 CFR 

417.536(f)(1) 

V. Collection of Information Requirements 

A. Legislative Requirement for Solicitation 

of Comments 

B. Requirements in the Regulation Text 

C. Additional Information Collection 

Requirements 

1. ESRD QIP 

a. Display of Certificates for the PY 2015 

ESRD QIP 

b. NHSN Dialysis Event Reporting 

Requirement for the PY 2015 ESRD QIP 

c. ICH CAHPS Survey Attestation 

Requirement for the PY 2015 ESRD QIP 

d. Data Validation Requirements 

2. Reductions to Bad Debt Payments for All 

Medicare Providers 

VI. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

2. Statement of Need 

3. Overall Impact 

B. Detailed Economic Analysis 

1. CY 2013 End-Stage Renal Disease 

(ESRD) Prospective Payment System 

(PPS) 

a. Effects on ESRD Facilities 

b. Effects on Other Providers 

c. Effects on the Medicare Program 

d. Effects on Medicare Beneficiaries 

e. Alternatives Considered 

2. ESRD QIP 

a. Effects of the PY 2015 ESRD QIP 

b. Alternatives Considered for the PY 2015 

ESRD QIP 

3. Reductions to Bad Debt Payments for All 

Medicare Providers 

C. Accounting Statement 

VII. Regulatory Flexibility Act Analysis 

VIII. Unfunded Mandates Reform Act 

Analysis 

IX. Federalism Analysis 

X. Files Available to the Public via the 

Internet 

Regulations Text 

Acronyms 

Because of the many terms to which 

we refer by acronym in this final rule, 

we are listing the acronyms used and 

their corresponding meanings in 

alphabetical order below: 

AMCC Automated Multi-Channel 

Chemistry 

ASP Average Sales Price 

AV Arteriovenous 

BLS Bureau of Labor Statistics 

BMI Body Mass Index 

BSA Body Surface Area 

CAH Critical Access Hospital 

CBSA Core-Based Statistical Area 

CCN CMS Certification Number 

CDC Centers for Disease Control and 

Prevention 

CLABSI Central Line Access Bloodstream 

Infections 

CFR Code of Federal Regulations 

CIP Core Indicators Project 

CMHC Community Mental Health Center 

CMP Competitive Medical Plans 

CMS Centers for Medicare & Medicaid 

Services 

CPM Clinical Performance Measure 

CPT Current Procedural Terminology 

CROWNWeb Consolidated Renal 

Operations in a Web-Enabled Network 

CY Calendar Year 

DFC Dialysis Facility Compare 

DFR Dialysis Facility Report 

DME Durable Medical Equipment 

ESA Erythropoiesis stimulating agent 

ESRD End-Stage Renal Disease 

ESRDB End-Stage Renal Disease Bundled 

FDA Food and Drug Administration 

FI/MAC Fiscal Intermediary/Medicare 

Administrative Contractor 

FQHC Federally Qualified Health Center 

FY Fiscal Year 

GDP Gross Domestic Product 

HAI Healthcare-associated Infections 

HCPCS Healthcare Common Procedure 

Coding System 

HCPP Health Care Prepayment Plan 

HD Hemodialysis 

HHD Home Hemodialysis 

HMO Health Maintenance Organization 

ICD–9–CM International Classification of 

Diseases, 9th Edition, Clinical 

Modifications 

ICH CAHPS In-Center Hemodialysis 

Consumer Assessment of Healthcare 

Providers and Systems 

IGI IHS Global Insight 

IPPS Inpatient Prospective Payment System 

KDIGO Kidney Disease: Improving Global 

Outcomes 

KDOQI Kidney Disease Outcome Quality 

Initiative 

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 

MAP Medicare Allowable Payment 

MCP Monthly Capitation Payment 

MIPPA Medicare Improvements for Patients 

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

275) 

MMA Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 

MMEA Medicare and Medicaid Extenders 

Act of 2010 Pub. L. 111–309 

MFP Multifactor Productivity 

NHSN National Healthcare Safety Network 

NQF National Quality Forum 

PD Peritoneal Dialysis 

PFS Physician Fee Schedule 

PPS Prospective Payment System 

PSR Performance Score Report 

PY Payment Year 

QIP Quality Incentive Program 

REMIS Renal Management Information 

System 

RFA Regulatory Flexibility Act 

RHC Rural Health Clinic 

RRF Residual Renal Function 

RUL Reasonable Useful Lifetime 

SBA Small Business Administration 

SHR Standardized Hospitalization Ratio 

SIMS Standard Information Management 

System 

SMR Standardized Mortality Ratio 

SNF Skilled Nursing Facility 

SSA Social Security Administration 

TEP Technical Expert Panel 

The Act Social Security Act 

The Affordable Care Act The Patient 

Protection and Affordable Care Act 

URR Urea Reduction Ratio 

VAT Vascular Access Type 

VBP Value Based Purchasing 

I. Executive Summary 

A. Purpose 

1. End-Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) 

This final rule updates and makes 

revisions to the End-Stage Renal Disease 

(ESRD) prospective payment system 

(PPS) for calendar year (CY) 2013. In 

accordance with section 1881(b)(14) of 

the Social Security Act (the Act), as 

added by section 153(b) of the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA) (Pub. L. 

110–275), the Centers for Medicare & 

Medicaid Services (CMS) implemented 

a case-mix adjusted bundled PPS for 

Medicare outpatient ESRD dialysis 

services beginning January 1, 2011. The 

ESRD PPS replaced the basic case-mix 

adjusted composite payment system and 

the methodologies for the 

reimbursement of separately billable 

outpatient ESRD services. 

Also, section 1881(b)(14)(F) of the 

Act, as added by section 153(b) of 

MIPPA and amended by section 3401(h) 

of the Affordable Care Act (Pub. L. 111– 

148), established that beginning CY 

2012, and each subsequent year, the 

Secretary shall reduce the market basket 

increase factor by a productivity 


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67452 Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations 

adjustment described in section 

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

addition, the application of the 

productivity adjustment may result in 

the increase factor being less than 0.0 

percent for a year. 

2. End-Stage Renal Disease (ESRD) 

Quality Incentive Program (QIP) 

This final rule also sets forth 

requirements for the ESRD quality 

incentive program (QIP), including for 

payment year (PY) 2015. The program is 

authorized under section 153(c) of 

MIPPA, which added section 1881(h) to 

the Social Security Act (the Act). The 

ESRD QIP is the most recent step in 

fostering improved patient outcomes by 

establishing incentives for dialysis 

facilities to meet performance standards 

established by CMS. 

3. Reductions to Bad Debt Payments for 

all Medicare Providers and Elimination 

of the Cap on Bad Debt Reimbursement 

to ESRD Facilities 

This final rule also implements the 

changes to the limitations on payments 

for bad debt reimbursement set forth in 

section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012 

(Pub. L. 112–96) by revising 42 CFR 

413.89, Bad debts, charity, and courtesy 

allowances. Additionally, this rule will 

remove the cap on bad debt 

reimbursement to ESRD facilities. 

B. Summary of the Major Provisions 

1. ESRD PPS 

• Update to the composite and ESRD 

PPS base rate for CY 2013: For CY 2013, 

the ESRD PPS base rate is $240.36. This 

amount reflects the application of the 

ESRD bundled (ESRDB) market basket 

reduced by the productivity adjustment, 

or 2.3 percent, and the wage index 

budget-neutrality adjustment factor of 

1.000613 to the CY 2012 ESRD PPS base 

rate of $234.81. The base rate is 

applicable to both the ESRD PPS portion 

of the blended payment under the 

transition and payments under the full 

PPS. During the transition, we are 

required to update the composite rate 

for ESRD facilities receiving a blended 

payment. For CY 2013, the composite 

base rate is $145.20. This amount 

reflects the CY 2012 composite rate of 

$141.94, increased by the ESRDB market 

basket reduced by the productivity 

adjustment. 

• Update to the composite rate drug 

add-on for CY 2013: There are no 

changes to the methodology used to 

compute the drug add-on for CY 2013; 

we are only updating the data used to 

calculate the drug add-on for CY 2013. 

Using 6 years of average sales price 

(ASP) drug expenditure data and other 

data, we estimate a 2.9 percent decrease 

in aggregate drug expenditures and a 4.0 

percent increase in enrollment. Using 

these estimates, we project a 6.6 percent 

decrease in per patient growth of drug 

expenditures for CY 2013. Thus, we are 

projecting that the combined growth in 

per patient utilization and pricing for 

CY 2013 will result in a decrease to the 

drug add-on equal to 0.9 percentage 

points. We will apply a zero update to 

the drug add-on adjustment and 

maintain the $20.33 per treatment drug 

add-on amount for CY 2013. Because 

the market basket minus productivity 

that is applied to the composite rate 

increases the composite rate, the add-on 

adjustment of 14.3 percent is reduced to 

14.0 percent to maintain the drug addon at $20.33. 

• Market basket and productivity 

adjustment: Under section 

1881(b)(14)(F) of the Act, beginning in 

CY 2012, ESRD PPS payment amounts 

and the composite rate portion of the 

transition blended payment amounts 

shall be annually increased by an ESRD 

market basket percentage increase factor 

reduced by a multi-factor productivity 

(MFP) adjustment. The CY 2013 ESRDB 

market basket increase factor is 2.9 

percent. The current forecast of the CY 

2013 MFP adjustment is 0.6 percent. 

The resulting final CY 2013 MFPadjusted ESRDB market basket update is 

equal to 2.3 percent. 

• The transition budget-neutrality 

adjustment factor: For CY 2013, we are 

applying the transition budgetneutrality adjustment methodology 

established in CY 2011. This results in 

a 0.1 percent adjustment. Therefore, for 

CY 2013, a 0.1 percent increase will be 

applied to both the blended payments 

made under the transition and payments 

made under the full ESRD PPS for renal 

dialysis services furnished January 1, 

2013 through December 31, 2013. 

• Updates to the wage index and 

wage index floor: We adjust wage 

indices on an annual basis using the 

most current hospital wage data to 

account for differing wage levels in 

areas in which ESRD facilities are 

located. In CY 2013, we are not making 

any changes to the application of the 

wage index budget-neutrality 

adjustment factor and will continue to 

apply the budget-neutrality adjustment 

to the pre-floor, pre-reclassified wage 

index values for the composite rate 

portion of the blended payment and to 

the base rate for the ESRD PPS. Over the 

past several years, we have been 

gradually decreasing the wage index 

floor by 0.05 in an effort to gradually 

phase out the floor, and in CY 2013 we 

will continue to do so. Therefore, in CY 

2013, we are reducing the wage index 

floor from 0.550 to 0.500. We also 

applied the wage index budgetneutrality adjustment factor to the wage 

index floor of 0.500, which results in an 

adjusted wage index floor of 0.501 

(0.500 × 1.001141) for CY 2013. 

• Update to the outlier policy: We are 

updating the outlier services fixed 

dollar loss amounts and Medicare 

Allowable Payments (MAPs) for CY 

2013 using 2011 data. Based on the use 

of more current data, the fixed dollar 

loss amount for pediatric patients will 

decrease from $71.64 to $47.32 and the 

MAP amount will decrease from $45.44 

to $41.39 as compared to CY 2012 

values. For adult patients, the fixeddollar loss amount drops from $141.21 

to $110.22 and the MAP amount drops 

from $78.00 to $59.42. Because of the 

decline in utilization associated with 

the implementation of the expanded 

bundle, the 1 percent target for outlier 

payments was not achieved in CY 2011. 

Use of 2011 data to recalibrate the 

thresholds, reflecting lower utilization 

of epoetin and other outlier services, is 

expected to result in aggregate outlier 

payments close to the 1 percent target in 

CY 2013. We believe this update to the 

outlier MAPs and fixed dollar loss 

amounts for CY 2013 will increase 

payments for ESRD beneficiaries 

requiring higher resource utilization in 

accordance with a 1 percent outlier 

policy. 

• Policy reiteration (composite rate 

drugs and AY modifier): Under the 

composite and basic case-mix adjusted 

composite rate payment systems, certain 

drugs were included in the composite 

rate and were not eligible for separate 

payment. Our analyses of claims show 

that ESRD facilities are continuing to 

report composite rate drugs on ESRD 

claims. In this rule, we are reiterating 

that any item or service included in the 

composite rate should not be identified 

on ESRD claims. An AY modifier can be 

appended to claims for drugs and 

laboratory tests that are not ESRDrelated to allow for separate payment. 

Our analyses of claims show that there 

are ESRD facilities and laboratories that 

are appending the AY modifier to drugs 

and laboratory tests that we believe are 

ESRD-related, resulting in separate 

payment. In this rule, we reiterate the 

purpose of the AY modifier and 

emphasize that we are continuing our 

monitoring efforts. We also indicate that 

we may consider eliminating the AY 

modifier in future rulemaking if we 

believe that the AY modifier is not being 

used for the purpose intended. 


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2. ESRD QIP 

This final rule also implements new 

requirements for the ESRD QIP. It will 

continue some of the previous ESRD 

QIP measures, add new measures, and 

expand the scope of some of the existing 

measures to cover the measure topics as 

follows: 

• To evaluate anemia management: 

Æ Hemoglobin Greater Than 12 g/dL, 

a clinical measure. 

Æ Anemia Management, a reporting 

measure.* 

• To evaluate dialysis adequacy: 

Æ A clinical Kt/V measure for adult 

hemodialysis patients.* 

Æ A clinical Kt/V measure for adult 

peritoneal dialysis patients. * 

Æ A clinical Kt/V measure for 

pediatric in-center hemodialysis 

patients. * 

• To determine whether patients are 

treated using the most beneficial type of 

vascular access: 

Æ Vascular Access Type, a clinical 

measure topic comprised of an 

arteriovenous fistula and a catheter 

measure. 

• To address effective bone mineral 

metabolism management: 

Æ Mineral Metabolism, a reporting 

measure. 

• To address safety: 

Æ National Healthcare Safety Network 

(NHSN) Dialysis Event reporting 

measure. 

• To assess patient and caregiver 

experience: 

Æ In-Center Hemodialysis Consumer 

Assessment of Healthcare Providers and 

Systems (ICH CAHPS) survey reporting 

measure. 

* Denotes that this measure is new to 

the ESRD QIP. 

This final rule also establishes CY 

2013 as the performance period for the 

PY 2015 ESRD QIP. It also establishes 

performance standards for each measure 

and adopts scoring and payment 

reduction methodologies that are similar 

to those finalized for the PY 2014 ESRD 

QIP. 

3. Reductions to Bad Debt Payments for 

all Medicare Providers and Elimination 

of the Cap on Bad Debt Reimbursement 

to ESRD Facilities 

This rule also implements the 

statutory changes to the limitations on 

payments for bad debt reimbursement 

by revising 42 CFR 413.89, Bad debts, 

charity, and courtesy allowances. We 

are also moving 42 CFR 413.178(a) to 42 

CFR 413.89(h)(3), and moving 42 CFR 

413.178(d)(2) to 42 CFR 413.89(i)(2) and 

removing and reserving the remainder 

of 42 CFR 413.178. Additionally, we are 

making a technical correction to the 

cross reference in 42 CFR 417.536(f)(1) 

to Medicare bad debt reimbursement 

policy. Finally, this final rule will 

eliminate the cap on bad debt 

reimbursement to an ESRD facility at its 

unrecovered costs. 

C. Summary of Costs and Benefits 

In section VI.B of this final rule, we 

set forth a detailed analysis of the 

impacts that the changes will have on 

affected entities and beneficiaries. The 

impacts include the following: 

1. Impacts of the Final ESRD PPS 

The impact chart in section VI.B of 

this final rule displays the estimated 

change in payments to ESRD facilities in 

CY 2013 as compared to estimated 

payments in CY 2012. The overall 

impact of the CY 2013 changes is 

projected to be a 3.0 percent increase in 

payments. Hospital-based ESRD 

facilities have an estimated 3.6 percent 

increase in payments compared with 

freestanding facilities with an estimated 

2.9 percent increase. Urban facilities are 

expected to receive an estimated 

payment increase of 3.0 percent 

compared to an estimated 2.9 percent 

increase for rural facilities. We expect a 

2.4 percent decrease in estimated 

payments as a result of wage index 

adjustments for Puerto Rico and the 

Virgin Islands. However, this decrease is 

offset primarily by the impact of the 

market basket increase, resulting in an 

estimated 0.6 percent increase in 

payment. The estimated 3.0 percent 

overall payment increase will result in 

a $250 million cost to Medicare and a 

$60 million cost to beneficiaries. In 

2013, a 2.3 percent market basket 

increase will result in a $190 million 

cost to Medicare and a $50 million cost 

to beneficiaries. The outlier fixed dollar 

loss and MAP adjustments in CY 2013 

will result in a $30 million cost to 

Medicare and a $10 million cost to 

beneficiaries. The difference in cost to 

Medicare is due to the effects of 

changing the blend of payments from 

50/50 to 25/75 and the 0.1 percent 

transition budget-neutrality adjustment. 

2. Impacts for ESRD QIP 

The overall economic impact of the 

ESRD QIP is an estimated $24.6 million 

for PY 2015. We expect the total 

payment reductions to be approximately 

$12.1 million, and the costs associated 

with the collection of information 

requirements for certain measures to be 

approximately $12.4 million. 

The estimated payment reduction will 

continue to incentivize facilities to 

provide higher quality care to 

beneficiaries. The reporting measures 

that result in costs associated with the 

collection of information are critical to 

better understanding the quality of care 

beneficiaries receive, particularly a 

patient’s experience of care, and will be 

used to incentivize improvements in the 

quality of care provided. 

3. Impacts of Bad Debt Provisions 

We are codifying the provisions of 

section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012 

that requires reductions in bad debt 

reimbursement to all providers eligible 

to receive bad debt reimbursement; 

these provisions are specifically 

prescribed by statute and thus, are 

generally self-implementing. There will 

be a $10.92 billion savings to the 

program over 10 years resulting from 

these self-implementing reductions in 

bad debt reimbursement. We are also 

removing the cap on reimbursement for 

bad debt to ESRD facilities for cost 

reporting periods beginning on or after 

January 1, 2013, which will result in a 

cost to the Medicare program of $170 

million over 10 years. 

II. Calendar Year (CY) 2013 End-Stage 

Renal Disease (ESRD) Prospective 

Payment System (PPS) 

A. Background on the End-Stage Renal 

Disease (ESRD) Prospective Payment 

System (PPS) 

On August 12, 2010, we published in 

the Federal Register a final (75 FR 

49030) titled, ‘‘End-Stage Renal Disease 

Prospective Payment System’’, 

hereinafter referred to as the CY 2011 

ESRD PPS final rule. In the CY 2011 

ESRD PPS final rule, we implemented a 

case-mix adjusted bundled PPS for 

Medicare outpatient ESRD dialysis 

services beginning January 1, 2011, in 

accordance with section 1881(b)(14) of 

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

MIPPA. 

On April 6, 2011, we published in the 

Federal Register an interim final rule 

with comment period (76 FR 18930) 

titled, ‘‘Changes in the End-Stage Renal 

Disease Prospective Payment System 

Transition Budget-Neutrality 

Adjustment’’, which revised the ESRD 

transition budget-neutrality adjustment 

for CY 2011. In the interim final rule, 

we revised the 3.1 percent transition 

budget-neutrality adjustment reduction 

to a zero percent transition budgetneutrality adjustment for renal dialysis 

services furnished on April 1, 2011 

through December 31, 2011 (76 FR 

18933). On November 10, 2011, we 

published in the Federal Register, a 

final rule (76 FR 70228 through 70316) 

titled, ‘‘Medicare Program; End-Stage 

Renal Disease Prospective Payment 

System and Quality Incentive Program; 


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Ambulance Fee Schedule; Durable 

Medical Equipment; and Competitive 

Acquisition of Certain Durable Medical 

Equipment, Prosthetics, Orthotics and 

Supplies (hereinafter referred to as the 

CY 2012 ESRD PPS final rule). In that 

final rule, for the ESRD PPS, we made 

a number of routine updates for CY 

2012, implemented the second year of 

the transition to the ESRD PPS, made 

several policy changes, clarifications, 

and technical changes. In the CY 2013 

ESRD PPS proposed rule (77 FR 40956), 

we summarize the updates, changes, 

and clarifications that were finalized in 

the CY 2012 ESRD PPS final rule (76 FR 

70228). 

B. Summary of the Proposed Provisions 

and Responses to Comments on the CY 

2013 ESRD PPS 

The proposed rule, titled ‘‘Medicare 

Program; End-Stage Renal Disease 

Prospective Payment System, Quality 

Incentive Program, and Bad Debt 

Reductions for All Medicare Providers’’ 

(77 FR 40952), hereinafter referred to as 

the CY 2013 ESRD PPS proposed rule 

appeared in the Federal Register on July 

11, 2012, with a comment period that 

ended on August 31, 2012. In that 

proposed rule, for the ESRD PPS, we 

proposed to (1) make a number of 

routine updates for CY 2013, (2) 

implement the third year of the 

transition, and (3) make several policy 

changes and clarifications. We received 

approximately 40 public comments on 

the ESRD PPS proposals, including 

comments from ESRD facilities; national 

renal, nephrologist and patient 

organizations; patients; manufacturers; 

health care systems; and nurses. In this 

final rule, we provide a summary of 

each proposed provision, a summary of 

the public comments received and our 

responses to them, and the policies we 

are finalizing for the CY 2013 ESRD 

PPS. 

C. Routine Updates and Proposed Policy 

Changes to the CY 2013 ESRD PPS 

1. Composite Rate Portion of the ESRD 

PPS Blended Payment 

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

requires a 4-year transition under the 

ESRD PPS. This final rule implements 

the third year of the transition for those 

ESRD facilities that did not elect to 

receive 100 percent of the payment 

amount under the ESRD PPS. For CY 

2013, under 42 CFR 413.239(a)(3), 

facilities that are transitioning will 

receive a blended rate equal to the sum 

of 75 percent of the full ESRD PPS 

amount and 25 percent of the basic casemix adjusted composite payment 

amount. Accordingly, we continue to 

update the composite rate portion of the 

blended payment during the transition, 

(that is, CY 2011 through 2013), which 

includes updates to the drug add-on 

adjustment required by section 

1881(b)(12)(F) of the Act, discussed in 

section II.C.1.a of this final rule, as well 

as the wage index values (which 

includes a budget-neutrality factor) used 

to adjust the labor component of the 

composite rate discussed in section 

II.C.5 of this final rule. For CY 2013, we 

proposed to update the second part of 

the transition budget-neutrality 

adjustment to reflect updated data. The 

transition budget-neutrality adjustment 

is applied to both the blended payments 

under the transition and payments 

under the ESRD PPS. The discussion 

regarding the transition budgetneutrality adjustment can be found in 

section II.C.4 of this final rule. 

As discussed in the CY 2013 ESRD 

PPS proposed rule (76 FR 40957), 

section II.C.3 of this final rule, and in 

section 1881(b)(14)(F)(ii) of the Act, as 

added by section 153(b) of MIPPA and 

amended by section 3401(h) of the 

Affordable Care Act, for the years in 

which the transition applies, the 

composite base rate shall be annually 

increased by the ESRDB market basket 

and, for CY 2012 and each subsequent 

year, the ESRDB market basket shall be 

reduced by the productivity adjustment 

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

of the Act. In the CY 2013 ESRD PPS 

proposed rule (77 FR 40957), we 

proposed for CY 2013 a composite rate 

of $145.49, which reflected the CY 2012 

composite rate of $141.94 increased by 

an ESRDB market basket of 3.2 reduced 

by the productivity adjustment of 0.7 

percent, resulting in an update of 2.5 

percent, based on the first quarter 2012 

IGI forecast of the ESRDB market basket. 

We received four public comments 

supporting our proposal to increase the 

composite base rate by 2.5 percent for 

ESRD services furnished in CY 2013 and 

paid under the blended payment 

methodology during the transition 

period. 

In section II.C.3.b of this final rule, we 

finalize the CY 2013 ESRDB market 

basket update of 2.9 percent, and the 

MFP adjustment of 0.6 percent, which 

results in a forecasted rate of increase to 

the base rate of 2.3 percent. This final 

update is based on the third quarter 

2012 IGI forecast of the ESRDB market 

basket. Consequently for CY 2013, we 

are finalizing the composite base rate 

under the ESRD PPS payment of 

$145.20 for ESRD services furnished 

during CY 2013 and paid under the 

blended payment methodology. This 

amount reflects the CY 2012 composite 

rate of $141.94 increased by the CY 

2013 ESRD market basket increase factor 

of 2.9 percent reduced by the 

productivity adjustment of 0.6 percent. 

The resulting CY 2013 MFP-adjusted 

ESRD market basket update is 2.3 

percent ($141.94 × 1.023 = $ 145.20). 

a. Update to the Drug Add-On to the 

Composite Rate Portion of the ESRD 

Blended Payment Rate 

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

requires a 4-year transition under the 

ESRD PPS. Under 42 CFR 413.239, 

ESRD facilities were permitted to make 

a one-time election by November 1, 

2010, to be excluded from the transition 

and receive full payment under the 

ESRD PPS. Under § 413.239(a)(3), in CY 

2013, ESRD facilities that elected to 

receive payment under the transition 

will be paid a blended amount 

consisting of 25 percent of the basic 

case-mix adjusted composite payment 

system payment and 75 percent of the 

ESRD PPS payment. Thus, we must 

continue to update the composite rate 

portion of the blended payment amount 

during the ESRD PPS transition (CY 

2011 through 2013), which includes an 

update to the drug add-on. 

As required under section 1881(b)(12) 

of the Act, the basic case-mix adjusted 

composite payment system includes the 

services in the composite rate and an 

add-on to the composite rate portion of 

the blended payment to account for the 

difference between pre-Medicare 

Modernization Act payments for 

separately billed drugs and the revised 

drug pricing specified in the statute. For 

the drug add-on for CY 2013 (77 FR 

40957 through 40959), we did not 

propose any changes to the drug add-on 

methodology, but merely updated the 

data used in computing the drug add-on 

as described below. 

i. Estimating Growth in Expenditures for 

Drugs and Biologicals in CY 2013 

Section 1881(b)(12)(F) of the Act 

specifies that the drug add-on increase 

must reflect ‘‘the estimated growth in 

expenditures for drugs and biologicals 

(including erythropoietin) that are 

separately billable * * *’’. By referring 

to ‘‘expenditures’’, we believe the 

statute contemplates that the update 

would account for both increases in 

drug prices, as well as increases in 

utilization of those drugs. 

As we indicated in the CY 2013 ESRD 

PPS proposed rule (77 FR 40957), we 

continue to estimate growth in drug 

expenditures based on the trends in 

available data. To account for increases 

in drug prices and utilization for CY 

2013 we used the 6 years of available 

drug expenditure data based on ASP 

pricing. We then removed growth in 


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enrollment for the same time period 

from the expenditure growth so that the 

residual reflects the per patient 

expenditure growth (which includes 

price and utilization combined). 

To estimate drug expenditure growth 

using trend analysis, for CY 2013, we 

looked at the average annual growth in 

total drug expenditures between 2006 

and 2011. First, we estimated the total 

drug expenditures for all ESRD facilities 

in CY 2011. We used the final CY 2006 

through CY 2010 ESRD claims data and 

the latest available CY 2011 ESRD 

facility claims, updated through 

December 31, 2011 (that is, claims with 

dates of service from January 1 through 

December 31, 2011, that were received, 

processed, paid, and passed to the 

National Claims History File as of 

December 31, 2011). We indicated in the 

CY 2013 ESRD PPS proposed rule (77 

FR 40958) that for the CY 2013 PPS final 

rule, we would use additional updated 

CY 2011 claims with dates of service for 

the same timeframe. This updated CY 

2011 data file would include claims 

received, processed, paid, and passed to 

the National Claims History File as of 

June 30, 2012. We further stated that 

while the CY 2011 claims file used in 

the proposed rule was the most current 

available, we recognize that it does not 

reflect a complete year, as claims with 

dates of service towards the end of the 

year have not all been processed. To 

more accurately estimate the update to 

the drug add-on, completed aggregate 

drug expenditures are required. 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40958), we inflated the CY 

2011 drug expenditures to estimate the 

June 30, 2012 update of the 2011 claims 

file. We used the relationship between 

the December 2010 and the June 2011 

versions of 2010 claims to estimate the 

more complete 2011 claims that were 

available in June 2012 and applied that 

ratio to the 2011 claims data from the 

December 2011 claims file. The net 

adjustment to the CY 2011 claims data 

was an increase of 9.7 percent to the 

2011 expenditure data. This adjustment 

allows us to more accurately compare 

the 2010 and 2011 drug expenditure 

data to estimate per patient growth. 

We further stated in the CY 2013 

ESRD PPS proposed rule (77 FR 40958), 

that using the completed full-year 2011 

drug expenditure figure, we calculated 

the average annual change in drug 

expenditures from 2006 through 2011. 

This average annual change showed a 

decrease of 3.0 percent in drug 

expenditures from 2006 through 2011. 

We used this 3.0 percent decrease to 

project drug expenditures for both 2012 

and 2013. 

For this CY 2013 final rule, using the 

full year 2011 drug expenditure figure 

based on the June 2012 update of the CY 

2011 National Claims History File, we 

calculated the average annual change in 

drug expenditure from 2006 through 

2011. This average annual change 

showed a decrease of 2.9 percent in 

drug expenditures from 2006 through 

2011. We used this 2.9 decrease to 

project drug expenditures for both 2012 

and 2013. We note that the decrease in 

the drug expenditures percentage is a 

result of our use of updated data. 

ii. Estimating Per Patient Growth 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40958), we explained that 

once we had the projected growth in 

drug expenditures from 2012 to 2013, 

we calculated per patient growth 

between CYs 2012 and 2013 by 

removing the estimated growth in 

enrollment data between CYs 2012 and 

2013. We had estimated a 4.6 percent 

growth in fee-for-service Medicare 

dialysis beneficiary enrollment between 

CYs 2012 and 2013. To obtain the perpatient estimated growth in 

expenditures, we divided the total drug 

expenditure change of a 3 percent 

decrease between 2012 and 2013 (0.97) 

by enrollment growth of 4.6 percent 

(1.046) for the same timeframe. The 

result was a per-patient growth factor 

equal to 0.927 (0.97/1.046 = 0.927). 

Thus, we are projecting a 7.3 percent 

decrease (¥7.3% = ¥.073 = 0.927 ¥1) 

in per patient growth in drug 

expenditures between CYs 2012 and 

2013. 

For this final rule, we estimate a 4.0 

percent estimated growth in enrollment 

between CYs 2012 and 2013. To obtain 

the per-patient estimated growth in 

expenditures, we divided the total drug 

expenditure change of a 2.9 percent 

decrease between CYs 2012 and 2013 

(0.971) by enrollment growth of 4.0 

percent (1.04) for the same timeframe. 

The result is a per-patient growth factor 

equal to 0.934 (.971/1.04=.934). Thus, in 

this final rule, for CY 2013 we are 

projecting a 6.6 percent decrease 

(¥6.6% percent =¥.063=.934¥1) in 

per patient growth in drug expenditures 

between CYs 2012 and 2013. 

iii. Applying the Proposed Growth 

Update to the Drug Add-On Adjustment 

We explained in the CY 2013 ESRD 

PPS proposed rule (77 FR 40958), that 

in the CY 2012 ESRD PPS proposed and 

final rules, we provided an incorrect 

citation to the CY 2006 PFS final rule 

with comment in the discussion of the 

application of the projected growth 

update percentages. The correct citation 

to this discussion in the CY 2006 PFS 

final rule with comment is 70 FR 70166 

and 70167. In the CY 2006 rule, we 

applied the projected growth percentage 

to the total amount of drug add-on 

dollars established for CY 2005 to 

establish a dollar amount for the CY 

2006 growth. In addition, we projected 

the growth in dialysis treatments for CY 

2006 based on the projected growth in 

ESRD enrollment. We divided the 

projected total dollar amount of the CY 

2006 growth by the projected total 

dialysis treatments to develop the per 

treatment growth update amount. This 

growth update amount, combined with 

the CY 2005 per treatment drug add-on 

amount, resulted in a 14.7 percent 

adjustment to the composite rate for CY 

2006. 

We further explained in the CY 2013 

ESRD PPS proposed rule (77 FR 40958), 

that subsequent to the publication of the 

CY 2006 PFS final rule with comment, 

the Deficit Reduction Act (DRA) of 2005 

(Pub. L. 109–171) was enacted on 

February 8, 2006. Section 5106 of the 

DRA amended section 1881(b)(12) of the 

Act to require the Secretary to increase 

the amount of the composite rate 

component of the basic case-mix 

adjusted system for dialysis services 

furnished on or after January 1, 2006 by 

1.6 percent above the amount of the 

composite rate for such services 

furnished on December 31, 2005. We 

issued Change Request 4291, 

Transmittal 849, entitled, ‘‘Update to 

the ESRD Composite Payment Rates’’ on 

February 10, 2006 to instruct contractors 

to implement this change. We stated in 

Change Request 4291 that because the 

drug add-on adjustment is determined 

as a percentage of the composite rate, it 

was necessary to adjust the drug add-on 

percentage to account for the 1.6 percent 

increase in the composite payment rate. 

Therefore, the total drug add-on 

adjustment to the composite payment 

rate for 2006 was 14.5 percent instead 

of 14.7 percent. 

Finally, we explained in the CY 2013 

ESRD PPS proposed rule (77 FR 40958) 

that in the CY 2007 PFS final rule with 

comment period (71 FR 69683 and 

69684), we revised our update 

methodology by applying the growth 

update to the per treatment drug add-on 

amount. That is, for CY 2007, we 

applied the growth update factor of 4.03 

percent to the $18.88 per treatment drug 

add-on amount resulting in an updated 

per treatment drug add-on amount of 

$19.64 per treatment (71 FR 69684). For 

CY 2008, the per treatment drug add-on 

amount was updated to $20.33. In the 

CYs 2009, 2010, and 2011 PFS final rule 

with comment period (73 FR 69755 

through 69757, 74 FR 61923, and 75 FR 

73485, respectively) and the CY 2012 


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ESRD PPS final rule (76 FR 70239), we 

applied a zero update to the per 

treatment drug add-on amount resulting 

in a per treatment drug add-on amount 

of $20.33. For CY 2013, we did not 

make any update to the per treatment 

drug add-on amount of $20.33 

established in CY 2008. 

As discussed in detail below, in this 

final rule, for CY 2013, we are finalizing 

a zero update to the per treatment drug 

add-on amount of $20.33 established in 

CY 2008. 

iv. Update to the Drug Add-On 

Adjustment for CY 2013 

As discussed above, in the CY 2013 

ESRD PPS proposed rule (77 FR 40958), 

we estimated a 3.0 percent decrease in 

drug expenditures between CYs 2012 

and 2013. Combining this decrease with 

a 4.6 percent increase in enrollment, as 

described above, we projected a 7.3 

percent decrease in per patient growth 

of drug expenditures between CYs 2012 

and CY 2013. Therefore, in the CY 2013 

ESRD PPS proposed rule, we projected 

that the combined growth in per patient 

utilization and pricing for CY 2013 

would result in a decrease to the drug 

add-on equal to 1.0 percentage points 

(out of the revised 14.0 percent add-on 

for 2013). This figure was derived by 

applying the 7.3 percent decrease to the 

CY 2012 drug add-on of $20.33. This 

resulted in a revised drug add-on of 

$18.85, which is 13.0 percent of the 

proposed CY 2013 base composite rate 

of $145.49. We indicated that if we were 

to apply no decrease to the drug add-on 

of $20.33, this would result in a 14.0 

percent drug add-on. However, similar 

to last year and as indicated above, we 

proposed a zero update to the drug addon adjustment. We believe this 

approach is consistent with the 

language under section 1881(b)(12)(F) of 

the Act, which states in part that ‘‘the 

Secretary shall annually increase’’ the 

drug add-on amount based on the 

growth in expenditures for separately 

billed ESRD drugs. Therefore, we 

proposed to apply a zero update and 

maintain the $20.33 per treatment drug 

add-on amount for CY 2013. We sought 

comment on our proposed zero update 

to the drug add-on. 

We further stated in the CY 2013 

ESRD PPS proposed rule (77 FR 40959), 

that the current $20.33 per treatment 

drug add-on reflected a 14.3 percent 

drug add-on adjustment to the 

composite rate in effect for CY 2012. As 

discussed in section II.3.a of the CY 

2013 ESRD PPS proposed rule, section 

1881(b)(14)(F) of the Act requires that 

an ESRDB market basket minus 

productivity adjustment be used to 

update the composite rate portion of the 

ESRD PPS payment resulting in a 

decrease to the CY 2013 drug add-on 

adjustment from 14.3 to 14.0 percent, to 

maintain the drug add-on at $20.33. 

This decrease occurs because the drug 

add-on adjustment is a percentage of the 

composite rate. Since the proposed CY 

2013 composite rate is higher than the 

CY 2012 composite rate and since the 

drug add-on remains at $20.33, the 

percentage decreases. Therefore, we 

proposed a drug add-on adjustment to 

the composite rate for CY 2013 of 14.0 

percent. 

We did not receive any comments on 

our proposals to use a zero update to the 

drug add-on or on the proposed drugadd on adjustment to the composite rate 

for CY 2013 of 14.0 percent. 

In this final rule, for CY 2013, we 

estimate a 2.9 percent decrease in drug 

expenditures between CYs 2012 and 

2013. Combining this increase with a 

4.0 percent increase in enrollment, we 

project a 6.6 percent decrease in per 

patient growth of drug expenditures 

between CYs 2012 and 2013. Therefore, 

we project that the combined growth in 

per patient utilization and pricing for 

CY 2013 results in a decrease to the 

drug add-on equal to 0.9 percentage 

points. This figure is derived by 

applying the 6.6 percent decrease to the 

CY 2012 drug add-on of $20.33. This 

results in a revised drug add-on of 

$18.98, which is 13.1 percent of the 

final CY 2013 base composite rate of 

$145.20. Applying no decrease to the 

drug add-on of $20.33 results in a 14.0 

percent drug add-on. Similar to last year 

and as discussed above, for CY 2013, we 

are finalizing a zero update to the drug 

add-on and maintaining the $20.33 per 

treatment drug add-on amount. 

The current $20.33 per treatment drug 

add-on reflected a 14.3 percent drug 

add-on adjustment to the composite rate 

in effect for CY 2012. Using the latest 

ESRDB market basket minus 

productivity adjustments to update the 

composite rate portion of the ESRD PPS 

payment (forecast of 2.3 percent in CY 

2013 effective January 1, 2013, as 

discussed in section II.C.3 of this final 

rule), results in a decrease to the CY 

2013 drug add-on adjustment from 14.3 

to 14.0 percent in order to maintain the 

drug add-on amount of $20.33. This 

decrease occurs because the drug addon adjustment is a percentage of the 

composite rate. Because the final CY 

2013 composite rate is higher than CY 

2012 composite rate, and since the drug 

add-on remains at $20.33, the 

percentage decreases. Therefore, we are 

finalizing for CY 2013 the drug add-on 

adjustment of 14.0 to the composite rate. 

2. ESRD PPS Base Rate 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40959) and CY 2012 ESRD 

PPS final rule (76 FR 70231), we 

discussed the development of the ESRD 

PPS per treatment base rate that is 

codified in the Medicare regulations at 

42 CFR 413.220 and 413.230. We 

explained that the CY 2011 ESRD PPS 

final rule (75 FR 49071 through 49082) 

provides a detailed discussion of the 

methodology used to calculate the ESRD 

PPS base rate and the computation of 

factors used to adjust the ESRD PPS 

base rate for projected outlier payments 

and budget-neutrality in accordance 

with sections 1881(b)(14)(D)(ii) and 

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

respectively. Specifically, the ESRD PPS 

base rate was developed from CY 2007 

claims (that is, the lowest per patient 

utilization year), updated to CY 2011, 

and represented the average per 

treatment Medicare Allowable Payment 

(MAP) for composite rate and separately 

billable services. We further explained 

that in accordance with 42 CFR 413.230, 

the ESRD PPS base rate is adjusted for 

the patient-specific case-mix 

adjustments, applicable facility 

adjustments, geographic differences in 

area wage levels using an area wage 

index, as well as any outlier payment or 

training payments (if applicable). For 

CY 2012, the ESRD PPS base rate was 

$234.81 (76 FR 70231). 

We also indicated in the CY 2013 

ESRD PPS proposed rule (77 FR 40959) 

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

as added by section 153(b) of MIPPA 

and amended by section 3401(h) of the 

Affordable Care Act, provides that, 

beginning in 2012, the ESRD PPS 

payment amounts are required to be 

annually adjusted by the rate of increase 

in the ESRD market basket, reduced by 

the productivity adjustment. 

Accordingly, in the CY 2013 ESRD PPS 

proposed rule, we applied the 2.5 

percent increase to the CY 2012 ESRD 

PPS base rate of $234.81, which resulted 

in a proposed CY 2013 ESRD PPS base 

rate of $240.68 ($234.81 × 1.025 = 

$240.68). The ESRD PPS base rate is 

applicable to both the ESRD PPS portion 

of the blended payment under the 

transition and payments under the full 

ESRD PPS. 

In addition, for CY 2013, we proposed 

a wage index budget-neutrality 

adjustment factor of 1.000826 to be 

applied to the CY 2013 ESRD PPS base 

rate (that is, $240.68), which yielded a 

proposed CY 2013 ESRD PPS wage 

index budget-neutrality adjusted base 

rate of $240.88 ($240.68 × 1.000826 = 

$240.88). 


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Comment: All commenters supported 

our CY 2013 ESRD PPS wage index 

budget-neutrality adjusted base rate. 

Two commenters thanked CMS for 

providing an update to the base rate, 

and one commenter specifically 

appreciated the base rate increase at a 

time when the Medicare ESRD program 

is undergoing significant changes and 

noted that it is important to retain 

savings where applicable. 

Response: We thank the commenters 

for their support. In this final rule, using 

updated data for CY 2013, we applied 

the 2.3 percent increase (ESRDB market 

basket update less productivity) to the 

CY 2012 ESRD PPS base rate of $234.81, 

which results in an ESRD PPS base rate 

for CY 2013 of $240.21 ($234.81 × 1.023 

= $240.21). In addition, we applied the 

wage index budget-neutrality 

adjustment factor of 1.000613 to the 

updated base rate of $240.21, yielding 

an ESRD PPS wage index budgetneutrality adjusted base rate for CY 2013 

of $240.36 ($240.21 × 1.000613 = 

$240.36). 

3. ESRD Bundled Market Basket 

a. Overview and Background 

In accordance with section 

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

section 153(b) of MIPPA and amended 

by section 3401(h) of the Affordable 

Care Act, beginning in 2012, the ESRD 

bundled payment amounts are required 

to be annually increased by an ESRD 

market basket increase factor that is 

reduced by the productivity adjustment 

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

of the Act. The application of the 

productivity adjustment described may 

result in the increase factor being less 

than 0.0 for a year and may result in 

payment rates for a year being less than 

the payment rates for the preceding 

year. The statute further provides that 

the market basket increase factor should 

reflect the changes over time in the 

prices of an appropriate mix of goods 

and services used to furnish renal 

dialysis services. Under section 

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

section 153(b) of MIPPA and amended 

by section 3401(h) of the Affordable 

Care Act, the ESRDB market basket 

increase factor will also be used to 

update the composite rate portion of 

ESRD payments during the ESRD PPS 

transition period from CYs 2011 through 

2013; though beginning in CY 2012, 

such market basket increase factor will 

be reduced by the productivity 

adjustment. Therefore, a full market 

basket was applied to the composite rate 

portion of the blended payment in CY 

2011 during the first year of the 

transition. 

b. Market Basket Update Increase Factor 

and Labor-related Share for ESRD 

Facilities for CY 2013 

As required under section 

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

developed an all-inclusive ESRDB input 

price index (75 FR 49151 through 

49162). Although ‘‘market basket’’ 

technically describes the mix of goods 

and services used to produce ESRD care, 

this term is also commonly used to 

denote the input price index (that is, 

cost categories, their respective weights, 

and price proxies combined) derived 

from that market basket. Accordingly, 

the term ‘‘ESRDB market basket’’, as 

used in this document, refers to the 

ESRDB input price index. 

We proposed to use the same 

methodology described in the CY 2011 

ESRD PPS final rule (75 FR 49151 

through 49162) to compute the CY 2013 

ESRDB market basket increase factor 

and labor-related share based on the 

best available data (76 FR 40503). 

Consistent with historical practice, we 

estimated the ESRDB market basket 

update based on IHS Global Insight 

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

recently available data. IGI is a 

nationally recognized economic and 

financial forecasting firm that contracts 

with CMS to forecast the components of 

the market baskets. 

Using this methodology and the IGI 

forecast for the third quarter of 2012 of 

the CY 2008-based ESRDB market 

basket (with historical data through the 

second quarter of 2012), and consistent 

with our historical practice of 

estimating market basket increases 

based on the best available data, the CY 

2013 ESRDB market basket increase 

factor is 2.9 percent. 

For the CY 2013 ESRD payment 

update, we will continue to use a laborrelated share of 41.737 percent for the 

ESRD PPS payment and the ESRD PPS 

portion of the blended payment, which 

was finalized in the CY 2011 ESRD final 

rule (75 FR 49161). We will also 

continue to use a labor-related share of 

53.711 percent for the ESRD composite 

rate portion of the blended payment for 

all years of the transition. This laborrelated share was developed from the 

labor-related components of the 1997 

ESRD composite rate market basket that 

was finalized in the CY 2006 Physician 

Fee Schedule (PFS) final rule (70 FR 

70168), and is consistent with the mix 

of labor-related services paid under the 

composite rate, as well as the method 

finalized in the CY 2011 ESRD PPS final 

rule (75 FR 49116). 

c. Productivity Adjustment 

The ESRDB market basket must be 

annually adjusted by changes in 

economy-wide productivity. 

Specifically, under section 

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

by section 3401(h) of the Affordable 

Care Act, for CY 2012 and each 

subsequent year, the ESRD market 

basket percentage increase factor shall 

be reduced by the productivity 

adjustment described in section 

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

statute defines the productivity 

adjustment to be equal to the 10-year 

moving average of changes in annual 

economy-wide private nonfarm business 

multifactor productivity (MFP) (as 

projected by the Secretary for the 10- 

year period ending with the applicable 

fiscal year, year, cost reporting period, 

or other annual period) (the ‘‘MFP 

adjustment’’). The Bureau of Labor 

Statistics (BLS) is the agency that 

publishes the official measure of private 

nonfarm business MFP. Please see 

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

BLS historical published MFP data. 

CMS notes that the methodology for 

calculating and applying the MFP 

adjustment to the ESRD payment update 

is similar to the methodology used in 

other payment systems, as required by 

section 3401 of the Affordable Care Act. 

The projection of MFP is currently 

produced by IGI. The details regarding 

the methodology for forecasting MFP 

and how it is applied to the market 

basket was finalized in the CY 2012 

ESRD PPS final rule (76 FR 70232 

through 70234). Using this method and 

the IGI forecast for the third quarter of 

2012 of the 10-year moving average of 

MFP, the CY 2013 MFP factor is 0.6 

percent. 

d. Calculation of the ESRDB Market 

Basket Update, Adjusted for Multifactor 

Productivity for CY 2013 

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

Act, beginning in CY 2012, ESRD PPS 

payment amounts and the composite 

rate portion of the transition blended 

payment amounts shall be annually 

increased by an ESRD market basket 

percentage increase factor reduced by a 

productivity adjustment. We proposed 

to follow the same methodology for 

calculating the ESRDB market basket 

updates adjusted for MFP that was 

finalized in the CY 2012 ESRD PPS final 

rule (76 FR 70234). 

Thus, in accordance with section 

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

basket increase factor for CY 2013 for 

the ESRDB market basket is based on 

the 3rd quarter 2012 forecast of the CY 

2008-based ESRDB market basket 


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update, which is estimated to be 2.9 

percent. This market basket percentage 

is then reduced by the MFP adjustment 

(the 10-year moving average of MFP for 

the period ending CY 2013) of 0.6 

percent, which is based on IGI’s 3rd 

quarter 2012 forecast. The resulting 

MFP-adjusted ESRDB market basket 

update for CY 2013 is equal to 2.3 

percent, or 2.9 percent less 0.6 

percentage point. 

We received two comments in 

support of the market basket update. We 

are finalizing the update to the ESRDB 

market basket of 2.3 percent for CY 

2013. 

4. Transition Budget-Neutrality 

Adjustment for CY 2013 

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

requires the Secretary to provide a 4- 

year phase-in of the payments under the 

ESRD PPS for renal dialysis services 

furnished on or after January 1, 2011, 

with payments under the ESRD PPS 

fully implemented for renal dialysis 

services furnished on or after January 1, 

2014. Although the statute uses the term 

‘‘phase-in,’’ we use the term 

‘‘transition’’ in our discussions in order 

to be consistent with other Medicare 

payment systems. 

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

permitted ESRD facilities to make a onetime election to be excluded from the 

transition. An ESRD facility that elected 

to be excluded from the transition 

receives payment for renal dialysis 

services furnished on or after January 1, 

2011, based on 100 percent of the 

payment rate under the ESRD PPS 

rather than a blended payment based in 

part on the payment under the basic 

case-mix adjusted composite payment 

system and in part on the payment 

under the ESRD PPS. Section 

1881(b)(14)(E)(iii) of the Act also 

requires that we make an adjustment to 

payments during the transition so that 

the estimated total amount of payments 

under the ESRD PPS, including 

payments under the transition, equals 

the estimated total amount of payments 

that would otherwise occur under the 

ESRD PPS without such a transition. We 

refer to this provision as the transition 

budget-neutrality adjustment. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70235), we discussed the two 

parts that comprise the transition 

budget-neutrality adjustment factor. For 

the first part, we created a one-time 

payment adjustment to the composite 

rate portion of the blended payment 

during the transition to account for the 

per treatment costs of ESRD drugs with 

an injectable equivalent that were paid 

under Part D. We finalized the one-time 

addition of the CY 2011 Part D per 

treatment amount of $0.49 to the 

composite rate (76 FR 70231). For the 

second part, we explained that we 

computed a factor that would make the 

estimated total amount of payments 

under the ESRD PPS, including 

payments under the transition, equal to 

the estimated total amount of payments 

that would otherwise occur without 

such a transition. 

Given that the transition budgetneutrality adjustment required under 

section 1881(b)(14)(E)(iii) of the Act 

applies in each year of the transition, we 

must update the transition budgetneutrality adjustment for CY 2013, the 

third year of the transition. As discussed 

in detail below, and in accordance with 

section 1881(b)(14)(E)(iii) of the Act, an 

adjustment is made to payments so that 

estimated total payments under the 

transition equal estimated total payment 

amounts without such a transition. 

In the CY 2013 ESRD PPS proposed 

rule, we did not propose to change the 

methodology used to calculate either 

part of the transition budget-neutrality 

adjustment factor. We did, however, 

propose to use updated data to calculate 

the second part of the transition budgetneutrality adjustment factor. The first 

part, which is the Part D payment 

amount added to the composite rate, is 

updated annually by the ESRDB market 

basket reduced by the productivity 

adjustment. The second part is updated 

as described below. 

For CY 2013, we started with 2011 

utilization data from claims, as 2011 is 

the latest complete year of claims data 

available. In the CY 2013 ESRD PPS 

proposed rule, we used the December 

2011 claims file. In this final rule, we 

used the June 2012 claims file. We 

updated the CY 2011 utilization data to 

CYs 2012 and 2013 payments by using 

the price growth factors for CYs 2012 

and 2013, as discussed in the impact 

analysis in section VI.C of this final 

rule. We then took the estimated 

payments under the full CY 2013 ESRD 

PPS and the blended payments under 

the transition based on actual facility 

election data and compared these 

estimated payments to the total 

estimated payments in CY 2013 as if all 

facilities had elected to receive payment 

under the ESRD PPS. We then 

calculated the transition budgetneutrality factor to be 1 minus the ratio 

of estimated payments under the ESRD 

PPS as if there were no transition to the 

total estimated payments under the 

transition, which results in a zero 

percent reduction factor for CY 2013. In 

the CY 2013 ESRD PPS proposed rule, 

we proposed a zero percent reduction to 

all payments made to ESRD facilities 

(that is, the zero percent adjustment 

would be applied to both the blended 

payments made under the transition and 

payments made under the 100 percent 

ESRD PPS) for renal dialysis items and 

services furnished January 1, 2013 

through December 31, 2013 (77 FR 

40957). We solicited comments on the 

proposed second part of the CY 2013 

transition budget-neutrality adjustment. 

We received three comments as set 

forth below. 

Comment: All of the commenters 

supported using updated data and 

maintaining a zero percent budgetneutrality transition adjustment for CY 

2013. 

Response: We thank the commenters 

for their support of our proposed use of 

updated data and a transition budgetneutrality factor of zero percent for renal 

dialysis services furnished during 

January 1, 2013 through December 31, 

2013. As we indicated above, for the 

proposed rule, we used the December 

2011 claims file to compute the 

transition budget-neutrality adjustment 

factor. For this final rule, we used the 

June 2012 claims file. As a result of 

using the June 2012 claims file, we 

calculated the transition budgetneutrality factor to be a reduction of 1 

minus the ratio of estimated payments 

under the ESRD PPS as if there were no 

transition to the total estimated 

payments under the transition, which 

results in a 0.1 percent increase factor 

for CY 2013. We believe the claims data 

we used to perform our analysis 

resulted in the change in the transition 

budget-neutrality adjustment factor from 

the zero factor used in previous years to 

the 0.1 percent increase factor for CY 

2013. We note that in past years, the 

transition budget-neutrality factor has 

not always been an absolute zero, but 

was rounded to zero percent. The June 

2012 claims file represents 2011 data, 

the first year of the PPS. In 2011, the 

utilization for separately billable drugs, 

laboratory tests and other items dropped 

significantly. For ESRD facilities that are 

paid under the transition, the decrease 

in utilization contributed to the 

payment for the composite rate portion 

of the blended payment being lower 

than the payment for the ESRD PPS 

portion of the blended payment. 

Therefore, total payments for all 

facilities under the transition were 

lower than what payments would have 

been under the ESRD PPS, if there were 

no transition. This widening difference 

resulted in the transition budgetneutrality adjustment rounding to 0.1 

for CY 2013. We are finalizing for CY 

2013 a transition budget-neutrality 

adjustment of 0.1 percent. 


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5. Updates to the Wage Index Values 

and Wage Index Floor for the Composite 

Rate Portion of the Blended Payment 

and the ESRD PPS Payment 

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

Act provides that the ESRD PPS may 

include such other payment 

adjustments as the Secretary determines 

appropriate, such as a payment 

adjustment by a geographic wage index, 

such as the index referred to in section 

1881(b)(12)(D) of the Act. In the CY 

2011 ESRD PPS final rule (75 FR 49117), 

we finalized the use of the OMB’s corebased statistical area (CBSA) based 

geographic area designations to define 

urban/rural areas and corresponding 

wage index values. In the CY 2012 

ESRD PPS final rule (76 FR 70241), we 

finalized the wage index policy that is 

used under the ESRD PPS. Under the 

ESRD PPS, we have adopted the same 

method and source of wage index values 

used previously to compute the wage 

index values for the basic case-mix 

adjusted composite payment system. 

Specifically, we finalized our policies to 

continue to utilize the methodology 

established under the composite 

payment system for updating the wage 

index values using the OMB’s CBSAbased geographic area designations to 

define urban and rural areas and 

corresponding wage index values; the 

gradual reduction of the wage index 

floor during the transition; and the 

policies for areas with no hospital data. 

For CY 2013, we did not propose any 

changes to the methodology finalized in 

the CY 2012 final rule and will update 

the wage index values using the FY 

2013 Inpatient Prospective Payment 

System (IPPS) pre-floor, pre-reclassified 

hospital wage data. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70242), we explained that we 

would continue to use the labor-related 

share of 53.711 finalized in the 2005 

PFS final rule (70 FR 70168) for the 

composite rate portion of the blended 

payment during the transition and 

continue to use a labor-related share of 

41.737 for the ESRD PPS payment for 

CY 2012. We also discussed that the 

wage data used to construct the wage 

index under the ESRD PPS is updated 

annually, based on the most current 

data available and based on the Office 

of Management and Budget’s (OMB’s) 

urban and rural definitions and 

corresponding wage index values. 

Additional discussion on the laborrelated share can be found in section 

II.c.3 of this final rule. For CY 2013, we 

did not propose to change the laborrelated shares, as finalized in the CY 

2012 rule, as discussed in section II.C.3 

of this final rule. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70240), we discussed that during 

the transition we would continue to 

update the composite rate portion of the 

ESRD PPS blended payment, including 

adjusting payments for geographic 

differences in area wage levels, as noted 

above. We also discussed the 

application of the wage index budgetneutrality adjustment factor to the area 

wage index values for the composite 

rate portion of the ESRD PPS blended 

payment. In the proposed rule, for CY 

2013 we did not propose any changes to 

the methodology for the wage index 

used to adjust the composite rate 

portion of the ESRD PPS blended 

payment. 

a. Reduction to the ESRD Wage Index 

Floor 

In the CY 2012 ESRD PPS final rule 

(76 FR 70239 through 70241), we 

finalized that we will continue to 

reduce the wage index floor by 0.05 for 

each of the remaining years of the 

transition. That is, we finalized the 0.05 

reduction to the wage index floor for 

CYs 2012 and 2013, resulting in a wage 

index floor of 0.550 and 0.500, 

respectively. The wage index floor value 

is used in lieu of wage index values 

below the floor. The wage index floor is 

applied to both the composite rate 

portion of the blend and to the ESRD 

PPS. In the CY 2013 ESRD PPS 

proposed rule, we did not propose any 

changes to the wage index floor 

methodology or reduction. 

Consequently, for CY 2013 we indicated 

in the proposed rule that we would 

continue to reduce the wage index floor 

by 0.05, which will reduce the wage 

index value for the wage index floor 

from 0.550 to 0.500. For CY 2013, the 

wage index floor of 0.500 only applies 

to areas located in Puerto Rico because 

those are the only areas that have wage 

index values below the wage index floor 

value of 0.500. In the CY 2012 ESRD 

PPS final rule (76 FR 70241), we 

explained that continuing to artificially 

adjust the wage index values after the 

transition by substituting a wage index 

floor is not an appropriate method to 

address low wages in certain geographic 

locations. Therefore, we would no 

longer apply a wage index floor 

beginning January 1, 2014. 

b. Policies for Areas With No Wage Data 

In the CY 2012 ESRD PPS final rule 

(76 FR 70241), we explained that we 

adopted the CBSA designations for the 

basic case-mix adjusted composite rate 

payment system and for the ESRD PPS. 

We also discussed and finalized the 

methodologies we use to calculate wage 

index values for ESRD facilities that are 

located in urban and rural areas where 

there are no hospital data. That is, for 

urban areas with no hospital data we 

compute the average wage index value 

of all urban areas within the State and 

use that value as the wage index. For 

rural areas with no hospital data, we 

compute the wage index using the 

average wage index values from all 

contiguous CBSAs to represent a 

reasonable proxy for that rural area. For 

rural Puerto Rico, we use the wage 

index floor as the wage index value, 

since all rural Puerto Rico areas are 

below the floor. 

We further explained that for rural 

Massachusetts, we determined that the 

borders of Dukes and Nantucket 

Counties are contiguous with Barnstable 

and Bristol counties. Under the 

methodology, the values for these 

counties are averaged to establish the 

wage index value for rural 

Massachusetts. 

After the CY 2012 ESRD PPS final 

rule was published, we determined that 

for CY 2012 there was a rural hospital 

with wage data on which to base an area 

wage index for rural Massachusetts. We 

note that the wage index value for rural 

Massachusetts was correctly identified 

on the wage index table for CY 2012 

based on the wage data for that rural 

hospital. Consequently, in the CY 2013 

ESRD PPS proposed rule we corrected 

the statement in the CY 2012 final rule 

that ‘‘For rural Massachusetts, we 

determined that the borders of Dukes 

and Nantucket Counties are contiguous 

with Barnstable and Bristol counties. 

Under the methodology, the values for 

these counties are averaged to establish 

the wage index value for rural 

Massachusetts’’ (76 FR 70241). 

Therefore, for CY 2012 and subsequent 

years, the area wage index value for 

rural Massachusetts is based on wage 

data of the rural hospital. 

For CY 2013, we will continue to use 

the statewide urban average based on 

the average of all urban areas within the 

state for urban areas without hospital 

data. We note that Yuba City, California 

now has hospital data to calculate a 

wage index. Therefore, the methodology 

for computing a wage index for urban 

areas without hospital data no longer 

applies to that area. The only urban area 

without wage index data is HinesvilleFort Stewart, GA. 

c. Wage Index Budget-Neutrality 

Adjustment 

In the CY 2012 ESRD PPS final rule 

(76 FR 70241 and 70242), we explained 

that we have broad discretion under 

section 1881(b)(14)(D)(iv)(II) of the Act 

to develop a geographic wage index. We 

explained that in addition to being 


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given broad discretion, the section cites 

the wage index under the basic case-mix 

adjusted composite payment system as 

an example. We have previously 

interpreted the statutory requirement in 

section 1881(b)(12)(D) of the Act for the 

geographic adjustment for the basic 

case-mix adjusted composite payment 

system as requiring that the geographic 

adjustment be made in a budget-neutral 

manner. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70241 and 70242), we finalized 

the policy to apply the wage index in a 

budget-neutral manner under the ESRD 

PPS using a wage index budgetneutrality adjustment factor. We further 

explained that in the first year of the 

ESRD PPS, CY 2011, we did not apply 

a wage index budget-neutrality 

adjustment factor under the ESRD PPS 

because budget-neutrality was achieved 

through the overall 98 percent budgetneutrality requirement in section 

1881(b)(14)(A)(ii) of the Act. In the CY 

2012 ESRD PPS final rule (76 FR 70242), 

we finalized that for CYs 2012 and 2013 

we will apply the wage index budgetneutrality adjustment to the wage index 

values for the composite rate portion of 

the blended payment and that for CY 

2012 and subsequent years we will 

apply the wage index budget-neutrality 

adjustment to the ESRD PPS base rate 

for purposes of the ESRD PPS portion of 

the blended payment during the 

transition and the ESRD PPS payment. 

We did not propose any changes to the 

wage index budget-neutrality 

adjustment methodology for CY 2013. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70242), we also finalized the 

methodology for computing the wage 

index budget-neutrality adjustment 

factor for CY 2012 and subsequent 

years. For CY 2013, we did not propose 

any changes to the methodology. 

Consequently, for the CY 2013 wage 

index budget-neutrality adjustment 

factors, we use the fiscal year (FY) 2013 

pre-floor, pre-reclassified, nonoccupational mix-adjusted hospital data 

to compute the wage index values, 2011 

outpatient claims (paid and processed 

as of December 31, 2011), and 

geographic location information for each 

facility, which can be found through 

Dialysis Facility Compare (DFC). The 

DFC can be found at the Dialysis 

Facility Compare Web page on the 

Medicare.gov Web site at www.

Medicare.gov/Dialysis. The FY 2013 

hospital wage index data for each urban 

and rural locale by CBSA may also be 

accessed on the CMS Web site at 

http://www.cms.hhs.gov/

AcuteInpatientPPS/WIFN/list.asp. The 

wage index data are located in the 

section entitled, ‘‘FY 2013 Proposed 

Rule Occupational Mix Adjusted and 

Unadjusted Average Hourly Wage and 

Pre-Reclassified Wage Index by CBSA’’. 

To compute the CY 2013 wage index 

budget-neutrality adjustment factor for 

this final rule, we used treatment counts 

from the 2011 claims and facilityspecific CY 2012 payment rates; we 

computed the estimated total dollar 

amount that each ESRD facility would 

have received in CY 2012. The total of 

these payments became the target 

amount of expenditures for all ESRD 

facilities for CY 2013. Next, we 

computed the estimated dollar amount 

that would have been paid for the same 

ESRD facilities using the final ESRD 

wage index for CY 2013. The total of 

these payments becomes the new CY 

2013 amount of wage-adjusted 

expenditures for all ESRD facilities. 

After comparing these two dollar 

amounts (target amount divided by the 

new CY 2013 amount), we calculated 

two wage index budget-neutrality 

adjustment factors that, when 

multiplied by the applicable CY 2013 

estimated payments, would result in 

aggregate payments to ESRD facilities 

that would remain budget-neutral when 

compared to the target amount of 

expenditures. The first factor was 

applied to the ESRD PPS base rate. The 

second factor was applied to the wage 

index values for the composite rate 

portion of the blended payment. 

Therefore, in this final rule, we are 

finalizing for CY 2013, the wage index 

budget-neutrality adjustment factor for 

the composite portion of the ESRD PPS 

blended payment of 1.001141, which is 

applied directly to the ESRD wage index 

values. For the ESRD PPS (that is, for 

the full ESRD PPS payments and the 

ESRD PPS portion of the blended 

payments during the transition), we are 

finalizing the wage index budgetneutrality adjustment factor of 1.000613 

that will be applied to the ESRD PPS 

base rate. Because we apply the wage 

index budget-neutrality adjustment 

factor to the wage index values to 

ensure budget-neutrality under the 

composite rate portion of the blended 

payment, we also apply the wage index 

budget-neutrality adjustment factor to 

the wage index floor. We note that this 

would apply to areas in Puerto Rico, 

subject to the floor. Therefore, for the 

composite rate portion of the blended 

payment, we are finalizing for CY 2013, 

to apply the wage index budgetneutrality adjustment factor to the wage 

index floor of 0.500 which results in an 

adjusted wage index floor of 0.501 

(1.001141 × 0.500) because under the 

composite rate, the wage index budgetneutrality adjustment is applied to the 

wage index value. Under the ESRD PPS, 

the wage index budget-neutrality 

adjustment factor is applied to the base 

rate. 

d. ESRD PPS Wage Index Tables 

The CY 2013 ESRD PPS proposed 

wage index tables, referred to as 

Addendum A (ESRD facilities located in 

urban areas), and Addendum B (ESRD 

facilities located in rural areas) are 

posted on the CMS Web site at http:// 

www.cms.gov/vESRDPayment/PAY/list.

asp. The wage index tables list two 

separate columns of wage index values. 

One column represents the wage index 

values for the composite rate portion of 

the blended payment to which the wage 

index budget-neutrality adjustment 

factor has been applied. The other 

column lists the wage index values for 

the ESRD PPS, which does not reflect 

the application of the wage index 

budget-neutrality adjustment factor, 

because we finalized for CY 2012 and 

subsequent years that we will apply the 

wage index budget-neutrality 

adjustment factor to the ESRD PPS base 

rate. 

We received one comment. The 

comment and our response are set forth 

below. 

Comment: We received a comment 

from an LDO that expressed concern 

about the negative impact of the wage 

index floor on dialysis providers in 

Puerto Rico. The commenter expressed 

concern that wages for dialysis facilities 

in Puerto Rico are not accurately 

captured by the current hospital wage 

index methodology. The commenter 

urged CMS to determine an alternate 

basis for calculating the wage index 

floor in Puerto Rico, stating that it does 

not believe that the wage index as 

reported for Puerto Rico is 

representative of the wage levels of 

dialysis providers in Puerto Rico 

relative to a sample of other states. 

Specifically, the commenter provided 

its own analysis of its random sampling 

of cost report salaries comparing ESRD 

facilities in Puerto Rico with ESRD 

facilities in Florida, Georgia, Ohio, 

South Carolina and Virginia. The 

commenter recommended that 

reimbursement for Puerto Rico be based 

on ‘‘some measure other than the 

hospital wage index, such as basing the 

wage index on cost report salaries 

relative to other state salaries.’’ The 

commenter further explained that 

Puerto Rico requires that only registered 

nurses (RN) provide dialysis therapy, 

and therefore, in the dialysis setting, the 

occupational mix would be weighted 

more toward RNs than the mix for 

hospital. 

Response: We understand that the 

commenter is concerned about wage 


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index values in Puerto Rico, however, it 

is our policy to use wage indices for all 

ESRD facilities that are based on the 

IPPS pre-floor, pre-reclassified hospital 

wage data. We discuss this in detail 

above. We believe that this is an 

appropriate mechanism for obtaining 

wage index values to be used to 

geographically adjust the ESRD PPS 

base rate for all ESRD facilities. It has 

been the same method that we have 

used previously for the basic case-mix 

adjusted composite rate payment 

system. We refer the commenter to the 

discussion on the methodology used to 

determine wage index values in the CY 

2013 IPPS final rule (77 FR 53365 

through 55367). We will, however, 

consider the commenter’s recommended 

approach if we determine in the future 

that a change to the methodology for 

determining geographic wage index 

values is warranted. 

In the CY 2012 ESRD PPS proposed 

rule (76 FR 40509 and 40510), we 

proposed to continue to reduce the wage 

index floor by 0.50 for each of the 

remaining years of the transition (that is, 

CYs 2012 and 2013). We also stated that 

‘‘we continue to believe that artificially 

adjusting wage index values by 

substituting a wage index floor is not an 

appropriate method to address low 

wages in certain geographic locations’’ 

and that, accordingly, we will no longer 

apply a wage index floor beginning 

January 1, 2014 (76 FR 70241). We will 

include in the CY 2014 ESRD PPS 

proposed rule, the methodology we 

propose to use to address wages in rural 

Puerto Rico when we no longer apply 

the wage index floor. 

Therefore, we are finalizing the wage 

index floor value of 0.500 for CY 2013. 

6. Drug Policy Changes 

a. Daptomycin 

In the CY 2011 ESRD PPS final rule 

(75 FR 49050 through 49052), we stated 

that antibiotics used for the treatment of 

vascular access infections and 

peritonitis are renal dialysis services 

under the ESRD PPS. Payments for antiinfective drugs in injectable forms 

(covered under Part B) and oral or other 

forms of administration (formerly 

covered under Part D) used for the 

treatment of ESRD, were included in 

computing the final ESRD PPS base rate 

and, therefore, would not be separately 

paid under the ESRD PPS. We further 

stated that any anti-infective drug or 

biological used for the treatment of 

ESRD-related conditions would be 

considered a renal dialysis service and 

not eligible for separate payment. We 

noted that this policy also applies to any 

drug or biological that may be 

developed in the future. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70243), we explained that 

subsequent to the publication of the CY 

2011 ESRD PPS final rule, we received 

numerous comments indicating that 

vancomycin is indicated in the 

treatment of both ESRD and non-ESRD 

conditions, such as skin infections. In 

the CY 2012 ESRD PPS final rule (76 FR 

70243), we allowed ESRD facilities to 

receive separate payment for 

vancomycin when furnished to treat 

non-ESRD related conditions. When 

ESRD facilities furnish vancomycin to 

treat non-ESRD related conditions, they 

place the AY modifier on the claim. We 

stipulated that in accordance with ICD– 

9–CM guidelines as described in the CY 

2011 ESRD PPS final rule (75 FR 49107), 

an ESRD facility must report on the 

claim the diagnosis code for which 

vancomycin is indicated. We also 

reiterated that treatment of any skin 

infection that is related to renal dialysis 

access management would be 

considered a renal dialysis service paid 

under the ESRD PPS, and that no 

separate payment would be made (76 FR 

70243). Finally, in response to 

comments, we stated that we would 

consider allowing separate payment for 

daptomycin (76 FR 70243). 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40963), we explained that 

after consultation with our medical 

experts, we proposed to allow ESRD 

facilities to receive separate payment for 

daptomycin when furnished to treat 

non-ESRD related conditions for CY 

2013 and subsequent years. When ESRD 

facilities furnish daptomycin to treat 

non-ESRD-related conditions, they 

would place the AY modifier on the 

claim. We also explained that if ESRD 

facilities submitted claims for 

daptomycin with the AY modifier, then 

the ESRD facility would also be required 

to report the diagnosis code for which 

the daptomycin is indicated in 

accordance with ICD–9–CM diagnostic 

coding guidelines. We sought public 

comments on our proposal to permit 

separate payment for daptomycin when 

furnished to treat non-ESRD-related 

conditions. As we discussed in the 

proposed rule, we will continue to 

monitor the use of anti-infectives 

furnished by ESRD facilities including 

those that are identified as non-ESRD 

related (77 FR 40963). The comments 

we received and our responses are set 

forth below. 

Comment: We received eight 

comments in support of our proposal to 

allow for separate payment for 

daptomycin when furnished for nonESRD related conditions. One 

commenter encouraged CMS to consider 

the appropriateness of other antiinfective drugs and biologicals which 

could be used in the future for both 

ESRD and non-ESRD conditions, with 

the primary goal to help reduce drug 

resistance in this compromised and 

susceptible patient population. 

Response: We thank the commenters 

for their support. We believe that the 

commenter is suggesting that CMS 

should frequently consider whether 

other drugs should be included in the 

ESRD PPS. We will consider allowing 

separate payment for other anti-infective 

drugs and biologicals as we may 

determine appropriate. 

We are finalizing the proposal to 

eliminate the restriction on daptomycin 

to allow ESRD facilities to receive 

separate payment by placing the AY 

modifier on the claim for daptomycin 

when furnished to treat non-ESRD 

related conditions. In accordance with 

ICD–9–CM diagnostic coding guidelines 

as described in the CY 2011 ESRD PPS 

final rule (75 FR 49107), the ESRD 

facility must indicate on the claim the 

diagnosis code for which the 

daptomycin is indicated. 

During our monitoring of claims we 

have noted that there are ESRD facilities 

that are indicating a type of organism 

rather than a diagnosis that would 

indicate that the anti-infective was 

furnished for non-ESRD-related 

conditions. We reiterate that the 

diagnosis code for which vancomycin or 

daptomycin is used must be indicated 

on the claim. We also reiterate that 

treatment of any skin infection that is 

related to renal dialysis access 

management will be considered a renal 

dialysis service and will continue to be 

paid under the ESRD PPS, and no 

separate payment will be made. We will 

continue to monitor the use of antiinfectives furnished by ESRD facilities 

including those that are identified as 

non-ESRD related to ensure proper 

billing of these drugs. 

b. Alteplase and Other Thrombolytics 

In the CY 2012 ESRD PPS final rule 

(76 FR 70246 through 70247), we 

explained that after the CY 2011 ESRD 

PPS final rule was published, our 

clinical review of the 2007 ESRD claims 

used to develop the ESRD PPS revealed 

that dialysis facilities routinely used 

alteplase and other thrombolytic drugs 

for access management purposes. We 

explained that under the Medicare 

Benefit Policy Manual, Pub. 100–02, 

chapter 11, section 30.4.1, drugs used as 

a substitute for any of the listed items 

or used to accomplish the same effect 

were covered under the composite rate. 

We further explained that because 


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heparin is a composite rate drug and 

could be used for access management, 

any drug or biological used for the same 

purpose may not be separately paid. 

Medicare regulations at 42 CFR 

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

specify the methodology used to 

calculate outlier payments. An ESRD 

facility is eligible for an outlier payment 

if its actual or imputed Medicare 

Allowable Payment (MAP) amount per 

treatment for ESRD outlier services 

exceeds a threshold. The MAP amount 

represents the average incurred amount 

per treatment for services that were or 

would have been considered separately 

billable services prior to January 1, 

2011. The discussion on the outlier 

policy is in section II.C.7 of this final 

rule. Section 413.237(a)(1) provides the 

definition of ESRD outlier services. 

Specifically, § 413.237(a)(1)(i) includes 

‘‘ESRD related drugs and biologicals 

that were or would have been, prior to 

January 1, 2011, separately billable 

under Medicare Part B.’’ 

Because outlier payments are 

restricted under § 413.237(a) to those 

items or services that were or would 

have been separately billable prior to 

January 1, 2011, in the CY 2012 ESRD 

PPS final rule (76 FR 70249), we 

excluded thrombolytic drugs from the 

outlier policy and we recomputed the 

outlier MAP amounts to reflect this 

change. However, we noted in the CY 

2012 ESRD PPS final rule (76 FR 70249), 

that for CY 2012 we had not proposed 

to exclude separate payment of 

thrombolytic drugs under the composite 

rate portion of the blended payment and 

therefore, separate payment would be 

made for thrombolytics for the 

composite rate portion of the blended 

payment in CY 2012. 

For CY 2013, we proposed that 

thrombolytic drugs would not be 

considered eligible for separate payment 

under the composite rate portion of the 

blended payment for those ESRD 

facilities that are receiving a blended 

payment under the transition (77 FR 

40963). We believe that this is 

consistent with the changes we made to 

our outlier policy regarding excluding 

thrombolytic drugs from outlier 

eligibility as discussed above. We note 

that these conclusions are specific to 

ESRD. We solicited comments on our 

proposal to exclude thrombolytic drugs 

from separate payment under the 

composite rate portion of the blended 

payment during the transition. 

The comments and our responses are 

set forth below. 

Comment: We received five comments 

pertaining to our proposal to no longer 

provide separate payment for 

thrombolytic drugs under the composite 

rate portion of the blended payment in 

CY 2013. In general, commenters agreed 

with CMS that both heparin and 

alteplase or other thrombolytic drugs are 

used for access management, but a few 

commenters disagreed with our 

assertion that heparin and alteplase are 

used for the same purpose. Some 

commenters specifically noted that 

CMS’s proposal not to allow separate 

payment for alteplase and thrombolytic 

drugs under the composite rate portion 

of the blended payment during the 

transition period for CY 2013 is flawed 

because the drugs are used to achieve 

different clinical results and utilize 

different mechanisms of action. In 

particular, the commenters noted that 

heparin is used to prevent clotting 

whereas alteplase is used to avoid a 

poorly functioning catheter. Some 

commenters provided examples of the 

efficacy of alteplase and thrombolytics, 

as compared to heparin. Some 

commenters, including a renal 

organization and a pharmaceutical 

manufacturer, disagreed that heparin 

can be used as a substitute for alteplase, 

citing the different mechanisms of 

action for the two drugs. One 

commented that because heparin and 

thrombolytics achieve different clinical 

results, they should not be treated as 

substitutes for payment purposes. 

Response: We believe alteplase and 

heparin are used for the same renal 

dialysis-related purpose, namely, 

vascular access management. In the CY 

2012 ESRD PPS final rule (76 FR 70246 

through 70249), we addressed similar 

comments regarding the use of alteplase 

and heparin in the context of our 

proposal to eliminate thrombolytics 

from the outlier policy. We noted that 

in the development of the ESRD PPS, 

we recognized that alteplase and 

heparin were pharmacologically 

different (that one is a thrombolytic that 

lyses clots and the other is an 

anticoagulant that prevents clots, 

respectively) (76 FR 70248). We further 

stated, however, that we believed that 

both drugs enable the catheter or graft 

to function either through clot 

prevention or clot degradation, thereby 

providing effective dialysis vascular 

access. We further believe that, for 

purposes of payment for renal dialysis 

services, it is sufficient that these 

products can be used for the purpose of 

providing dialysis vascular access. 

Consistent with the ESRD Benefit Policy 

Manual, Pub. 100–02, chapter 11, 

section 30.4.1, drugs used as substitutes 

for any of the listed items, or used to 

accomplish the same effect, are covered 

under the composite rate and are not 

separately payable. Because heparin is a 

composite rate drug and thrombolytics 

are used to achieve the same renal 

dialysis-related clinical outcome, we 

believe it is appropriate to exclude 

thrombolytic drugs from separate 

payment under the composite rate 

portion of the blended payment during 

the transition. 

Comment: One ESRD facility 

commented that the high cost of 

alteplase compared to heparin would 

prevent substitution of alteplase for 

heparin. The commenter argued that 

CMS’s policy in the ESRD Benefit Policy 

Manual, Pub. 100–02, chapter 11, 

section 30.4.1 of covering under the 

composite rate drugs used as substitutes 

for composite rate drugs, or used to 

accomplish the same effect, is without 

regard to innovation, cost, effectiveness, 

and efficiencies, and may result in 

increased cost to the Medicare program. 

The commenter also noted that the cost 

of thrombolytics is included in the 

ESRD PPS for those not in the transition 

and that elimination of separate 

payment for those in the transition 

would negatively impact 

reimbursement. A pharmaceutical 

company stated that the proposed 

changes may negatively affect catheter 

care because disallowing outlier 

payments and separate payment for 

thrombolytics creates a financial 

incentive for facilities to avoid restoring 

patency with alteplase. 

Response: In the CY 2012 ESRD PPS 

final rule (76 FR 70247), we explained 

that the ESRD PPS provides an 

opportunity for ESRD facilities to make 

decisions based on the medical needs of 

patients and not on the basis of financial 

gain. We further explained that we are 

not implying that thrombolytics or any 

access management drug should not be 

used when clinically indicated. We 

noted that Medicare payment policy is 

not intended to dictate, determine, or 

influence clinical practice or favor one 

course of treatment over another. 

Rather, by accounting in the ESRD PPS 

base rate for the cost of drugs and 

biologicals that had been separately 

payable under the composite rate 

system, we believe that we provide 

adequate payment to maintain patency 

of the access site regardless of whether 

patency is maintained using heparin or 

a thrombolytic. For additional 

information regarding this issue, we 

refer the commenters to the comment 

responses in the CY 2012 ESRD PPS 

final rule (76 FR 70247 through 70249). 

We disagree with the commenter that 

ESRD facilities receiving blended 

payments during the transition are 

unfairly disadvantaged because they 

will not receive separate payment for 

thrombolytics for the portion of the 


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blended payment based on the 

composite rate. Even when the 

composite rate system was in place 

before the ESRD PPS was implemented, 

it was our policy not to pay separately 

for drugs that could be used to 

accomplish the same effect as composite 

rate drugs. Accordingly, it is consistent 

with that policy not to provide separate 

payment for thrombolytics for the 

composite rate portion of blended 

payments during the remainder of the 

transition. 

For all of the reasons stated above, we 

continue to believe that alteplase and 

other thrombolytics should not be 

eligible for separate payment under the 

composite rate portion of the blended 

payment. After consideration of public 

comments, we are finalizing our CY 

2013 proposal to exclude alteplase and 

other thrombolytics from separate 

payment, which we believe is consistent 

with the CY 2012 ESRD PPS changes 

made to the outlier policy to exclude 

thrombolytic drugs from outlier 

payments. 

c. Part B Drug Pricing 

In the CY 2011 ESRD PPS proposed 

rule (74 FR 49991), with respect to 

estimating the imputed MAP amounts of 

ESRD outlier services that are separately 

billable under Part B, we proposed to 

use Average Sales Price (ASP) data for 

Part B ESRD-related drugs (which is 

updated quarterly). We did not make 

any changes to this proposed 

methodology in the CY 2011 final rule. 

In the CY 2012 ESRD PPS final rule (76 

FR 70243), we explained that ESRD 

facilities receiving blended payments 

under the transition would receive 

payments based on ASP for separately 

billable ESRD drugs and biologicals for 

the composite rate portion of the blend. 

In the CY 2012 ESRD PPS final rule (76 

FR 70244), we stated that under the 

outlier policy, we will use the ASP 

methodology. 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40963), we proposed for CY 

2013 and subsequent years to continue 

to use the ASP methodology, including 

any modifications finalized in the PFS 

final rules, to compute our outlier MAP 

amounts, the drug add-on, and any 

other policy that requires the use of 

payment amounts for drugs and 

biologicals that would be separately 

paid absent the ESRD PPS and for the 

composite rate portion of the blended 

payment during the transition. We 

explained that we would use this 

methodology for payment analyses that 

CMS may perform. We did not receive 

public comments on our proposal to 

apply the ASP methodology or any 

modifications to the ASP for these 

purposes, as updated in the PFS rule or 

in updating the ASP pricing. Therefore, 

we are finalizing that for CY 2013 and 

subsequent years we will continue to 

use the ASP methodology, including 

any modifications finalized in the 

Physician Fee Schedule (PFS) final 

rules, to compute outlier MAP amounts, 

the drug add-on, and any other policy 

that requires the use of payment 

amounts for drugs and biologicals that 

would be separately paid absent the 

ESRD PPS and for the composite rate 

portion of the blended payment during 

the transition. 

7. Revisions to the Outlier Policy 

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

requires that the ESRD PPS include a 

payment adjustment for high cost 

outliers due to unusual variations in the 

type or amount of medically necessary 

care, including variability in the amount 

of erythropoiesis stimulating agents 

(ESAs) necessary for anemia 

management. Our regulations at 42 CFR 

413.237(a)(1) provide that ESRD outlier 

services include: (i) ESRD-related drugs 

and biologicals that were or would have 

been, prior to January 1, 2011, 

separately billable under Medicare Part 

B; (ii) ESRD-related laboratory tests that 

were or would have been, prior to 

January 1, 2011, separately billable 

under Medicare Part B; (iii) medical/ 

surgical supplies, including syringes 

used to administer ESRD-related drugs, 

that were or would have been, prior to 

January 1, 2011, separately billable 

under Medicare Part B; and (iv) renal 

dialysis service drugs that were or 

would have been, prior to January 1, 

2011, covered under Medicare Part D, 

excluding ESRD-related oral-only drugs. 

In the CY 2011 ESRD PPS final rule, 

we stated that for purposes of 

determining whether an ESRD facility 

would be eligible for an outlier 

payment, it would be necessary for the 

facility to identify the actual ESRD 

outlier services furnished to the patient 

by line item on the monthly claim (75 

FR 49142). 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40964), we explained that 

drugs, laboratory tests, and medical/ 

surgical supplies that we would 

recognize as outlier services are 

specified in Attachment 3 of Change 

Request 7064, Transmittal 2033 issued 

August 20, 2010 and rescinded and 

replaced by Transmittal 2094, dated 

November 17, 2010. We also explained 

that with respect to the outlier policy, 

Transmittal 2094 identified additional 

drugs and laboratory tests that may be 

eligible for ESRD outlier payment. 

Transmittal 2094 was rescinded and 

replaced by Transmittal 2134, dated 

January 14, 2011 which was issued to 

correct the subject on the Transmittal 

page and made no other changes. 

In the CY 2012 ESRD PPS final rule 

(76 FR 70246), we finalized our 

proposal to stop issuing a specific list of 

eligible outlier service drugs which 

were or would have been separately 

billable under Medicare Part B prior to 

January 1, 2011. We stated in that rule 

that we planned to use separate 

guidance to continue to identify renal 

dialysis service drugs which were or 

would have been covered under Part D 

for outlier eligibility purposes in order 

to provide unit prices for calculating 

imputed outlier services. In the CY 2013 

ESRD PPS proposed rule (77 FR 40964), 

we explained that we planned to 

identify, through our monitoring efforts, 

those items and services that are 

incorrectly being identified as eligible 

outlier services. Any updates to the list 

of renal dialysis items and services that 

qualify as outlier services will be made 

through administrative issuances, if 

necessary. 

We indicated in the CY 2013 ESRD 

PPS proposed rule (77 FR 40964), that 

Medicare regulations at 42 CFR 

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

specify the methodology used to 

calculate outlier payments. We 

explained that an ESRD facility is 

eligible for an outlier payment if its 

actual or imputed Medicare Allowable 

Payment (MAP) amount per treatment 

for ESRD outlier services exceeds a 

threshold. We further explained that the 

MAP amount represents the average 

incurred amount per treatment for 

services that were or would have been 

considered separately billable services 

prior to January 1, 2011. We also stated 

that the threshold is equal to the ESRD 

facility’s predicted ESRD outlier 

services MAP amount per treatment 

(which is case-mix adjusted) plus the 

fixed dollar loss amount. Finally, we 

explained that in accordance with 42 

CFR 413.237(c), facilities are paid 80 

percent of the per treatment amount by 

which the imputed MAP amount for 

outlier services (that is, the actual 

incurred amount) exceeds this threshold 

and that ESRD facilities are eligible to 

receive outlier payments for treating 

both adult and pediatric dialysis 

patients. 

In the CY 2011 ESRD PPS final rule, 

using 2007 data, we established the 

outlier percentage at 1.0 percent of total 

payments (75 FR 49142 through 49143). 

We also established the fixed dollar loss 

amounts that are added to the predicted 

outlier services MAP amounts. The 

outlier services MAP amounts and fixed 

dollar loss amounts are different for 

adult and pediatric patients due to 


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differences in the utilization of 

separately billable services among adult 

and pediatric patients (75 FR 49140). 

As we explained in the CY 2011 ESRD 

PPS final rule (75 FR 49138 and 49139), 

the predicted outlier services MAP 

amounts for a patient would be 

determined by multiplying the adjusted 

average outlier services MAP amount by 

the product of the patient-specific casemix adjusters applicable using the 

outlier services payment multipliers 

developed from the regression analysis 

to compute the payment adjustments. 

The average outlier services MAP 

amount per treatment for CY 2011 was 

based on payment amounts reported on 

2007 claims and adjusted to reflect 

projected prices for 2011. For CY 2012, 

the outlier services MAP amounts and 

fixed dollar loss amounts were based on 

2010 data (76 FR 70250). That is, for 

CYs 2011 and 2012, the MAP and fixed 

dollar loss amounts were computed 

based on pre-ESRD PPS claims data and 

utilization. 

Comment: Several commenters agreed 

that no changes need to be made to the 

methodology and commended CMS for 

its transparency regarding the data and 

methodology used to update the MAP 

and fixed dollar loss thresholds. Some 

commenters expressed appreciation of 

CMS’s clear explanation of eligible 

outlier services. 

Response: We thank the commenters 

for their support. We will continue to 

issue guidance regarding the renal 

dialysis items and services that could 

qualify for outlier payment. 

a. Impact of Changes to the Outlier 

Policy 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40964), we explained that 

we did not propose any changes to the 

methodology used to compute the MAP 

or fixed dollar loss amounts. Rather, we 

explained that we were updating the 

outlier services MAP amounts and fixed 

dollar loss amounts to reflect the 

utilization of outlier services reported 

on the 2011 claims using the December 

2011 claims file. In this final rule, for 

CY 2013, we used the June 2012 update 

of the CY 2011 National Claims History 

File to update the outlier services MAP 

amounts and fixed dollar loss amounts. 

That is, for CY 2013, the MAP and fixed 

dollar loss amounts are based on 

utilization data from the 2011 ESRD PPS 

claims. For this final rule, the impact of 

this update is shown in Table 1, which 

compares the outlier services MAP 

amounts and fixed dollar loss amounts 

used for the outlier policy in CY 2012 

with the updated estimates. The 

estimates for the CY 2013 outlier policy, 

which are included in Column III of 

Table 1, were inflation-adjusted to 

reflect projected 2013 prices for outlier 

services. 

TABLE 1—OUTLIER POLICY: IMPACT OF USING UPDATED DATA TO DEFINE THE OUTLIER POLICY

Column I 

Outlier policy for CY2012 

(based on 2010 data price 

inflated to 2012) * 

Column II 

Updated outlier estimates 

based on 2011 data price 

inflated to 2012 * 

Column III 

Final outlier policy for 

CY2013 (based on 2011 

data price inflated to 

2013) * 

Age 

< 18 

Age 

> = 18 

Age 

< 18 

Age 

> = 18 Age 

< 18 

Age 

> = 18 

Average outlier services MAP amount per treatment 1 ... $46.26 $81.73 $37.84 $59.49 $38.65 $61.38 

Adjustments 

Standardization for outlier services 2 ........................ 1.0024 0.9738 1.0927 0.9878 1.0927 0.9878 

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

Adjusted average outlier services MAP amount 3 .... $45.44 $78.00 $40.52 $57.59 $41.39 $59.42 

Fixed dollar loss amount that is added to the predicted 

MAP to determine the outlier threshold 4 ..................... $71.64 $141.21 $44.16 $103.47 $47.32 $110.22 

Patient months qualifying for outlier payment ................. 5.7% 5.4% 7.8% 5.2% 7.6% 5.1% 

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

2012 prices in Columns I and II and projected 2013 prices in Column III). 1Excludes patients for whom not all data were available to calculate projected payments under an expanded bundle. The outlier services MAP 

amounts are based on 2011 data. The medically unbelievable edits of 400,000 units for epoetin and 1,200 mcg for Aranesp that are in place 

under the ESA claims monitoring policy were applied. 2Applied to the average outlier MAP per treatment. Standardization for outlier services is based on existing Case Mix Adjusters for adult and 

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

each patient. 4The fixed dollar loss amounts were calculated using 2011 data to yield total outlier payments that represent 1% of total projected payments 

for the ESRD PPS. 

As seen in Table 1, the estimated 

fixed dollar loss amounts that determine 

the 2013 outlier threshold amounts 

(Column III) are lower than those used 

for the 2012 outlier policy (Column I). 

The main reason for these reductions is 

the lower utilization of epoetin and 

other outlier services in CY 2011, the 

first year of the PPS. This can be seen 

by comparing the outlier service MAP 

amounts in Column I (which are based 

on 2010 data) with the outlier service 

MAP amounts in Column II (which are 

based on 2011 data). 

The fixed dollar loss amounts which 

are added to the predicted MAP 

amounts per treatment to determine the 

outlier thresholds are being updated 

from the CY 2012 amount. Based on the 

use of the most recently available data, 

the fixed-dollar loss amount for 

pediatric patients will decrease from 

$71.64 to $47.32 and the MAP amount 

will decrease from $45.44 to $41.39 as 

compared to CY 2012 values. For adult 

patients, the fixed-dollar loss amount 

drops from $141.21 to $110.22 and the 

MAP amount drops from $78.00 to 

$59.42. 

We estimate that the percentage of 

patient months qualifying for outlier 

payments under the current policy will 

be 5.1 percent and 7.6 percent for adult 

and pediatric patients, respectively, 

based on our use of 2011 data. The 

pediatric outlier MAP and fixed dollar 

loss amounts continue to be lower for 

pediatric patients than adults due to the 

continued lower use of outlier services 

(primarily reflecting lower use of 

epoetin and other injectable drugs). 

Comment: All of the commenters 

supported CMS’s decision to lower the 

threshold for both the fixed dollar loss 


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and MAP amounts for pediatric and 

adult patients. The commenters stated 

that they believed that outlier payment 

mechanisms are fundamental to the 

long-term success of prospective 

payment systems to ensure patients get 

the care they need, even when there are 

financial disincentives. The commenters 

further expressed that it is important for 

CMS to ensure that the information it 

uses to determine the outlier thresholds 

each year is as current as possible and 

agreed with CMS in using the 2011 

ESRD claims and utilization for CY 

2013. 

Response: We thank the commenters 

for their support. 

Comment: Several commenters 

expressed concern that some ESRD 

facilities may not have the necessary 

resources available to identify outlier 

services on the claim, and therefore are 

not receiving the outlier payments to 

which they are entitled. One commenter 

suggested that CMS make available data 

indicating that the outlier policy is 

beneficial to small ESRD facilities. The 

commenter further explained that this 

policy could be detrimental to small 

facilities because, although the facilities’ 

base rate is reduced by 1 percent to 

account for outlier services, the facilities 

may be unable recoup this amount 

because of resource limitations. 

Response: Outlier services are the 

items and services that were separately 

paid prior to the implementation of the 

ESRD PPS and are also separately paid 

under the composite rate portion of the 

blended payment for those ESRD 

facilities under the transition. We do not 

believe that it should be difficult for 

small facilities to identify outlier 

services on claims because these 

facilities should have had experience 

identifying these items on claims before 

the PPS was implemented. Specifically, 

the items eligible for outlier payments 

under the ESRD PPS are the same items 

that had been separately paid under the 

basic case-mix adjusted composite rate 

system and are separately paid under 

the composite rate portion of the 

blended payment for ESRD facilities 

receiving payment under the transition. 

Consequently, we believe that 

identifying items eligible for outlier 

payment is not an additional burden nor 

do we believe that it is difficult for 

small ESRD facilities. 

In terms of demonstrating that the 

outlier policy is beneficial to small 

ESRD facilities, we note that the outlier 

policy is intended to account for the 

cost of beneficiaries with high resource 

utilization; it is not intended to account 

for facility size. Instead, our low-volume 

adjustment accounts for facility size by 

adjusting for the cost of treating a low 

volume of ESRD patients. Although we 

will continue to monitor the impact of 

our outlier policy, as noted above, we 

believe that all facilities, regardless of 

size, should be able to identify outlier 

services on claims and be compensated 

for the cost of treating beneficiaries with 

high resource utilization. 

b. Outlier Policy Percentage 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40965), we explained that 42 

CFR 413.220(b)(4) stipulates that the per 

treatment base rate is reduced by 1 

percent to account for the proportion of 

the estimated total payments under the 

ESRD PPS that are outlier payments. We 

further explained that because of the 

decrease in utilization associated with 

the implementation of the ESRD PPS, 

the 1 percent target for outlier payments 

was not achieved in CY 2011. For this 

final rule, using the June 2012 update of 

the CY 2011 National Claims History 

File, we found that outlier payments 

represented approximately 0.3 percent 

of total payments. That is, the historical 

data previously used to set the outlier 

thresholds for CY 2011 projected greater 

use of outlier services than was 

observed under the expanded ESRD 

PPS, leading to lower outlier payments 

than expected. Use of 2011 data to 

recalibrate the thresholds, reflecting 

lower utilization of epoetin and other 

outlier services, will result in aggregate 

outlier payments close to the 1 percent 

target in CY 2013. We believe this 

update to the outlier MAP and fixed 

dollar loss amounts for CY 2013 will 

increase payments for ESRD 

beneficiaries requiring higher resource 

utilization in accordance with a 1 

percent outlier policy. 

We note that recalibration of the fixed 

dollar loss amounts in this final rule for 

CY 2013 outlier payments results in no 

change in payments to ESRD facilities 

for beneficiaries with renal dialysis 

items and services that are not eligible 

for outlier payments, but raises 

payments to providers for beneficiaries 

with renal dialysis items and services 

that are eligible for outlier payments. 

Therefore, beneficiary co-insurance 

obligations would increase for renal 

dialysis services eligible for outlier 

services and would remain unchanged 

for those not eligible. 

Comment: One commenter 

recommended that CMS estimate and 

publish the amount of the shortfall in 

outlier payments paid during CY 2011. 

The commenters recommended that 

CMS develop a mechanism to return 

these funds to the ESRD facilities so that 

these funds may be used to offset the 

costs associated with numerous 

‘‘unfunded mandates’’ imposed on these 

facilities. One commenter suggested that 

CMS set less than 1 percent aside for 

outliers and allocate the leftover funds 

to the ESRD PPS base rate. 

Response: We disagree that the 

shortfall in outlier payments should be 

used to make additional payments to 

ESRD facilities to account for not 

achieving the 1 percent threshold. The 

1 percent outlier policy is a prospective 

payment mechanism in which 

thresholds are established and adjusted 

on a yearly basis based on historical 

data. In the FY 1997 Inpatient 

Prospective Payment System (IPPS) 

final rule (61 FR 46229 and 46230), we 

explained that we believe our outlier 

policies are consistent with the statute 

and the goals of the prospective 

payment system. Many of the factors 

used to set prospective payment 

amounts for a given year are based on 

estimates. These factors include not 

only the outlier thresholds, but also the 

market basket rate of increase, the 

update factors and the required budgetneutrality provisions. We do not believe 

that Congress intended that the 

standardized amounts should be 

adjusted (upward or downward) to 

reflect differences between projected 

and actual outlier payments for a given 

year. Moreover, retroactive adjustments 

would be extremely difficult or 

impracticable (if not impossible) to 

administer. We further explained that 

the thresholds for a given year reflect 

certain levels of costs, so that if costs are 

held down, fewer cases qualify for 

outlier payments and outlier payments 

are lower than expected. We believe that 

the same explanation applies to the 

ESRD PPS. 

D. Clarifications Regarding the ESRD 

PPS 

1. Reporting Composite Rate Items and 

Services 

In the CY 2011 ESRD PPS final rule 

(75 FR 49036), we explained that 

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

requires that the ESRD PPS payment 

bundle include composite rate items 

and services. The basic case-mix 

adjusted composite payment system 

represented a limited PPS for a bundle 

of routine outpatient maintenance renal 

dialysis services. We defined composite 

rate services at § 413.171 as ‘‘items and 

services used in the provision of 

outpatient maintenance dialysis for the 

treatment of ESRD and included in the 

composite payment system established 

under section 1881(b)(7) [of the Act] and 

the basic case-mix adjusted composite 

payment system established under 

section 1881(b)(12) of the Act.’’ In 42 

CFR 413.171 we also defined renal 


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dialysis services as including, ‘‘items 

and services included in the composite 

rate for renal dialysis services as of 

December 31, 2010.’’ We further 

explained that currently services that 

are billed on the ESRD claim do not 

provide any detail of the composite rate 

items and services that are furnished to 

the patient. We indicated that, as we 

discussed in the Medicare Claims 

Processing Manual, Pub. 100–04, 

chapter 8, sections 50.1 and 50.2, 

laboratory tests and drugs covered 

under the facility’s composite rate may 

not be billed separately (75 FR 49173). 

We stated in the CY 2013 ESRD PPS 

proposed rule that the composite rate 

represented the routine items and 

services provided to Medicare 

beneficiaries for outpatient maintenance 

dialysis and therefore was full payment 

for those items and services. Therefore, 

it would not have been appropriate for 

ESRD facilities to bill for items and 

services in the composite rate because 

this would result in duplicate payments 

by Medicare (77 FR 40965). 

We also explained in the CY 2011 

ESRD PPS final rule (75 FR 49048), that 

in our analysis of the ESRD claims we 

identified drugs and biologicals that 

were included in the composite 

payment rate but for which ESRD 

facilities received separate payment in 

addition to the composite rate payment. 

Because these composite rate drugs and 

biologicals were listed separately on the 

ESRD claims, separate payment was 

inadvertently made. We further 

explained that we excluded those 

inadvertent payments from the final 

ESRD PPS base rate calculation. We also 

noted that the Medicare Benefit Policy 

Manual, Pub. 100–02, chapter 11, 

section 30.4.1 lists the drugs and fluids 

that were included under the composite 

payment system and explicitly states, 

‘‘* * * drugs used in the dialysis 

procedure are covered under the 

facility’s composite rate and may not be 

billed separately. Drugs that are used as 

a substitute for any of these items, or are 

used to accomplish the same effect, are 

also covered under the composite rate.’’ 

The manual further provides that 

‘‘administration of these items (both the 

staff time and supplies) is covered 

under the composite rate and may not 

be billed separately’’ (75 FR 49048). 

In the CY 2012 ESRD PPS final rule 

(76 FR 70243), with regard to 

antibiotics, we provided for separate 

payment for vancomycin when 

furnished to treat non-ESRD related 

conditions. We also eliminated the 

payment distinction for antibiotics 

furnished in an ESRD facility or in the 

home used to treat access infections or 

peritonitis. We finalized that antibiotics 

furnished in the home to treat access 

site infections and peritonitis would be 

eligible for outlier payment (76 FR 

70246). In the CY 2013 ESRD PPS 

proposed rule (77 FR 40963), we 

proposed to allow for separate payment 

for daptomycin if furnished for nonESRD-related conditions and finalized 

in section II.C.6.2 of this final rule. 

As described at 42 CFR 413.239, there 

are ESRD facilities receiving 

reimbursement under the transition, 

that is, receiving a blended payment of 

the basic case-mix adjusted composite 

rate payment system and the ESRD PPS. 

If an ESRD facility receives payment 

under the transition and reports a drug, 

biological, or laboratory test that was 

included in the composite rate on the 

ESRD claim, it could inadvertently 

receive separate payment for that item 

or service within the portion of the 

blended payment that is based on the 

basic case-mix adjusted composite 

payment system. 

As mentioned above and defined at 42 

CFR 413.237, ESRD-related drugs, 

biologicals, and laboratory tests that 

were or would have been separately 

payable under the basic case-mix 

adjusted composite payment system 

qualify as eligible outlier services. In the 

CY 2012 ESRD PPS final rule (76 FR 

70246), we finalized that as of CY 2012, 

we would no longer issue a specific list 

of eligible outlier service drugs which 

were or would have been separately 

billable under Medicare Part B prior to 

January 1, 2011. If an ESRD facility 

reports a drug or biological that was 

included in the basic case-mix adjusted 

composite payment system on the ESRD 

claim, it would inappropriately be 

applied toward an outlier calculation 

because all drugs and biologicals with a 

rate available on the ASP pricing file 

when the modifier AY is not present 

may be eligible for outlier consideration. 

We explained in the CY 2013 ESRD 

PPS proposed rule, that as a result of 

our monitoring efforts, we continue to 

find composite rate drugs reported on 

ESRD claims and reiterated that 

composite rate items and services are 

not to be reported on the ESRD facility 

claims. We noted that we are instituting 

measures to ensure that composite rate 

drugs are prevented from being applied 

to the outlier payment. These measures 

will be discussed through 

administrative issuances, as 

appropriate. We also noted that we 

would continue to monitor the reporting 

of composite rate items and services on 

ESRD claims and plan to take actions to 

recoup inappropriate and duplicative 

payments. Finally, we noted that if the 

inclusion of composite rate items and 

services such as laboratory tests, drugs 

and supplies on claims will be required 

to be reported, we will discuss this 

requirement in future rulemaking (77 FR 

40966). 

We received one comment on this 

issue. The comment and our response 

are set forth below. 

Comment: One commenter concluded 

that any action to recoup inappropriate 

and duplicative payments for reporting 

composite rate items and services 

should be pursued on a going forward 

basis rather than retrospectively. 

Response: CMS has a fiduciary 

responsibility to ensure that accurate 

payments are made. If we were to 

identify inappropriate payments that 

had been made because composite rate 

items and services were reported on 

claims for the purpose of receiving 

separate payment we would pursue 

recoupment of those payments in 

accordance with applicable laws and 

regulations. 

2. ESRD Facility Responsibilities for 

ESRD-Related Drugs and Biologicals 

In the CY 2013 ESRD PPS proposed 

rule (77 FR 40966), we indicated that we 

had become aware that some ESRD 

facilities are requiring ESRD 

beneficiaries to purchase renal dialysis 

drugs from the ESRD facility and are 

instructing beneficiaries not to use their 

Part D plan for their purchases. We 

explained that section 1866(a)(1)(A) of 

the Act, as codified in regulations at 42 

CFR 489.21, prohibits providers from 

billing beneficiaries for services for 

which the beneficiary would have been 

entitled to have payment made under 

Medicare if the provider appropriately 

filed claims for those services. 

Furthermore, section 1881(b)(2)(A) of 

the Act states that payments shall be 

made to an ESRD facility only if it 

agrees to accept such payments as 

payment in full for covered services 

except for the beneficiary co-insurance 

and deductible amounts. 

Furthermore, in the CY 2011 ESRD 

PPS final rule (75 FR 49045), we 

explained that the ESRD PPS bundled 

base rate reflects Medicare payment for 

the average ESRD patient. We stated that 

we had incorporated payments under 

the basic case-mix adjusted composite 

rate payment system as well as 

payments for separately billable items 

and services into the ESRD PPS base 

rate. As a result, we believe the ESRD 

PPS payments are sufficient and reflect 

the average cost of providing care to the 

average patient with ESRD and 

therefore, we expect that, on average, 

high cost patients would be offset by 

low cost patients. In the CY 2011 ESRD 

PPS final rule (75 FR 49045), we also 

explained that we had provided for 


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higher acuity patients with patient casemix adjusters and outlier payments for 

high-cost patients. We further cited 42 

CFR 494.90 of the ESRD Conditions for 

Coverage which requires the 

development of an individualized 

patient plan of care to address patient 

needs and concluded that we believe 

ESRD facilities should make medical 

decisions based on patient needs and 

not solely on a financial basis. 

In the CY 2011 ESRD PPS final rule 

(75 FR 49050), we stipulated that any 

drug or biological (that is, injectable, 

oral or other forms of administration) 

furnished for the purpose of access 

management, anemia management, 

vascular access or peritonitis, cellular 

management or bone and mineral 

metabolism would be considered renal 

dialysis services under the ESRD PPS. 

Any drug or biological used as a 

substitute for a drug or biological that 

was included in the ESRD PPS bundled 

base rate would also be a renal dialysis 

service and would not be eligible for 

separate payment. Antiemetics, antiinfectives, antipruritics, anxiolytic, 

excess fluid management, fluid and 

electrolyte management and pain 

management drugs and biologicals 

could be used for dialysis purposes and 

therefore, are considered ESRD-related 

when used for those purposes. We 

indicated that we presumed these drugs 

and biologicals to be renal dialysis 

services in whatever form they are 

furnished, unless indicated on the claim 

that they are used for non-ESRD-related 

conditions. Drugs and biologicals paid 

under Part D that are furnished by an 

ESRD facility for ESRD-related purposes 

are considered renal dialysis services 

(75 FR 49050 and 49051). 

In the CY 2013 ESRD PPS proposed 

rule, we reiterated that ESRD facilities 

are responsible for furnishing renal 

dialysis items and services that are 

required to meet patient needs. This 

would include oral or other forms of 

administration of injectable drugs and 

biologicals that are furnished for ESRDrelated conditions. We also expect that 

ESRD facilities will not restrict access to 

necessary drugs for financial purposes 

by requiring patients to purchase 

medically necessary drugs and 

biologicals. We expect that ESRD 

facilities will furnish drugs and 

biologicals that had been considered 

medically necessary prior to the 

implementation of the ESRD PPS and 

not exclude them because the ESRD 

facility is now financially responsible 

for these drugs and biologicals. Because 

of the reasons cited above, ESRD 

facilities may not require, induce or 

coerce beneficiaries to purchase any 

renal dialysis item or service. 

We received no comments on the 

clarification of our policy regarding 

ESRD facility responsibilities for ESRDrelated drugs and biologicals. 

3. Use of AY Modifier 

As we indicated in the CY 2013 ESRD 

PPS proposed rule (77 FR 40967), in the 

CY 2011 ESRD PPS final rule, we 

developed a mechanism to be used by 

ESRD facilities to identify and be paid 

separately for non-ESRD-related items 

and services, such as drugs, biologicals, 

and equipment and supplies (75 FR 

49052 and 75 FR 49168). We provided 

this mechanism in order to support a 

Medicare beneficiary’s need for nonESRD-related items and services (that is, 

predominantly drugs and laboratory 

tests) during a dialysis treatment and to 

mitigate the need for the beneficiary to 

receive additional injections or health 

care visits. We further stated that in the 

event that supplies or equipment are not 

ESRD-related, ESRD facilities would be 

required to place a modifier on the 

claim for those supplies and equipment, 

signifying that they were used for 

services that were not ESRD-related and 

eligible for separate payment outside of 

the ESRD PPS (75 FR 49168). Change 

Request 7064, Transmittal 2033, titled 

‘‘End Stage Renal Disease (ESRD) 

Prospective Payment System (PPS) and 

Consolidated Billing for Limited Part B 

Services’’, issued on August 20, 2010, 

re-issued November 17, 2010 under 

Transmittal 2094, and re-issued January 

14, 2011 under Transmittal 2134, 

provided instructions on the use of the 

modifier. In that Change Request, we 

indicated that the claim lines for 

laboratory tests and drugs provided to a 

beneficiary for reasons other than the 

treatment of ESRD must be submitted 

with the AY modifier to signal separate 

payment outside of the ESRD PPS. In 

the CY 2012 ESRD PPS final rule, we 

provided for the use of the AY modifier 

with vancomycin if used for non-ESRDrelated conditions and with the 

requirement that the ESRD facilities 

include the diagnosis code of the 

condition on the claim (76 FR 70243). 

In the CY 2013 ESRD PPS proposed rule 

(77 FR 40967), we proposed to allow the 

use of the AY modifier for separate 

payment when daptomycin is furnished 

by an ESRD facility to an ESRD 

Medicare beneficiary for non-ESRD 

related conditions. We are finalizing 

this policy above. ESRD facilities are 

required to indicate an appropriate 

diagnosis code on the claim that reflects 

the condition requiring the use of 

daptomycin. 

We explained in the CY 2013 ESRD 

PPS proposed rule (77 FR 40967) that 

our monitoring activities have identified 

that ESRD facilities and clinical 

laboratories are appending the AY 

modifier for items that we believe are 

ESRD-related. We noted in the proposed 

rule (77 FR 40967) that some ESRD 

facilities and clinical laboratories 

appear to be appending the AY modifier 

on many items and services reported on 

claims. We reiterated in the proposed 

rule that the purpose of the AY modifier 

is to allow beneficiaries the convenience 

to receive non-ESRD-related items (for 

example, drugs and laboratory tests) 

during their dialysis treatment and to 

allow the ESRD facility to receive a 

separate payment for furnishing those 

items. The AY modifier is also intended 

to allow separate payment to 

laboratories in the event an ESRDrelated laboratory test is required for 

non-ESRD-related conditions. The AY 

modifier is not intended to be used to 

receive a separate payment for items 

that are ESRD-related and therefore 

included in the ESRD PPS base rate. We 

further stated that we would continue to 

monitor the use of the AY modifier and 

intend to take steps to recoup 

inappropriate payments. In the event 

that we believe the AY modifier is not 

being used for the purpose intended, we 

may be forced to discontinue the AY 

modifier and cease to provide separate 

payment for any non-ESRD-related drug 

or laboratory test furnished. 

We received several comments on our 

clarification of this policy and our 

responses are set forth below. 

Comment: We received six comments 

regarding the AY modifier. Commenters 

supported maintaining the AY modifier 

for non-ESRD conditions. Several 

commenters provided reasons for 

supporting the AY modifier. For 

example, some commenters concurred 

that the AY modifier is intended to 

allow Medicare beneficiaries the 

convenience of receiving non-ESRD 

related items and services during the 

course of dialysis treatment; and to 

allow the ESRD facility or laboratory to 

receive a separate payment when 

furnishing non-ESRD items or services. 

It also enables optimal coordinated care 

to Medicare beneficiaries by minimizing 

their need for additional doctor visits 

and duplicative or unnecessary lab tests. 

Five commenters largely encouraged 

CMS to continue the use of the modifier 

for reporting non-ESRD related items or 

services for payment and to furnish 

supporting data on AY modifier misuse. 

A few commenters suggested that CMS 

should consider drafting guidance on 

the appropriate use of the AY modifier. 

A few commenters expressed concern 

over the possible elimination of the AY 

modifier and identified possible 

resulting hardships for Medicare ESRD 


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beneficiaries. One commenter noted that 

the elimination of the AY modifier 

would force facilities to send dialysis 

patients to labs or infusion centers to 

receive IV medications that would risk 

the vascular access and add 

transportation and time burdens for the 

beneficiary. 

Response: We thank commenters for 

their support of the use of the AY 

modifier. We agree that the elimination 

of the AY modifier could result in 

additional hardships for ESRD 

beneficiaries. 

Comment: One commenter suggested 

that, rather than eliminating the AY 

modifier, CMS should rely upon the 

contractors to educate providers, audit 

payments for AY items, and request 

documentation when appropriate. 

Another commenter encouraged CMS to 

provide data on the exact abuses or the 

scope of modifier misuse noting that 

patients should not suffer because of 

modifier abuse, but rather CMS should 

work with facilities and providers to 

ensure policy compliance. 

Response: With regard to the 

suggestion that the responsibility for AY 

modifier monitoring education should 

rest on the CMS contractors (that is, the 

Medicare Administrative Contractors 

(MACs)), we note that we do provide 

education and instructions to the A/B 

MACs through administrative issuances 

and MedLearn articles that they can 

then use to educate providers. For 

example, CMS Change Request #7064 

and subsequent Medicare Learning 

Network Matters (MLN) article # 

MM7064, published on January 14, 

2011, notifies contractors that ESRDrelated laboratory services, drugs and 

supplies will be subject to Part B 

consolidated billing edits and no longer 

separately payable when furnished to 

ESRD beneficiaries. However, these 

consolidated billing edits do not apply 

when the items and services are not 

ESRD-related. When items and services 

are furnished to an ESRD beneficiary for 

conditions other than ESRD, the AY 

modifier must be present on the claim 

to bypass billing edits and allow for a 

separate payment outside of the ESRD 

PPS. CMS MLN #MM7064 may be 

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

Outreach-and-Education/MedicareLearning-Network-MLN/ 

MLNMattersArticles/Downloads/ 

MM7064.pdf. Finally, we are in the 

process of updating the ESRD Benefit 

Policy Manual, Pub 100–02, chapter 11, 

to reflect the policy requirements under 

the ESRD PPS, including the use of the 

AY modifier. 

With regard to the comment 

concerning monitoring the use of the 

AY modifier and the suggested 

functions to be performed by the MACs, 

as we discussed in the CY 2013 ESRD 

PPS proposed rule (77 FR 40967), we 

are continuing to monitor the use of the 

AY modifier and intend to take steps to 

recoup inappropriate payments. 

Although we are updating our manual, 

we believe that we have provided 

adequate instructions as to the 

appropriate use of the AY modifier. We 

expect that the contractors will convey 

information regarding the proper use of 

the AY modifier to the ESRD facilities, 

and will also audit payments and 

request documentation as necessary. 

However, CMS has the responsibility to 

ensure that payments are made 

appropriately. Therefore, we will 

continue to monitor the use of the AY 

modifier. If we believe that the AY 

modifier is not being used as intended, 

or it is being used in order to receive 

separate payment for renal dialysis 

items and services that are in the 

bundled payment, we will be forced to 

reconsider its use. 

E. Miscellaneous Comments 

We received thirty-five comments 

from Medicare beneficiaries, family 

members, ESRD facilities, nurses, 

physicians, professional organizations, 

renal organizations, and manufacturers 

related to issues that were not 

specifically addressed in the CY 2013 

ESRD PPS proposed rule. 

Comment: We received comments 

from patients, their families, renal 

associations and manufacturers 

requesting changes in how CMS pays for 

home dialysis and home dialysis 

training. Many of these commenters 

described the benefits of home dialysis. 

Most commenters asked CMS to 

increase the number of weekly 

allowable dialysis sessions and 

eliminate the medical justification 

requirement for additional sessions. One 

commenter questioned why payment for 

in-facility dialysis was the same as for 

home dialysis, noting the differences 

between staff and supply use between 

in-facility and home dialysis. Some 

commenters contended that patient 

requests for home dialysis are being 

denied. Commenters also stated that 

beneficiaries with ESRD are not 

provided with the same home training 

opportunities as beneficiaries whose 

care is covered by other payment 

sources. Many of the commenters stated 

that payment for home dialysis training 

is insufficient and does not reflect the 

true cost of training. Some commenters 

indicated various ranges of time 

required for home training in terms of 

time per day and number of training 

sessions. One home dialysis 

organization stated that ESRD facilities 

only receive payment for 18, rather than 

25, training sessions for new patients. 

Response: CMS developed a 

reimbursement mechanism with the 

2011 implementation of the ESRD PPS 

that we believe supports home-based 

dialysis. That is, the ESRD PPS 

payment, which includes drugs, 

laboratory tests, staff time, supplies, 

patient-level adjustments, facility-level 

adjustments and outlier payments, is the 

same regardless of the location where 

the dialysis services are furnished or the 

dialysis modality, which we believe 

supports beneficiaries’ ability to elect to 

receive dialysis at home, where 

appropriate. It is not, however, CMS’s 

intent to encourage, discourage or 

require any particular dialysis modality. 

Rather, we believe that decisions 

regarding whether to receive dialysis 

and which dialysis modality to use 

should be made by beneficiaries in 

consultation with their physicians. This 

includes the decision whether to receive 

home hemodialysis or home peritoneal 

dialysis, rather than in-facility dialysis. 

We believe that the decision to perform 

home dialysis includes determining the 

beneficiary’s abilities, the beneficiary’s 

desire to perform home dialysis and the 

beneficiary’s physical and emotional 

status. 

With regard to the comment asking 

why the payment is the same for infacility as home dialysis, we believe that 

our policy to pay the same amount, 

including the patient-level and facilitylevel adjustments, as well as the outlier 

policy for home and in-facility dialysis, 

provides adequate payment to account 

for the short-term increase in staff time 

necessary to train beneficiaries for home 

dialysis. Training costs are included in 

the ESRD PPS base rate, however, we 

also provide an add-on adjustment for 

each training session that represents one 

hour of nursing time to conduct one-onone training treatments for each training 

treatment furnished by a Medicare 

certified home dialysis training facility. 

The add-on payment for one hour of 

training per training session does not 

imply that it takes only one hour per 

training session to properly educate a 

beneficiary to perform home dialysis. 

We believe that our payment is adequate 

for training and home dialysis. 

We have been and will continue to 

monitor and analyze trends in home 

dialysis and home dialysis training. We 

have seen a continuing increase in 

overall home dialysis since mid-2009, 

including in 2011. In particular, we 

have observed an increase in home 

hemodialysis and a decline in home 

peritoneal dialysis with an overall 

higher rate of home peritoneal dialysis. 

In addition, our monitoring shows that 


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ESRD facilities receive payments for 

more treatments for home hemodialysis 

than for in-facility hemodialysis. We 

also have seen an increase in home 

training in 2011, particularly in 

retraining. Consequently, we do not 

believe that the ESRD PPS and our 

training adjustment discourage 

beneficiaries from receiving home 

dialysis. 

Commenters also requested that we 

increase the maximum number of 

dialysis sessions and eliminate the 

medical justification requirement for 

dialysis treatments after a beneficiary 

has received three sessions in one week. 

We note that, although three is the 

maximum number of sessions that we 

will cover without a showing of medical 

necessity, we will cover additional 

sessions where those sessions are 

medically necessary. We are aware that 

there are observational studies that 

support additional weekly dialysis 

treatments and that there is some 

industry support for additional 

treatments. We have and will continue 

to monitor and analyze the number of 

dialysis treatments that Medicare 

beneficiaries receive to determine 

whether a change in this longstanding 

policy is warranted. 

In addition, in the CY 2011 ESRD PPS 

final rule (75 FR 49064) we stated in 

response to a MedPAC comment that we 

would consider whether it would be 

appropriate to utilize a larger unit of 

payment, rather than a per treatment 

payment, after the transition period. We 

further stated that ‘‘we may evaluate 

whether the ERSD PPS has resulted in 

improved outcomes, the degree to 

which home dialysis has increased, and 

whether interested stakeholders would 

favor an alternative to the per treatment 

approach.’’ We will continue to monitor 

the impact of the ESRD PPS and will 

take these comments into consideration 

if we determine that any changes to the 

per treatment payment approach are 

warranted. 

With regard to the comment that 

ESRD facilities receive payment for 18 

rather than 25 training treatments for 

new patients, we believe that the 

commenter is confusing the adjustment 

for beneficiaries who are receiving home 

dialysis training but are not in their first 

four months of dialysis, with 

beneficiaries who have been newly 

diagnosed with ESRD and are receiving 

their first four months of dialysis. The 

home dialysis training adjustment 

applies to those beneficiaries who are 

not in their first four months of dialysis 

treatments. This adjustment does not 

apply for those beneficiaries newly 

diagnosed with ESRD. Instead, facilities 

receive the onset of dialysis adjustment 

for these beneficiaries. As we explained 

in the CY 2011 ESRD PPS final rule (75 

FR 49094), we believe that the costs 

associated with the onset of dialysis 

adjustment and the training add-on 

adjustment overlap (that is, costs for 

services could be accounted for in both 

adjustments). Accordingly, we finalized 

a policy that ESRD facilities will not 

receive the home dialysis training 

adjustment when they are receiving the 

onset of dialysis adjustment. This does 

not mean that an ESRD facility may not 

furnish home training services during 

the onset period. Rather, the onset of 

dialysis payment adjustment of 51 

percent per treatment accounts for the 

administrative and labor costs 

associated with new patients, including 

the costs to train patients. 

We are unable to address the 

comment contending that ESRD 

beneficiaries are not offered the same 

home dialysis training opportunities as 

those offered to ESRD beneficiaries 

covered by private payers because we 

are not familiar with these payment 

sources. 

Comment: One patient support group 

recommended that CMS use revenue 

code 0820 when reporting home dialysis 

instead of revenue code 0821, which is 

currently used to describe both infacility and home dialysis services. The 

commenter contends that this will 

correctly identify patients on home 

dialysis in Medicare claims data. 

Response: Our current Medicare 

policy for reporting home dialysis 

services with revenue code 0821 

appended with ESRD condition code 74 

(Dialysis in the Home) allows us to 

distinguish beneficiaries receiving 

dialysis at home from those receiving 

treatment in an ESRD facility. 

Comment: We received twelve 

comments regarding the Agency’s plan 

to include oral-only drugs in the ESRD 

PPS bundled payment for CY 2014. 

Commenters expressed concern about 

the administrative burden, compliance 

with state laws, and associated costs in 

furnishing oral-only drugs within the 

scope of the ESRD service. A few 

commenters requested that CMS ask for 

community input so that the inclusion 

of the oral-only drugs will be an 

uneventful transition for patients. ESRD 

industry associations cautioned that the 

inclusion of oral-only drugs into the 

ESRD PPS CY 2014 bundled payment 

may limit patient access to the most 

clinically appropriate drugs and 

threaten optimal health outcomes for 

ESRD Medicare beneficiaries. Some 

commenters recommended that CMS 

include patient protections to ensure 

patient care is not compromised and 

that oral-only drugs continue to be 

furnished at the recommended doses. 

Many commenters requested that the 

Agency share advance information 

about the methodology and data sources 

that the Agency will use to calculate the 

reimbursement rates for drugs and 

therapies and encouraged CMS to use 

the most recent year of available data to 

establish a payment rate for oral-only 

drugs. Other commenters requested that 

CMS adopt a methodology that 

measures the actual utilization on a per 

treatment basis and includes costs 

associated with drug administration 

when reimbursing oral-only drugs as 

part of the ESRD PPS. 

Response: We thank the commenters 

for their comments. In the CY 2011 

ESRD PPS final rule (75 FR 49038 

through 49044), we responded to 

comparable comments regarding the 

inclusion of oral-only drugs in CY 2014. 

We received many suggestions from 

stakeholders on how oral-only drugs 

should be included in the ESRD PPS 

bundled payment. We have reviewed 

and will continue to review all of the 

comments, which we will consider as 

we formulate our proposals on this 

issue. We intend to address the 

inclusion of oral-only drugs in the ESRD 

PPS in the CY 2014 ESRD PPS proposed 

rule. 

Comment: We received three 

comments from industry associations 

requesting that CMS release the ratesetting file to allow the industry to test 

the Agency’s assumptions and complete 

its own analysis of the payment policies 

set forth in the CY 2013 ESRD PPS 

proposed rule. One commenter 

encouraged CMS to make data available 

to the public generally, not just dialysis 

facilities in particular, to allow for a 

more complete assessment of the ESRD 

PPS program. 

Response: We received comparable 

requests and comments in response to 

the CY 2012 ESRD PPS proposed rule 

and responded to those comments in the 

CY 2012 ESRD PPS final rule (76 FR 

70254 to 70255). We believe that we 

have provided and will provide data 

sufficient to analyze the payment 

policies included in the proposed rule, 

by posting the impact file for CY 2012 

on the ESRD PPS Payment Web site. We 

will also post a provider-level impact 

file and the wage index file for CY 2013 

shortly after publication of this final 

rule. We also explained that we have 

not made the rate setting file available 

‘‘because the release of patient 

identifiable data is not necessary to 

accomplish the purpose of analyzing 

our proposals. Applicable Federal 

privacy laws and regulations, including 

the Privacy Act and HIPPA Privacy Rule 

only permit us to disclose personal 


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identifiable information when it is 

necessary to administer the program, or 

for health care operations and 

payment.’’ 

Comment: We received 8 comments 

requesting modification to the 

standardization factor methodology and 

calculation for CY 2013. Many of these 

commenters encouraged CMS to use the 

most current data available in order to 

establish the standardization factor, 

rather than historical estimates. Some 

commenters indicated that because we 

had adjusted the outlier fixed dollar loss 

and MAP amounts to account for outlier 

payments below the 1 percent threshold 

in CY 2011, we should provide a 

comparable adjustment to the 

standardization factor and the ESRD 

PPS base rate to account for payments 

for patient- and facility-level adjusters 

that were not utilized. Some 

commenters continue to contend that 

the ESRD PPS base rate established in 

CY 2011 is incorrect and that CMS 

should return the payment amounts 

removed from the base rate to account 

for the adjusters, thereby increasing the 

base rate. Other commenters stated that 

the ESRD PPS base rate should be 

adjusted to account for payments 

allocated for the patient- and facilitylevel adjusters that had not ultimately 

been paid to the ESRD facilities. A few 

commenters requested that CMS modify 

the payment for case-mix and comorbidity adjustments. 

Response: In the CY 2011 ESRD PPS 

final rule, we described the data sources 

that were used in constructing the ESRD 

PPS payment bundle, the development 

of the ESRD PPS base rate, and the 

payment adjusters (75 FR 49064 through 

49127). In the CY 2013 ESRD PPS 

proposed rule, we proposed to update 

the base rate by the rate of increase in 

the ESRD market basket, reduced by the 

productivity adjustment (77 FR 40959). 

The base rate was developed using 2007 

claims, in accordance with section 

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

requires CMS to use the lowest per 

patient utilization year. We also 

explained the methodology used to 

determine the case-mix adjustment 

amount, including co-morbidities (75 

FR 49087 through 49116). In the CY 

2013 ESRD PPS proposed rule, we 

stated that we were not proposing any 

changes to the methodology used to 

compute the MAP or fixed dollar loss 

amounts, but were updating the outlier 

services MAP amounts and fixed dollar 

loss amounts to reflect the utilization of 

outlier services reported on the 2011 

claims, using the December 2011 claims 

file (77 FR 40964). The methodology for 

calculating and updating the base rate 

was finalized last year through notice 

and comment rulemaking, as were the 

methodologies for updating the outlier 

threshold. In the CY 2013 ESRD PPS 

proposed rule, we did not propose to 

change how the base rate is calculated 

or updated. We also did not propose in 

the CY 2013 ESRD PPS proposed rule to 

modify the payment adjusters. We do 

not believe that because we lowered the 

MAP and fixed dollar loss amounts to 

adjust for outlier payment expenditures 

that were below the 1 percent target, we 

must adjust the standardization factor 

for the ESRD PPS base rate. We will, 

however, continue to monitor our 

payments and consider if any changes 

need to be made in the future. 

Comment: One commenter requested 

clarification when billing Medicare for 

Lipid Profile laboratory services 

furnished to ESRD beneficiaries. 

Another commenter encouraged CMS to 

furnish guidance for blood draws and 

laboratory collections under the ESRD 

PPS. 

Response: ESRD-related laboratory 

tests may not be billed with the AY 

modifier and no separate payment shall 

be made when an ESRD facility or 

laboratory furnishes ESRD-related 

laboratory tests to an ESRD beneficiary. 

We discuss laboratory tests furnished 

under the PPS in our CY 2011 and CY 

2012 ESRD PPS final rules (75 FR 49053 

through 49056 and 76 FR 70249 through 

70250, respectively). Furthermore, the 

Lipid Profile laboratory test is 

appropriately included in the ESRD PPS 

payment bundle when Lipid 

abnormalities result from, or are related 

to the beneficiary’s ESRD. For example, 

some forms of dialysis, particularly 

peritoneal dialysis, are associated with 

increased cholesterol and triglyceride 

levels, and a Lipid Profile laboratory test 

to assess these levels would be included 

in the bundled payment. If, however, 

the Lipid Profile laboratory test is 

furnished for reasons other than for the 

treatment of ESRD, the laboratory 

services may be billed with the AY 

modifier and are eligible for separate 

payment. With regard to the comment 

requesting guidance for blood draws 

and laboratory collections, we refer the 

commenter to Change Request 7617, 

Transmittal 150, entitled, 

‘‘Implementation of Changes in End 

Stage Renal Disease Payment for 

Calendar Year 2012’’ issued on 

November 16, 2011. 

Comment: One commenter requested 

that CMS consider the implementation 

of pediatric co-morbidities to the 

pediatric case mix adjustments, while 

another commenter requested 

consideration of a case-mix adjustment 

for race. One association called for CMS 

to establish a new technology adjuster 

in a non-budget-neutral manner, stating 

that new technologies have the potential 

to lead to better diagnosis, treatment, 

and patient outcomes. 

Response: We thank the commenters 

for their suggestions, but note that we 

did not propose to implement these 

adjusters in the CY 2013 ESRD PPS 

proposed rule. We refer the commenters 

to the CY 2011 ESRD PPS final rule (75 

FR 49128 through 49134; 75 FR 49108 

and 49115; 75 FR 49174), in which we 

explained the methodology used to 

develop the ESRD PPS for the pediatric 

population, discussed the reasons for 

not including a patient-level case mix 

adjuster for race, and responded to 

comments suggesting that we provide 

separate payment for new and 

innovative drugs and technologies. 

Comment: Some commenters 

requested that the cost reports be 

amended to reflect the actual cost of 

care. Some of the recommendations 

included that the cost report should 

provide flexibility to allow for 

innovation, eliminate the limitation on 

medical director fees, recognize the cost 

of supporting the ESRD networks, and 

allow immediate recognition on cost 

reports of ‘‘new or innovative items/ 

services,’’ 

Response: We thank the commenters 

for their suggestions. We plan to analyze 

the cost reports to determine if there are 

any changes required and will consider 

the suggestions provided. 

We received a number of other 

comments on a variety of topics that we 

believe are outside the scope of the 

proposed rule. The commenters 

requested that ESRD beneficiaries be 

able to maintain disability benefits 

while employed; expressed concern 

about the ‘‘corporate practice of 

medicine’’ by dialysis facilities; noted 

that securing the necessary 

documentation for acute co-morbidities 

is problematic and urged CMS to 

furnish co-morbidity claims data from 

the CMS database; advocated for 

inclusion of their product in the ESRD 

PPS payment; and disputed over 

payment changes to its product under 

Part D. We appreciate the comments; 

however, because these comments were 

not in response to any proposals or 

discussions in the proposed rule, they 

are beyond the scope of this final rule. 

We refer the commenters to the CY 2011 

ESRD PPS final rule, where we believe 

that we addressed many of these issues 

(75 FR 49030). 


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III. End-Stage Renal Disease (ESRD) 

Quality Incentive Program (QIP) for 

Payment Year (PY) 2015 

A. Background 

For over 30 years, monitoring the 

quality of care provided to end-stage 

renal disease (ESRD) patients by dialysis 

providers or facilities (hereinafter 

referred to collectively as ‘‘facility’’ or 

‘‘facilities’’) has been an important 

component of the Medicare ESRD 

payment system. The ESRD quality 

incentive program (QIP) is the most 

recent step in fostering improved 

patient outcomes by establishing 

incentives for dialysis facilities to meet 

or exceed performance standards 

established by CMS. The ESRD QIP is 

authorized by section 153(c) of MIPPA, 

which added section 1881(h) to the Act. 

CMS established the ESRD QIP for PY 

2012, the initial year of the program in 

which ESRD payment reductions based 

on quality performance are being made 

to dialysis facilities, in two rules 

published in the Federal Register on 

August 12, 2010 and January 5, 2011 (75 

FR 49030 and 76 FR 628, respectively). 

On November 10, 2011, CMS published 

a final rule in the Federal Register 

outlining the PY 2013 and PY 2014 

ESRD QIP (76 FR 70228). 

Section 1881(h) of the Act requires 

the Secretary to establish an ESRD QIP, 

which we have implemented by (i) 

selecting measures; (ii) establishing the 

performance standards that apply to the 

individual measures; (iii) specifying a 

performance period with respect to a 

year; (iv) developing a methodology for 

assessing the total performance of each 

facility based on the performance 

standards with respect to the measures 

for a performance period; and (v) 

applying an appropriate payment 

reduction to facilities that do not meet 

or exceed the established Total 

Performance Score. In this final rule, we 

describe each of these elements, as 

applicable, and our final policies for 

their application to PY 2015 and future 

payment years of the ESRD QIP. 

B. Summary of the Proposed Provisions 

and Responses to Comments on the 

ESRD QIP for PY 2015 

A proposed rule, entitled ‘‘Medicare 

Program; End-Stage Renal Disease 

Prospective Payment System, Payment 

System, Quality Incentive Program, and 

Bad Debt Reductions for All Medicare 

Providers’’ (77 FR 40952), hereinafter 

referred to as the CY 2013 ESRD PPS 

proposed rule, appeared in the Federal 

Register on July 11, 2012, with a 

comment period that ended on August 

31, 2012. In that proposed rule, we 

made proposals for the ESRD QIP, 

including introducing and expanding 

measures, refining the scoring 

methodology, modifying the program’s 

public reporting requirements, 

establishing how the ESRD QIP payment 

reduction applies to facilities whose 

ownership has changed, and initiating a 

data validation pilot program. We 

received approximately 55 public 

comments on these proposals from 

many interested parties including 

dialysis facilities, organizations 

representing dialysis facilities, 

nephrologists, nurses, dietitians, home 

health advocacy groups, pharmaceutical 

manufacturers, patients, advocacy 

groups, and the Medicare Payment 

Advisory Commission (MedPAC). In 

this section of the final rule, we provide 

a summary of each proposed 

requirement, a summary of the public 

comments received on these 

requirements, our responses to these 

comments, and the final policies that we 

will adopt for the program. 

C. Considerations in Updating and 

Expanding Quality Measures Under the 

ESRD QIP for PY 2015 and Subsequent 

PYs 

1. Value-Based Purchasing (VBP) 

Overview 

Throughout the past decade, Medicare 

has been transitioning from a program 

that pays for healthcare based solely on 

the number of services furnished to a 

beneficiary to a program that ties 

payments to providers and suppliers to 

the quality of care of the services they 

deliver. By paying for the quality of 

care, rather than merely the quantity of 

care, we believe we are strengthening 

the healthcare system while also 

advancing the National Quality Strategy 

and the three part aim which promote 

(i) better care for the individual thereby 

(ii) advancing the health of the entire 

population while also (iii) reducing 

costs. CMS specifies the domains and 

specific measures of quality for our VBP 

programs and we are working to link the 

aims of the National Quality Strategy 

with our payment policies on a national 

scale. 

There are currently six domains of 

measurement for our VBP programs, 

based on the six priorities of the 

National Quality Strategy: (i) Care 

coordination; (ii) population/ 

community health; (iii) efficiency and 

cost reduction; (iv) safety; (v) patientand caregiver-centered experience and 

outcomes; and (vi) clinical care. 

Together these domains not only 

encourage better care at the facility 

level, but also encourage different care 

settings to interface to comprehensively 

improve healthcare overall. Although 

currently none of the VBP programs 

measure quality across all of the six 

domains, we are working to ensure that 

each program considers measures 

supporting the six national priorities 

where feasible. Furthermore, we are 

working in partnership with facilities, 

beneficiaries, the National Quality 

Forum (NQF), the Measures Application 

Partnership, sister agencies in the 

Department of Health and Human 

Services (HHS), and other stakeholders 

to develop new measures where gaps 

exist, refine measures requiring 

adjustment, and remove measures when 

appropriate. We are also working with 

stakeholders to ensure that the ESRD 

QIP serves the needs of our beneficiaries 

and also advances the goals of the 

National Quality Strategy. 

We believe that the development of an 

ESRD QIP that is successful in 

promoting the delivery of high quality 

healthcare services in dialysis facilities 

is paramount. We seek to adopt 

measures for the ESRD QIP that promote 

high-quality, safer, and more efficient 

care. In addition to the priorities of the 

National Quality Strategy, our measure 

development and selection activities for 

the ESRD QIP take into account other 

national priorities, such as those 

established by the National Priorities 

Partnership (http://www.qualityforum.

org/npp/), HHS Strategic Plan (http://

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

priorities.html), the National Strategy 

for Quality Improvement in Healthcare 

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

reports/quality03212011a.html), and the 

HHS National Action Plan to Prevent 

Healthcare Associated Infections (HAIs) 

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

esrd.html). To the extent practicable, we 

have sought to adopt measures that have 

been endorsed by a national consensus 

organization, recommended by multistakeholder organizations, and 

developed with the input of facilities, 

purchasers/payers, beneficiaries, and 

other stakeholders. 

2. Brief Overview of Proposals 

For PY 2014, we adopted measures for 

the ESRD QIP that fall under three of the 

six VBP measure priority domains based 

on the National Quality Strategy: 

• Safety: National Healthcare Safety 

Network (NHSN) Dialysis Event 

reporting; 

• Patient- and caregiver-centered 

experience: In-Center Hemodialysis 

Consumer Assessment of Healthcare 

Providers and Systems (ICH CAHPS) 

survey reporting; and 

• Clinical quality of care: (i) 

Hemoglobin Greater Than 12 g/dL; (ii) 

Hemodialysis Adequacy (Urea 

Reduction Ratio (URR)); (iii) Vascular 


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Access Type; (iv) and Mineral 

Metabolism reporting (76 FR 70228). 

For PY 2014, we also proposed to 

change the requirements for the Mineral 

Metabolism reporting measure. 

For PY 2015, we proposed to add new 

measures in the clinical quality of care 

domain and to expand the scope of the 

NHSN Dialysis Event reporting measure 

(safety domain) and the Mineral 

Metabolism reporting measure (clinical 

quality of care domain). We believe that 

the PY 2015 ESRD QIP should not only 

promote the health of ESRD patients, 

but also uphold the goals of the National 

Quality Strategy (NQS). To that end, we 

proposed to include 11 measures in the 

PY 2015 ESRD QIP. We also proposed 

to include these measures and measure 

topics in subsequent payment years. 

The proposed measures would evaluate 

facilities on the following topics that fall 

under the NQS clinical quality of care 

measure domain: 

• For purposes of evaluating anemia 

management: 

Æ Hemoglobin Greater Than 12 g/dL, 

a clinical measure. 

Æ Anemia Management, a reporting 

measure.* 

• To evaluate dialysis adequacy: 

Æ A clinical Kt/V measure for adult 

hemodialysis patients.* 

Æ A clinical Kt/V measure for adult 

peritoneal dialysis patients.* 

Æ A clinical Kt/V measure for 

pediatric hemodialysis patients.* 

• To determine whether patients are 

treated using the most beneficial 

type of vascular access: 

Æ An arteriovenous fistula measure. 

Æ A catheter measure. 

• To address effective bone mineral 

metabolism management: 

Æ Hypercalcemia, a clinical 

measure.* 

Æ Mineral Metabolism, a reporting 

measure (expansion proposed). 

Additionally, we proposed to expand 

a previously adopted reporting measure 

addressing safety: 

• NHSN Dialysis Event reporting 

measure. 

We also proposed to continue using a 

previously adopted reporting measure 

assessing patient- and caregivercentered experience: 

• ICH CAHPS survey reporting 

measure. 

*Indicates that the measure is new to 

the ESRD QIP. 

Although we did not propose to adopt 

measures that address care 

coordination, population/community 

health, or efficiency and cost of care, we 

solicited comments in the proposed rule 

on potential measures that would fall 

into each of these areas. We discussed 

the following measures that are under 

consideration for possible adoption in 

subsequent payment years: a 30-Day 

Hospital Readmission measure to 

address care coordination; an access to 

care measure to address population/ 

community health; and an efficiency 

measure. We also discussed the 

Standardized Hospitalization Ratio 

Admissions (SHR) measure and the 

Standardized Mortality Ratio (SMR) 

measure that we are considering for 

program adoption in future years. We 

welcomed, and continue to welcome, 

further comments on these and other 

potential measures for future payment 

years. 

3. Measures Application Partnership 

Review 

In addition to the considerations 

discussed above, in selecting measures 

for the PY 2015 ESRD QIP, we 

considered input from the multistakeholder group, the Measures 

Application Partnership (http://www.

qualityforum.org.map/). Section 

1890A(a)(1) of the Act, as added by 

section 3014(b) of the Affordable Care 

Act, requires the entity with a contract 

under section 1890(a) of the Act, 

currently NQF, to convene multistakeholder groups to provide input to 

the Secretary on the selection of quality 

and efficiency measures for use in 

certain programs. Section 1890A(a)(2) of 

the Act requires the Secretary, not later 

than December 1 of each year, to make 

available to the public a list of quality 

and efficiency measures that are under 

consideration for use in certain 

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

Act requires the entity with a contract 

under section 1890(a) of the Act to 

transmit the input of the multistakeholder groups to the Secretary not 

later than February 1 of each year, 

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

of the Act requires the Secretary to take 

into consideration the input of the 

multi-stakeholder groups in selecting 

quality and efficiency measures. The 

Measures Application Partnership is the 

public-private partnership comprised of 

multi-stakeholder groups convened by 

NQF for the primary purpose of 

providing input on measures as required 

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

Act. The Measures Application 

Partnership’s input on the quality and 

efficiency measures under consideration 

for adoption in CY 2012 was transmitted 

to the Secretary on February 1, 2012 and 

is available at (http://www.qualityforum.

org/WorkArea/linkit.aspx?Link

Identifier=id&ItemID=69885). As 

required by section 1890A(a)(4) of the 

Act, we considered these 

recommendations in selecting quality 

and efficiency measures for the ESRD 

QIP. 

Four proposed measures for the PY 

2015 ESRD QIP (that is, three for 

dialysis adequacy and one for 

hypercalcemia) were made publicly 

available in accordance with section 

1890A(a)(2) of the Act and were 

reviewed by the Measures Application 

Partnership. The Measures Application 

Partnership gave support to two of the 

proposed measures, NQF #1454: 

Proportion of patients with 

hypercalcemia and NQF #1423: 

Minimum spKt/V for Pediatric 

Hemodialysis Patients. The Measures 

Application Partnership supported the 

direction of a proposed composite 

measure comprised of two NQFendorsed measures, NQF #0249: 

Hemodialysis Adequacy Clinical 

Performance Measure III: Hemodialysis 

Adequacy—HD Adequacy—Minimum 

Delivered Hemodialysis Dose and NQF 

#0318: Peritoneal Dialysis Adequacy 

Clinical Performance Measure III— 

Delivered Dose of Peritoneal Dialysis 

Above Minimum. The Measures 

Application Partnership recommended 

that the composite measure comprised 

of the two NQF dialysis adequacy 

measures be tested to ensure feasibility. 

We took these comments into 

consideration when we proposed 

measures for the PY 2015 ESRD QIP. 

4. PY 2014 Mineral Metabolism Measure 

In the CY 2012 ESRD PPS final rule, 

we adopted the Mineral Metabolism 

reporting measure for the PY 2014 ESRD 

QIP which requires each facility to attest 

that it monitored serum calcium and 

serum phosphorus at least once a month 

for each Medicare ESRD patient (76 FR 

70271). We have since realized, 

however, that it may be difficult for 

some facilities to make this attestation 

if, for example, a patient is seen at the 

beginning of the month, his or her blood 

is not drawn, and then he or she is 

hospitalized or transient for the 

remainder of the month. While it is our 

intention to encourage facilities to put 

systems and processes into place to 

ensure at least monthly serum calcium 

and phosphorus monitoring, we believe 

it is reasonable to give consideration to 

situations where the monthly blood 

draw does not happen within the 

dialysis facility given these scenarios. 

Therefore, for PY 2014, we proposed to 

change the Mineral Metabolism 

reporting requirement. 

We considered proposing to require 

facilities to report the required 

information for less than 100 percent of 

their patients. There are circumstances, 

however, that are beyond a facility’s 

control wherein it may not be able to 


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draw a sample for this patient. 

Therefore, for purposes of scoring the 

measure, we proposed to modify the PY 

2014 measure to require that, in order 

for a facility to receive 10 points on the 

PY 2014 Mineral Metabolism measure, 

it must attest that it monitored on a 

monthly basis the serum calcium and 

serum phosphorus levels for every 

Medicare ESRD patient provided that: 

(i) The patient is alive for the entirety 

of the applicable month; (ii) if the 

patient is treated in-center, that patient 

was treated at that facility at least twice 

during the claim month; and (iii) if the 

patient receives dialysis at home, a 

facility must report this information 

regardless of the number of treatments, 

provided that a claim is submitted for 

that patient. We also proposed that if a 

patient is hospitalized or transient 

during a claim month, the facility could 

monitor the serum calcium and serum 

phosphorus readings for that patient for 

the month if a patient has labs drawn by 

another provider/facility, those labs are 

evaluated by an accredited laboratory (a 

laboratory that is accredited by, for 

example, Joint Commission, College of 

American Pathologists, AAB (American 

Association of Bioanalysts), or State or 

Federal agency), and the dialysis facility 

reviews the serum calcium and serum 

phosphorus readings. We stated our 

belief that these proposals will provide 

more flexibility for facilities and will 

also prevent facilities from drawing 

blood, even when not necessary, each 

time a patient visits for fear that he or 

she will fail to come to the facility again 

during that month. We requested 

comment on this proposal. 

We also requested comment on our 

consideration to lower the attestation to 

monthly monitoring of 98 percent of 

Medicare ESRD patients. We chose 98 

percent in order to encourage 

improvement, and to ensure that we do 

not undermine the current level of highreporting (based on the CROWNWeb 

pilot data). We recognize that 100 

percent might not be appropriate due to 

some individual cases that may not fit 

specified criteria. 

Additionally, for purposes of 

clarification, we noted that the PY 2014 

attestations for both the Mineral 

Metabolism and ICH CAHPS measures 

will become available in CROWNWeb in 

December 2012. As noted in the CY 

2012 ESRD PPS final rule, these 

attestations must be made before 

January 31, 2013 (76 FR 70269, 70271). 

We received the following comments 

on these proposals: 

Comment: Many commenters were 

appreciative of our willingness to revisit 

our requirements for the PY 2014 

Mineral Metabolism attestation. Some 

commenters suggested that we modify 

the exclusion to include the following 

patients: (i) Beneficiaries who are 

regularly treated at the facility and who 

fit into one of these categories: (a) 

Beneficiaries who die within the 

applicable month; (b) beneficiaries that 

receive fewer than 7 treatments in a 

month; and (c) beneficiaries receiving 

home dialysis therapy who miss their 

in-center appointments when there is a 

documented, good faith effort to have 

them participate in such a visit during 

the applicable month; (ii) transient 

dialysis patients; (iii) pediatric patients 

(unless the measure is specific to this 

population); and (iv) kidney transplant 

recipients with a functioning graft. 

Commenters stated that these exclusions 

are consistent with our own measures, 

CROWNWeb, and the URR reporting 

specifications; additionally, these 

exclusions seek to hold facilities 

accountable only for those beneficiaries 

to whom they regularly give care and for 

whose care they can affect. One 

commenter believed that home dialysis 

patients should only be included if they 

attend their monthly visit. One 

commenter requested that we use NQF 

inclusion criteria for purposes of 

defining the exclusions of the Mineral 

Metabolism reporting measure. 

Response: Upon further review, we 

agree with commenters who believe that 

the exclusions should be modified. We 

recognize that treating a patient twice 

may not provide enough time to 

effectuate quality patient care. We agree 

with the commenters who suggested 

that an in-center hemodialysis patient 

should be excluded if treated by a 

facility fewer than seven times during 

the month, regardless of whether the 

patient is officially admitted to that 

facility. With seven treatments, we 

believe that a facility should have had 

adequate opportunities to draw blood 

necessary to measure serum calcium 

and phosphorus levels. We also believe 

that the threshold of seven will 

discourage unnecessary testing of incenter hemodialysis patients by 

facilities because they will know that, 

since in-center patients are typically 

treated three times per week, a patient 

must have been treated by the facility 

for at least two weeks to be included; 

thus, the facility need not feel pressure 

to draw blood for every in-center patient 

during the first few visits of the month. 

Based on these considerations, we will 

not finalize our proposal to exclude 

only in-center patients who have been 

treated fewer than two times by the 

facility during the claim month. Instead, 

we will exclude any patient who is 

treated by the facility fewer than seven 

times during the reporting month. 

We do not believe that it is necessary 

to specifically exclude transient patients 

from this measure because, as noted, 

any patient that is treated by the facility 

at least seven times during the 

applicable reporting month is present at 

the facility for enough time that the 

facility should be held accountable for 

that patient. Likewise, for the same 

reasons mentioned above, we do not 

believe we need to separately exclude 

patients who are deceased at the end of 

the reporting month. Provided that the 

patient is treated by the facility at least 

seven times during that month, the 

facility should be able to draw blood 

necessary to monitor serum calcium and 

serum phosphorus levels even if the 

patient is deceased at the end of the 

month. 

We continue to believe that facilities 

should be required to attest that they 

monitored the serum calcium and 

phosphorus levels of home dialysis 

patients irrespective of whether those 

patients attend a monthly appointment. 

We believe that it is incumbent upon a 

facility to make home dialysis patients 

aware that they must attend monthly 

appointments to be properly treated. In 

addition, since the mechanisms that 

cause cardiovascular and bone disease 

do not differ between home and incenter hemodialysis patients, we believe 

that the inclusion of home dialysis 

patients in the Mineral Metabolism 

reporting measure is appropriate. 

Therefore we will finalize our proposal 

that we will include any home 

hemodialysis patient for which a facility 

submits a claim with respect to the 

reporting month in this measure. 

We also believe it is important to 

include transplant patients until they 

are officially discharged from a facility; 

regular monitoring can help ensure that 

a transplant remains effective and that 

the facility is continuing to provide the 

best care possible. 

We believe it is important to monitor 

serum calcium and serum phosphorus 

levels in adult and pediatric patients 

alike because improper bone mineral 

metabolism management can lead to 

serious, negative outcomes, including 

death, in both populations. Although we 

are aware that specific target values for 

calcium and phosphorus have not been 

set for the pediatric population, we still 

believe that this measure will lead to 

better observation of mineral 

metabolism in these patients if one or 

both of these values are unusually high 

or low. Additionally, we believe that the 

inclusion of pediatric patients in this 

measure is consistent with current 

guidelines on the frequency of mineral 


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1We note that the reporting requirements are 

somewhat different for CROWNWeb. All patients 

must be reported for CROWNWeb purposes, even 

if those patients would not be included in the 

measure for purposes of the ESRD QIP. 

metabolism testing as reported in 

KDIGO guidelines chapter 3 ‘‘Diagnosis 

of CKD–MBD: biochemical 

abnormalities.’’ Thus, we believe that 

this measure is appropriate for both 

adult and pediatric patients. 

Finally, we do not believe that we 

must use NQF inclusion criteria for this 

measure. Although we seek to align our 

measures and our selection criteria with 

NQF as much as possible, as we stated 

in the CY 2011 ESRD PPS Final Rule, 

we believe it is appropriate, at this time 

to employ a measure that has not been 

NQF-endorsed (76 FR 70271 through 

72). 

For the reasons stated above, we are 

finalizing that to earn 10 points on the 

Mineral Metabolism reporting measure, 

facilities must attest in CROWNWeb 

that they have monitored the serum 

calcium and serum phosphorus levels 

on a monthly basis for (i) in-center 

Medicare patients who have been 

treated at least seven times by the 

facility; and (ii) home hemodialysis 

Medicare patients for whom the facility 

submits a claim. 

Comment: Several commenters 

encouraged us to not adopt a percentage 

reporting threshold because it does not 

distinguish between beneficiaries 

legitimately excluded and those that 

were merely missed. Other commenters 

requested that we use both exclusions 

and a threshold, recognizing that there 

are some circumstances preventing 

blood draws that facilities cannot 

control; one commenter suggested a 

threshold of 90 percent or an allowance 

of two patients to ensure that small 

facilities are not disproportionally 

affected. Another commenter 

recommended that we use a threshold of 

95 percent. Another commenter stated 

that requiring 98 percent reporting may 

make it difficult for patients to travel 

because dialysis facilities may 

encourage them otherwise to ensure 

compliance with the measure. 

Response: We agree with the 

commenters who argued that, even with 

exclusions, there are circumstances in 

which facilities cannot attest to 

monitoring the serum calcium and 

serum phosphorus levels for every 

patient at least once per month. For 

example, a facility may wait until later 

to draw blood from a patient because it 

believes that patient will be treated by 

the facility for the entirety of the month, 

but learns that the patient has been 

hospitalized unexpectedly for all or part 

of the applicable month. Therefore, we 

believe that we should not require an 

attestation of 100 percent monitoring. 

Based on data from the CROWNWeb 

pilot, we believe that facilities report 

serum calcium and serum phosphorus 

levels for approximately 96 percent of 

their patients. Therefore, we will 

finalize that facilities must attest to 

monitoring calcium and phosphorus on 

a monthly basis for at least 96 percent, 

in total, of (i) in-center Medicare 

patients who have been treated at least 

seven times by the facility; and (ii) 

home hemodialysis Medicare patients 

for whom the facility submits a claim.1

We are concerned that small facilities 

may be disproportionately impacted by 

this 96 percent reporting threshold 

because, for example, a facility with 10 

patients could miss monitoring for only 

one patient and fail to meet the 

threshold. We have previously stated 

that, to disincentivize cherry picking, 

we seek to ensure that one patient does 

not skew a facility’s score. We do, 

however, seek to ensure the highest 

quality of care regardless of the facility 

size. Taking these two competing 

interests into consideration, we believe 

that it is appropriate to allow facilities 

that treat less than 11 Medicare patients 

during the performance period to attest 

that they have met the requirements for 

this measure if they monitored the 

serum calcium and serum phosphorus 

levels on a monthly basis for at least all 

but one of its (i) in-center Medicare 

patients who have been treated at least 

seven times by the facility; and (ii) 

home hemodialysis Medicare patients 

for whom the facility submits a claim. 

We believe 11 is the appropriate cut-off 

because, as we explain below, a case 

minimum of 11 allows us to include as 

many facilities as possible while also 

taking into account privacy and 

reliability. We believe that one is the 

appropriate number because, as noted 

above, although we seek to ensure the 

highest quality of care regardless of 

facility size, we also seek to mitigate 

cherry-picking by ensuring that one 

patient does not skew a facility’s score. 

Comment: Many commenters noted 

that it is impractical for facilities to 

obtain labs from other providers because 

other providers are not required to 

measure these data, do not share data 

with dialysis facilities, and, even if 

facilities could obtain these data, they 

could not be sure that the labs were 

consistent or reported under the same 

standards. 

Response: We recognize that it may be 

difficult for facilities to coordinate with 

hospitals and other care providers in 

order to obtain lab values. Accordingly, 

we are not mandating facilities to do so. 

In the proposed rule (77 FR 40969), we 

stated that facilities may obtain lab 

values from other providers. This 

proposal was specifically designed to 

afford facilities more flexibility in 

acquiring serum calcium and 

phosphorus values. Facilities are highly 

encouraged to coordinate with other 

providers, but this measure does not 

mandate them to do so. We believe that 

the commenters’ concerns about 

inconsistent lab data are mitigated by 

the requirement that the lab must be 

accredited. Facilities can use these 

values for the purpose of monitoring the 

serum calcium and phosphorus levels of 

their patients; additionally, collecting 

these data may encourage providers to 

engage one another about the patient’s 

conditions and care. 

Comment: Several commenters asked 

for clarification on the following points: 

(1) Are only Medicare patients included 

in the denominator, (2) are Medicare 

Railroad and Medicare Advantage (MA) 

patients included in the denominator, 

(3) could CMS give an example of an 

accurate application of the exclusions 

and/or threshold, (4) if CMS institutes a 

threshold, would it be rounded, (5) if a 

patient is excluded from the measure for 

attestation purposes, must his or her 

values still be reported in CROWNWeb, 

and (6) how does CMS plan on counting 

the number of treatments for home 

patients. 

Response: We will address these 

questions in turn. 

First, a facility treating at least 11 

Medicare patients during the 

performance period is required to 

monitor serum calcium and serum 

phosphorus on a monthly basis for all 

(i) in-center Medicare patients who have 

been treated at least seven times by the 

facility; and (ii) home hemodialysis 

Medicare patients for whom the facility 

submits a claim. These patients include 

Medicare Advantage and Medicare 

Railroad beneficiaries. 

As an example of the application of 

the exclusions and threshold, assume 

the following: (i) A facility treats 30 

Medicare patients in month X; (ii) 

patient A is an in-center hemodialysis 

patient who was treated by the facility 

seven times during the first two weeks 

of month X, but the facility failed to 

obtain a blood draw during this period, 

and the patient is in the hospital for the 

next two weeks of month X but the 

facility monitors the patient’s serum 

phosphorus and calcium by obtaining 

these values from the hospital; (iii) 

patient B and C are both in-center 

hemodialysis patients who were treated 

by the facility at least seven times 

during month X, but the facility fails to 

monitor the serum calcium and serum 

phosphorus of these patients during 


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2Note that, for ease, we provided an example for 

only one month. However, to make the attestation, 

a facility must monitor for the duration of the 

performance period the serum calcium and serum 

phosphorus levels on a monthly basis for all (i) incenter Medicare patients who have been treated at 

least seven times by the facility; and (ii) home 

hemodialysis Medicare patients for whom the 

facility submits a claim. 

month X; (iv) patient D was visiting the 

facility and was treated by the facility 

only 4 times during month X; and (v) 

the facility monitors the serum calcium 

and serum phosphorus on a monthly 

basis for every other (i) in-center 

Medicare patient who had been treated 

at least seven times by the facility 

during month X; and (ii) home 

hemodialysis Medicare patient for 

whom the facility submitted a claim 

during month X. The facility is 

considered to have monitored the serum 

calcium and serum phosphorus during 

month X for every patient except B and 

C because patient D was only treated 

four times during the month and the 

facility obtained the values for patient A 

from another provider. The facility’s 

monitoring rate for month X is 27/29, or 

93.1 percent (rounded to 93 percent). A 

facility with 30 patients must attest that 

it monitored on a monthly basis the 

serum calcium and serum phosphorus 

for all (i) in-center Medicare patients 

who have been treated at least seven 

times by the facility; and (ii) home 

hemodialysis Medicare patients for 

whom the facility submits a claim. 

Therefore, this facility could not attest 

that it successfully monitored the serum 

calcium and serum phosphorus in total 

for at least 96 percent of its (i) in-center 

Medicare patients who had been treated 

at least 7 times by the facility; and (ii) 

home hemodialysis Medicare patients 

for whom the facility submitted a 

claim.2 For purposes of this measure, 

facilities may round up to a whole 

percentage point when calculating 

whether they met the 96 percent 

threshold. 

Finally, for the reasons discussed 

above, facilities will be required to 

monitor the serum calcium and serum 

phosphorus at least once per month for 

every home hemodialysis patient for 

whom it submits a claim regardless of 

the number of treatments during that 

month. 

Comment: Many commenters 

requested that we revisit various aspects 

of the PY 2014 ESRD QIP. 

Response: The PY 2014 ESRD QIP 

was finalized on November 1, 2011 (76 

FR 70228). Although we requested 

comment regarding the PY 2014 Mineral 

Metabolism reporting measure in the 

proposed rule, we did not propose to 

reconsider any other elements of the PY 

2014 program. Therefore, we consider 

these comments to be outside the scope 

of the proposed rule. We refer readers to 

the 2012 ESRD PPS final rule for more 

information on the finalized PY 2014 

ESRD QIP (76 FR 70228). 

For the reasons stated above, we 

finalize that a facility treating at least 11 

Medicare patients during the 

performance period can attest to 

meeting the requirements of the PY 

2014 Mineral Metabolism reporting 

measure if it monitors on a monthly 

basis the serum calcium and serum 

phosphorus for at least 96 percent in 

total of all (i) in-center Medicare 

patients who have been treated at least 

seven times by the facility; and (ii) 

home hemodialysis Medicare patients 

for whom the facility submits a claim. 

We also finalize that a facility treating 

fewer than 11 Medicare patients during 

the performance period can attest to 

meeting the requirements of the PY 

2014 Mineral Metabolism reporting 

measure if it monitors on a monthly 

basis the serum calcium and serum 

phosphorus levels for at least all but one 

of its (i) in-center Medicare patients 

who have been treated at least seven 

times by the facility; and (ii) home 

hemodialysis Medicare patients for 

whom the facility submits a claim. 

D. Proposed Measures for the PY 2015 

ESRD QIP and Subsequent PYs of the 

ESRD QIP 

Similar to our other quality reporting 

and pay for performance programs, we 

proposed that once a quality measure is 

selected and finalized for the ESRD QIP 

through rulemaking, the measure would 

continue to remain part of the program 

for all future years, unless we remove or 

replace it through rulemaking or 

notification (if the measure raises 

potential safety concerns). We believe 

that this will streamline the rulemaking 

process, provide continuity of quality 

measurement, and allow ESRD facilities 

to plan both quality reporting and 

quality improvement activities. In 

general, we anticipate considering 

quality measures for removal or 

replacement if: (1) Measure performance 

among the majority of ESRD facilities is 

so high and unvarying that meaningful 

distinctions in improvements or 

performance can no longer be made; (2) 

performance or improvement on a 

measure does not result in better or the 

intended patient outcomes; (3) a 

measure no longer aligns with current 

clinical guidelines or practice; (4) a 

more broadly applicable (across settings, 

populations, or conditions) measure for 

the topic becomes available; (5) a 

measure that is more proximal in time 

to desired patient outcomes for the 

particular topic becomes available; (6) a 

measure that is more strongly associated 

with desired patient outcomes for the 

particular topic becomes available; or 

(7) collection or public reporting of a 

measure leads to negative unintended 

consequences. If there is reason to 

believe that a measure raises potential 

safety concerns, we proposed that we 

would take immediate action to remove 

the measure from the ESRD QIP and not 

wait for the annual rulemaking cycle. 

We proposed that such measures would 

be promptly removed from the measure 

set, and we would confirm the removal 

in the next ESRD QIP rulemaking cycle. 

ESRD facilities and the public would be 

immediately notified of our decision to 

remove a measure that raises potential 

safety concerns through the usual ESRD 

program communication channels, 

including memos, email notification, 

and web postings. 

Many of the quality measures used in 

different Medicare and Medicaid 

reporting programs are endorsed by 

NQF. As part of its regular maintenance 

process for endorsed performance 

measures, the NQF requires measure 

stewards to submit annual measure 

maintenance updates and undergo 

maintenance of endorsement review 

every 3 years. Under the measure 

maintenance process, the measure 

steward (owner/developer) is 

responsible for updating and 

maintaining the currency and relevance 

of the measure and confirming 

specification changes to NQF on an 

annual basis. NQF solicits information 

from measure stewards for annual 

reviews in order to review measures for 

continued endorsement in a specific 3- 

year cycle. Non-NQF-endorsed 

measures may also go through similar 

maintenance by their measure stewards; 

such maintenance includes reviewing 

and updating measures. 

Through the measure maintenance 

process, measures are sometimes 

updated to incorporate changes that we 

believe do not substantially change the 

nature of the measures. Examples could 

be changes to exclusions to the patient 

population, changes to definitions, or 

extension of the measure endorsement 

to apply to other settings. We believe 

these types of maintenance changes are 

distinct from more substantive changes 

to measures that result in what are 

considered new or different measures, 

and that they do not trigger the same 

agency obligations under the 

Administrative Procedure Act. 

We proposed that if a measure that we 

have adopted for the ESRD QIP is 

updated in a manner that we consider 

to not substantially change the nature of 

the measure, we would use a 


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subregulatory process to incorporate 

those updates to the measure 

specifications that apply to the program. 

Specifically, we would revise our 

previously adopted measure 

specifications to clearly identify the 

updates made by the NQF or other 

measure steward and either post the 

updates directly on the CMS Web site or 

provide links to where the updates can 

be found. We would also provide 

sufficient lead time for facilities to 

implement the changes where changes 

to the data collection systems would be 

necessary. 

We proposed to continue to use the 

rulemaking process to adopt changes to 

a measure that we consider to 

substantially change the nature of the 

measure. We stated our belief that this 

proposal adequately balances our need 

to incorporate updates to ESRD QIP 

measures in the most expeditious 

manner possible, while preserving the 

public’s ability to comment on updates 

that so fundamentally change an 

endorsed measure that it is no longer 

the same measure that we originally 

adopted. We invited public comment on 

this proposal and on our proposal that 

once a quality measure is adopted, it is 

retained for use in the subsequent ESRD 

QIP payment years unless we remove or 

replace it as discussed above. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Commenters requested 

clarification regarding the removal or 

replacement criteria for measures, 

specifically the criteria listed in (2) and 

(5) and the process for removal or 

replacement. Commenters suggested 

that CMS provide illustrative scenarios 

and consider convening an emergency 

technical expert panel (TEP) to identify 

and analyze removal or replacement 

issues. Commenters also encouraged us 

to add two criteria for removal or 

replacement: (i) Negative unintended 

consequences to the Medicare ESRD 

system as a whole; and (ii) if data for a 

measure cannot be collected reliably 

and accurately or if collecting the data 

places an undue burden on facilities. 

One commenter asked that CMS confirm 

that we will use rulemaking to retire or 

remove measures from the ESRD QIP. 

Finally, the commenters stated that 

some of the measures proposed meet the 

replacement and removal criteria and 

suggested that CMS implement only 

new measures that meet the proposed 

criteria. 

Response: We thank those 

commenters who provided suggestions 

regarding the criteria and process for 

measure replacement or removal from 

the ESRD QIP. We concur with those 

commenters who argue in favor of 

implementing measures that meet the 

proposed criteria. We do not believe 

that an emergency technical expert 

panel (TEP) is an appropriate part of the 

removal process, as we typically 

convene TEPs in order to obtain expert 

stakeholder input as part of the measure 

development process. These TEPs are 

convened as needed during the measure 

maintenance cycle and can provide any 

necessary comment regarding the 

clinical appropriateness of implemented 

measures. Emergency TEPs would also 

be difficult and expensive to employ 

quickly, such as in response to public 

comments in support of measure 

removal. We will consider the inclusion 

of additional removal criteria such as 

those suggested by commenters through 

future rulemaking, but will finalize the 

proposed criteria to remain consistent 

with similar criteria implemented for 

other quality reporting and pay-forperformance programs, such as the 

Hospital Inpatient Quality Reporting 

Program and Hospital Outpatient 

Quality Reporting Program. The second 

criterion we proposed, the availability 

of alternative measures with a stronger 

relationship to patient outcomes, is 

intended to allow us to implement new 

measures in the ESRD QIP that have a 

stronger association with relevant health 

outcomes. Such measures may better 

assess the quality of care provided by 

dialysis facilities and in such cases, we 

believe it would be appropriate to 

reflect this in the ESRD QIP. Our use of 

the fifth criterion is consistent with this 

principal, and would be applied in 

those circumstances where we believe 

existing measures are not as temporally 

proximal to health outcomes of interest 

as are newly available measures. We 

believe that in such cases, it would be 

appropriate to remove these measures, 

rather than simply increase the volume 

of quality measures for which dialysis 

facilities are responsible under the 

ESRD QIP. 

Except for measures that raise 

potential safety concerns, any decisions 

to remove or replace measures under the 

ESRD QIP will be made through the 

rulemaking process. Each year, we will 

assess whether any measures should be 

removed or replaced under the ESRD 

QIP, and we will make appropriate 

proposals during the rulemaking cycle. 

Stakeholders will then have the 

opportunity to provide feedback 

regarding the proposed removal or 

replacement of these measures, and the 

rationale behind our proposals. Any 

measure removal will then be finalized 

as part of the ESRD PPS final rule. 

We take the suggestion that we 

implement only new measures that meet 

the proposed criteria to mean that we 

should implement only measures that 

do not meet the proposed removal 

criteria. We recognize the potential 

value in taking these criteria into 

consideration for measure 

implementation, and believe we do so to 

the extent practicable. However, we 

believe that we must take into 

consideration additional criteria, such 

as statutory requirements governing the 

ESRD QIP and emergent public health 

and safety issues, when determining 

what measures to propose and finalize 

for the program. In some cases, it is 

possible that these issues will take 

precedence over the criteria proposed 

for measure removal. 

Comment: Several commenters urged 

us to adopt measure specifications and 

data definitions that are clear, 

modifying this information through 

rulemaking alone. Commenters argued 

that it is only appropriate to use subregulatory processes to aid facilities in 

interpreting the specifications and 

definitions, and suggested that we 

develop a regular and transparent 

process for collecting and responding to 

these questions, ideally on a quarterly 

basis with a schedule set forth in rules. 

Response: We thank those 

commenters who provided feedback to 

our proposal to update NQF-endorsed 

measures using a subregulatory process. 

We concur that measure specifications 

and data definitions should be clear. 

However, we believe that using a 

subregulatory process to make certain 

types of updates to measures is 

appropriate. The NQF regularly 

maintains its endorsed measures 

through annual and triennial reviews, 

which may result in the NQF making 

updates to the measures. We believe 

that it is important to have in place a 

subregulatory process to incorporate 

non-substantive updates made by the 

NQF to the measure specifications we 

have adopted for the ESRD QIP so that 

these measures remain up-to-date and 

clinically relevant. We also recognize 

that some changes the NQF might make 

to its endorsed measures are substantive 

in nature and might not be appropriate 

for adoption using a subregulatory 

process. Therefore, we are finalizing a 

policy under which we will use a 

subregulatory process to make nonsubstantive updates to NQF-endorsed 

measures used for the ESRD QIP. With 

respect to what constitutes substantive 

versus non-substantive changes, we 

expect to make this determination on a 

case-by-case basis. Examples of nonsubstantive changes might include 

updated diagnosis or procedure codes, 

medication updates for categories of 

medications, broadening of age ranges, 


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and exclusions for a measure (such as 

the addition of a hospice exclusion to 

the 30-day mortality measures used in 

the Hospital IQR Program). We believe 

that non-substantive changes may 

include updates to NQF-endorsed 

measures based upon changes to 

guidelines upon which the measures are 

based. 

We will continue to use rulemaking to 

adopt substantive updates made by the 

NQF to the endorsed measures we have 

adopted for the ESRD QIP. Examples of 

changes that we might consider to be 

substantive would be those in which the 

changes are so significant that the 

measure is no longer the same measure, 

or when a standard of performance 

assessed by a measure becomes more 

stringent (for example, changes in the 

acceptable timing of medication, 

procedure/process, or test 

administration). Another example of a 

substantive change would be where the 

NQF has extended its endorsement of a 

previously endorsed measure to a new 

setting, such as extending a measure 

from the inpatient setting to hospice. 

These policies regarding what is 

considered substantive versus nonsubstantive would apply to all ESRD 

QIP measures. We also note that the 

NQF process incorporates an 

opportunity for public comment and 

engagement in the measure maintenance 

process. 

We aim to be as transparent as 

possible in implementing the ESRD QIP. 

Occasionally, questions arise related to 

measures that have been adopted. We 

plan to publish these questions and 

answers on a publicly available Web 

site. We will consider standardizing a 

timeline for submission of and answers 

to these questions as the program 

evolves. 

For the reasons discussed above, we 

are finalizing our proposal regarding 

continued use of measures in the ESRD 

QIP unless we remove or replace them. 

We are also adopting a policy under 

which we will use a subregulatory 

process to make non-substantive 

updates to measures, and will use the 

rulemaking process to make substantive 

updates to measures. 

1. PY 2014 Measures Continuing for PY 

2015 and Subsequent PYs 

We previously finalized six measures 

including one measure with two 

measure sub-components (see Table 2 

below) for the PY 2014 ESRD QIP (76 FR 

70228). We proposed to continue to use 

five of these measures for the PY 2015 

ESRD QIP; however, we also proposed 

to augment two (NHSN Dialysis Event 

reporting and Mineral Metabolism 

reporting) of these five measures used in 

PY 2014 to continue to promote 

improvement in the PY 2015 ESRD QIP. 

We proposed to remove the PY 2014 

URR Dialysis Adequacy measure. In 

addition, we proposed to add three new 

measures of dialysis adequacy, an 

anemia management reporting measure, 

and a hypercalcemia clinical measure 

(Table 3). 

TABLE 2—MEASURES ADOPTED FOR THE PY 2014 ESRD QIP 

NQF No. Measure title 

N/A ....................................... Percent of Patients with Hemoglobin Greater Than 12 g/dL* 

N/A ....................................... URR Hemodialysis Adequacy 

N/A for composite measure Vascular Access Type ........ Hemodialysis Vascular Access-Maximizing Placement of Arterial Venous Fistula 

(AVF)* (NQF#0257). 

Hemodialysis Vascular Access-Minimizing use of Catheters as Chronic Dialysis 

Access* (NQF#0256). 

N/A1 ...................................... NHSN Dialysis Event Reporting*+

Enroll and report 3 months of dialysis event data. 

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

Facilities are required to attest that they administered the ICH CAHPS survey via a 

third party during the performance period. 

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

Facilities are required to attest that they have monitored each of their Medicare patient’s phosphorus and calcium levels monthly throughout the performance period.*+

1We note that an NQF-endorsed bloodstream infection measure (NQF#1460) exists, and data for this measure is collected as part of dialysis 

event reporting in NHSN. It is our intention to use this measure in future years of the ESRD QIP. We believe that a reporting measure is a necessary step in reaching our goal to use NQF#1460. 2We note that a related measure utilizing the results of this survey has been NQF-endorsed (#0258), and it is our intention to use this measure in future years of the ESRD QIP. We believe that a reporting measure is a necessary step in reaching our goal to use NQF#0258. 3We note that the NQF has previously endorsed phosphorus and calcium monitoring measures (#0261 and #0255) upon which this measure 

is based. NQF has since withdrawn its endorsement of the calcium measure. 

* Indicates a measure we are proposing for PY 2015 and future years of the ESRD QIP. 

+ Indicates a measure we are proposing to augment for PY 2015 and future years of the ESRD QIP. 

TABLE 3—NEW MEASURES PROPOSED FOR THE ESRD QIP PY 2015 AND FUTURE YEARS OF THE PROGRAM

NQF No. Measure title 

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

0249 ............ Hemodialysis Adequacy Clinical Performance Measure III: Hemodialysis Adequacy—HD Adequacy—Minimum Delivered Hemodialysis Dose. 

0318 ............ Peritoneal Dialysis Adequacy Clinical Performance Measure III—Delivered Dose of Peritoneal Dialysis Above Minimum. 

1423 ............ Minimum spKt/V for Pediatric Hemodialysis Patients. 

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


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We proposed to continue using two 

measures and one measure topic 

adopted in PY 2014 for the PY 2015 

ESRD QIP and subsequent payment 

years of the program. For the reasons 

stated in the CY 2012 ESRD PPS final 

rule (76 FR 70262, 70264 through 65, 

70269), we proposed to continue using: 

(i) The Hemoglobin Greater than 12 g/ 

dL measure; (ii) the Vascular Access 

Type measure topic comprised of two 

measures, (a) the Hemodialysis Vascular 

Access-Maximizing Placement of AVF 

(NQF #0257) measure, and (b) the 

Hemodialysis Vascular AccessMinimizing use of Catheters as Chronic 

Dialysis Access (NQF #0256) measure; 

and (iii) the ICH CAHPS survey 

reporting measure. The technical 

specifications for these measures can be 

found at http://www.dialysisreports.org/ 

pdf/esrd/public-measures/Anemia

Management-HGB-2015-NPRM.pdf; 

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

public-measures/VascularAccessCatheter-2015-NPRM.pdf; http://www.

dialysisreports.org/pdf/esrd/publicmeasures/VascularAccess-Fistula-2015- 

NPRM.pdf; and http://www.dialysis

reports.org/pdf/esrd/public-measures/

ICHCAHPS-2015-NPRM.pdf. We 

requested comment on the proposed 

continuation of these measures. 

The comments we received on these 

proposals and our responses are set 

forth below. We will separately discuss 

each of the measures and the comments 

received on these measures. 

a. Hemoglobin Greater Than 12 g/dL 

Comment: Many commenters strongly 

supported the continuation of this 

measure, specifically because proper 

anemia management can prevent 

patients from developing serious, life 

threatening conditions. Other 

commenters, however, asked that we 

consider removing the measure or 

reducing its weight since high 

hemoglobin and ESA overuse no longer 

pose a realistic concern because of the 

economic incentives of the ESRD PPS 

payment bundle and the new clinical 

evidence and FDA-approved label for 

ESAs (http://www.fda.gov/Drugs/ 

DrugSafety/ucm259639.htm). One 

commenter noted that the TREAT study 

and its own research indicate that large 

ESA doses, rather than high hemoglobin 

levels, result in adverse effects. Finally, 

one commenter believes that the 

Hemoglobin Greater Than 12 g/dL 

measure leads to confusion because 

physicians begin increasing ESA dosage 

only after hemoglobin levels have fallen 

far below 12 g/dL, resulting in an 

increase in patients with low 

hemoglobin levels. The same 

commenter noted that it is difficult to 

incentivize clinics to provide proper 

ESA dosage with the ESRD PPS 

payment bundle and the Hemoglobin 

Greater than 12 g/dL measure combined. 

Finally, one commenter urged us to 

individualize anemia management 

measures. 

Response: We appreciate feedback 

relating to the use of the Hemoglobin 

Greater Than 12 g/dL measure in the 

ESRD QIP. We recognize that changes in 

the incentive structure for ESA therapy 

may have consequences for ESA 

utilization. We feel, however, that 

because of the negative clinical 

outcomes that can result from high 

hemoglobin levels in the ESRD 

population, this measure is still 

important in ensuring that facilities 

provide quality care. 

We also appreciate the need to 

consider dosage and clinical practice 

when ascertaining the potential adverse 

effects of ESA therapy. We have begun 

to develop additional anemia 

management measures that account for 

ESA dose. These measures are focused 

on utilization of ESAs and transfusion 

avoidance to further incentivize proper 

care. We intend to propose to adopt one 

or more of these measures for the ESRD 

QIP in future rulemaking. 

Finally, we agree that it is important 

to individualize care for each 

beneficiary. We believe that the 

Hemoglobin Greater than 12 g/dL 

measure both allows facilities discretion 

to properly manage hemoglobin levels 

in each patient and prevents adverse 

patient outcomes associated with 

hemoglobin levels that are too high. 

However, we recognize that greater 

individualization may be possible and 

are currently working to develop 

additional anemia management 

measures that will enhance this aspect 

of the ESRD QIP. 

Comment: Several commenters 

supported the measure, generally, but 

asked us to make refinements. One 

commenter suggested that we measure 

hemoglobin on a three or 6-month 

rolling basis rather than monthly 

because monthly measurement does not 

provide a comprehensive assessment of 

the care patients are receiving; studies 

show that although hemoglobin levels 

can fluctuate greatly within short 

periods of time, the mean hemoglobin 

level can remain in the measure target 

range. Another commenter stated that, 

as the measure is currently conceived, 

facilities cannot act on its results. 

Because it takes time for hemoglobin 

levels to change, one commenter 

recommended excluding patients who 

have been on ESA therapy for one 

month or less and patients whose ESA 

therapy was promptly discontinued 

once the facility became aware that their 

hemoglobin levels were over 12 g/dL. 

Finally, one commenter noted that 

hemoglobin levels at high altitude 

facilities are more likely to be greater 

than 12 g/dL. 

Response: We thank the commenters 

who made suggestions regarding the 

refinement of the Hemoglobin Greater 

Than 12 g/dL measure. Addressing the 

concern commenters raised with the 

high degree of variability in hemoglobin 

from month to month, the measure rate 

is calculated using the average 

hemoglobin of a patient over 4–12 

months. For example, if a patient is 

treated for 4 months, then we use the 

average of the 4-month period to 

calculate the measure rate. If a patient 

is treated for 5 months, we use the 

average from that 5-month period and so 

on. Relevant to concerns raised about 

the exclusion of patients who have just 

begun ESA therapy, the measure 

currently excludes new patients (less 

than 90 days since ESRD onset), and 

excludes claims for which there is no 

evidence of ESA use. We believe these 

exclusions address the commenters’ 

concerns. Regarding the comment that 

hemoglobin levels at high altitude 

facilities are more likely to reach the 

measure threshold, we do not currently 

employ risk adjustment for the measure 

for this or other environmental factors 

that could conceivably have similar 

impacts. However, we plan to conduct 

monitoring and surveillance of our 

quality measures for issues such as 

geographical variation. 

Comment: One commenter argued 

that using patients’ yearly averages for 

measures fails to test the actionability of 

the measures because it is difficult to 

identify areas of improvement until the 

end of the year. Instead, the commenter 

suggests ‘‘per-facility averaging,’’— 

averaging of end-of-month hemoglobin 

results for each facility’s patients, each 

month, then averaging up to 12 of those 

facility monthly averages, which this 

commenter argued allows facilities to 

know their year-to-date numerators and 

denominators, fostering ongoing quality 

incentive and process improvement. 

Response: We appreciate the 

commenter’s suggestion regarding perfacility averaging and all feedback to 

improve the usefulness of our quality 

measures to facilities. However, we 

believe that averaging hemoglobin over 

multiple patients in a facility would be 

inconsistent with medical guidance, 

which deals with patient specific 

situations. We believe that facilities 

should strive to provide the best care to 

each patient treated by the facility. 

Comment: One commenter requested 

confirmation that patients who are not 


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on ESA therapy are not included in the 

Hemoglobin Greater than 12 g/dL 

measure. 

Response: The measure rate is 

calculated using claims that include a 

hemoglobin level and ESA dosing 

information. 

Comment: Several commenters 

requested that we include a measure in 

the ESRD QIP that establishes a floor for 

hemoglobin, specifically noting that, 

because of the bundle, there may be a 

perceived financial incentive to 

underutilize ESAs. They argued that 

studies have shown that as hemoglobin 

drops below 10, mortality and 

hospitalization increase, and that 

hemoglobin levels affect a patient’s 

quality of life (both empirically and 

anecdotally). Some commenters stated 

that we should reinstate the Hemoglobin 

Greater than 10 g/dL measure that we 

used in the PY 2012 ESRD QIP, arguing 

that the measure is reliable and is 

consistent with the FDA-approved 

labeling which recognizes the 

importance of transfusion avoidance 

and recommends that initiation of ESA 

therapy be considered when the 

hemoglobin level falls below 10 g/dL. 

One commenter argued that patients 

should be allowed to make decisions 

about their quality of life and safety, 

even if that means keeping the 

hemoglobin level higher than 

recommended. Other commenters noted 

that patients with hemoglobin less than 

10 g/dL are increasing, as are the rate of 

transfusions, and increased transfusions 

can decrease the chances of a successful 

transplant; in turn, failed transfusions 

can increase the cost of care since 

patients with transplants cost less than 

those on dialysis. One commenter stated 

that we should specifically consider 

reinstituting a hemoglobin floor if the 

United States Renal Data Service 

information shows that transfusion rates 

have risen significantly. Other 

commenters suggested that even if we 

do not adopt a measure for low 

hemoglobin, we report hemoglobin 

levels, transfusion rates, and ESA 

dosage on DFC and include the 

Hemoglobin Less than 10 g/dL measure 

on DFC. Finally, other commenters 

urged us to continue to monitor and 

support metrics such as transfusions, 

quality of life, reactivity to antibodies 

preventing transfusions, and 

underutilization of ESAs. 

Response: We thank the commenters 

for bringing to us their concerns about 

the ESRD PPS payment bundle 

potentially increasing the risk for 

underutilization of ESA therapy. As 

noted in the CY 2012 ESRD PPS final 

rule (76 FR 70257), we could not at the 

time identify a specific hemoglobin 

lower bound level that has been proven 

safe for all patients treated with ESAs, 

and the state of evidence supporting 

such a lower bound remains weak. For 

these reasons, we believe that the 

rationale for removing the Hemoglobin 

Less Than 10 g/dL measure from the 

ESRD QIP measure set remains valid. 

However, we recognize that the 

potential for ESA underutilization is an 

important issue. As noted in the CY 

2012 ESRD PPS final rule (76 FR 70257), 

we will continue to monitor the 

Medicare ESRD population for evidence 

of underutilization of ESAs, a rise in 

blood transfusions, and the replacement 

of ESA therapy with transfusions. 

Although we are no longer including the 

Hemoglobin Less than 10 g/dL measure 

in the ESRD QIP (and will no longer be 

publicly reporting it on DFC beginning 

January 2013), the results will be 

available via a downloadable file for 

facilities to provide for continued 

monitoring of the measure. Finally, we 

continue to work with stakeholders 

through a consensus-based measure 

development process to produce 

measures capable of addressing ESA 

underutilization and blood transfusions, 

while remaining consistent with the 

existing relevant guidelines and 

evidence base. 

We also appreciate comments 

encouraging us to move toward 

implementing quality of life and other 

patient-centered measures that address 

anemia management. These 

measurement domains are important to 

us and we plan to develop appropriate 

measures to be implemented in the 

ESRD QIP during future rulemaking. 

For the reasons stated above, we will 

continue to use the Hemoglobin Greater 

than 12 g/dL measure for PY 2015 and 

future years of the ESRD QIP. The 

technical specifications for this 

finalized measure can be found at 

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

public-measures/AnemiaManagementHGB-2015-FR.pdf 

b. Vascular Access Type (VAT) Measure 

Topic 

Comment: Many commenters strongly 

supported our continued inclusion of 

the VAT measure topic in the PY 2015 

ESRD QIP. Many commenters, however, 

also expressed concern that the 

composite measure over-emphasizes 

fistulae, underemphasizes grafts, and, 

therefore, promotes inappropriate care 

in some cases. Commenters noted that 

fistulae are not suitable for some 

patients, fistulae take time to mature, 

and grafts are sometimes the most 

clinically appropriate. Several 

commenters asked us to decrease the 

emphasis on fistulae by developing a 

graft measure and, in the meantime, 

weight the catheter measure at 2⁄3 of the 

VAT measure topic and the fistula 

measure at 1⁄3 of the VAT measure topic. 

Other commenters urged us to take a 

‘‘fistula first, catheter last’’ approach 

that would award some points for 

patients with grafts. Commenters were 

also concerned that the fistula standards 

are too stringent and could cause 

unintended consequences such as 

‘‘cherry-picking’’ patients who are not 

eligible for a fistula. Commenters 

suggested that we exclude or allow 

doctors to exclude certain patients from 

the measure’s denominator providing 

for more individualized care, noting that 

studies show that facilities are unlikely 

to ‘‘game’’ such an exception. 

Response: As discussed in the CY 

2011 ESRD PPS Final Rule, we continue 

to believe that the VAT measure topic 

and its respective weights incentivize 

the best care for ESRD beneficiaries (76 

FR 70265, 70275). Catheters are 

undesirable due to their high rate of 

complications, such as infections, and 

we discourage their use through the 

catheter measure. We believe that the 

preferred type of vascular access is an 

AV fistula due to lower rates of 

complications, which we promote 

through the fistula measure. Although 

grafts do decrease the risk of infections 

and complications when compared to 

catheters, grafts do not decrease these 

risks as much as fistulae. We, therefore, 

do not believe that grafts are either 

beneficial enough to be specifically 

rewarded or harmful enough to be 

specifically penalized. Furthermore, we 

do not believe it is in the best interest 

of patients to weight the fistula measure 

more than the catheter measure because 

our primary goal is to promote fistula 

use; we believe that both measures are 

equally important in promoting the best 

clinical practices with respect to VAT. 

We recognize that the catheter 

measure could incentivize ‘‘cherrypicking’’ of patients, leading to access to 

care issues for patients with catheters. 

We are actively monitoring access to 

care and other potential issues 

associated with ‘‘cherry-picking,’’ and it 

is our intent to engage the community 

as we monitor these issues. 

Comment: One commenter 

encouraged us to promote fistulae in 

pediatric patients as well as adults. 

Response: We thank the commenter 

who encouraged the promotion of 

fistulae use in pediatric patients. The 

NQF-endorsed fistula measure excluded 

pediatric patients. Children on chronic 

dialysis have a fundamentally different 

psychosocial profile than adults. Fistula 

use, with its attendant frequent painful 

needle sticks are less commonly used in 


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3See https://www.cahps.ahrq.gov/content/ 

products/ICH/PROD_ICH_Intro.asp?p=1022&s=222. 

children than adults. In addition, there 

are technical issues that make fistula 

creation more difficult in children. We 

will continue to investigate whether 

there are measures in existence or that 

could be developed for the purpose of 

appropriately addressing vascular 

access among pediatric patients and 

may propose to adopt one or more of 

these measures in future rulemaking. 

For the reasons listed above, we will 

continue to use the VAT measure topic 

for PY 2015 and future years of the 

ESRD QIP. The technical specifications 

for the finalized measures in this 

measure topic can be found at http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/VascularAccessCatheter-2015-FR.pdf and http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/VascularAccessFistula-2015-FR.pdf. 

c. In-center Hemodialysis Consumer 

Assessment of Healthcare Providers and 

Systems (ICH CAHPS) 

Comment: Many commenters 

supported the measure in its entirety. 

Many commenters supported 

monitoring patients’ experiences, but 

believe the ICH CAHPS survey, with 57 

questions, is too burdensome and 

lengthy for beneficiaries to complete. 

These commenters requested that we 

minimize this burden and suggested 

that the ICH CAHPS survey be parsed 

into three parts, with each patient 

receiving one of these parts and a group 

of core questions. Commenters also 

suggested that CMS allow facilities to 

give patients the survey and allow 

patients to return surveys via a ‘‘dropbox’’ at the facility or by mail to the 

third-party administrator; commenters 

believe this approach will improve the 

response rate as patients are less likely 

to ignore the survey and one commenter 

noted that, without such an approach, 

the experiences of homeless patients 

will not be recorded. 

Response: As we noted in the 2012 

ESRD PPS Final Rule, we continue to 

believe that assessing the experiences of 

patients is vital to quality care (76 FR 

70269 through 70). Patient surveys can, 

and should, draw a facility’s attention to 

issues that can only be raised by those 

receiving care. Although commenters 

may consider the survey to be 

burdensome to patients, the CAHPS tool 

went through extensive testing during 

development including focus groups 

and one-on-one patient sessions which 

assessed this burden and created 

specifications accordingly. Furthermore, 

we believe that concerns about patient 

burden can be at least partially 

mitigated without decreasing the 

number of questions on the survey or 

how the survey is administered. For 

example, as the specifications indicate,3

patients may take a break during the 

administration of the survey or take the 

survey in multiple sittings if they feel 

that the number of questions is too great 

to answer at one time. Finally, we do 

not believe that facilities should be 

permitted to give patients the survey at 

the facility and allow patients to submit 

these surveys via a ‘‘drop box’’ or any 

other method. We believe that patients 

are much more likely to truthfully 

respond to the surveys if they are 

perceived to be in no way connected to 

the facility; providing the surveys at the 

facility and allowing patients to return 

them by any means may lead to the 

patient to believe that his or her answers 

can be traced to him or her, and this 

thought may bias the surveys. Thus, we 

believe that this survey as it is currently 

specified is the best method available at 

this time to measure patient experience. 

We thank commenters for bringing to 

our attention the hardships homeless 

patients may face in accessing the 

survey. Although we believe that the 

survey most accurately represents 

patients’ experiences of care at this 

time, we will continue to evaluate how 

we can accurately capture all patient 

populations, including the homeless. 

Comment: One commenter suggested 

that CMS define a threshold for patients 

at which a facility would not need to 

administer the survey. 

Response: We recognize that there are 

many small dialysis facilities for which 

hiring a third-party administrator to 

fulfill the ICH CAHPS survey 

requirements is impractical or 

prohibitively costly. Therefore, 

beginning PY 2015, we will exempt any 

facilities that have treated (whether that 

patient was visiting the facility or 

otherwise) 10 patients during the 

performance period or fewer that are 

qualified to take the survey. Patients are 

qualified to take the survey if they are 

adult, in-center hemodialysis patients. 

We believe that 11 patients (regardless 

of the number of times these patients 

were treated) is an appropriate 

threshold for applying the measure 

because it is consistent with the policy 

that we are finalizing for all measures in 

which we recognize that facilities with 

10 or fewer patients in the denominator 

of a measure should be exempt from 

that measure. Although we are not 

requiring facilities to submit actual ICH 

CAHPS data at this time, we are 

considering collecting it in the future. 

We also intend to use the information 

collected from reporting measures for 

purposes of scoring clinical measures 

based on the same data in subsequent 

payment years and want to adopt a 

minimum reporting threshold that we 

can apply to all measures. For these 

reasons, we are finalizing that facilities 

must attest to administering the ICH 

CAHPS survey if they treat during the 

performance period at least 11 adult, incenter hemodialysis patients. We also 

finalize that we will consider a facility 

to have met the 11 patient threshold 

unless it affirmatively attests in 

CROWNWeb that it treated 10 or fewer 

in-center, adult hemodialysis patients 

during the performance period. If a 

facility does not affirmatively attest to 

having treated 10 or fewer in-center, 

adult hemodialysis patients during the 

performance period, we will score it on 

this measure. Additionally, we are 

applying this policy to the NHSN 

Dialysis Event reporting measure, 

discussed below, because we intend to 

use the data from that measure to adopt 

a clinical measure in subsequent 

payment years. Unlike the ICH CAHPS 

measure, the NHSN measure applies to 

both adult and pediatric in-center 

hemodialysis patients. Therefore, we 

finalize that a facility must treat at least 

11 in-center hemodialysis patients 

(whether adult or pediatric) during the 

performance period to be scored on the 

NHSN Dialysis Event reporting measure. 

To be considered a facility which has 

treated 10 or fewer in-center 

hemodialysis patients (whether adult or 

pediatric) during the performance 

period, the facility must make an 

attestation in CROWNWeb to this effect. 

If a facility does not make this 

attestation, we will score it on this 

measure. 

Comment: One commenter expressed 

concern that patients often do not 

answer the surveys honestly for fear of 

retaliation and the validity of the survey 

should be questioned. 

Response: We recognize that patients 

may feel pressure to answer questions in 

the survey favorably. We believe, 

however, this concern is mitigated 

because under the measure 

specifications, a third-party must 

administer the survey. These third-party 

administrators are not associated with 

facilities and do not report patientspecific data to the facilities. Therefore, 

the facility would have no knowledge of 

patient’s answers. 

Comment: Several commenters 

expressed concern about CROWNWeb’s 

ability to provide an adequate reporting 

system for this measure. 

Response: CROWNWeb was launched 

nationally in June of 2012, and we 

recognize that some facilities may still 

be familiarizing themselves with the 


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new system. As discussed, facilities are 

not required to report ICH CAHPS data 

to CROWNWeb or any other system; 

they are only required to make an 

attestation that they administered the 

surveys according to the specifications. 

The attestations for the ICH CAHPS 

measure for PY 2015 are not due until 

the end of January 2014. We have no 

reason to believe that the attestation 

function will not be ready by the end of 

January 2013, the PY 2014 deadline. We 

believe that by this time, facilities’ 

transition period should have ended, 

and facilities will be able to successfully 

submit their attestations. Therefore, 

because the attestations should be ready 

in CROWNWeb by January 2013 for the 

PY 2014 ESRD QIP, they should also be 

available in CROWNWeb for the PY 

2015 program. 

Comment: Many commenters noted 

that the ICH CAHPS measure’s thirdparty administration requirement 

imposes significant costs on facilities 

and that facilities should be allowed to 

include these costs in their cost reports. 

Response: Facilities may report 

allowable operating expenses in their 

Medicare cost reports. We believe that it 

is consistent with this payment policy 

for facilities to include the ICH CAHPS 

costs on their cost reports because they 

are allowable operating expenses. 

Comment: Several commenters urged 

us to adopt the ICH CAHPS measure as 

an outcome measure rather than a 

reporting measure. One commenter 

believes that, if we cannot implement 

the measure as an outcome measure for 

PY 2015, we should do the following in 

order to facilitate our adoption of an 

ICH CAHPS outcome measure as soon 

as possible: (i) Develop a standardized 

protocol and quality assurance 

guidelines for survey administration 

that are more detailed than the AHRQ 

requirements; (ii) contract with an 

experienced organization that can 

provide oversight for the ICH CAHPS 

program; and (iii) approve survey 

vendors. Another commenter argued 

that the survey should be limited to 

questions about the facility rather than 

the physician. 

Response: Currently, we are not able 

to include the ICH CAHPS survey as an 

outcome measure because we do not 

possess data from which we can set 

performance standards. We believe that 

it is important to adopt an outcomebased measure as soon as possible, and 

we are diligently working to ensure that 

it is a part of the program as soon as 

possible. To that end, we will be 

working to set up a survey vendor 

approval program; we believe that the 

specifications are appropriately 

detailed, but we will continue to assess 

whether they should be refined before 

we propose to adopt this survey as an 

outcome-based measure. Regarding the 

survey questions, the majority of the 

survey is limited to questions about the 

facility. Only seven of the 58 core 

questions are about the patients’ 

nephrologists. There are 22 questions 

about the staff at the facility (not 

including the doctor), three about the 

center, and nine about treatment; the 

remaining questions capture 

demographic information. The 

continuous care received by dialysis 

patients makes them keenly aware of 

their primary doctors’ involvement. To 

the extent that the questions are about 

the physician, we believe that they are 

appropriate because they are targeted at 

the nephrologist who is most involved 

in the patient’s dialysis care. 

Comment: Commenters requested that 

we develop new measures of patient’s 

experiences. One commenter argued 

that a measure should be developed that 

evaluates a patient’s experience during 

each dialysis session because each 

experience can vary, and further argued 

that this type of evaluation would allow 

facilities to better assess why patients 

do not stay for entire treatments or miss 

treatments. Many commenters requested 

that we develop a CAHPS measure for 

home hemodialysis and peritoneal 

dialysis patients. Commenters also 

suggested that we make the responses to 

the surveys public. 

Response: We remain dedicated to 

developing and adopting measures of 

patient experiences of care in the ESRD 

QIP, specifically those patients who are 

treated at home. At this time we cannot 

operationally make the responses to the 

ICH CAHPS survey public because, as 

noted above, we do not possess the data; 

however, we will consider making these 

surveys public in future years if 

facilities are required to submit their 

ICH CAHPS data to CMS. 

For the reasons discussed above, we 

are finalizing the ICH CAHPS reporting 

measure for use in the PY 2015 ESRD 

QIP and future years of the program. We 

are also finalizing that the measure 

applies to facilities that treat a 

minimum of 11 in-center, adult 

hemodialysis patients during the 

performance period. We will consider a 

facility to have met the 11 in-center, 

adult hemodialysis patient threshold 

unless it affirmatively attests in 

CROWNWeb to having treated 10 or 

fewer adult, in-center hemodialysis 

patients during the performance period. 

If a facility does not make the 

attestation, we will score it accordingly. 

The technical specifications for this 

finalized measure can be found at 

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

public-measures/ICHCAHPS-2015- 

FR.pdf. 

2. Expansion of Two PY 2014 Measures 

for PY 2015 and Subsequent PYs 

As stated earlier, we believe it is 

important to continue using measures 

from one payment year to the next 

payment year of the program to 

encourage continued improvements in 

patient care. Therefore, we proposed to 

expand the requirements under two 

reporting measures that we adopted for 

the PY 2014 ESRD QIP. These proposed 

expanded requirements would apply to 

the measures for PY 2015 and 

subsequent payment years of the ESRD 

QIP. 

a. Expanded National Healthcare Safety 

Network (NHSN) Dialysis Event 

Reporting Measure 

Hospital Acquired Infections (HAIs) 

are a leading cause of preventable 

mortality and morbidity across different 

settings in the healthcare sector, 

including dialysis facilities. In a 

national effort to reduce HAIs outcome, 

HHS agencies, including CMS and the 

Centers for Disease Control and 

Prevention (CDC) are working together 

to encourage facilities to report to the 

NHSN as a way to track and facilitate 

action intended to reduce HAIs. The 

NHSN is currently a secure, internetbased surveillance system that 

integrates patient and healthcare 

personnel safety surveillance systems 

managed by the Division of Healthcare 

Quality Promotion at the CDC. NHSN 

has been operational since 2006 and 

tracks data from acute care hospitals, 

long-term care hospitals, psychiatric 

hospitals, rehabilitation hospitals, 

outpatient dialysis centers, ambulatory 

surgery centers, and long term care 

facilities. We believe that reporting 

dialysis events to the NHSN by all 

facilities supports national goals for 

patient safety, particularly goals for the 

reduction of HAIs. 

For the reasons stated above, we 

proposed to retain the NHSN Dialysis 

Event reporting measure that we 

adopted for the PY 2014 ESRD QIP (76 

FR 70268 through 70269), but with an 

expanded reporting period. For PY 

2014, ESRD facilities were required to: 

(i) Enroll in the NHSN and complete 

any training required by the CDC related 

to reporting dialysis events via the 

NHSN system; and (ii) submit three or 

more consecutive months of dialysis 

event data to the NHSN. For the PY 

2015 ESRD QIP and future payment 

years, we proposed to retain the NHSN 

measure and expand the reporting 

period to a full 12 months of dialysis 

event data. Although we expect most 


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facilities to have enrolled and trained in 

the NHSN dialysis event system by the 

end of CY 2012, we proposed that 

facilities that have not done so by 

January 1, 2013 or facilities that receive 

a CMS certification number (CCN) 

during 2013 must enroll and complete 

this training before reporting the data in 

order to fulfill the requirements of this 

reporting measure. The information 

reported to NHSN would be provided by 

the CDC to CMS for use in the ESRD 

QIP. 

As discussed in more detail below, we 

proposed that the performance period 

for the PY 2015 ESRD QIP would be CY 

2013. We proposed that facilities must 

report dialysis event data monthly to the 

NHSN for this measure. We also 

proposed that facilities be granted a 

‘‘grace period’’ of one month to report 

these data. For further information 

regarding the NHSN’s dialysis event 

reporting protocols, please see http://

www.cdc.gov/nhsn/psc_da_de.html. 

This link provides general information 

and links to more detailed, specialized 

information. 

We note that this proposed measure 

only applies to facilities treating 

patients in-center. For purposes of the 

NHSN Dialysis Event reporting measure, 

we determine whether a facility treats 

patients in-center by referencing the 

facility’s information in CMS data 

sources (that is, SIMS and 

CROWNWeb). Facilities report the types 

of patients that they serve in these data 

sources. If a facility lists in-center 

services, we proposed that the facility 

would be required to comply with the 

NHSN dialysis event reporting measure. 

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

requires that, unless the exception set 

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

Act applies, the measures specified for 

the ESRD QIP under section 

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

been endorsed by the entity with a 

contract under section 1890(a) of the 

Act (which is currently NQF). Under the 

exception set forth in 1881(h)(2)(B)(ii) of 

the Act, in the case of a specified area 

or medical topic determined appropriate 

by the Secretary for which a feasible and 

practical measure has not been endorsed 

by the entity with a contract under 

section 1890(a) of the Act, the Secretary 

may specify a measure that is not so 

endorsed so long as due consideration is 

given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the Secretary. 

An NQF-endorsed bloodstream 

infection measure (NQF#1460) exists 

and is collected by the CDC as part of 

dialysis event reporting in NHSN. This 

measure assesses the number of 

hemodialysis patients with positive 

blood cultures. This measure differs 

from the dialysis event reporting 

measure that we adopted for the PY 

2014 ESRD QIP and proposed to expand 

beginning with the PY 2015 program 

because it evaluates the number of 

hemodialysis outpatients with positive 

blood cultures over a specified time 

period. By contrast, the NHSN Dialysis 

Event reporting measure that we 

proposed assesses facilities based on 

whether they enroll and report dialysis 

event data to the NHSN, not based on 

what the data reported are. We intend 

to propose to adopt NQF #1460 once 

facilities have reported enough data to 

enable us to compute performance 

standards, achievement thresholds, 

improvement thresholds, and 

benchmarks for the measure. 

For the reasons stated in the CY 2012 

ESRD PPS final rule (76 FR 70268 

through 69), we proposed to retain the 

measure and expand the reporting 

period for PY 2015 and future payment 

years of the program. We requested 

comment on this proposal, and noted 

that the technical specifications for this 

measure are located at http://www.

dialysisreports.org/pdf/esrd/publicmeasures/NHSNDialysisReporting2015-NPRM.pdf. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Many commenters 

supported the expansion of the NHSN 

Dialysis Event reporting measure, 

stating that monitoring the number of 

patients with access-related infections 

for an entire year will help the 

community better understand ways to 

reduce infection rates. Some 

commenters expressed concern with 

certain aspects of the measure. Several 

commenters expressed their concern 

about the burden of this measure, 

specifically highlighting the burden of 

manual data-entry and the staff hours 

demanded for this entry and oversight; 

one commenter noted that NQF criteria 

related to feasibility favor electronic 

collection and data collected during the 

course of care. Commenters argued 

further that manual data entry affects 

reliability, further affecting the baseline 

calculations for future measures. Many 

commenters suggested a batch 

download system. Some commenters 

noted that the CDC intends to make a 

Clinical Document Architecture (CDA) 

system available for batch entries, but 

expressed concern that the CDC CDA 

system will be available for individual 

facilities only (rather than for an entire 

corporation); others stated that they did 

not believe the CDA system will be 

ready for data entry by the end of CY 

2012. Commenters also stated that the 

NHSN system is yet another Web site to 

which ESRD facilities must report, 

reducing time staff can spend caring for 

patients. Finally, some commenters 

support the expansion of the measure, 

but only if the required monthly 

reporting is at the facility rather than the 

patient level. 

Response: We do not believe that this 

measure is unnecessarily burdensome. 

Monitoring vascular access infections 

following uniform definitions and 

utilizing the comparative rate data to 

evaluate and improve performance is 

part of providing good patient care. 

Although enrollment and training can 

be time-consuming, approximately 90 

percent of all hemodialysis centers have 

already enrolled in NHSN. Furthermore, 

we believe that any burden a facility 

may face is outweighed by the 

importance of this measure since 

infections can often lead to serious 

complications, including death. Further 

to help decrease the burden, the CDC 

began allowing facilities to report to 

NHSN through imported CDA files on 

September 14, 2012. Using this 

function, any individual with 

Administrative Rights for a facility will 

be able to import that facility’s specific 

CDA files that meet NHSN’s formatting 

requirements. This includes large 

dialysis organizations that have given 

Administrative Rights to a single person 

for purposes of the entire (or some 

portion of) the organization. However, at 

this time each facility’s files must be 

submitted separately. Because we are 

aware that large dialysis organizations 

(as well as many other dialysis 

companies) have given Administrative 

Rights to a single representative of the 

organization, we recognize that they 

will eventually be able to submit CDA 

data for a number of individual 

facilities, from a single central location, 

all through a single batch submission 

process. This batch data submission 

process is expected to be available in 

August 2013. Finally, the monthly 

reporting required by the NHSN is at the 

facility level. Facility-level review of the 

data in NHSN is expected, whether the 

data are reported by facility staff or by 

a corporate representative. We believe 

that facilities have a direct role in 

preventing infections by collecting the 

NHSN Dialysis Event data, actively 

assessing their data, and regularly 

feeding back this information to clinical 

staff to improve practices. 

Comment: One commenter argued 

that the NHSN Dialysis Event reporting 

measure will not improve care because 

the system is not efficient and is not 

correlated to CROWNWeb. Many 

commenters urged us to synchronize 

NHSN and CROWNWeb data 


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requirements. Commenters also 

requested that CMS continue to use the 

same reporting schedule for PY 2015 as 

it will for PY 2014, allowing facilities to 

report quarterly with all data being 

required by March 31, 2014. 

Commenters noted that quarterly 

reporting is important because this 

timeframe will allow facilities ample 

time to submit data correctly, stating 

that some infections take more than a 

month to identify and capture. One 

commenter recommended that we 

modify the requirements of this 

provision to allow a facility to report a 

full 12 months of data by January 31, 

2014. Other commenters urged us to 

ensure that the NHSN Dialysis Event 

reporting measure allows the NHSN 

system to remain a surveillance system. 

Response: We disagree with the 

comment that the NHSN Dialysis Event 

reporting measure will not improve 

care. Requiring facilities to report 

through the NHSN will allow us to 

monitor and better understand the 

causes of infections. Additionally, as we 

stated in the proposed rule (77 FR 40971 

through 72), we intend to use the 

information gathered by this reporting 

measure to adopt a clinical measure in 

future years; this measure will 

encourage facilities to decrease the 

circumstances which lead to infections. 

Although we intend to use data from the 

NHSN to adopt a clinical measure, we 

will work with the CDC to ensure that 

the ESRD QIP does not unnecessarily 

limit the surveillance purposes of the 

NHSN system. 

Commenters are correct in that the 

NHSN Dialysis Event reporting measure 

data is not correlated to CROWNWeb. 

We recognize that CROWNWeb and the 

NHSN are two distinct systems which 

require reporting. At this time, we do 

not require infection reporting in 

CROWNWeb. We believe that it is more 

beneficial for both facilities and CMS to 

require infection reporting through the 

NHSN. The NHSN is a well-established 

secure, internet-based surveillance 

system that integrates patient and 

healthcare personnel safety surveillance 

systems managed by the Division of 

Healthcare Quality Promotion at the 

CDC; it is used by many other types of 

providers to report infections. We 

believe that NHSN’s history and widespread surveillance make it the best 

mode of reporting dialysis events at this 

time. 

We do not agree with commenters’ 

suggestions to extend the reporting 

timeline for the PY 2015 NHSN Dialysis 

Event reporting measure. The NHSN 

system recommends monthly reporting, 

and we believe it is important to adhere 

to the NHSN requirements as much as 

possible. However, to maximize data 

completeness and accuracy, facilities 

will be allowed to add to and modify 

the reported data until the performance 

period reporting deadline. Data for the 

entire performance period must be 

reported by April 15, 2014. We chose 

April 15, 2014 because this date allows 

facilities a full quarter after the 

performance period to review their data 

for completeness and accuracy. After 

consulting with the CDC, we believe 

that such a timeframe will maximize the 

reliability of the data and allow facilities 

to report any infections that developed 

during the performance period but that 

are identified after the performance 

period has ended. 

Comment: One commenter is 

concerned with the proposed expansion 

of this measure if NHSN data is not 

validated or audited for completeness. 

This commenter expressed specific 

concern that there could be surveillance 

bias in interpreting submitted data. 

Response: We recognize that bias 

exists because some facilities may be 

more likely to identify and report 

dialysis events than others. Varying 

degrees of completeness of the data 

could lead to inaccurate comparisons 

between facilities. The CDC and CMS 

are beginning to formulate a strategy to 

validate data for purposes of the ESRD 

QIP; we are committed to rigorous 

validation to identify inaccuracies and 

ensure reliability of the data. 

Comment: One commenter suggested 

that CDC standardize and clarify data 

definitions to ensure ‘‘apples-to-apples’’ 

comparisons and allow corporate 

oversight of data entered into the system 

for verification and reliability purposes. 

Another commenter stated that it does 

not support the adoption of a future 

NHSN Dialysis Event clinical measure 

because facility policies and procedures 

and physician practices vary widely 

with respect to the circumstances under 

which blood cultures are obtained and 

results are reported; this commenter 

requested that reporting be standardized 

before the measure is adopted. 

Response: The CDC develops 

protocols, definitions, and criteria for 

the purposes of standardizing reporting, 

and expects that all NHSN users strictly 

adhere to the protocol guidance for data 

that are reported into NHSN. The 

dialysis event surveillance reporting 

protocol is available on CDC’s NHSN 

Web site and includes data definitions 

(http://www.cdc.gov/nhsn/PDFs/ 

pscManual/ 

8pscDialysisEventcurrent.pdf). Users 

may contact the NHSN help desk 

(NHSN@cdc.gov) for clarifications to 

these data definitions. We will continue 

to work with the CDC to monitor these 

concerns while we consider adopting a 

measure based on NHSN data for future 

years of the program. 

Comment: One commenter requested 

clarification regarding whether facilities 

are required to report infections 

occurring in the dialysis unit only, 

exempting the facilities for infections 

that result from care in other 

environments. 

Response: The measure specifications, 

which are available at (http:// 

www.cdc.gov/nhsn/PDFs/pscManual/ 

8pscDialysisEventcurrent.pdf), provide 

that positive blood cultures occurring 

within one calendar day after a hospital 

admission must also be reported. For 

further clarification on reportable event 

definitions and considerations 

surrounding attribution, please contact 

the NHSN help desk (NHSN@cdc.gov). 

Comment: One commenter asked us 

to confirm that, as long as the census 

data is reported every month, the 

facility may attest to having met the 

requirements for the NHSN measure. 

Response: For the reasons discussed 

above, we finalize that a facility may 

attest for purposes of being exempt from 

reporting for the NHSN dialysis event 

measure if it treats fewer than 11 incenter hemodialysis patients during the 

performance period. If a facility treats 

11 or more in-center hemodialysis 

patients, we will score the facility based 

on whether it reported data to the 

NHSN. 

Comment: One commenter urged us 

to develop a measure which targets the 

cause of the infections. Another 

commenter suggested that CMS consider 

adding NHSN dialysis specific 

indicators, perhaps in stages, such as 

local access site infection, access-related 

bloodstream infection, and vascular 

access infection to the NHSN 

surveillance data. 

Response: We thank commenters for 

these suggestions. We acknowledge that 

preventing and monitoring infections is 

crucial to patient care. We will continue 

to work with the dialysis community to 

include robust infection measures in the 

ESRD QIP. 

Comment: Many commenters support 

our proposed transition of the NHSN 

Dialysis Event reporting measure to a 

clinical measure using the NQFendorsed measure #1460. Some 

commenters urged us to adopt the 

clinical measure in PY 2015. Other 

commenters, however, suggested that 

we allow sufficient time to ensure that 

NHSN data can be reported without 

additional burden to providers. One 

commenter suggested that, once the 

measure is adopted as a clinical 

measure, we interpret the rate of 

positive blood cultures against the 


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facility’s rate of empiric antibiotic 

treatment, since some facilities treat 

empirically rather than through taking 

blood cultures. 

Response: We thank commenters for 

supporting our proposal to adopt the 

NQF-endorsed infection measure for 

future years of the program. We are 

unable to adopt the NQF-endorsed 

clinical measure for PY 2015 because 

we have not yet gathered data on which 

we can base performance standards. For 

purposes of the ESRD QIP, facilities 

began reporting to the NHSN during 

2012; to receive full points on the 

measure for PY 2014, facilities need 

only to report three months of data. We 

do not believe it is appropriate to base 

performance standards on three months 

of data for purposes of an infection 

measure because infections can vary by 

season. We believe that using a 12- 

month period for setting these standards 

will prove more accurate. Because we 

are requiring 12 months of data for the 

PY 2015 ESRD QIP, we believe we can 

use this information to adopt standards 

for a clinical measure in future years. 

Additionally, we agree with the 

commenters who believe that it may be 

necessary for facilities to become more 

familiar with the NHSN system before 

we adopt a clinical measure. 

We thank the commenter who 

suggested that we interpret the rate of 

positive blood cultures against the 

facility’s rate of empiric antibiotic 

treatments to account for facilities that 

might treat patients empirically for 

infection without drawing cultures. The 

NHSN collects information on IV 

antimicrobial starts, in part, for this 

reason. Providers are expected to adhere 

to standards of clinical practice, which 

include obtaining blood cultures prior 

to antibiotic administration for 

suspected bloodstream infections. 

Comment: One commenter stated its 

support for the adoption of an MRSA 

standardized infection rate clinical 

measure. 

Response: We thank the commenter 

for providing this suggestion and will 

take it into consideration in future 

measure development and rulemaking. 

For the reasons stated above, we 

finalize the NHSN Dialysis Event 

reporting measure as proposed except 

for the following; a facility must treat at 

least 11 in-center hemodialysis patients 

(both adult and pediatric) during the 

performance period to be scored on the 

NHSN Dialysis Event reporting measure, 

as noted above. To be considered a 

facility which has treated 10 or fewer incenter hemodialysis patients during the 

performance period, the facility must 

make an attestation in CROWNWeb to 

this effect. If a facility does not make 

this attestation, we will score it 

accordingly. Additionally, we 

recommend that facilities report 

monthly to the NHSN. Data for the 

entire performance period must be 

reported by April 15, 2014. The 

technical specifications for this 

finalized measure can be found at 

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

public-measures/ 

NHSNDialysisReporting-2015-FR.pdf. 

b. Expanded Mineral Metabolism 

Reporting Measure 

Undertreatment of bone mineral 

metabolism disease can cause severe 

consequences for ESRD patients. For PY 

2014, it was not yet feasible for us to 

adopt a clinical measure evaluating 

facilities based on their patients’ bone 

mineral metabolism rates because 

facilities did not report serum 

phosphorus and serum calcium values 

during the baseline and performance 

periods that we finalized with respect to 

that year. Instead, for PY 2014, we 

finalized a measure assessing whether 

facilities routinely monitored the serum 

calcium and serum phosphorus levels in 

their patients. For PY 2015, we 

proposed to expand this measure by 

requiring facilities to report a serum 

calcium and serum phosphorus level for 

each qualifying patient each month 

according to the requirements in 

CROWNWeb. Facilities would be 

required to enter these values into 

CROWNWeb on a monthly basis. 

Facilities would be granted a ‘‘grace 

period’’ of one month to enter the data. 

For example, we would require a facility 

to report serum calcium and serum 

phosphorus data for January 2013 on or 

before February 28, 2013. The final 

month of data from the performance 

period would be reported on or before 

January 31, 2014. 

We do not intend for this measure to 

encourage unnecessary testing or 

unduly burden a facility. Consequently, 

for purposes of scoring the measure, we 

considered proposing to require 

facilities to report the required 

information for less than 100 percent of 

their patients. Specifically, we 

considered lowering the threshold to 

reporting 98 percent of patients for a 

month in order to receive credit for that 

month. We chose 98 percent in order to 

encourage improvement, and to ensure 

that we do not undermine the current 

level of high-reporting (based on the 

CROWNWeb pilot data). We recognize 

that 100 percent might not be 

appropriate due to some individual 

cases that may not fit specified criteria. 

We ultimately proposed that a facility 

should be required to take and report 

these values for every patient at least 

once per month so that each beneficiary 

receives the highest standard of care. 

We noted, however, that there are 

circumstances beyond a facility’s 

control wherein it may not be able to 

draw a sample for this patient. 

Therefore, we did not propose that the 

facility itself must draw the serum 

phosphorus and serum calcium levels. 

If, for example, a patient is hospitalized 

or transient during a claim month, we 

proposed that the facility may report the 

serum calcium and serum phosphorus 

readings for the patient for a month if 

a patient has labs drawn by another 

provider/facility and those labs are 

evaluated by an accredited laboratory (a 

laboratory that is accredited by, for 

example, the Joint Commission, the 

College of American Pathologists, the 

AAB (American Association of 

Bioanalysts), or State or Federal agency), 

and the dialysis facility obtains the 

serum calcium and serum phosphorus 

readings. Additionally, we proposed to 

only consider a patient qualified for this 

measure (i) if the patient is alive at the 

end of the month; (ii) if the patient is 

treated in-center, that patient was 

treated at that facility at least twice 

during the claim month; and (iii) if the 

patient receives dialysis at home, a 

claim is submitted for that patient. We 

stated our belief that that these 

proposals will provide more flexibility 

for facilities and will also discourage 

facilities from drawing blood, even 

when not necessary, for fear that the 

patient will fail to come to the facility 

again during that month. We requested 

comment on these proposals. We also 

requested comment on whether 

facilities should only have to report data 

for 98 percent of their patients. 

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

requires that, unless the exception set 

forth in section 1881(h)(2)(B)(ii) applies, 

the measures specified for the ESRD QIP 

under section 1881(h)(2)(A)(iii) of the 

Act must have been endorsed by the 

entity with a contract under section 

1890(a) of the Act (which is currently 

NQF). Under the exception set forth in 

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

of a specified area or medical topic 

determined appropriate by the Secretary 

for which a feasible and practical 

measure has not been endorsed by the 

entity with a contract under section 

1890(a) of the Act, the Secretary may 

specify a measure that is not so 

endorsed so long as due consideration is 

given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the Secretary. 

An NQF-endorsed measure assessing 

hypercalcemia exists (NQF #1454) and 

we proposed to adopt this measure for 

the PY 2015 ESRD QIP and subsequent 


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payment years, as further discussed 

below. The NQF-endorsed 

hypercalcemia measure, however, does 

not score facilities based only on 

whether or not that facility reported 

serum calcium values. The Mineral 

Metabolism reporting measure, unlike 

the Hypercalcemia measure, would 

assess only whether facilities report 

serum calcium and serum phosphorus 

values. It would not score facilities 

based on the actual values that they 

report. We stated our belief that it is 

important to continue to encourage 

reporting independent of a measure that 

scores based on the actual values 

reported because we need such values 

to monitor aspects of bone mineral 

metabolism, for example phosphorus 

management, independent of 

hypercalcemia; we noted that this 

information will allow us to develop 

comprehensive bone mineral 

metabolism measures for use in future 

years of the ESRD QIP. 

In the CY 2012 ESRD PPS final rule, 

we discussed the basis for the Mineral 

Metabolism reporting measure (76 FR 

70270 through 71). We stated that ‘‘the 

NQF has previously endorsed 

phosphorus and calcium monitoring 

measures (NQF #0261 and NQF #0255) 

and, in 2008, we adopted serum calcium 

and serum phosphorus monitoring as 

Clinical Performance Measures (http:// 

www.dialysisreports.org/ 

ESRDMeasures.aspx).’’ The NQF 

measures referenced above call for 

monitoring these serum calcium and 

serum phosphorus values, but they do 

not require actual reporting of these 

values, as is the intent of the Mineral 

Metabolism reporting measure. 

For these reasons, we proposed to 

expand the Mineral Metabolism 

reporting measure for PY 2015 and 

subsequent payment years under 

1881(h)(2)(B)(ii) of the Act. The 

technical specifications for this measure 

can be found at http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/MineralMetabolismReporting-2015-NPRM.pdf. We further 

noted that requiring the reporting of 

serum calcium and serum phosphorus 

levels for the PY 2015 ESRD QIP will 

allow us to develop mineral metabolism 

measures based on clinical data in the 

future. We requested comment on these 

proposals to expand the Mineral 

Metabolism reporting measure. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Many commenters 

generally supported this measure, but 

requested that we make modifications to 

our proposed exclusions. These 

commenters suggested that we exclude, 

for all of the reporting measures, the 

following patients: (i) Beneficiaries who 

are regularly treated at the facility and 

who fit into one of these categories: (a) 

Beneficiaries who die within the 

applicable month; (b) beneficiaries that 

receive fewer than 7 treatments in a 

month; and (c) beneficiaries receiving 

home dialysis therapy who miss their 

in-center appointments when there is a 

documented, good faith effort to have 

them participate in such a visit during 

the applicable month; (ii) transient 

dialysis patients; (iii) pediatric patients 

(unless the measure is specific to this 

population); and (iv) kidney transplant 

recipients with a functioning graft. 

Commenters stated that these exclusions 

are consistent with our own measures 

reported on DFC. Additionally, 

commenters stated that these exclusions 

seek to hold facilities accountable only 

for those beneficiaries to whom they 

regularly give care and for whose care 

they can affect. Another commenter, 

however, stated that we should not 

implement other commenters’ 

suggestions that we exclude 

beneficiaries receiving home dialysis 

therapy who miss their in-center 

appointments when there is a 

documented, good faith effort to have 

them participate in such a visit during 

the applicable month; this commenter 

stated that it is the responsibility of the 

facilities to educate patients on the 

importance of making and keeping 

appointments. Additionally the 

commenter argued that ‘‘good faith’’ is 

too vague; commenter requested that, if 

we did adopt this exclusion, we clearly 

define a ‘‘good faith effort.’’ 

Response: Upon further review, we 

agree with commenters who believe that 

the exclusions should be modified. We 

recognize that treating a patient twice 

may not provide enough time to 

effectuate quality patient care. We agree 

with the commenters who suggested 

that an in-center hemodialysis patient 

should be excluded if treated by a 

facility fewer than seven times during 

the month, regardless of whether the 

patient is officially admitted to that 

facility. With seven treatments, we 

believe that a facility should have had 

adequate opportunities to draw blood 

necessary to report serum calcium and 

phosphorus levels. We also believe that 

the threshold of seven will discourage 

unnecessary testing of in-center 

hemodialysis patients by facilities 

because they will know that, since incenter patients are typically treated 

three times per week, a patient must 

have been treated by the facility for at 

least two weeks to be included; thus, the 

facility need not feel pressure to draw 

blood for every patient for the first few 

visits of the month. Based on these 

considerations, we will not finalize our 

proposal to exclude only in-center 

patients who have been treated fewer 

than two times by the facility during the 

claim month. Instead, we will exclude 

any in-center patient who is treated by 

the facility fewer than seven times 

during the reporting month. 

We do not believe that it is necessary 

to specifically exclude transient patients 

from this measure because, as noted, 

any patient that is treated by the facility 

at least seven times during the 

applicable reporting month is present at 

the facility for enough time that the 

facility should be held accountable for 

that patient. Likewise, for the same 

reasons mentioned above, we do not 

believe we need to separately exclude 

patients who are deceased at the end of 

the reporting month. Provided that the 

patient is treated by the facility at least 

seven times during that month, the 

facility should be able to draw blood 

necessary to report serum calcium and 

serum phosphorus levels even if that 

patient is deceased at the end of the 

month. 

We continue to believe that facilities 

should be required to report the serum 

calcium and phosphorus levels of home 

dialysis patients irrespective of whether 

those patients attend a monthly 

appointment. We believe that it is 

incumbent upon a facility to make home 

dialysis patients aware that they must 

attend monthly appointments to be 

properly treated. In addition, since the 

mechanisms that cause cardiovascular 

and bone disease do not differ between 

home and in-center hemodialysis 

patients, we believe that the inclusion of 

home dialysis patients in the Mineral 

Metabolism reporting measure is 

appropriate. Therefore we will finalize 

our proposal that we will include any 

home hemodialysis patient for which a 

facility submits a claim with respect to 

the reporting month in this measure. 

We also believe it is important to 

include transplant patients until they 

are officially discharged from a facility; 

regular monitoring can help ensure that 

a transplant remains effective and that 

the facility is continuing to provide the 

best care possible. 

We believe it is important to monitor 

serum calcium and serum phosphorus 

levels in adult and pediatric patients 

alike because improper bone mineral 

metabolism management can lead to 

serious, negative outcomes, including 

death, in both populations. Although we 

are aware that specific target values for 

calcium and phosphorus have not been 

set for the pediatric population, we still 

believe that this measure will lead to 


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better observation of mineral 

metabolism in these patients if one or 

both of these values are unusually high 

or low. Additionally, we believe that the 

inclusion of pediatric patients in this 

measure is consistent with current 

guidelines on the frequency of mineral 

metabolism testing as reported in 

KDIGO guidelines chapter 3 ‘‘Diagnosis 

of CKD–MBD: biochemical 

abnormalities.’’ Thus, we believe that 

this measure is appropriate for both 

adult and pediatric patients. 

For the reasons stated above, we 

finalize that facilities must report in 

CROWNWeb the serum calcium and 

serum phosphorus levels on a monthly 

basis for (i) in-center Medicare patients 

who have been treated at least seven 

times by the facility; and (ii) home 

hemodialysis Medicare patients for 

whom the facility submits a claim. 

Comment: Several commenters 

encouraged us to not adopt a percentage 

reporting threshold because it would 

not distinguish between beneficiaries 

legitimately excluded and those that 

were merely missed. Other commenters 

requested that we use both exclusions 

and a threshold; one commenter 

suggested a threshold of 90 percent or 

an allowance of two patients to ensure 

that small facilities are not 

disproportionally affected. Another 

commenter stated that requiring 98 

percent reporting may make it difficult 

for patients to travel because dialysis 

facilities may encourage them otherwise 

to ensure compliance with the measure. 

One commenter requested that we 

provide guidance regarding the 

standardization of blood-draws so that 

data can be reliable before we 

implement a reporting threshold. 

Response: We agree with the 

commenters who argued that, even with 

exclusions, there are circumstances in 

which facilities cannot report the serum 

calcium and serum phosphorus levels 

for every patient at least once per 

month. For example, a facility may wait 

to draw blood from a patient because it 

believes that the patient will be treated 

for the entirety of the month, but learns 

that the patient has been hospitalized 

unexpectedly for all or part of the 

applicable month. Therefore, we believe 

that we should not require an attestation 

of 100 percent monitoring. Based on 

data from the CROWNWeb pilot, we 

believe that facilities are generally able 

to report serum calcium and serum 

phosphorus for approximately 96 

percent of their patients. As commenters 

have argued, the information in 

CROWNWeb, however, was voluntarily 

reported which may mean that the data 

is biased toward facilities that value 

reporting; additionally, the data from 

the CROWNWeb pilot was mainly 

supplied by LDOs that may be more 

likely to have more resources and 

corporate policies that require reporting 

compliance. Furthermore, such a high 

percentage requirement may 

disadvantage small facilities. For 

example, if a facility has 10 patients, 

failure to report for one patient will 

drop that facility’s reporting rate to 

below 90 percent. 

Taking all of these issues into 

consideration, we finalize a normative 

reporting threshold for this measure; 

facilities will be required to report at the 

rate of the 50th percentile of all facilities 

in 2013 for each month of the 

performance period in order to gain 10 

points on the measure. However, if the 

50th percentile of all facilities in 2013 

is greater than 97 percent, facilities will 

only be required to report monthly for 

97 percent, in total, of their (i) in-center 

Medicare patients who have been 

treated at least seven times by the 

facility; and (ii) home hemodialysis 

Medicare patients for whom the facility 

submits a claim. This floor ensures that 

facilities are not penalized as long as 

they improve by one percent above the 

reporting rates in the CROWNWeb pilot; 

that is, facilities know that, provided 

they reach 97 percent for each month of 

the performance period, they will meet 

the requirements of the measure. We 

believe that it is important to adopt a 

reporting rate of 97 percent in PY 2015 

to ensure continued improvement. We 

believe that this methodology fairly 

balances the concerns that the reporting 

in CROWNWeb is skewed with our 

desire to encourage continued 

improvement in the community. 

We are concerned that small facilities 

may be disproportionately impacted by 

the reporting threshold because, for 

example, a facility with 10 patients 

could fail to report for only one patient 

and, therefore, fail to meet the 

threshold. As we have stated, we intend 

to use the information collected from 

reporting measures for purposes of 

scoring clinical measures based on the 

same data in subsequent payment years. 

Therefore, we will not require a facility 

to report this measure if it treats fewer 

than 11 (i) in-center Medicare patients 

who have been treated at least seven 

times by the facility; and (ii) home 

hemodialysis Medicare patients for 

whom the facility submits a claim. If a 

facility does not treat at least 11 of these 

patients during the performance period, 

it will be required to attest to this fact 

via CROWNWeb. If a facility does not 

make the attestation, we will score it 

accordingly. 

Comment: Some commenters did not 

support including this measure in PY 

2015. One commenter argued that it is 

inappropriate to adopt this measure 

because it is not-NQF endorsed, nor. 

One commenter stated that it is 

inappropriate to adopt this measure 

under the exception set forth in the 

statute for measures which are not NQFendorsed; this commenter stated that 

the NQF process ensures that measures 

have gone through a rigorous evaluation 

process, including reliability and 

validity. Some commenters argued that 

this measure should be deferred because 

we have not articulated the intent of the 

data collection or explained the measure 

for which we intend to ultimately use 

these data. Several commenters do not 

support this measure because facilities 

already collect these data so the 

measure is unlikely to improve care, 

and they requested that we adopt a 

measure based on outcomes. One 

commenter does not support adoption 

of this measure because, it contends, 

Kidney Disease: Improving Global 

Outcomes (KDIGO) has not indicated 

that serum calcium and serum 

phosphorus must be reported on a 

monthly basis. Further, the commenter 

argues that although it is customary to 

measure serum calcium and phosphorus 

monthly, there is no evidence that it 

indicates quality care. 

Response: KDIGO recommends 

monthly measurements (see Table 13 on 

internet document titled ‘‘Kidney 

Disease Improving Global Outcomes 

Clinical Practice Guideline for the 

Diagnosis, Evaluation, Prevention, and 

Treatment of Chronic Kidney DiseaseMineral and Bone Disorder (CKD– 

MBD)’’ at http://www.kdigo.org/ 

guidelines/mbd/guide3.html#chap31)). 

KDIGO also emphasizes the importance 

of following trends versus single 

measurements, thus supporting 

relatively frequent measurements (for 

example, monthly). There is evidence 

that calcium and phosphorus levels may 

be associated with clinical outcomes. 

Monthly measurements will serve to 

identify elevated levels of serum 

calcium and phosphorus and trigger 

therapeutic interventions, thus 

contributing to high quality care. 

Because of these important 

considerations, and for the reasons 

stated above, we believe that it is 

important to adopt this measure even 

though it is not NQF-endorsed. We 

disagree that it is inappropriate to adopt 

a measure not endorsed by NQF under 

the exception set forth in the statute. We 

believe the exception language was 

intended for such a circumstance where 

an endorsed measure is not available for 

implementation to address key issues 

described in the statute, such as mineral 


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metabolism. We will continue to work 

toward the development and 

implementation of appropriate, NQFendorsed measures to support the ESRD 

QIP. 

Comment: Many commenters noted 

that it is impractical for facilities to 

obtain lab values from other providers 

because other providers are not required 

to measure these data, do not share data 

with dialysis facilities, and, even if 

facilities could obtain these data, they 

could not be sure that the lab values 

were consistent or reported under the 

same standards. Finally, these 

commenters stated that CROWNWeb 

does not permit facilities to submit data 

obtained from other providers if the lab 

result is outside the admission or 

discharge date. 

Response: We recognize that it may be 

difficult for facilities to coordinate with 

hospitals and other care providers in 

order to obtain lab values. Therefore, we 

are not mandating facilities to do so. In 

the CY 2013 ESRD PPS proposed rule 

(77 FR 40969), we stated that facilities 

may obtain lab values from other 

providers. This proposal was 

specifically designed to afford facilities 

more flexibility in acquiring and 

reporting serum calcium and serum 

phosphorus values. As discussed 

previously in this preamble, facilities 

are highly encouraged to coordinate 

with other providers, but the ESRD QIP 

does not mandate them to do so. We 

believe that the commenters’ concerns 

about inconsistent lab data are mitigated 

by the requirement that the lab must be 

accredited. Finally, the commenter is 

right in that CROWNWeb does not allow 

facilities to submit data obtained from 

other providers if the lab result is 

outside the admission or discharge date. 

As long as the patient is treated at least 

seven times by the facility during the 

applicable reporting month, however, 

the facility will be required to report the 

patient’s serum phosphorus and 

calcium levels regardless of whether the 

patient also has blood drawn elsewhere 

(for example, as a result of a 

hospitalization) during the month. 

Comment: Many commenters 

encouraged us to monitor, in addition to 

phosphorus and calcium, serum levels 

of parathyroid hormone (PTH), arguing 

that proper bone mineral management 

must take all three factors into account. 

Commenters also encouraged us to 

adopt measures in all of these areas. 

Response: We thank those 

commenters who advocated the 

monitoring of PTH. We recognize the 

important role played by parathyroid 

hormone in mineral metabolism in the 

ESRD population, and will pursue 

avenues by which we may monitor 

serum levels of parathyroid hormone in 

the future. 

As explained above, we are modifying 

our proposed exclusions and finalizing 

that any facility must report serum 

calcium and serum phosphorus levels 

for all (i) in-center Medicare patients 

who have been treated at least seven 

times by the facility; and (ii) home 

hemodialysis Medicare patients for 

whom the facility submits a claim least 

once per month via CROWNWeb at the 

lesser of the 50th percentile of facilities 

in 2013 or 97 percent per month to 

receive 10 points on the measure. We 

also finalize that we will only apply this 

measure to facilities with at least 11 (i) 

in-center Medicare patients who have 

been treated at least seven times by the 

facility; and (ii) home hemodialysis 

Medicare patients for whom the facility 

submits a claim. Facilities who treat less 

than 11 of these patients during the 

performance period must attest to this 

fact in CROWNWeb. If they do not make 

this attestation, we will score them 

accordingly. The technical 

specifications for this finalized measure 

can be found at http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/MineralMetabolismReporting-2015–FR.pdf. 

3. New Measures for PY 2015 and 

Subsequent PYs of the ESRD QIP 

As the program evolves, we believe it 

is important to continue to evaluate and 

expand the measures selected for the 

ESRD QIP. Therefore, for the PY 2015 

ESRD QIP and subsequent payment 

years, we proposed to adopt five new 

measures. The proposed new measures 

include: Three measures of dialysis 

adequacy (together comprising one 

dialysis adequacy measure topic); one 

measure of hypercalcemia; and one 

reporting measure related to hemoglobin 

and ESA dosages for all patients. 

a. Kt/V Dialysis Adequacy Measure 

Topic 

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

ESRD QIP must evaluate facilities based 

on measures of ‘‘dialysis adequacy.’’ For 

PYs 2012 through 2014, the ESRD QIP 

included a hemodialysis adequacy 

measure evaluating the number of 

patients with a URR of at least 65 

percent. For the PY 2015 ESRD QIP, and 

future payment years, we proposed to 

remove the URR Hemodialysis 

Adequacy measure. In its place, we 

proposed to adopt three measures of 

dialysis adequacy (together comprising 

one dialysis adequacy measure topic) 

based on Kt/V (K = clearance, t = 

dialysis time, and V = volume of 

distribution) for the PY 2015 ESRD QIP 

and future payment years of the 

program. Kt/V is a widely accepted 

measure of dialysis adequacy in the 

ESRD community because it takes into 

account the amount of urea removed 

with excess fluid. Further, while the 

URR Hemodialysis Adequacy measure 

only applies to in-center hemodialysis 

patients, we stated that the proposed Kt/ 

V measures will allow us to evaluate 

dialysis adequacy in adult hemodialysis 

(HD) patients (in-center and home 

hemodialysis (HHD)) receiving three 

treatments weekly, adult peritoneal 

dialysis (PD) patients, and pediatric HD 

patients receiving three to four 

treatments weekly. We proposed to 

adopt the following NQF-endorsed Kt/V 

measures of dialysis adequacy, each one 

applicable to a different patient 

population: 

(i) NQF #0249: Hemodialysis 

Adequacy Clinical Performance 

Measure III: Hemodialysis Adequacy— 

HD Adequacy—Minimum Delivered 

Hemodialysis Dose; 

(ii) NQF #0318: Peritoneal Dialysis 

Adequacy Clinical Performance 

Measure III—Delivered Dose of 

Peritoneal Dialysis Above Minimum; 

and 

(iii) NQF #1423: Minimum spKt/V for 

Pediatric Hemodialysis Patients. The 

proposed measures assess whether 

Medicare dialysis patients (PD, HD, and 

pediatric hemodialysis) meet the 

modality specific Kt/V threshold. 

Performance on the measures is 

expressed as a proportion of patientmonths meeting the measure threshold. 

The technical specifications for these 

measures can be found at http://www.

dialysisreports.org/pdf/esrd/publicmeasures/PediatricHemodialysis

Adequacy-ktv-2015-NPRM.pdf; http://

www.dialysisreports.org/pdf/esrd/

public-measures/PeritonealDialysis

Adequacy-ktv-2015-NPRM.pdf; and 

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

public-measures/Hemodialysis

Adequacy-ktv-2015-NPRM.pdf. 

We requested comment on these 

proposals. The comments we received 

on these proposals and our responses 

are set forth below. 

i. Adult Hemodialysis Adequacy 

Comment: The majority of 

commenters strongly supported the 

adoption of this measure and the 

removal of URR as a measure of dialysis 

adequacy, stating that the measure is 

more accurate and used more widely by 

the dialysis community. Other 

commenters, however, stated that URR 

is a more appropriate measure of 

dialysis adequacy because Kt/V is 

dependent upon many factors, 

including mid-week sampling, accurate 

urine collection, and dialysis 


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prescriptions, whereas URR needs only 

pre- and post-blood draws. One 

commenter did not support a Kt/V 

measure because it only promotes 

‘‘adequacy’’ rather than optimal health, 

urea is not associated with toxicity, it 

does not take into account 

ultrafiltration, and it is only a point in 

time measurement. Some commenters 

supported the adoption of Kt/V as a 

measure of dialysis adequacy for 

hemodialysis patients, but requested 

that we delay implementation until PY 

2016 so that we can ensure the data we 

are using to calculate achievement 

thresholds, benchmarks, and 

performance standards were calculated 

using consistent methodology. One 

commenter suggested that we include 

Kt/V in PY 2015, but calculate rates for 

performance standards, benchmarks, 

and thresholds based on data from 

January 1, 2012–June 30, 2012 since 

these dates would include only data that 

were calculated using the NQFendorsed formulae. Finally, one 

commenter stated that we should 

request raw data from facilities and 

calculate Kt/V to ensure consistency. 

Response: We thank those 

commenters who supported the 

implementation of these measures. We 

note that the published literature 

suggests there is insufficient evidence to 

support the superiority of alternative 

measures of small solute clearance over 

spKt/V. The KDOQI Clinical Practice 

Guideline for Methods for Measuring 

and Expressing Hemodialysis Dose (CPG 

2) also state that ‘‘the delivered Kt/V 

determined by single-pool urea kinetic 

modeling continues to be preferred as 

the most precise and accurate measure 

of dialysis’’ (page 12, KDOQI 2006 

Update). Furthermore, the minimum 

delivered hemodialysis dose for both 

adult and pediatric patients, spKt/ 

V>=1.2, was endorsed by NQF in 2007. 

Regarding concerns about the use of 

consistent methodology in the 

calculation of performance standards, 

beginning in January 2012, the measure 

specifications for adult and pediatric 

hemodialysis Kt/V state that single-pool 

Kt/V be measured using Daugirdas II or 

Urea Kinetic Modeling. We anticipate 

that these specifications will provide 

valid and consistent spKt/V values. 

We thank the commenter for the 

suggestion of utilizing data from January 

1, 2012–June 30, 2012 to set 

achievement thresholds, benchmarks, 

and performance standards. We believe, 

however, that whenever possible, these 

values should be based on a full year of 

data since these data, although not 

necessarily calculated using the same 

NQF-endorsed methodology, represent 

any changes that may occur as a result 

of seasonality. Additionally, utilizing 

this timeframe will enable us to post the 

numerical values of the performance 

standards as soon as they are available 

in December 2012 or January 2013. 

We thank the commenter for the 

suggestion of collecting raw data rather 

than calculated spKt/V values. At this 

time, we are not operationally able to 

request these elements on claims. We 

will consider this suggestion in future 

years of the program. 

Comment: Several commenters 

supported the measure but requested 

that we refine it to specify that the 

calculated spKt/V include estimates of 

residual renal function (RRF) to avoid 

incentivizing improper, longer dialysis 

sessions for these patients; one 

commenter recommended that, 

consistent with KDOQI guidance, RRF 

be included in spKt/V only if the urine 

collection used to measure it was within 

the previous 90 days. Commenters also 

requested that we exclude patients 

dialyzing four or more times per week 

or overnight and include patients with 

Kt/V less than 2.5 since many patients 

achieve these values. 

Response: Consistent with the 2006 

KDOQI Clinical Guidelines for 

hemodialysis adequacy, we do not find 

published, medical evidence to support 

the inclusion of RRF in defining the 

minimum target spKt/V. Additionally, 

effective January 2012, the Medicare 

claims processing instructions 

specifically state that the reported spKt/ 

V should not include RRF. We currently 

exclude patients dialyzing four or more 

times per week from the adult HD 

measure because this exclusion was 

NQF-endorsed. 

According to the measure 

specifications, overnight dialysis 

patients are included in the HD spKt/V 

measure unless they are dialyzing less 

than two or greater than four times per 

week, or if they are in the first 90 days 

of ESRD treatment. We do not currently 

have the ability to identify patients who 

are receiving thrice weekly in-center 

nocturnal hemodialysis and do not have 

a measure specific to this population. 

We are currently working with 

stakeholders to develop adequacy 

measures to address frequent, home, 

and nocturnal hemodialysis patients for 

future years of the ESRD QIP. 

Finally, patients with spKt/V less 

than 0.5 or greater than 2.5 are excluded 

from the Kt/V adult hemodialysis 

dialysis adequacy measure. Patients 

with HD spKt/V values greater than 2.5 

are excluded from the measure 

calculation as these values are 

considered implausible for most 

hemodialysis patients. 

Comment: Commenter stated that 

spKt/V does not reflect patients on short 

daily, frequent, and nocturnal dialysis 

and should be updated accordingly. 

Another commenter requested that we 

develop a spKt/V measure for home 

dialyzers. 

Response: We are currently working 

with stakeholders to develop adequacy 

measures to address other members of 

the ESRD population (i.e. frequent, 

home, and nocturnal hemodialysis 

patients) for future years of the ESRD 

QIP. 

Comment: One commenter requested 

that we specify that the lab draw for this 

measure should be done mid-week to 

better reflect patients’ actual conditions. 

Response: Under the measure 

specifications for the Kt/V adult 

hemodialysis adequacy measure, 

facilities are required to report the last 

spKt/V measurement of the month. The 

NQF-endorsed measures for minimum 

dialysis adequacy for both pediatric and 

adult patients do not adjust for the day 

of the week; a minimum target value of 

spKt/V greater than or equal to 1.2 

should be achieved regardless of when 

this is measured. We appreciate your 

suggestion and will take it under 

consideration during our ongoing 

measure maintenance. 

Comment: One commenter stated that 

‘‘dialysis adequacy’’ is a misnomer 

because it does not provide a full 

picture of dialysis adequacy. Instead, 

the commenter suggests it be called a 

measure of ‘‘urea removal,’’ encouraging 

stakeholders to develop measures that 

are more comprehensive of dialysis 

adequacy. Another commenter asked us 

to recognize that ‘‘adequacy’’ is not 

synonymous with optimal levels. 

Response: ‘‘Dialysis adequacy’’ is 

used in the ESRD QIP to represent the 

quantification of urea removal by 

dialysis, one widely accepted 

measurement of adequacy of this 

treatment. We recognize there are other 

aspects of dialysis adequacy, and we are 

currently working with stakeholders to 

develop additional measures for future 

years of the ESRD QIP. Additionally, we 

emphasize that these minimum spKt/V 

target levels may not be optimal levels 

for all patients. Therefore we encourage 

clinicians to consider targeting higher 

spKt/V targets on an individual patient 

basis as clinically indicated. 

ii. Peritoneal Dialysis Adequacy 

Comment: Many commenters 

supported the adoption of this measure 

and asked us to finalize the measure 

along with the formula and 

methodology for its calculation. One 

commenter explicitly asked us to 

finalize a methodology for obtaining 


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dialysate, blood, and urine sampling. 

Other commenters, however, did not 

support the measure, stating that we 

have not yet specified a consistent 

reporting methodology. These 

commenters suggested that we finalize 

this measure as a reporting measure 

only for PY 2015, define a methodology 

for calculating the values in the final 

rule, and use data from CY 2013 for 

purposes of adopting this measure as a 

clinical measure in future years. One 

commenter stated that we should 

request raw data from facilities and 

calculate Kt/V to ensure consistency. 

Finally, some commenters stated that 

they did not support the measure. 

Response: We thank the commenters 

who supported the adoption of this 

measure. There is more than one 

method that may be used by facilities to 

calculate PD Kt/V. Methods for 

reporting PD Kt/V on Medicare claims 

were specified prior to the start of data 

collection in July 2010 and are based on 

measure specifications endorsed by the 

National Quality Forum in 2007. 

Measurement of peritoneal dialysis Kt/ 

V is based on timed (24 hour) dialysate 

collection to measure urea clearance (k). 

Time (t) is specified in the definition 

(week or per week). The only 

component of Kt/V measurement in 

peritoneal dialysis that is formula-based 

is the estimation of total body water (V). 

V is estimated from either of two 

formulae (Watson or Hume) predictive 

equations that are based on patient 

anthropometric and demographic 

information. We will consider the 

standardization of estimating total body 

water as part of our annual ongoing 

measure maintenance process, but we 

note that we believe it is appropriate to 

adopt this measure without this 

standardization because the Watson and 

Hume formulae yield substantially 

similar results. Moreover, NQF 

approved the measure with the 

specification to use the Watson or Hume 

formula to estimate ‘‘V.’’ We choose to 

collect reported Kt/V, rather than the 

data elements for Kt/V, due to the 

limitations of collecting data on 

Medicare claims and to minimize 

burden on facilities. 

Comment: One commenter supported 

the use of Kt/V as a measure of dialysis 

adequacy for peritoneal dialysis 

patients, but suggested that we refine it 

in the final rule. This commenter stated 

that we need to: (i) Clarify in the 

technical measure specifications that a 

patient is only included in the measure 

population if he/she has been on 

peritoneal dialysis for 90 days or more 

so that a patient transferring from 

hemodialysis to peritoneal dialysis will 

not be immediately counted in the 

measure; and (ii) exclude patients in the 

first month they are eligible to be 

included in the denominator if no Kt/V 

measurement is taken until the fourth 

month since the measure specifies Kt/V 

need only be measured once every 4 

months. One commenter noted that a 

monthly measurement period for the 

measure is problematic because Kt/V is 

assessed throughout the month in home 

training clinics; this commenter 

suggested that there be a 30-day window 

from the time of the adequacy measure 

to adjust the prescription and repeat the 

adequacy measure. 

Response: We thank commenters for 

their feedback regarding the exclusion 

criteria for Kt/V for adult peritoneal 

ESRD patients. To the first point, 

patients are excluded from this measure 

if they are in the first 90 days of 

treatment for ESRD. If a patient changes 

from hemodialysis to peritoneal dialysis 

during a month, the patient would be 

included in both the HD and PD Kt/V 

measure calculations. The 2006 KDOQI 

Clinical Practice Guidelines for 

peritoneal dialysis adequacy (Guideline 

2.1.2) state ‘‘the total solute clearance 

(residual kidney and peritoneal, in 

terms of Kt/V) should be measured 

within the first month after initiating 

dialysis therapy and at least once every 

4 months thereafter.’’ While this 

measure is consistent with the 

guideline, we acknowledge that a 

patient may be included in the PD Kt/ 

V measure calculation in the same 

month their modality changed to PD. 

However, after switching from 

hemodialysis to peritoneal dialysis, 

peritoneal dialysis clearance typically is 

not measured right away or even in the 

same month as the PD catheter 

insertion, as the peritoneal membrane is 

in a state of flux and its membrane 

transport characteristics are unstable for 

a few weeks. In several clinical 

scenarios it may not be appropriate to 

measure PD Kt/V within the first several 

weeks after initiation of peritoneal 

dialysis. Therefore, we believe that the 

PD unit personnel will not have 

measured PD adequacy in the 30 days 

following the transition from HD to PD. 

With regard to the comment on 

excluding patients from the 

denominator for the first month if no 

measurement is taken until the fourth 

month, we use the data reported in 

conjunction with Medicare dialysis 

facility claims value code D5: Result of 

last Kt/V reading and occurrence code 

51: Date of last Kt/V reading. The claims 

reporting instructions indicate that for 

PD patients this should be within the 

last 4 months of the claim date of 

service. All monthly claims with valid 

PD Kt/V values will be used in the 

calculation. In response to the monthly 

measurement period comment, for PD 

patients, facilities are only required to 

report Kt/V once every 4 months. 

Comment: One commenter urged us 

to develop a pediatric peritoneal 

dialysis adequacy measure in 

collaboration with stakeholders. 

Response: We are currently working 

with stakeholders to develop a pediatric 

peritoneal dialysis adequacy measure as 

part of a consensus-based measure 

development process, and we will 

consider implementing such a measure 

through future rulemaking. 

iii. Pediatric In-Center Hemodialysis 

Adequacy 

Comment: Several commenters 

supported the adoption of a Kt/V 

hemodialysis adequacy measure for 

pediatric patients even if we do not 

adopt the adult Kt/V measures. Other 

commenters, however, argued that we 

should not finalize the pediatric incenter hemodialysis adequacy measure 

because (i) the measure does not 

exclude RRF patients; and (ii) the 

measure applies to 4 times per week 

hemodialysis. These commenters 

believe that adoption of the proposed 

measure would, in effect, raise the 

pediatric dialysis dose above the adult 

dialysis dose in a substantial number of 

children who either have a significant 

RRF or are treated with dialysis four 

days a week; they caution that we 

should avoid incentivizing improper, 

longer dialysis sessions for these 

patients. Some commenters urged us to 

harmonize the adult and pediatric spKt/ 

V hemodialysis adequacy measures, 

specifically regarding the required 

number of dialysis sessions for 

inclusion in the measure and the 

inclusion of RRF. Another commenter 

stated that we should consider changing 

the measure so that it is based on 

weekly dose. Other commenters stated, 

generally, that spKt/V is not appropriate 

for pediatric patients and encouraged us 

to work with stakeholders to develop a 

suitable pediatric dialysis measure. 

Response: We thank the commenters 

who supported the implementation of 

the spKt/V hemodialysis adequacy 

measure for pediatric patients and those 

who provided feedback for its 

implementation. The measure 

methodology was developed through a 

consensus-based process incorporating 

the input of a Technical Expert Panel 

and was endorsed by NQF in 2011. The 

pediatric hemodialysis adequacy 

measure differs from the corresponding 

adult adequacy measure in that the 

measure applies to patients receiving 

four dialysis treatments a week. 


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Analysis of 2007 claims data suggest 

that in 5.6 percent of patient-weeks, 

dialysis sessions occurred four times per 

week for pediatric patients. Given that 

this is a significant proportion, the TEP 

concluded that these patients should be 

included in this measure. As seen in 

Table 4 below, there were three or four 

dialysis sessions in approximately 88 

percent of patient-weeks. Based on these 

results, the TEP concluded that by 

defining the denominator as 

hemodialysis patients receiving dialysis 

three or four times weekly, the measure 

will be applicable to most pediatric 

hemodialysis patients. 

TABLE 4—DIALYSIS SESSIONS PER PATIENT WEEK AMONG ALL HD PEDIATRIC PATIENTS < 20 YEARS OLD

Sessions 

per week 

Number of 

patient-weeks Percent 

1 ................ 211 2.6 

2 ................ 614 7.5 

3 ................ 6712 82.2 

4 ................ 533 6.5 

5 ................ 60 0.7 

6 ................ 36 0.4 

7 ................ 3 0.04 

N=312 patients with first Medicare 

dialysis claim on or before January 1, 

2007. 

With regard to the incorporation of 

RRF in the calculation of adequacy, the 

TEP did not agree that RRF should be 

added to the measure description for 

several reasons: (i) Published studies 

evaluating dialysis adequacy in the 

pediatric population do not include 

residual renal function; (ii) RRF changes 

continuously with age in the pediatric 

population; and (iii) RRF is difficult to 

measure among pediatric patients. 

Neither the NQF-endorsed measure 

specifications nor the KDOQI guidelines 

support measuring spKt/V in pediatric 

patients based on a weekly dose. 

Furthermore there is no evidence to 

support a minimum target value for a 

weekly Kt/V dose. We will continue to 

consider other measurements of dialysis 

adequacy for the pediatric population; 

at this time, we believe that this 

measure is the most suitable. 

For the reasons stated above, we are 

adopting the Kt/V measure topic as 

proposed. The technical specifications 

for each of the finalized measures in this 

measure topic can be found at http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/ 

HemodialysisAdequacy-ktv-2015– 

FR.pdf (adult hemodialysis), http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/ 

PeritonealDialysisAdequacy-ktv-2015– 

FR.pdf (adult peritoneal dialysis), and 

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

public-measures/ 

PediatricHemodialysisAdequacy-ktv2015–FR.pdf (pediatric in-center 

hemodialysis). 

b. Hypercalcemia 

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

states that the measures specified for the 

ESRD QIP shall include other measures 

as the Secretary specifies, including, to 

the extent feasible, measures of bone 

mineral metabolism. Abnormalities of 

bone mineral metabolism are 

exceedingly common and contribute 

significantly to morbidity and mortality 

in patients with advanced Chronic 

Kidney Disease (CKD). Numerous 

studies have associated disorders of 

mineral metabolism with morbidity, 

including fractures, cardiovascular 

disease, and mortality. Therefore, we 

believe it is necessary to adopt a clinical 

measure that encourages proper bone 

mineral metabolism management. 

One indicator of bone mineral 

metabolism management is ensuring 

normal calcium levels in the blood. 

Therefore, we proposed to use the NQFendorsed measure, NQF #1454: 

Proportion of patients with 

hypercalcemia, to evaluate ESRD 

facilities for the PY 2015 and future 

payment years of the ESRD QIP. This 

measure assesses the number of patients 

with uncorrected serum calcium greater 

than 10.2 mg/dL for a 3-month rolling 

average. ‘‘Uncorrected’’ means not 

corrected for serum albumin 

concentration. Performance on this 

measure is expressed as a proportion of 

patient-months for which the 3-month 

rolling average exceeds the measure 

threshold. Because the NQF-endorsed 

measure calls for a 3-month rolling 

average, we also proposed that the first 

measure rate for this measure would be 

calculated using the first 3 months of 

data collected during the proposed 

performance period (that is, there would 

be no measure rate for the first 2 months 

of the performance period; we would 

calculate the first measure rate for the 

performance period using the first 3 

months of data and would then 

calculate a rate each successive month, 

dropping the oldest month and adding 

the newest month). Because we 

proposed to adopt this measure not only 

for PY 2015, but also subsequent 

payment years, we also proposed that, 

beginning with the PY 2016 program, 

we would measure hypercalcemia 

beginning in January of the applicable 

performance period. This would allow 

us to have a 3-month rolling average for 

all months in the performance period. 

We proposed that the 3-month rolling 

average rate for January would be 

calculated using the rates from 

November and December of the 

previous year as well as January of that 

year. Likewise, we proposed that the 

rate for February would be calculated 

using the rates from December, January 

and February to calculate the 3-month 

rolling average, and so on. Technical 

specifications for this measure can be 

found at http://www.dialysisreports.org/ 

pdf/esrd/public-measures/ 

MineralMetabolism-Hypercalcemia2015–NPRM.pdf. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Several commenters 

supported this measure, noting that it is 

consistent with KDIGO guidelines and 

is especially necessary given that we 

will include oral-only drugs in the 

bundle beginning in PY 2014; some 

commenters specifically argued that that 

there is sufficient validity and reliability 

of the data collected in CROWNWeb to 

establish an appropriate clinical 

measure for PY 2015, and noted that 

this measure is in keeping with 

Congress’ intent to include a measure of 

bone mineral metabolism in the ESRD 

QIP. Other commenters, however, stated 

their belief that, despite its NQFendorsement, the measure is not aligned 

with clinical standards, is contrary to 

KDIGO guidelines, and does not 

advance the aims of the National 

Quality Strategy. Additionally, several 

commenters, both those supporting and 

opposing the measure, argued that it is 

inappropriate to use CROWNWeb data 

to define performance standards, 

achievement thresholds, and 

benchmarks because the data 

underrepresents small- and mid-sized 

dialysis organizations, does not account 

for the differences in reporting which 

may exist when data are voluntarily 

reported (and data were voluntarily 

reported in the CROWNWeb pilot), was 

submitted with the understanding that it 

was test data and would not be used by 

CMS programs, and because it suffers 

from serious data collection problems, a 

lack of definitions, and a lack of 

reporting requirements in CROWNWeb. 

Many commenters suggested that we 

adopt this measure as a reporting 

measure only for PY 2015. Several other 

commenters believe that the proposed 

hypercalcemia measure is only 

appropriate if we include similar 

clinical measures for serum phosphorus, 

parathyroid hormone (PTH), and other 

mineral metrics because a 

hypercalcemia measure alone represents 

a piecemeal approach to bone and 

mineral metabolism that will not be 

sufficient to ensure quality care for 

ESRD patients and may even incentivize 


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4Hematocrit values are used to calculate 

hemoglobin levels by taking the hematocrit value 

and dividing by three. 

inappropriate care. Finally, commenters 

recommended that CMS monitor 

secondary parathyroid hormone and not 

include oral-only drugs in the bundle 

until such measures and monitoring are 

in place. 

Response: Commenters rightly state 

that the performance standards, 

achievement thresholds, and 

benchmarks for the proposed 

Hypercalcemia measure were not 

calculated using data from all facilities. 

Because it is possible that these 

calculations could contain a systemic 

bias, and we have no effective means of 

addressing that bias in the ESRD QIP as 

this time, we will not finalize a clinical 

measure for hypercalcemia, as discussed 

above, until valid data from all facilities 

are accessible for the purpose of 

establishing performance standards, 

achievement thresholds, and 

benchmarks. We are not finalizing a 

clinical Hypercalcemia measure at this 

time. We do, however, continue to 

believe that hypercalcemia is an 

important indicator of bone mineral 

metabolism, and we intend to use this 

measure in subsequent payment years. 

Comment: One commenter stated that, 

generally, we should not use data from 

CROWNWeb for the ESRD QIP until the 

validity of CROWNWeb data is 

confirmed. Commenters also urged us to 

find solutions for the CROWNWeb 

issues which the community has been 

experiencing in order to ensure that, as 

measures increasingly rely on 

CROWNWeb data, there is no question 

as to the data’s validity. 

Response: We thank the commenters 

who expressed concern regarding the 

use of CROWNWeb data for the ESRD 

QIP. Given the potential risk to validity 

of ESRD QIP clinical measures 

calculated using CROWNWeb data, we 

will not finalize the proposed clinical 

measure for hypercalcemia that depends 

on those data, as noted above. 

Comment: One commenter urged us 

to exclude patients who have 

hypercalcemia for reasons other than 

ESRD treatment (for example, 

medication and malignancy) from the 

Hypercalcemia measure. The 

commenter requests confirmation that 

the Hypercalcemia measure includes all 

patients rather than just Medicare 

patients, and is concerned with CMS’ 

move to include the total facility 

population in the measure collection 

process. One commenter seeks 

clarification regarding whether a lower 

or higher rate is desirable for the 

Hypercalcemia measure. 

Response: We thank the commenters 

for raising these issues with the 

Hypercalcemia measure, and we will 

incorporate them in discussions during 

future rulemaking, when the 

Hypercalcemia measure is considered as 

a measure for the ESRD QIP in future 

payment years. 

For the reasons discussed above, we 

will not finalize the Hypercalcemia 

measure for use in the PY 2015 ESRD 

QIP or subsequent years until indicated 

otherwise in rulemaking. 

c. Anemia Management Reporting 

Measure 

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

‘‘measures on anemia management that 

reflect the labeling approved by the 

Food and Drug Administration (FDA) 

for such management.’’ Although the 

current FDA-approved label for ESAs 

only specifically addresses hemoglobin 

levels greater than 11 g/dL, previous 

FDA-approved labels suggested patients 

on ESAs maintain a hemoglobin level of 

10–12 g/dL. As we noted in the CY 2012 

ESRD PPS final rule, upon further 

research, the FDA determined that there 

is no evidence suggesting a lower target 

level at which hemoglobin does not 

cause increased risks of death, serious 

adverse cardiovascular reactions, and 

stroke and, therefore, changed its 

approved label on June 24, 2011 (76 FR 

70257). 

As a result of the changes in the FDA 

approved-label and the implementation 

of the ESRD QIP, we are monitoring 

trends and indicators of anemia 

management for the Medicare ESRD 

population. We have found that the 

average monthly blood transfusion rate 

increased from 2.7 percent in 2010 to 

3.2 percent in 2011. We are working 

through our ESRD QIP monitoring and 

evaluation program to further assess the 

effect of the ESRD PPS. We believe that 

it is important that we continue 

monitoring hemoglobin levels in 

patients to ensure that anemia is 

properly treated, and we, therefore, 

proposed to adopt a measure for PY 

2015, and future payment years, which 

requires facilities to report ESA dosage 

(if applicable) and hemoglobin and/or 

hematocrit levels for patients on at least 

one monthly claim. In addition to this 

measure, proposed below, we plan to 

continue to monitor the rate of 

transfusions and may consider the 

adoption of relevant quality measures 

through future rulemaking if necessary. 

Since January 1, 2012, facilities have 

been required to report hemoglobin or 

hematocrit 4 levels for each patient on 

every claim (CR 7640). Beginning April 

1, 2012, if a hemoglobin or hematocrit 

value is not included in the claim, the 

claim is returned to the facility (CR 

7593). If a hemoglobin or hematocrit 

value is not available for a patient, a 

facility can enter a default value of 

99.99 on the claim and the claim will 

not be returned, provided the facility is 

not billing for an ESA. The default value 

is not acceptable when the claim 

includes an ESA, in such a case, the 

claim will be returned to the facility. 

We stated in the proposed rule that 

we are concerned that our current 

policy of paying claims that include a 

default hemoglobin or hematocrit value 

of 99.99 could lead to the underreporting of patients’ hemoglobin or 

hematocrit levels and ESA dosage by 

facilities; we are specifically concerned 

that we will not receive complete and 

accurate hemoglobin/hematocrit 

readings for those patients not receiving 

ESAs because a default value of 99.99 

can be reported on claims, and these 

claims will be paid, if no ESA is 

administered to the patient. 

Additionally, we believe that facilities 

might choose to strategically not report 

certain patients’ hemoglobin or 

hematocrit levels on certain claims— 

those where the patient’s hemoglobin 

levels are greater than 12 g/dL—in order 

to make the performance rate of their 

Hemoglobin Greater Than 12 g/dL 

measure seem better and reduce the 

likelihood of a payment reduction under 

the ESRD QIP. 

Because it is possible that facilities 

could under-report hemoglobin or 

hematocrit levels, we proposed to adopt 

an Anemia Management reporting 

measure for the PY 2015 ESRD QIP, and 

future payment years of the program. 

For this measure, we proposed to 

require facilities to report a hemoglobin 

or hematocrit value and, as applicable, 

an ESA dosage for all Medicare patients 

at least once per month via claims. We 

proposed to consider claims with 99.99 

values as not meeting the requirements 

of this measure (that is, claims reporting 

99.99 will be counted as if the 

hemoglobin or hematocrit value were 

left blank). 

We stated that we do not intend for 

this proposed measure to encourage 

unnecessary testing or unduly burden a 

facility. Consequently, for purposes of 

scoring the measure, we considered 

proposing to require facilities to report 

the required information for less than 

100 percent of their patients. 

Specifically, we considered lowering 

the threshold to reporting 98 percent of 

patients for a month in order to receive 

credit for that month. We ultimately 

proposed that a facility should be 

required to take and report these values 

for every patient at least once per month 

so that each beneficiary receives the 


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highest standard of care. We realize, 

however, that there are circumstances 

beyond a facility’s control wherein it 

may not be able to draw a sample for 

this patient. Therefore, we did not 

propose that the facility itself must draw 

blood for each patient. If, for example, 

a patient is hospitalized or transient 

during a claim month, the facility may 

report the hemoglobin/hematocrit 

readings and ESA dosage (if applicable) 

for the patient for a month if a patient 

has labs drawn by another provider/ 

facility and those labs are evaluated by 

an accredited laboratory (a laboratories 

that is accredited by, for example, the 

Joint Commission, the College of 

American Pathologists, the AAB 

(American Association of Bioanalysts), 

or State or Federal agency), and the 

dialysis facility obtains the hemoglobin/ 

hematocrit readings and ESA dosage. 

Additionally, we proposed to only 

consider a patient qualified for this 

measure (i) if the patient is alive at the 

end of the month; (ii) if the patient is 

treated in-center, that patient was 

treated at that facility at least twice 

during the claim month; and (iii) if the 

patient receives dialysis at home, a 

claim is submitted for that patient. We 

believe that these proposals will provide 

more flexibility for facilities and will 

also discourage facilities from drawing 

blood, even when not necessary for fear 

that the patient will fail to come to the 

facility again during that month. We 

requested comment on this proposal. 

We also requested comment on whether 

facilities should only have to report data 

for 98 percent of their patients. 

The proposed Anemia Management 

reporting measure was not included in 

the list of measures under consideration 

in accordance with section 1890A(a)(2) 

of the Act because we had not yet fully 

assessed the impact of the new FDAapproved ESA labeling on the ESRD 

population. We have since received and 

analyzed more, but still incomplete, 

anemia management data; we believe it 

is necessary to require facilities to 

provide complete data so that we may 

fully understand the effect of the 

changes to ESA labeling and other 

factors. The proposed Anemia 

Management reporting measure will 

play a critical role in patient safety. As 

noted above, our monitoring activities 

indicate that there has been a slight but 

noticeable increase in transfusions since 

the adoption of the ESRD PPS. 

Additionally, a United States Renal Data 

System analysis presented in May 2012 

found an increase in blood transfusion 

rates among ESRD patients concurrent 

with the implementation of the ESRD 

PPS. Although the association of 

changes in transfusion rates with the 

ESRD PPS, FDA labeling changes, and 

other factors are not yet known, we 

believe proactive facility engagement in 

regular monitoring of patient 

hemoglobin or hematocrit levels 

regardless of ESA use is critical to 

maintaining safe care, protecting the 

safety of beneficiaries, and monitoring 

the program effectively. We further 

believe that the data collected from the 

proposed measure are necessary for 

measure development in a clinical area 

of critical significance to patient 

safety—anemia and transfusion. A delay 

in proposing to adopt this reporting 

measure may prevent us from creating 

clinical measures for use in future years 

of the program and pose a risk to 

patients. Finally, we noted that section 

1881(h) of the Act specifically 

highlights the importance of anemia 

management measures, and we do not 

believe it would be in the best interest 

of the program to wait an additional 

year to propose this measure. 

For the reasons stated above, we 

proposed to adopt an Anemia 

Management reporting measure for the 

PY 2015 ESRD QIP and subsequent 

payment years. We provided the 

technical specifications for this 

measure, at http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/AnemiaManagementReporting-2015–NPRM.pdf. We 

requested public comment on these 

proposals. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Some commenters 

supported the measure, stating that they 

believe this measure will allow us to 

closely monitor the underutilization of 

ESAs and the increase in transfusions. 

Commenters also stated that they 

believe that this measure will assist in 

explaining and monitoring timely ESA 

discontinuation and studying the 

potential effect of altitude on patients. 

Many commenters supported this 

measure, but requested that we make 

modifications to our proposed 

exclusions. These commenters 

suggested that we exclude, for all of the 

reporting measures, the following 

patients: (i) Beneficiaries who are 

regularly treated at the facility and who 

fit into one of these categories: (a) 

beneficiaries who die within the 

applicable month; (b) beneficiaries that 

receive fewer than 7 treatments in a 

month; and (c) beneficiaries receiving 

home dialysis therapy who miss their 

in-center appointments when there is a 

documented, good faith effort to have 

them participate in such a visit during 

the applicable month; (ii) transient 

dialysis patients; (iii) pediatric patients 

(unless the measure is specific to this 

population); and (iv) kidney transplant 

recipients with a functioning graft. 

Commenters stated that these exclusions 

would be consistent with our own 

measures reported on DFC; commenters 

also stated that these exclusions seek to 

hold facilities accountable only for 

those beneficiaries to whom they 

regularly give care and for whose care 

they can affect. Another commenter, 

however, stated that we should not 

implement other commenters’ 

suggestions that we exclude 

beneficiaries receiving home dialysis 

therapy who miss their in-center 

appointments when there is a 

documented, good faith effort to have 

them participate in such a visit during 

the applicable month; this commenter 

stated that it is the responsibility of the 

facilities to educate patients on the 

importance of making and keeping 

appointments. Additionally this 

commenter argued that ‘‘good faith’’ is 

too vague; commenter requested that, if 

we did adopt this exclusion, we clearly 

define a ‘‘good faith effort.’’ Another 

commenter stated that peritoneal 

dialysis patients do not need to be seen 

at a facility once per month and the 

measure should be accordingly revised. 

Response: Consistent with the 

Mineral Metabolism reporting measure, 

we agree with commenters who believe 

that the exclusions should be modified. 

We recognize that treating a patient 

twice may not provide enough time to 

effectuate quality patient care. We agree 

with the commenters who suggested 

that an in-center hemodialysis patient 

should be excluded if treated by a 

facility fewer than seven times during 

the month, regardless of whether the 

patient is officially admitted to that 

facility. With seven treatments, we 

believe that a facility should have had 

adequate opportunities to draw blood 

necessary to report hemoglobin/ 

hematocrit. We also believe that the 

threshold of seven will discourage 

unnecessary testing of in-center 

hemodialysis patients by facilities 

because they will know that, since incenter patients are typically treated 

three times per week, a patient must 

have been treated by the facility for at 

least two weeks to be included; thus, the 

facility need not feel pressure to draw 

blood for every patient during the first 

few visits of the month. Based on these 

considerations, we will not finalize our 

proposal to only exclude in-center 

patients who have been treated fewer 

than two times by the facility during the 

claim month. Instead, we will exclude 

any patient who is treated by the facility 


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fewer than seven times during the 

reporting month. 

We do not believe that it is necessary 

to specifically exclude transient patients 

from this measure because, as noted, 

any patient that is treated by the facility 

at least seven times during the 

applicable reporting month is present at 

the facility for enough time that the 

facility should be able to measure that 

patient’s hemoglobin/hematocrit. 

Likewise, for the same reasons, we do 

not believe we need to separately 

exclude patients who are deceased at 

the end of the reporting month. 

Provided that the patient was treated by 

the facility at least seven times during 

that month, the facility should be able 

to draw blood necessary to obtain 

hemoglobin/hematocrit values even if 

the patient is deceased at the end of the 

month. 

Additionally, we do not agree that 

facilities should not be held accountable 

for drawing blood from home dialysis 

patients who fail to attend a monthly 

appointment. We believe that it is 

incumbent upon a facility to make home 

dialysis patients aware that they must 

attend monthly appointments to be 

properly treated. Therefore, we will 

finalize our proposal that we will 

include any home hemodialysis patient 

for which a facility submits a claim with 

respect to the reporting month in this 

measure. 

Finally, we believe it is important to 

include transplant patients until they 

are officially discharged from a facility; 

regular monitoring can help ensure that 

a transplant remains effective and the 

facility is continuing to provide the best 

care possible. 

For the reasons stated above, we will 

modify our proposals for the exclusions 

for this measure and finalize that, for 

the PY 2015 ESRD QIP, facilities must 

report hemoglobin/hematocrit at least 

once per month via claims for (i) incenter Medicare patients who have been 

treated at least seven times by the 

facility; and (ii) home hemodialysis 

Medicare patients for whom the facility 

submits a claim. If the facility 

administers an ESA to these patients, it 

must also report the HCPCS code and 

corresponding unit for that patient. We 

will interpret an empty HCPCS field to 

mean that no ESA was administered. 

Comment: Several commenters 

encouraged us to not adopt a percentage 

reporting threshold because it does not 

distinguish between beneficiaries 

legitimately excluded and those that 

were merely missed. Other commenters 

requested that we use both exclusions 

and a threshold; one commenter 

suggested a threshold of 90 percent or 

an allowance of two patients to ensure 

that small facilities are not 

disproportionally affected. Another 

commenter stated that requiring 98 

percent reporting may make it difficult 

for patients to travel because dialysis 

facilities may encourage them otherwise 

in order to ensure compliance with the 

measure. One commenter requested that 

we provide guidance regarding the 

standardization of blood-draws so that 

data can be reliable before we 

implement a reporting threshold. 

Response: We agree with the 

commenters who argued that, even with 

exclusions, there are circumstances in 

which facilities cannot report the 

hemoglobin/hematocrit and ESA 

dosage, as applicable, for every patient 

at least once per month. It is possible 

that these exclusions alone may hold a 

facility responsible for a patient who 

was technically treated by the facility 

but who did not receive actual treatment 

from the facility during the applicable 

month. For example, a facility may wait 

to draw blood from a patient because it 

believes that the patient will be treated 

there for the entirety of the month, but 

learns that the patient has been 

hospitalized unexpectedly for all or part 

of the applicable month. Therefore, we 

believe that we should not require 

facilities to report for 100 percent of 

their patients. Based on data from 

CROWNWeb, we believe that facilities 

report hemoglobin/hematocrit and ESA 

dosage for approximately 99 percent of 

their patients on a monthly basis. We 

believe it is appropriate to assume that 

a similar percentage was reported via 

claims. Although, as commenters have 

argued with regard to the Mineral 

Metabolism reporting and the 

Hypercalcemia measures, this 

information in CROWNWeb was 

voluntarily reported which may mean 

that the data is biased toward facilities 

that value reporting; additionally, the 

data from the CROWNWeb pilot was 

mainly supplied by LDOs that may be 

more likely to have more resources and 

corporate policies that require reporting 

compliance. 

Taking all of these issues into 

consideration, we finalize a normative 

reporting threshold for this measure; 

facilities will be required to report at the 

lesser of the 50th percentile of all 

facilities in 2013 or 99 percent, in total, 

of their (i) in-center Medicare patients 

who have been treated at least seven 

times by the facility; and (ii) home 

hemodialysis Medicare patients for 

whom the facility submits a claim. This 

floor ensures that facilities are not 

penalized as long as they report at a 

high rate that is consistent with 

CROWNWeb data; that is, facilities 

know that, provided they reach 99 

percent for each month of the 

performance period, they will meet the 

requirements of the measure. We believe 

that this methodology fairly balances 

the concerns that the reporting in 

CROWNWeb is skewed with our desire 

to encourage continued excellence in 

the community. 

We are concerned that small facilities 

may be disproportionately impacted by 

the reporting threshold because, for 

example, a facility with 10 patients 

could fail to report for only one patient 

and, therefore, fail to meet the 

threshold. As we discuss below, we 

believe that 11 cases is an appropriate 

minimum for purposes of scoring 

clinical measures. As we have stated, 

we intend to use the information 

collected from reporting measures for 

purposes of scoring clinical measures 

based on the same data in subsequent 

payment years. Therefore, we will not 

require a facility to report this measure 

if it treats less than 11 (i) in-center 

Medicare patients who have been 

treated at least seven times by the 

facility; or (ii) home hemodialysis 

Medicare patients for whom the facility 

submits a claim. If a facility does not 

treat at least 11 of these patients during 

the performance period, it will be 

required to attest to this fact via 

CROWNWeb. If a facility does not make 

the attestation, we will score it 

accordingly. 

Comment: Several commenters do not 

support this measure because facilities 

already collect these data so the 

measure is unlikely to improve care. 

Some of these commenters asked us to 

require facilities to report this 

information separate from the ESRD QIP 

on at least one monthly claim to ensure 

anemia is properly treated. 

Response: As we noted in the 

proposed rule (77 FR 40974), we believe 

that this measure will discourage 

underreporting of ESAs and 

hemoglobin. Currently, facilities may 

report a value of 99.99 as default 

hemoglobin for claims that do not 

include an ESA. Since the bundle 

includes ESAs, it may not be financially 

beneficial for a facility to report an ESA, 

especially if a patient’s hemoglobin is 

greater than 12—negatively affecting its 

Hemoglobin Greater than 12 g/dL 

measure score. Additionally, we are 

concerned that the 99.99 value will be 

overutilized and will not allow us to 

properly monitor hemoglobin levels 

across the ESRD population. If we are 

able to closely and accurately monitor 

ESA dosage and hemoglobin, we believe 

we will be able to improve care by using 

this information to monitor the effects of 

the bundle and the ESRD QIP on 

beneficiaries; we also believe we may 


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5http://www.cms.gov/Outreach-and-Education/ 

Medicare-Learning-Network-MLN/ 

MLNMattersArticles/downloads/MM4135.pdf. 

utilize these data in the future to 

develop an anemia management clinical 

measure. 

Comment: Many commenters noted 

that it is impractical for facilities to 

obtain lab values from other providers 

because other providers are not required 

to measure these data, do not share data 

with dialysis facilities, and, even if 

facilities could obtain these data, they 

could not be sure that the labs were 

consistent or reported under the same 

standards. Additionally, one commenter 

argued that hemoglobin levels from 

other facilities will be of little use 

without further information regarding 

why the patient was at that facility. One 

commenter agreed that hemoglobin/ 

hematocrit values can be supplied by 

another provider provided the labs are 

evaluated by an accredited facility. 

Response: We recognize that it may be 

difficult for facilities to coordinate with 

hospitals and other providers in order to 

obtain lab values. We, however, are not 

mandating facilities to do so. In the 

proposed rule (77 FR 40974), we stated 

that facilities may obtain lab values 

from other providers. This proposal was 

specifically designed to afford facilities 

more flexibility in acquiring and 

reporting hemoglobin and hematocrit 

values, as well as ESA dosage. Facilities 

are highly encouraged to coordinate 

with other providers, but this measure 

does not mandate them to do so. We 

believe that the commenters’ concerns 

about inconsistent lab data are mitigated 

by the requirement that the lab must be 

accredited. Further, we do not believe 

that data from another provider will be 

of little use. We can use these values to 

monitor hemoglobin and hematocrit 

levels of ESRD patients, as well as ESA 

dosage; additionally, collecting these 

data may encourage providers to engage 

one another about the patient’s 

conditions and care. 

Comment: One commenter noted that 

hemoglobin values on claims are from 

the prior month; therefore the 99.99 is 

used for the claim in the first month of 

a patient’s dialysis or if a patient had a 

transplant. The commenter requested 

clarification on what it should report in 

these circumstances. Other commenters 

argued that 99.99 should be available 

without penalty to facilities because in 

some instances, it is appropriate. One 

commenter supported disincentivizing 

99.99 reporting in order to stop facilities 

from not reporting patients with high 

hemoglobin. 

Response: The commenter is correct 

in that the Erythropoietin Monitoring 

Policy (2006) 5 requests that the 

hemoglobin/hematocrit reading reported 

on claims be defined as ‘‘the most recent 

reading taken before the start of this 

billing period. For patients beginning 

dialysis, use the most recent value prior 

to the onset of treatment.’’ We recognize 

that, for some patients, specifically 

those new to dialysis, this hemoglobin/ 

hematocrit values may not be available. 

Therefore, we will not require a facility 

to report a hemoglobin/hematocrit value 

for a patient if that patient has been on 

dialysis for less than one month 

(including when dialysis is resumed 

after a transplant); facilities may report 

the default value without being 

penalized in this circumstance. We 

remind facilities that if an ESA is 

reported on a claim, the facility must 

also report a hemoglobin/hematocrit 

level, regardless of whether that patient 

is new to dialysis (CR 7460). 

Comment: One commenter asked us 

to include Omontys, an ESA new to the 

market, in this measure. Other 

commenters generally requested that we 

monitor new ESAs and their effects on 

hemoglobin levels. 

Response: We intend to monitor ESA 

dosage for all ESAs used by dialysis 

facilities. Using HCPCS codes, a facility 

must indicate which ESA it 

administered, including Omontys. 

Comment: One commenter noted that 

it supports the reporting of hemoglobin, 

but not hematocrit because the data set 

should be standardized to require only 

hemoglobin reporting. 

Response: Facilities can report either 

hemoglobin or hematocrit on claims. 

Either will count for the purpose of this 

measure. (For the Hemoglobin Greater 

than 12 g/dL measure, hematocrit values 

are changed to hemoglobin by dividing 

by 3). As of 2011, only 14 percent of 

facilities reported hemoglobin, while 70 

percent reported hematocrit. We believe 

that requiring 70 percent of all facilities 

to alter their reporting method would 

generate undue burden on the dialysis 

facility community, for relatively little 

gain, as we have an established method 

for incorporating both hemoglobin and 

hematocrit into the measure calculation. 

Comment: Some commenters asked us 

to state the purposes of the anemia 

management reporting measure with 

more specificity. Some commenters 

requested that we clarify how we intend 

to report and make publicly available 

hemoglobin/hematocrit levels and ESA 

dosages. Commenters asked us to clarify 

the plans for the use of the information 

and how we will account for patient 

weight in our analyses. 

Response: We believe that the anemia 

management reporting measure 

emphasizes the importance of anemia 

management for the ESRD population 

and will support efforts to establish 

more meaningful, evidence-based 

clinical measures of anemia 

management in the future. We intend to 

publicly report the anemia management 

reporting measure rates in the same 

manner that we use to publicly report 

other measure rates under the ESRD QIP 

but will not score facilities based on 

those rates. Facilities will be able to 

preview the reporting data to be 

publicly reported before we post it on 

DFC. At present, the Anemia 

Management reporting measure does not 

take patient weight into account, but we 

will consider whether this type of 

adjustment is appropriate for future 

years of the ESRD QIP. We would also 

like to clarify that we will use HCPCS 

codes that indicate ESA administration 

and their corresponding units for 

assessing whether an ESA was 

administered. We will interpret an 

empty HCPCS field to mean that no ESA 

was administered. 

Comment: One commenter supports 

this measure but suggests that the data 

be captured in CROWNWeb since 

hemoglobin levels are only reported on 

claims with ESA doses. 

Response: The commenter is correct 

that CROWNWeb only requires a 

hemoglobin/hematocrit if an ESA is 

entered. 

Since January 1, 2012, however, 

facilities have been required to report 

hemoglobin/hematocrit on claims 

regardless of whether an ESA dose was 

administered (CR 7460). Facilities are 

expected to report the anemia 

management reporting measure on their 

claims. 

Comment: One commenter supports 

the measure but only for patients with 

hemoglobin less than 10 g/dL. It is more 

likely, the commenter argues, that one 

will identify a patient with a low 

hemoglobin (even if that patient is not 

on ESAs) if a new reporting measure is 

instituted. The commenter believes that 

reporting hemoglobin for patients not on 

ESAs who have a hemoglobin greater 

than 12 g/dL is not necessary because 

these patients are not at risk for the 

complications that arise from targeting 

high hemoglobin levels using ESAs. 

Response: It is our intention to use the 

data we collect from this reporting 

measure to develop an anemia 

management clinical measure and 

monitor anemia management trends. In 

order to better understand the ESRD 

population as a whole and collect a 


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robust data set, we believe it is 

important to collect hemoglobin/ 

hematocrit levels for patients regardless 

of their values or if an ESA was 

administered. Using this information, 

we can, among other things, assess 

trends across the entire population and 

use these data for measure development 

and monitoring purposes. 

As explained above, we are modifying 

our proposed exclusions and finalizing 

that a facility must report hemoglobin/ 

hematocrit and ESA dosage (via HCPCS 

codes and their units) for the lesser of 

the 50th percentile of facilities in 2013 

or 99 percent, in total, of its (i) in-center 

Medicare patients who have been 

treated at least seven times by the 

facility; and (ii) home hemodialysis 

Medicare patients for whom the facility 

submits a claim. We will interpret an 

empty HCPCS field to mean that no ESA 

was administered. We also finalize that 

we will only apply this measure to 

facilities with at least 11 (i) in-center 

Medicare patients who have been 

treated at least seven times by the 

facility; and (ii) home hemodialysis 

Medicare patients for whom the facility 

submits a claim. Facilities who treat less 

than 11 of these patients during the 

performance period must attest to this 

fact in CROWNWeb. If they do not make 

this attestation, we will score them 

accordingly. Additionally, we will not 

penalize facilities for using the default 

99.99 value for a patient in his/her first 

month of treatment at that facility. The 

technical specifications for this 

finalized measure can be found at 

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

public-measures/AnemiaManagementReporting-2015-FR.pdf. 

4. Measures Under Consideration for 

Future PYs of the ESRD QIP 

In addition to the PY 2015 ESRD QIP, 

we noted in the proposed rule that we 

are considering measures for future 

payment years of the program. We are 

specifically considering whether we 

should propose in future rulemaking to 

adopt the following two measures, 

• NQF #1463: Standardized 

Hospitalization Ratio for Admissions 

(SHR) and 

• NQF #0369: Dialysis Facility Riskadjusted Standardized Mortality Ratio 

(SMR). 

We stated that we intend to adopt these 

measures for future payment years of 

the ESRD QIP, possibly beginning with 

the PY 2018 program. We notified 

facilities of our intent and solicited 

comments on incorporating these 

measures into future payment years of 

the ESRD QIP. 

a. Standardized Hospitalization Ratio 

(SHR) 

Hospitalizations are an important 

indicator of patient quality of life and 

morbidity. The SHR is an NQF-endorsed 

(#1463), risk-adjusted measure of 

hospitalization for dialysis patients. The 

measure is claims-based and describes, 

as a ratio, the number of ESRD Medicare 

patient actual admissions versus 

expected hospitalizations adjusted for 

the facility’s Medicare patient case mix. 

Please refer to the NQF Web site 

(www.qualityforum.org) to obtain more 

detail about this measure. 

b. Standardized Mortality Ratio (SMR) 

The SMR measure is an NQFendorsed (#0396) critical patientcentered, outcome measure of overall 

patient care furnished by facilities. We 

believe that the SMR measure would 

encourage appropriate overall patient 

care by facilities and incentivize 

facilities to examine the holistic health 

of the patient rather than treating the 

patient based on an individual measureby-measure basis. The SMR measure 

describes, as a ratio, the number of 

ESRD Medicare patient actual deaths 

versus expected deaths adjusted for the 

facility’s Medicare patient case mix. 

Please refer to the NQF Web site 

(www.qualityforum.org) to obtain more 

detail about this measure. 

c. Public Reporting of SHR and SMR 

Measures 

Although the SHR and SMR measures 

may not be adopted for the ESRD QIP 

until a future payment year, we intend 

to publicly report these measure ratios 

to the public via Dialysis Facility 

Compare (DFC) to encourage facilities to 

improve their care. Section 4558(b) of 

the Balanced Budget Act of 1997 (Pub. 

L. 105–33) (BBA) directs the Secretary 

to develop, not later than January 1, 

1999, and implement, not later than 

January 1, 2000, a method to measure 

data reflective of the quality of renal 

dialysis services provided under the 

Medicare program. Under this authority, 

we began reporting the SMR measure on 

DFC in January, 2001 as a survival 

measure and used three categories to 

rate facility performance: ‘‘as expected,’’ 

‘‘worse than expected,’’ and ‘‘better than 

expected.’’ The SMR measure that we 

are considering adopting for the ESRD 

QIP was developed in 1999 and 

facilities are required to submit these 

data via form 2746. The SHR measure 

that we are considering adopting for the 

ESRD QIP was developed in 1995, 

presented to a Technical Expert Panel 

after modifications to risk adjustment 

and statistical modeling in 2007, and 

received NQF-endorsement in 2011. The 

data needed to calculate the SHR 

measure have been regularly reported to 

DFR since 1995 and have been used by 

facilities for quality improvement 

activities. We plan to add the SHR data 

to the DFC effective January 2013; 

additionally we will report the actual 

SMR rates/ratio on the DFC beginning 

January 2013. 

We originally proposed to adopt the 

SHR measure for the PY 2014 ESRD 

QIP, but did not finalize the proposal, 

in part, because commenters voiced 

concerns regarding the accuracy of the 

co-morbidity data used in the 

calculation of the measures. Details on 

public comments and why we did not 

adopt the SHR measure are articulated 

in the CY 2012 ESRD PPS final rule (76 

FR 70267). Since that time, we have 

identified that the claim form UB 92 

with the type of bill (TOB) field 72x 

allows a facility to input up to 17 comorbid conditions per claim 

submission. We acknowledge that 

patient co-morbidities can change with 

time and since the capability already 

exists on the UB 92 TOB, we believe the 

best means for facilities to update 

patient co-morbidities is through the 

ESRD 72x claims form. Details on this 

form can be found in the Medicare 

Claims Processing Manual, Chapter 8— 

Outpatient ESRD Hospital, Independent 

Facility, and Physician/Supplier Claims 

(https://www.cms.gov/manuals/ 

downloads/clm104c08.pdf). 

In addition, because the NQFendorsed SHR and SMR measures are 

risk-adjusted for ESRD patients that 

reside in nursing homes, in order to 

calculate the measure rates on DFC, we 

will utilize data from the Minimum Data 

Set (MDS) to identify those individuals 

in nursing homes. We would use these 

data not only for reporting the measure 

rates on DFC at present, but also for 

calculating the measures if we adopted 

them for use in future years of the ESRD 

QIP. The Omnibus Budget 

Reconciliation Act (OBRA) of 1987 

requires that all Medicare and Medicaid 

certified nursing homes complete MDS 

assessments on all of their patients. 

We requested comment regarding the 

feasibility of adopting these measures 

for future payment years of the ESRD 

QIP. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Although most 

commenters agreed that measures for 

hospitalization are important for quality 

reporting purposes, many commenters 

strongly opposed that the SHR measure 

be included in the ESRD QIP in 

subsequent payment years. These 


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commenters argued that the SHR 

measure is a measure over which 

facilities have little control because 

patients often follow the advice of their 

primary care physician or visit a 

hospital without consulting the facility 

to receive treatments that could be 

furnished in the outpatient setting. 

Commenters expressed concern that the 

measure could lead to cherry-picking, 

disincentivize appropriate 

hospitalization, and is not transparent 

enough for facilities to make 

improvements in this area because of 

they are confused about the riskadjustment methodology. Other 

commenters stated that the measure 

needs further refinement and validation, 

specifically regarding risk adjustment 

for frail patients such as those in 

nursing homes, cultural factors, 

socioeconomic factors, and health 

factors specific to the ESRD population. 

Commenters asked that these adjusters 

be made public. One commenter 

believes that this measure would create 

a bias for facilities on the basis of 

location. Some commenters suggested 

that, instead of implementing this 

measure, CMS consider a coordinated 

care model. Other commenters 

requested that we adopt a pilot for this 

measure wherein only aggregate data is 

reported until the measure can be 

further assessed and validated. Several 

commenters suggested that we 

implement an SHR measure focused on 

admissions that could have been 

prevented by interventions from dialysis 

facilities; one commenter suggested that 

the SHR measure be modified to 

calculate a ‘‘risk-adjusted standardized 

hospitalization ratio for dialysis accessrelated infections and fluid overload,’’ 

since these are elements facilities can 

control. 

Response: We thank commenters for 

these opinions. We will take these 

comments into consideration as we 

further assess the appropriateness of 

adopting the SHR measure for the ESRD 

QIP. 

Comment: Many commenters strongly 

supported the consideration of SHR for 

future years of the ESRD QIP. One 

commenter requested that we 

implement the measure as soon as 

possible. Commenters also supported 

reporting measure rates on DFC 

beginning in CY 2013. One commenter 

supports the addition of SHR data to 

DFC as long as a caveat is included 

explaining that dialysis facilities can 

influence but do not control 

hospitalization rates. This commenter 

also requested that the ‘‘expected,’’ 

‘‘better than expected,’’ and ‘‘less than 

expected’’ categories remain on DFC. 

One commenter argued that there is not 

enough data on SHR to report rates on 

DFC. 

Response: We thank the commenters 

who supported the future consideration 

of the SHR for implementation. We 

intend to begin public reporting of the 

SHR on DFC as of January 2013 to 

indicate the relative performance of 

facilities. We believe that dialysis 

facilities own partial responsibility for 

the rate at which their patients are 

hospitalized, in particular when that 

rate is substantially higher than at other 

peer facilities and may not be explained 

by variation in the illness of patients. 

We do acknowledge that care provided 

by dialysis facilities is not the sole 

determinant of the hospitalization of 

ESRD patients and this measure would 

not support the assertion that they are. 

The SHR is only shown for patients 

with at least 5 patient years at risk, 

which corresponds to approximately 10 

expected hospitalizations. The 

confidence interval for the SHR will 

also be reported on DFC to show the 

uncertainty in the value due to random 

variation, which will help to address the 

issue of limited data for the SHR. We 

appreciate these suggestions and will 

take them into consideration as we 

further assess the appropriateness of 

adopting the SHR measure for the ESRD 

QIP. 

Comment: Some commenters strongly 

support using the 72x claims as 

indicators of risk factors for facilities 

and patients. One commenter suggested 

that this information could be used in 

creating an access to care measure/ 

adjustment in the future. Other 

commenters, however, believe that 

reporting comorbidities on the 72x 

claim could be a huge administrative 

burden for facilities, including time 

associated with validating that the data 

they submit on these claims is valid. 

Response: We recognize that reporting 

co-morbidities on 72x claims could be 

burdensome to some facilities. We 

believe, however, that this information 

is valuable, specifically in the context of 

future measure development. We will 

continue to assess the best means 

available for risk-adjustment for both 

the SHR and SMR measures, taking both 

the benefits of the information and the 

burden to facilities into account, should 

we propose to adopt these measures in 

future rulemaking. 

Comment: One commenter argued 

that SHR is not a measure whereby 

facilities can make meaningful 

improvement because the measure’s 

rates cannot be calculated in real-time; 

the commenter asked that claims be 

made available to the facility in a timely 

manner if the measure is adopted so that 

they can become aware of 

hospitalizations and other comorbidities and calculate their SHR in 

real-time. 

Response: We will consider this 

suggestion if we decide to propose to 

adopt the SHR measure for the ESRD 

QIP in future rulemaking. 

Comment: One commenter noted that 

the SHR measure should be at least a 

two to three year measure as 1 year of 

data is not sufficient for an accurate 

assessment. 

Response: We recognize that the NQFspecifications call for a measurement 

period that is longer than 1 year, and we 

continue to assess how to implement 

such an extended measure period 

effectively in the ESRD QIP if we 

propose to adopt the SHR measure in 

future rulemaking. 

Comment: Many commenters opposed 

the use of SMR in future years for 

reasons similar to that of SHR. 

Commenters expressed concern that the 

measure could lead to cherry-picking 

and is not transparent enough for 

facilities to make improvements in this 

area because of they are confused about 

the risk-adjustment methodology. Other 

commenters stated that the measure 

needs further refinement and validation, 

specifically regarding risk adjustment 

for frail patients such as those in 

nursing homes, cultural factors, 

socioeconomic factors, and health 

factors specific to the ESRD population. 

Commenters asked that these adjusters 

be made public. One commenter 

believes that this measure would create 

a bias for facilities on the basis of 

location. Another commenter argued 

that the measure should only account 

for catheter/dialysis complications and 

should not include ‘‘sudden deaths.’’ 

One commenter stated that literature 

suggests that the measure is invalid in 

small facilities and only valid in large 

facilities when averaged over several 

years. Some commenters suggested that, 

instead of implementing this measure, 

CMS consider a coordinated care model. 

Other commenters requested that we 

adopt a pilot for this measure wherein 

only aggregate data is reported until the 

measures can be further assessed and 

validated. 

Response: We thank the commenters 

who shared concerns and provided 

suggestions regarding the future 

consideration of the SMR for 

implementation in the ESRD QIP. We 

will continue to consider these 

suggestions as we decide whether to 

propose to adopt the SMR measure. In 

the DFR, we limit reporting to facilities 

with at least 3 expected events for the 

time period. Similarly, we only 

calculated SHR based on at least 5 

patient years at risk, which corresponds 


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to approximately 10 expected 

hospitalizations. We incorporated these 

limitations on the measures to account 

for potentially imprecise estimates 

resulting from small facility size. 

Comment: One commenter stated that 

the SMR measure should not be adopted 

until CMS can articulate how it fits into 

the ESRD QIP’s strategic vision. 

Response: While we recognize that 

the ESRD population is at high risk for 

mortality by definition, we believe that 

mortality rates are susceptible to the 

quality of care provided by dialysis 

facilities. We believe the SMR may help 

distinguish the quality of care offered by 

dialysis facilities as determined by 

mortality, a key health care outcome 

used to assess quality of care in other 

settings, such as hospitals. We believe 

the SMR may also fill an important gap 

in the ESRD QIP by assessing the 

outcome of all ESRD care provided at 

the dialysis facilities, rather than 

individual processes of care. For these 

reasons, we will continue to consider 

the inclusion of the SMR in future 

rulemaking cycles. 

Comment: Many commenters strongly 

supported the consideration of SMR for 

future program years, noting that death 

is the most important measurement of 

negative outcomes. One commenter 

requested that we implement the 

measure as soon as possible. One 

commenter suggested that the measure 

specifically focus on patients within 

their first 90–120 days of dialysis since 

these patients are generally more likely 

to die. Commenters also supported 

reporting measure rates on DFC 

beginning in CY 2013. 

Response: We thank commenters for 

their support of this measure. At this 

time, we do not believe it should be 

included in the PY 2015 ESRD QIP due 

to the concerns voiced by other 

commenters. We will consider the 

measure’s assessment of patients in 

their first months of dialysis for future 

rulemaking. Finally, we will begin 

reporting the SMR measure rates on 

DFC in 2013 and are attempting to 

address potential shortcomings pointed 

out by commenters that we described in 

the CY 2012 ESRD PPS final rule (76 FR 

70267) prior to proposing the measure 

for ESRD QIP. 

Comment: One commenter argued 

that SMR is not a measure whereby 

facilities can make meaningful 

improvement because the measure’s 

rates cannot be calculated in real-time; 

the commenter asked that claims be 

made available to the facility in a timely 

manner if the measure is adopted so that 

they can become aware of 

hospitalizations and other comorbidities and may calculate their 

SMR in real-time. 

Response: We will consider this 

suggestion if we decide to propose to 

adopt the SMR measure for the ESRD 

QIP in future rulemaking. 

Comment: One commenter noted that 

the SMR measure should be at least a 

two to three year measure as 1 year is 

not sufficient for an accurate 

assessment. 

Response: We recognize that the NQFspecifications call for a measurement 

period that is longer than 1 year, and we 

continue to assess how to implement 

this measurement period effectively in 

the ESRD QIP if we decide to propose 

to adopt the SMR measure. 

Comment: One commenter requested 

clarification regarding whether the 

facility’s rates would be compared to 

current or past national averages when 

assessing the number of expected 

deaths. 

Response: The SMR measure 

estimates the relative death rate ratio for 

a facility, as compared to the national 

death rate. The relative death rate ratio 

and the national results are all 

determined during the same (current) 

time period. 

In response to comments, we will 

continue to consider the SMR and SHR 

measures for future years of the 

program. We will, as proposed, begin 

displaying the rates/ratios for these 

measures on DFC beginning in early 

2013. 

5. Other Potential Future Measures 

Under Development 

As part of our effort to continuously 

improve the ESRD QIP, we are working 

on developing additional, robust 

measures that provide valid assessments 

of the quality of care furnished to ESRD 

patients by ESRD facilities. Some areas 

of measure development are discussed 

below. In addition, we are considering 

the feasibility of developing quality 

measures in other areas such as kidney 

transplantation, quality of life, health 

information technology for quality 

improvement at the point of care and 

the electronic exchange of information 

for care coordination, and transfusions. 

We requested comment on these 

potential areas of future measurement 

and welcomed suggestions on other 

topics for measure development. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: We received suggestions 

for many future measures. These 

included: (i) A CAHPS/experience of 

care measure for home dialysis and predialysis patients; (ii) a measure 

assessing catheter access site infections; 

(iii) a measure for adequate serum 

albumin; (iv) a measure promoting 

immunizations; (v) measures assessing 

iron management; (vi) patient fluid 

management measures; (vii) measures 

incentivizing home hemodialysis; (viii) 

an NHSN measure for home patients 

that includes peritonitis; (ix) measures 

that specifically monitor nursing 

sensitive indicators; (x) a measure that 

tracks which modalities a facility offers; 

(xi) a measure that tracks whether a 

facility exceeds the average percentage 

of patients between 18 and 54 who are 

employed; (xii) a measure that tracks 

whether facilities have shifts after 5:00 

p.m.; (xiii) an emergency department 

use measure; (xiv) a measure on 

transplantations/referrals; (xv) a 

measure on dialysis adequacy for 

frequent dialyzers; (xvi) measures on 

phosphorus and PTH; (xvii) a composite 

measure which takes into account the 

interdependability of calcium, 

phosphorus, and parathyroid hormone 

in bone mineral metabolism; (xviii) 

measures assessing quality of life; and 

(xix) palliative care measures. 

Response: We thank the commenters 

for your comments regarding measure 

implementation. We will take these 

suggestions into consideration during 

future measure development and 

rulemaking. 

Comment: Some commenters 

specifically requested that we broaden 

the use of pediatric measures in the 

ESRD QIP. These commenters 

recommended that we (i) develop (a) a 

dialysis adequacy measure for 

peritoneal pediatric patients and (b) a 

CAHPS/experience of care measure for 

pediatric patients; and (ii) consider the 

following NQF-endorsed measures: (a) 

Measure 1418: Frequency of Adequacy 

Measurement for Pediatric 

Hemodialysis Patients; (b) Measure 

1421: Method of Adequacy 

Measurement for Pediatric 

Hemodialysis Patients; (c) Measure 

1425: Measurement of nPCR for 

Pediatric Hemodialysis Patients; (d) 

Measure 1433: Use of Iron Therapy for 

Pediatric Patients; and (e) 1424: 

Monthly hemoglobin measurement for 

Pediatric Patients. 

Response: We thank the commenters 

for suggesting additional measures 

relevant to the pediatric portion of the 

ESRD population for future 

consideration in the ESRD QIP. We 

recognize the importance of assessing 

the quality of care furnished to pediatric 

ESRD patients. To this end, we are 

adopting in this final rule a measure of 

pediatric hemodialysis adequacy for PY 

2015. We will consider whether it is 

appropriate to propose to adopt 


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additional pediatric measures for the 

ESRD QIP. 

Comment: Some commenters 

specifically discouraged us from 

considering certain measures for future 

ESRD QIP adoption. These included (i) 

a quality of life measure, because no 

research shows that facilities can 

improve this aspect of patient life and 

patients often refuse to take surveys; 

and (ii) measures on electronic 

information exchange because it is 

unclear what these measures would 

entail or how they could be carried-out. 

Response: We appreciate the 

comments and will take them into 

consideration during future measure 

development. 

Comment: Many commenters 

supported a measure on transfusions if 

this measure assessed transfusions that 

are within the control of ESRD facilities. 

One commenter suggested that, before 

the measure is adopted, we wait to see 

the results of studies looking at when 

transfusions are and are not within a 

facility’s control. One commenter 

requested clarification regarding where 

CMS accesses transfusion data, whether 

the information shows the underlying 

reason for the transfusion, and the 

timeframe for CMS’ access and analysis 

of the data. 

Response: We appreciate the 

comments and will take them into 

consideration during future measure 

development. 

Comment: Commenters also discussed 

the general principles CMS should 

embrace in future years of the program. 

Commenters encouraged us to work 

with the kidney care community to 

adopt a strategic vision for the ESRD 

QIP, specifically the criteria and process 

for the adoption of measures and 

domains. One commenter requested that 

CMS and other stakeholders agree on 

the timeline and process for future 

measure development. Commenters also 

urged us to provide the criteria used to 

select measures, recommending the 

NQF selection criteria, and engage the 

Measures Application Partnership in 

identifying measures to include in the 

program and their weighting. In 

selecting measures, commenters stated 

that every measure should (i) have a 

verified entity responsible to maintain 

and update it at least once every three 

years; and (ii) be fully and clearly 

specified and tested for reliability and 

validity. Commenters also 

recommended that we phase measures 

into the program, requiring reporting of 

the measure outside of the ESRD QIP for 

at least 1year, and once a measure is 

added, we score facilities based on the 

lesser of the facility’s performance or 

the national performance rate, at least 

for the first year. One commenter stated 

that all future measures should be NQFendorsed before they are adopted. 

Another commenter noted that NQFendorsement does not mean a measure 

is appropriate for the ESRD QIP. 

Response: We remain dedicated to a 

transparent, consensus-based measure 

development process that offers 

multiple opportunities for input from 

stakeholders. The measure development 

process that we currently use includes 

using Technical Expert Panels and 

public comment periods, seeking NQF 

endorsement, providing measures to the 

Measures Application Partnership for 

feedback, and the rulemaking process in 

which we respond to stakeholder 

comments. We encourage continued 

engagement by the kidney care 

community in this process, both in 

prioritizing additional measures, 

supporting ongoing measure 

development, and providing feedback 

for currently implemented measures. 

At present, we analyze all clinical 

measures for validity and reliability, 

and NQF endorsement is a key 

consideration we take into account 

when deciding whether to propose to 

adopt clinical measures. Where 

endorsed measures are not available to 

address key issues relevant to the ESRD 

population, we intend to consider 

unendorsed measures until such 

endorsed measures are available. We 

agree that clinical measures should be 

fully specified at the time they are 

proposed. 

We believe that, generally, it is 

helpful to both the ESRD QIP 

community and CMS to phase-in 

measures as the commenter suggests. 

We do not entirely understand the 

comment stating that we should score 

facilities based on the lesser of the 

facility’s performance or the national 

performance rate. We take this to mean 

that we should use a scoring 

methodology similar to PY 2012 and PY 

2013 for new measures. At this time, we 

believe the objectives of the program are 

best served by scoring facilities using 

the achievement and improvement 

scoring methodology for the reasons 

discussed below. 

Comment: Some commenters support 

additional measures but requested that 

they be implemented no sooner than PY 

2018 since CROWNWeb has just 

launched and data collection would 

likely be through CROWNWeb. 

Response: We recognize that 

CROWNWeb is a new data collection 

system and plan to take that into 

consideration while developing and 

implementing ESRD QIP measures in 

the future. 

Comment: In designing future years of 

the ESRD QIP, commenters urged us to 

focus on the most important measures 

because adding measures could dilute 

each measure’s weight in the calculation 

of the Total Performance Score. 

Response: We acknowledge the 

commenter’s concern and note that we 

will seek to balance appropriateness of 

the measures, importance of the 

measures, and parsimony as we 

consider what measures to implement 

through future rulemaking. 

Comment: Some commenters made 

broad suggestions about measure 

adoption in the future, suggesting that 

we use a phased approach for measure 

implementation whereby the measures 

would be reported outside of the ESRD 

QIP for 1 year prior to adoption of the 

measure in the ESRD QIP; commenters 

argued that this reporting period will 

allow us to set a proper baseline for 

clinical measures. 

Response: We thank commenters for 

their suggestions. In general, we seek to 

collect at least 1 year of data through 

claims or CROWNWeb before adopting 

a measure for the ESRD QIP. However, 

we make this assessment on a case-bycase basis because of the importance of 

timely implementation of some 

measures (for example, measures that 

directly affect patient safety). We will 

continue to consider these issues as the 

ESRD QIP evolves. 

Comment: One commenter 

encouraged us to improve the program 

by maintaining a reasonable number of 

measures in order to reduce 

administrative costs and publicly 

reporting quality measures on DFC. 

Response: As the ESRD QIP evolves 

from year-to-year, we seek to 

continuously evaluate the effectiveness 

of the measure set, burden to providers, 

and clarity for beneficiaries. 

a. Thirty-Day Hospital Readmissions 

One of the major areas our VBP 

programs seek to promote is care 

coordination. Care coordination 

measures assess caregivers not only on 

the care directly under their control, but 

also on their success in coordinating 

care with other providers and suppliers. 

Hospital readmission is often the 

outcome of uncoordinated care. Care 

coordination measures encourage 

primary caregivers, ESRD facilities, 

physicians, and hospitals to work 

together to improve the quality of care. 

A 30-day hospital readmissions measure 

is a primary example of care 

coordination. This measure is currently 

under development for the ESRD QIP, 

and we requested comment regarding 

our use of such a measure in future 

payment years. 


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The comments we received on this 

topic and our responses are set forth 

below. 

Comment: Commenters made many 

suggestions with regard to a 30-Day 

Readmissions measure. Some 

commenters did not support the 

adoption of this measure for the ESRD 

QIP, arguing that facilities cannot 

always control hospitalization, and 

suggested that facilities would be better 

suited to use this type of measure in a 

coordinated care setting. One 

commenter encouraged us to adopt this 

measure in place of an SHR measure 

because a 30-Day Readmission measure 

is more likely to increase care 

coordination and less likely to 

encourage cherry-picking. One 

commenter suggested that a 30-Day 

Readmission measure include a grace 

period of 10–14 days for which the 

facility would not be held responsible, 

preventing facilities from being 

penalized if the patient received lowquality care in the hospital, and limiting 

the possibility that facilities could turn 

away patients who have recently been 

hospitalized. This commenter also 

pointed out that the hospital 30-Day 

Readmissions measure does not include 

ESRD patients and argued that hospitals 

should be held responsible for 

readmissions during the grace period 

the commenter suggests. One 

commenter requested that the 

community be able to review the 

findings of the Hospitalization TEP that 

CMS held in May 2012 before this type 

of measure is adopted. 

Response: We appreciate the 

comments regarding our consideration 

of a 30-day readmission measure and 

will take them into consideration in 

future rulemaking. We note that it is our 

policy to make publicly available the 

results of measure development TEPs 

through http://www.cms.gov/Medicare/ 

Quality-Initiatives-Patient-AssessmentInstruments/MMS/ 

TechnicalExpertPanels.html. 

b. Efficiency 

One of the main goals of our VBP 

programs is not only to enhance quality 

of care but also improve efficiency in 

providing that care. At present, we are 

not aware of an efficiency measure that 

is appropriate for the ESRD population. 

We noted, however, that we were 

interested in receiving comments 

regarding this concept. 

The comments we received on this 

topic and our responses are set forth 

below. 

Comment: We received many 

comments regarding our proposal of 

developing and adopting an efficiency 

measure in future years. Several 

commenters noted that an efficiency 

measure is not necessary because of the 

bundled payment. Many commenters 

asked that, if such a measure is 

developed, it be case-mix adjusted for 

nursing home residents, homeless 

patients, and drug and alcohol abuse to 

discourage cherry-picking. One 

commenter cautioned us to explore the 

unintended consequences which may 

result from this measure, and another 

commenter requested that we engage in 

more studies defining ‘‘efficiency’’ 

before we adopt a measure. 

Response: We thank our commenters 

for their input regarding the 

consideration of an efficiency measure 

for implementation in the ESRD QIP. 

We will take these suggestions into 

account as we develop measures for 

future years of the ESRD QIP. 

c. Population/Community Health 

We are aware that unintended 

consequences, specifically those 

involving access to care, may result 

from the ESRD QIP. To address these 

concerns, we are currently monitoring 

access to care and exploring the 

development of new measures or 

adjustments to existing measures that 

would mitigate the unintended 

consequences and/or incentivize 

facilities caring for patients who may, 

generally, contribute to lower facility 

measure rates. We requested comment 

on developing such a measure or 

adjustments to measures, specifically 

with regard to access to care issues. 

The comments we received on this 

topic and our responses are set forth 

below. 

Comment: Many commenters 

provided feedback on a possible access 

to care measure. Some commenters 

encouraged the development of such 

measures. Many of these commenters 

suggested that, instead of creating a 

measure to assess access to care, we 

develop comorbidity adjustments for 

quality measures that would ease 

facilities’ concerns about treating these 

patients. Commenters who serve aging 

patients with multiple comorbidities 

believe there needs to be further 

consideration for facilities caring for 

these types of patient populations. 

Other commenters noted that present 

and future measures should exclude 

homeless patients, nursing home 

patients, and patients with 

comorbidities of drug/alcohol abuse and 

mental health issues to protect access to 

care for these patients. Several 

commenters believe that care 

coordination is important but is not 

practical due to data timing issues and 

knowledge of staff; these commenters 

suggested that CMS fund additional staff 

and technology prior to implementing 

care coordination measures. One 

commenter suggested that we analyze 

the following factors when assessing 

access to care: (i) Miles traveled to 

facility; (ii) time required to commute to 

facility; and (iii) method of 

transportation/responsible party. 

Response: We thank the commenters 

for expressing interest in addressing the 

issue of access to care. We are sensitive 

to the particular role access to care can 

play for ESRD patients, and the 

limitations encountered in collecting 

relevant data. Clinical measures 

assessing mortality and hospitalization 

in the ESRD population were proposed 

in the PY 2014 ESRD QIP, and we have 

incorporated risk adjustment for 

comorbidities in the specifications for 

these measures, but it is not clear to us 

how effectively this risk-adjustment can 

address problems with access. Factors 

such as distance traveled are not 

captured by claims data. We believe that 

exclusion of the suggested groups 

(homeless, nursing home patients, etc.) 

from quality measures may protect 

access for these groups, but would fail 

to adequately address issues for quality 

of care in those patients who are most 

at risk for poor health outcomes. We are 

also concerned that such exclusions 

may excuse facilities from taking steps 

toward more effective coordination of 

care. We respectfully disagree that care 

coordination is not practical. Rather, we 

believe it is a vital element of care for 

a population that is by definition at 

particular risk for transitions into and 

out of care settings such as acute care 

hospitals. It is particularly important for 

those patients who reside in long-term 

care facilities such as nursing homes, or 

who must seek care for chronic 

conditions related to mental health 

issues or drug/alcohol abuse to receive 

care that is coordinated since these 

individuals often receive extensive care 

from various types of providers. 

6. Scoring Background and General 

Considerations for the PY 2015 ESRD 

QIP 

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

requires the Secretary to develop a 

methodology for assessing the total 

performance of each facility based on 

the performance standards established 

with respect to the measures selected for 

the performance period. For the PY 

2014 ESRD QIP, we adopted a 

performance scoring methodology that 

assessed facilities on both their 

achievement and improvement on 

clinical measures. We stated that we 

believe that this scoring methodology 

will more accurately reflect a facility’s 

performance on the measures because it 


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will enable us to differentiate between 

facilities that simply meet the 

performance standards, those that 

exceed the performance standards by 

varying amounts, and those that fall 

short of the performance standards. We 

also stated that we believe that the PY 

2014 methodology appropriately 

incentivizes facilities to both achieve 

high Total Performance Scores and 

improve the quality of care they provide 

(76 FR 70272). We believe that the 

methodology set forth for PY 2014 

continues to incentivize facilities to 

meet the goals of the ESRD QIP; 

therefore, with the exception of the 

proposed changes in the proposed rule 

(77 FR 40976), we proposed to adopt a 

scoring methodology for the PY 2015 

ESRD QIP that is nearly identical to the 

PY 2014 ESRD QIP. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: Several commenters 

supported our proposal to use the PY 

2014 scoring methodology in the PY 

2015 ESRD QIP. 

Response: We thank commenters for 

their support. We will finalize our 

proposals to use the PY 2014 scoring 

methodology for use in the PY 2015 

program with the modifications 

discussed below. We believe that these 

modifications improve the efficacy of 

the program for the reasons discussed. 

7. Performance Period for the PY 2015 

ESRD QIP 

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

requires the Secretary to establish the 

performance period with respect to a 

year. For the PY 2014 ESRD QIP, we 

finalized a performance period of CY 

2012. We stated that we believe that, at 

this point, a 12-month performance 

period is the most appropriate for the 

program because this period accounts 

for any potential seasonal variations that 

might affect a facility’s score on some of 

the measures, and also provides 

adequate incentive and feedback for 

facilities and Medicare beneficiaries (76 

FR 70271). We continue to believe that 

a 12-month performance period will 

best meet these policy objectives, and 

we considered what 12-month period 

would be closest in time to the payment 

year but would still allow us to time to 

operationalize the program, calculate 

scores, and allow facilities a period of 

time to preview and ask questions 

regarding these scores before they are 

published and impact payment. We 

determined that CY 2013 is the latest 

period of time during which we can 

collect a full 12 months of data and still 

implement the payment reductions 

beginning with January 1, 2015 services. 

Therefore, for the PY 2015 ESRD QIP, 

we proposed to establish CY 2013 as the 

performance period for all of the 

measures. We requested comments on 

this proposal. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Commenters supported our 

proposal to use CY 2013 as the 

performance period for the PY 2015 

ESRD QIP; some commenters 

specifically supported a performance 

period that allows us to set standards 

before the performance period begins. 

Some commenters, while supporting 

this performance period, cautioned us 

against using data from CROWNWeb 

from this period since CY 2013 will be 

the first full year CROWNWeb is 

implemented. 

Response: We thank commenters for 

their support. We note that, because we 

are not finalizing the Hypercalcemia 

measure, we are no longer using data 

from CROWNWeb for purposes of 

scoring any clinical measure for the PY 

2015 ESRD QIP. For purposes of the PY 

2015 ESRD QIP, we will be using 

CROWNWeb to collect data only for the 

Mineral Metabolism reporting measure. 

We believe that this is appropriate since 

facilities will only be required to report 

data, but will not be scored based on 

these data for PY 2015. We believe that 

CROWNWeb is sufficiently 

implemented to allow successful 

reporting for CY 2013. We will continue 

to assess the appropriateness of 

CROWNWeb data for inclusion for 

purposes of clinical measures in the 

ESRD QIP. 

Comment: Many commenters asked 

us to shorten the data lag between the 

performance period and the payment 

reduction/public reporting of the data so 

that the data can remain relevant. 

Commenters suggested that 

CROWNWeb could be used to reduce 

these data lag. 

Response: For PY 2015, we have 

determined that data derived from 

claims is the most appropriate source on 

which to score facilities on clinical 

measures because this source is the 

most complete and representative of the 

greatest number of facilities. Because 

claims take more time to compile and 

calculate than other data sources to 

ensure reliability, there is a lag between 

the time when the claims are submitted 

for processing and the time that the 

claims become available to calculate 

ESRD QIP measure rates. We also 

believe it is important to allow facilities 

a period of time to review their scores 

before the payment adjustments take 

place. We are considering how we might 

be able to shorten this timeline in the 

future. We believe that CROWNWeb 

will be valuable in this effort once it has 

been successfully launched for a period 

of time, and we are confident that the 

data submission and validity issues 

have been resolved. 

Comment: One commenter suggested 

that we consider employing rolling 12- 

month performance periods with 

payment updated quarterly. 

Response: At this time, we are not 

able to implement a rolling 12-month 

performance period that is updated on 

a quarterly basis because we do not have 

the systems or resources in place to 

calculate scores, answer inquiries, and 

provide Performance Score Certificates 

more than once per year. We will, 

however, continue to consider this 

suggestion as the ESRD QIP evolves. 

For the reasons stated above, we 

finalize CY 2013 as the performance 

period for the PY 2015 ESRD QIP as 

proposed. 

8. Performance Standards for the PY 

2015 ESRD QIP 

Similar to the PY 2014 ESRD QIP, we 

proposed to adopt performance 

standards for the PY 2015 ESRD QIP 

measures under section 1881(h)(4)(A) of 

the Act. This section provides that ‘‘the 

Secretary shall establish performance 

standards with respect to measures 

selected * * * for a performance period 

with respect to a year.’’ Section 

1881(h)(4)(B) of the Act further provides 

that the ‘‘performance standards * * * 

shall include levels of achievement and 

improvement, as determined 

appropriate by the Secretary.’’ We use 

the performance standards to establish 

the minimum score a facility must 

achieve to avoid a payment reduction. 

a. Clinical Measure Performance 

Standards 

With respect to the seven proposed 

clinical measures, we proposed to set 

the PY 2015 improvement performance 

standard and achievement performance 

standard (collectively, the ‘‘performance 

standard’’) for each measure at the 

national performance rate (which we 

would define as the 50th percentile) of 

all facilities’ performance on the 

measure during CY 2011 (the proposed 

comparison period—discussed in more 

detail below). 

For the PY 2014 ESRD QIP, we set the 

performance standards at the national 

performance rate during a baseline 

period of July 1, 2010–June 30, 2011. 

This period of time, however, did not 

allow us to publish the numerical 

values for the performance standards 

concurrently with the final rule because 

of the length of time needed for us to 

compile claims-based measure data at 


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6http://www.esrdnet11.org. 

7Note that, as further explained below, the issue 

we have discussed with respect to the reporting of 

Kt/V values prior to CY 2012 would not be an issue 

for the calculation of improvement scores because 

we proposed CY 2012 as the period used to 

calculate the improvement threshold; beginning 

January 1, 2012, all facilities are required to report 

Kt/V uniformly on their claims. 

the individual facility level and 

calculate the measure rates. Instead, we 

included an estimate of the numerical 

values for the performance standards in 

the final rule, using nine months of 

data, and posted the numerical values of 

the performance standards based on the 

full 12 months of data on http:// 

www.dialysisreports.org/pdf/esrd/ 

public-measures/UpdatedBaseline2014–FR.pdf by the end of December 

2011. In order to ensure that we have 

enough time to calculate and assign 

numerical values to the proposed 

performance standards for the PY 2015 

program, we proposed to set the 

performance standards based on the 

national performance rate (that is, the 

50th percentile) of facility performance 

in CY 2011. We noted that by choosing 

this time period for PY 2015, however, 

the data on which we base the 

performance standards would only 

capture 6 months of more recent data 

when compared to PY 2014 and would 

also overlap with 6 months of the data 

used to calculate the PY 2014 

performance standards. We stated our 

concern that if we finalize this period of 

time, we would not be adequately 

addressing stakeholder requests that we 

take steps to minimize the length of 

‘‘data lag’’ between the dates used to 

calculate the performance standards and 

the payment year. We recognized that 

stakeholders might prefer that we base 

performance standards on data as close 

in time to PY 2015 as possible. 

We stated that the period of time 

closest to the payment year that would 

allow us to post the numerical values 

for the performance standards before the 

end of the first month of the 

performance period is parallel to that of 

PY 2014, from July 1, 2011 through June 

30, 2012. As with PY 2014, selecting 

this time period for purposes of 

calculating numerical values for the 

performance standards would not allow 

us to publish these numerical values 

until late 2012 or early 2013, which is 

closer in time and may possibly be 

during the performance period. 

However, as in PY 2014, we would still 

be able to provide estimates for the 

numerical values of the performance 

standards at the time of final rule 

publication and post the actual numbers 

as soon as they are available in 

December 2012 or January 2013. 

Based on these considerations, we 

proposed CY 2011 as the basis for the 

performance standards (that is, the 

national performance rates). We did, 

however, request comment concerning 

whether we should instead use data 

closer in time to the payment year and 

set the performance standards using July 

1, 2011 through June 30, 2012 data. 

For two of the PY 2015 measure 

topics, Kt/V Dialysis Adequacy and 

Hypercalcemia, we noted that we do not 

possess data for the entirety of CY 2011, 

the year on which we proposed to base 

the performance standards. We did not 

begin collecting uniform data on the Kt/ 

V hemodialysis adequacy measure until 

January 1, 2012 (see Change Request 

7460), and, under the conditions for 

coverage, facilities were not required to 

report serum calcium values that will be 

used to calculate the Hypercalcemia 

clinical measure until their submission 

of May, 2012 data with the June 2012 

national implementation of 

CROWNWeb. Despite these issues, we 

stated that we do have data on which 

we can base performance standards. We 

noted that although facilities are not yet 

required to report serum calcium levels, 

approximately 63 percent of facilities, 

which treat approximately 80 percent of 

the Medicare ESRD patient population, 

have been voluntarily reporting these 

data via CROWNWeb piloting since July 

2008. Additionally, we compared the 

serum calcium values reported by 

facilities in 2010 as part of a clinical 

data reporting program called ELab,6 to 

values that have been voluntarily 

reported by facilities in 2010 through 

CROWNWeb, and the values are 

significantly similar. We stated our 

belief that these similarities will also 

extend to data reported in 2011. 

Therefore, we proposed to calculate 

performance standards for the 

Hypercalcemia measure using the data 

that we collected via CROWNWeb Pilots 

collected during CY 2011. 

Uniform Kt/V reporting for 

hemodialysis patients did not begin 

until January 1, 2012 (CR 7640). Before 

this time, facilities could use a number 

of different methodologies to calculate 

Kt/V values, with the result that the 

values could be different depending on 

which methodology was used. We 

stated in the proposed rule that we have 

analyzed the data collected during the 

CROWNWeb pilot and found that 88 

percent of facilities that reported to 

CROWNWeb had reported Kt/V values 

using a NQF specified calculation 

method (this method is also specified in 

Change Request 7640) that yields 

consistent results and that is part of the 

specifications for each of the 

hemodialysis Kt/V measures that we 

proposed to adopt for the PY 2015 

program. Though we are not able to tell 

what calculation method a facility used 

by reviewing a claim, we believe it is 

reasonable to assume that roughly the 

same percentage of facilities reported 

Kt/V on their claims prior to 2012 using 

the same formula that they used to 

report it under the CROWNWeb pilot. 

For this reason, we proposed to 

calculate the performance standards for 

the three proposed Kt/V measures using 

CY 2011 claims data. This is the best 

data we have available at this time to set 

reliable performance standards for Kt/V. 

We stated that we understand that 

stakeholders may be concerned about 

the nuances of the data and we invited 

public comment on this proposal. 

We noted that if, after consideration 

of the comments, we decided to not 

adopt the adult, hemodialysis Kt/V 

measure for PY 2015, we would 

continue to use URR as a measure of 

hemodialysis adequacy for this 

population. We also noted that the NQFendorsed measure for Kt/V measure for 

peritoneal dialysis adequacy does not 

specify the body surface area formulae 

or the total body water formulae to 

utilize; and we would accept the 

submission of peritoneal adequacy Kt/V 

values that utilize the methods currently 

in use as industry standards. We believe 

it is important to include peritoneal 

dialysis patients in the ESRD QIP and 

we solicited comments on the inclusion 

of the peritoneal dialysis Kt/V adequacy 

measure. We proposed that, were we to 

retain the URR measure for adult 

hemodialysis, we would still adopt the 

Kt/V peritoneal dialysis measure. We 

proposed that these measures would 

still comprise a Dialysis Adequacy 

measure topic and would be scored in 

the same manner as we proposed for the 

Kt/V measures, below. 

Even with the challenges outlined 

above, we believed that the advantages 

of adopting the Kt/V hemodialysis 

measure for PY 2015 outweigh the 

disadvantages. Therefore, we proposed 

Kt/V as the measure for hemodialysis 

adequacy for PY 2015, but we 

specifically solicited comments 

regarding whether we should continue 

to use URR for adult hemodialysis 

patients for PY 2015.7

We also considered calculating 

performance standards for the Kt/V 

Dialysis Adequacy measure topic based 

on data from January 1, 2012–June 30, 

2012, to ensure that the data was 

calculated consistently. We are, 

however, aware that a shortened data 

period may affect the measure rates’ 

reliability. Therefore, we proposed to 

calculate performance standards based 


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on the data from CY 2011 discussed 

above, but we invited comment on an 

alternative 6 month period beginning on 

or after the date on which uniform 

reporting began, January 1, 2012. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Many commenters agreed 

with our proposal to use CY 2011 as the 

comparison period for purposes of 

calculating the performance standards 

because this period will allow facilities 

to view these standards when the final 

rule is published. Others, however, 

expressed support for using data from 

July 1, 2011–June 30, 2012 to calculate 

the performance standards because this 

period is closest in time to the 

performance period. Some commenters 

did not have a preference for the 

comparison period, but requested that 

we be consistent in the time periods we 

choose. Many commenters suggested 

that, regardless of the time period, we 

do not use CROWNWeb data to 

calculate performance standards 

because the data in CROWNWeb from 

this time period is largely from large 

dialysis organizations (LDOs). 

Response: Although we appreciate 

that July 1, 2011–June 30, 2012 is closer 

in time to the performance period, we 

believe that it will be more beneficial to 

facilities if they are familiar with the 

performance standards against which 

their performance will be evaluated 

before the performance period begins. 

We will continue to evaluate whether it 

will be feasible in the future to adopt 

performance standards using data from 

a period closer in time to the 

performance period and also make those 

standards public before the beginning of 

the performance period. Additionally, 

as we stated above, we will not be 

finalizing the Hypercalcemia measure 

for PY 2015. All of the other clinical 

measures we are adopting for PY 2015 

are claims-based, and we can set the 

performance standards for those 

measures without using CROWNWeb 

data. 

Comment: One commenter expressed 

concern that the standards are too rigid 

and we expect perfection. 

Response: We believe that the 

standards that we are setting are 

appropriate. It is the past performance 

of facilities nationally which determine 

the performance standards; thus, ESRD 

facilities have demonstrated their ability 

to achieve these standards. 

Additionally, to avoid a payment 

reduction, facilities need only meet the 

minimum Total Performance Score. As 

discussed below, a facility need not 

have a perfect score on all, or any, of the 

measures to meet this minimum. 

Furthermore, we believe it is important 

to incentivize the best care possible. 

For these reasons, we finalize our 

proposal to establish performance 

standards for the PY 2015 ESRD QIP 

clinical measures at the 50th percentile 

of national performance during CY 

2011. The numerical values for the 

performance standards are set forth 

below in Table 5. 

b. Performance Standards 

TABLE 5—FINALIZED NUMERICAL VALUES FOR THE PERFORMANCE STANDARDS FOR THE PY 2015 ESRD QIP 

CLINICAL MEASURES

Measure 

Performance 

standard 

% 

Hemoglobin > 12 g/dL .......... 1 

Vascular Access Type .......... ........................

% Fistula ........................... 60 

% Catheter ........................ 13 

Kt/V ........................

Adult Hemodialysis ........... 93 

Adult, Peritoneal Dialysis .. 84 

Pediatric Hemodialysis ...... 93 

In accordance with our statements in 

the CY 2012 ESRD PPS final rule (76 FR 

70273), if the final numerical values for 

the PY 2015 performance standards are 

worse than PY 2014 for a measure, we 

proposed to substitute the PY 2014 

performance standard for that measure. 

We stated our belief that the ESRD QIP 

should not have lower standards than 

previous years. We requested comments 

on this proposal. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: One commenter did not 

support our proposal to keep 

performance standards at least as high 

as they were the previous year and 

suggests that we, instead, investigate 

why a performance standard would 

drop. Another commenter agreed with 

our proposal and stated that the only 

reason that performance standards 

should be lower than they were the 

previous year is if we discover a major 

technical issue with the previous year’s 

standards, such as that the performance 

standards were miscalculated. 

Response: We believe it is important 

to encourage improvement as the ESRD 

QIP evolves to ensure that beneficiaries 

continue to receive quality care at 

achievable levels. Therefore, we will 

finalize our proposal to utilize previous 

years’ performance standards if they are 

higher than those of the next year. The 

performance standards for the measures 

used in previous years of the ESRD QIP 

(the Hemoglobin Greater than 12 g/dL 

measure and the Vascular Access Type 

measure topic) have not declined. 

Therefore, for PY 2015, we will use the 

performance standards in the above 

table. If we discover that performance 

on any of the measures is declining in 

future years, we also intend to 

investigate the precipitating causes and 

modify the ESRD QIP as necessary to 

ensure high quality care for 

beneficiaries. 

c. Performance Standards for the PY 

2015 Reporting Measures 

We established the performance 

standards for the reporting measures for 

PY 2014 based upon whether facilities 

met certain reporting requirements 

rather than achieved or improved on 

specific clinical values. We proposed to 

establish the same performance 

standard for the ICH CAHPS reporting 

measure for PY 2015 that we established 

for PY 2014. Under this proposed 

performance standard, facilities would 

be required to provide an attestation 

that they successfully administered the 

ICH CAHPS survey via a third party in 

accordance with the measure 

specifications. We proposed that this 

attestation must be completed in 

CROWNWeb by January 31, 2014. 

For the NHSN Dialysis Event 

reporting measure, we proposed to set 

the performance standard as 

successfully reporting 12 months of data 

from CY 2013. If a facility has not yet 

enrolled and trained in the NHSN 

dialysis event system, we proposed that 

the performance standard for that 

facility would also include completion 

of these requirements. 

For the Mineral Metabolism reporting 

measure, we proposed to set the 

performance standard as successfully 

reporting serum phosphorus and 

calcium values for all qualified patients 

for 12 months. 

For the Anemia Management 

reporting measure we proposed to set 

the performance standard as 

successfully reporting hemoglobin or 

hematocrit and ESA dosage (if 

applicable) for all qualified patients for 

12 months. 

We requested comment on these 

proposals. We did not receive any 

comments on these proposals. We will, 

therefore, finalize the reporting measure 

performance standards as proposed. 

9. Scoring for the PY 2015 ESRD QIP 

Measures 

In order to assess whether a facility 

has met the performance standards, we 

finalized a methodology for the PY 2014 

program under which we separately 

score each clinical and reporting 

measure. We score facilities based on an 


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achievement and improvement scoring 

methodology for purposes of assessing 

their performance on the clinical 

measures. Under the PY 2014 ESRD QIP 

scoring methodology, a facility’s 

performance on each of the clinical 

measures is determined based on the 

higher of (i) an achievement score or (ii) 

an improvement score (76 FR 70273). 

We proposed to use a similar 

methodology for purposes of scoring 

facility performance on each of the 

clinical measures for the PY 2015 ESRD 

QIP. 

As in PY 2014, in determining a 

facility’s achievement score for the PY 

2015 program, we proposed that 

facilities would, based on their 

performance in CY 2013 (the proposed 

performance period), receive points 

along an achievement range, which we 

would define as a scale that runs from 

the achievement threshold to the 

benchmark. We proposed to define the 

achievement threshold for each of the 

proposed clinical measures as the 15th 

percentile of national facility 

performance during CY 2011. We stated 

our belief that this achievement 

threshold will provide an incentive for 

facilities to continuously improve their 

performance while not reducing the 

incentives to facilities that score at or 

above the national performance rate for 

the clinical measures (76 FR 70276). We 

proposed to define the benchmark as the 

90th percentile of the national facility 

performance during CY 2011 because it 

represents a demonstrably high but 

achievable standard of excellence that 

the best performing facilities reached. 

We further proposed that, for the 

proposed Kt/V Dialysis Adequacy 

measures and the proposed 

Hypercalcemia measure, we would use 

the same data we proposed above to 

calculate the performance standards for 

purposes of calculating the achievement 

thresholds and the benchmarks for these 

measures. We requested comment on 

these proposals. 

In determining an improvement score 

for the clinical measures, we proposed 

that facilities would receive points 

along an improvement range, defined as 

a scale running between the 

improvement threshold and the 

benchmark. We proposed to define the 

improvement threshold as the facility’s 

rate on the measure during CY 2012. 

The facility’s improvement score would 

be calculated by comparing its 

performance on the measure during CY 

2013 (the proposed performance period) 

to its performance on the measure 

during CY 2012. We proposed to base 

the improvement threshold on data from 

CY 2012 rather than CY 2011 (the 

period of time we had proposed to use 

to calculate the performance standards, 

achievement thresholds, and 

benchmarks) because, as we explained 

above, we do not have complete facility 

level CY 2011 data that we can use to 

calculate an improvement threshold for 

every facility on the Kt/V Dialysis 

Adequacy measures. Rather than 

proposing to adopt a policy under 

which no facility could receive an 

improvement score on these measures, 

we proposed to use data from CY 2012 

to calculate the improvement 

thresholds. Additionally, we stated our 

belief that by using CY 2012 to calculate 

the improvement thresholds, we will 

more closely align timing of the 

payment reduction with the period of 

time we use to calculate improvement 

thresholds. We requested comments on 

our proposal to use data from CY 2012 

to calculate improvement thresholds. 

When considering the time period we 

would use to calculate improvement 

thresholds, we sought to mitigate data 

lag issues as much as possible by 

selecting a period in time as close as 

possible to the performance period. 

However, to entirely mitigate this data 

lag, we also considered a period that 

would take place during the 

performance period. Using this 

approach, to calculate an improvement 

score, we would derive an improvement 

threshold from either the first quarter of 

CY 2013 or the first 6 months of CY 

2013 and compare it to the facility’s 

measure rate in the last quarter of CY 

2013 or the last 6 months of CY 2013, 

respectively. We ultimately decided to 

not propose this approach because, 

when possible, we prefer to use 12 

months of data to calculate measure 

rates to ensure more reliable rates, 

particularly for low-volume facilities. 

Additionally, using this approach, part 

of the performance period for purposes 

of calculating the facility’s performance 

rate and achievement score (all of CY 

2013) could overlap with the data we 

use to calculate the improvement 

threshold (first quarter or 6 months of 

CY 2013). Although we proposed to 

calculate improvement thresholds based 

on data from CY 2012, we also 

requested comment regarding use of 

these alternative periods for purposes of 

calculating the improvement thresholds. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: One commenter stated that, 

to foster continued improvement, we 

should consider raising the achievement 

threshold over time to a level greater 

than 15 percent. 

Response: We believe that, at this 

time, it is appropriate to set the 

achievement threshold at the 15th 

percentile so that lower-performing 

facilities are incentivized to provide 

high quality care; if the thresholds are 

set too high, it is possible that a facility 

would not be incentivized to perform 

well because the cost to meet the 

achievement threshold would be so high 

that it would outweigh the overall loss 

of revenue resulting from the ESRD QIP 

payment reduction. Although we do not 

believe we should award lowperforming facilities a large number of 

points, we do believe it is important to 

set the standards to incentivize all 

facilities to perform better. 

Comment: One commenter suggested 

that we rename the achievement 

threshold the ‘‘Statistical Performance 

Floor’’ because ‘‘achievement’’ seems 

misleading if the floor is set at the 15th 

percentile. This commenter also 

recommended that the facility 

performance rate be renamed the 

‘‘Facility’s Current Year Performance 

Rate,’’ the benchmark be renamed the 

‘‘Exceptional Performance Rate’’ since it 

is at the 90th percentile, and the 

performance standard be renamed the 

‘‘National Average/Median Performance 

Rate in the Base Year.’’ 

Response: One of the ways we can 

make the ESRD QIP transparent is by 

seeking to achieve consistency from 

year-to-year, provided there is not a 

contravening interest. Changing the 

terminology of the achievement 

threshold, performance rate, 

performance standards, and benchmark 

could unnecessarily confuse both 

facilities and beneficiaries. 

Additionally, we seek to harmonize 

CMS’ value-based purchasing programs 

as much as possible, and we use these 

naming conventions across programs. 

Comment: Several commenters argued 

that we are creating inconsistencies 

between the Conditions for Coverage 

(CfCs) and the ESRD QIP; these 

commenters specifically argued that the 

CfCs state that a facility cannot be 

penalized for patient non-compliance, 

but many of the ESRD QIP measures 

effectively penalize facilities for patient 

non-compliance. The commenter 

suggested that we make allowances for 

patient noncompliance in the ESRD 

QIP’s design; one commenter 

specifically recommended that we 

should require only 90 percent 

compliance from patients that visit the 

facility at least seven times per month 

to reconcile the CfCs and the ESRD QIP. 

Response: We do not believe that we 

are creating inconsistencies between the 

CfCs and the ESRD QIP, nor do we 

believe that the ESRD QIP penalizes 

facilities for patient non-compliance. 

Although patients’ compliance with the 

plan of care is a factor in some of the 


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measures, the quality of care is largely 

controlled by the facility’s treatment of 

patients. Additionally, to the extent that 

patient non-compliance may be a factor, 

facilities are not required to obtain 

perfect results for every patient. To 

avoid a payment reduction, as we 

explain below, a facility need only meet 

the performance standards (that is, the 

50th percentile of national performance) 

for each clinical measure during the 

comparison period (for PY 2015, this 

will be CY 2011) and score half of the 

possible points for the reporting 

measures. 

Comment: Commenters agreed with 

our proposal to use the facility’s rate in 

CY 2012 to calculate improvement 

thresholds. 

Response: We thank the commenters 

for their support. 

Comment: One commenter suggested 

that the improvement threshold be 

renamed the ‘‘Facility’s Base Year 

Performance Rate’’ since the 

improvement threshold does not 

represent a gain or level of 

improvement. 

Response: As noted above, we believe 

it is important to use consistent 

terminology from year-to-year to ensure 

transparency and comprehension in 

both the ESRD QIP and across CMS’ 

VBP programs. 

For the reasons discussed above, we 

finalize our proposed definitions of the 

achievement thresholds, benchmarks, 

and improvement thresholds. We have 

calculated the numerical values for the 

achievement threshold and benchmarks 

based on data from CY 2011; we will 

calculate the numerical values for the 

improvement thresholds based on 

individual facilities’ data from CY 2012. 

The numerical values for the 

achievement thresholds and 

benchmarks for the PY 2015 ESRD QIP 

clinical measures are set forth below in 

Table 6. 

TABLE 6—FINALIZED NUMERICAL VALUES OF ACHIEVEMENT THRESHOLDS AND BENCHMARKS FOR THE PY 2015 ESRD 

QIP CLINICAL MEASURES

Measure 

Achievement 

threshold 

(percent) 

Benchmark 

(percent) 

Hemoglobin > 12 g/dL ............................................................................................................................................. 5 0 

Vascular Access Type: 

% Fistula ........................................................................................................................................................... 47 75 

% Catheter ........................................................................................................................................................ 22 5 

Kt/V: 

Adult Hemodialysis ........................................................................................................................................... 86 97 

Adult, Peritoneal Dialysis .................................................................................................................................. 63 94 

Pediatric Hemodialysis ..................................................................................................................................... 83 97 

In accordance with our statements in 

the CY 2012 ESRD PPS final rule (76 FR 

70273), if the final PY 2015 numerical 

values for the achievement thresholds 

and benchmarks are worse than PY 2014 

for a measure, we proposed to substitute 

the PY 2014 achievement thresholds 

and benchmarks for that measure. We 

believe that the ESRD QIP should not 

have lower standards than previous 

years. We requested comments on this 

proposal. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: One commenter did not 

support our proposal to keep 

achievement thresholds and 

benchmarks at least as high as they were 

the previous year and suggests that we, 

instead, investigate why these values 

would drop. Another commenter agreed 

with our proposal and stated that the 

only reason that performance standards 

should be lower than they were the 

previous year is if we discover a major 

technical issue with the previous year’s 

standards, such as that the performance 

standards were miscalculated. 

Response: We believe it is important 

to encourage improvement as the ESRD 

QIP evolves to ensure that beneficiaries 

continue to receive quality care at 

achievable levels. Therefore, we will 

finalize our proposal to utilize previous 

years’ achievement threshold and 

benchmarks if they are higher than 

those of the next year. The achievement 

thresholds and benchmarks for the 

measures used in previous years of the 

ESRD QIP (the Hemoglobin Greater than 

12 g/dL measure and the Vascular 

Access Type measure topic) have not 

declined. Therefore, for PY 2015, we 

will use the performance standards in 

the above table. If we discover that 

performance on any of the measures is 

declining in future years, we also intend 

to investigate the precipitating causes 

and modify the ESRD QIP as necessary 

to ensure high quality care for 

beneficiaries. 

a. Scoring Facility Performance on 

Clinical Measures Based on 

Achievement 

We proposed to award between 0 and 

10 points for each of the clinical 

measures. As noted, we proposed that 

this score be based upon the higher of 

an achievement or improvement score 

on the measure. For purposes of scoring 

achievement for the measures, we 

proposed to base the score on where a 

facility’s performance falls relative to 

the achievement threshold and the 

benchmark for that measure. We 

proposed that, identical to PY 2014, if 

a facility’s measure rate during the 

performance period is: 

• Equal to or greater than the 

benchmark, the facility would receive 

10 points for achievement; 

• Less than the achievement 

threshold, the facility would receive 0 

points for achievement; or 

• Equal to or greater than the 

achievement threshold, but below the 

benchmark, the following formula 

would be used to derive the 

achievement score: 

[9 * ((Facility’s performance period 

rate—achievement threshold)/ 

(benchmark—achievement threshold))] 

+ .5, with all scores rounded to the 

nearest integer, with half rounded up. 

Using this formula, a facility would 

receive a score of 1 to 9 points based on 

a linear scale disturbing all points 

proportionately between the 

achievement threshold and the 

benchmark so that the interval in 

performance between the score needed 

to receive a given number of 

achievement points and one additional 

achievement point is the same 

throughout the range of performance 

from the achievement threshold to the 

benchmark. 

b. Scoring Facility Performance on 

Clinical Measures Based on 

Improvement 

We proposed that facilities would 

earn between 0 and 9 points for each of 


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the clinical measures based on how 

much their performance on the measure 

during CY 2013 improved from their 

performance on the measure during CY 

2012. A unique improvement range for 

each measure would be established for 

each facility. We proposed that if a 

facility’s measure rate during the 

performance period is: 

• Less than the improvement 

threshold, the facility would receive 0 

points for improvement; or 

• Equal to or greater than the 

improvement threshold, but below the 

benchmark, the following formula 

would be used to derive the 

improvement score: 

[10 * ((Facility performance period 

rate—Improvement threshold)/ 

(Benchmark—Improvement 

threshold))]—.5, with all scores rounded 

to the nearest integer, with half rounded 

up. 

We note that if the facility’s score is 

equal to or greater than the benchmark, 

it would receive 10 points on the 

measure per the achievement score 

methodology discussed above. 

The comment we received on these 

proposals and our responses are set 

forth below. 

Comment: One commenter requested 

clarification on whether (i) a facility can 

earn points if its performance rate is 

below the improvement threshold but 

above the achievement threshold and 

(ii) a facility can earn points if its 

performance rate is below the 

achievement threshold but above the 

improvement threshold. A commenter 

also requested clarification regarding 

whether, when scoring improvement, 

we multiply the ((Facility performance 

period rate—Improvement threshold)/ 

(Benchmark—Improvement threshold))] 

by 10 before or after we subtract 0.5. 

Likewise, this commenter requested 

clarification for the achievement scoring 

on whether we multiply the ((Facility’s 

performance period rate—achievement 

threshold)/(benchmark—achievement 

threshold))] by 9 before or after we add 

0.5. 

Response: It is possible for a facility 

to earn achievement points even if that 

facility did not improve during the 

performance period as long as that 

facility’s performance period rate 

exceeds the improvement threshold. 

Likewise, a facility can earn 

improvement points even if its measure 

rate during the performance period is 

below the achievement threshold 

provided that facility improved during 

the performance period. Additionally, 

the 0.5 is added or subtracted, for 

achievement and improvement 

respectively, as the last step in the 

equations. 

For the reasons stated above, we will 

finalize the proposed methodology for 

scoring measures on achievement and 

improvement. 

c. Calculating the Reporting Measure 

Scores 

As noted, reporting measures differ 

from clinical measures in that they are 

not scored based on clinical values, but 

rather, are scored based on whether 

facilities are successful in achieving the 

reporting requirements associated with 

each of the measures. The criteria that 

would apply to each reporting measure 

are discussed below. 

With respect to the proposed Anemia 

Management, Mineral Metabolism, and 

NHSN Dialysis Event reporting 

measures, for each measure, we 

proposed to award facilities: 

(i) 0 points for meeting the reporting 

requirements for less than 6-consecutive 

months during the performance period; 

(ii) 5 points for meeting the reporting 

requirements for at least 6-consecutive 

months during the performance period; 

and 

(iii) 10 points for meeting the 

reporting requirements for all 12 months 

of the performance period. 

We believe that requiring 6- 

consecutive months of data rather than 

6 non-consecutive months of data for a 

facility to receive points on these 

measures will hold facilities to the 

highest level of quality, therefore, 

facilities will be encouraged to continue 

to improve their reporting mechanisms 

throughout the performance period. We 

are concerned that awarding points for 

6 non-consecutive months of reporting 

may cause facilities to be less diligent in 

their reporting efforts overall. We 

specifically requested comment 

regarding whether the proposed 6- 

consecutive month reporting 

requirement will improve quality more 

than a non-consecutive month reporting 

requirement. We also proposed, as 

discussed in more detail below, that 

facilities would need to receive a CCN 

prior to July 1, 2013 in order to receive 

a score on a reporting measure. Finally, 

for purposes of the NHSN Dialysis Event 

reporting measure, we proposed that to 

be awarded 5 or 10 points, any facility 

that has not yet enrolled and trained in 

the NHSN dialysis event system must 

do so and must agree to the required 

consent (http://www.cdc.gov/nhsn/PDFs

/PurposesEligibilityRequirements

Confidentiality.pdf). 

With respect to the proposed ICH 

CAHPS reporting measure, we proposed 

to retain the PY 2014 scoring 

methodology for the PY 2015 ESRD QIP. 

An in-center hemodialysis facility will 

receive a score of 10 points if it attests 

that it successfully administered the 

ICH CAHPS survey via a third party 

during the performance period 

according to the specification found at 

https://www.cahps.ahrq.gov/SurveysGuidance/ICH.aspx. Eligible facilities 

(facilities providing adult, in-center 

hemodialysis) that do not provide such 

an attestation would receive 0 points on 

the measure. We proposed that this 

attestation must be entered via 

CROWNWeb by January 31, 2014. We 

note that the ICH CAHPS survey is only 

available to adult patients who are 

treated in-center. For purposes of the 

ICH CAHPS reporting measure, we 

determine whether a facility treats 

adult, in-center patients by referencing 

the facility’s information in CMS data 

sources (that is, SIMS and 

CROWNWeb). Facilities report the types 

of patients that they serve in these data 

sources. If a facility lists adult in-center 

services, we proposed that the facility 

would be required to comply with the 

ICH CAHPS reporting measure. 

We requested comment on the 

proposed methodology for scoring the 

PY 2015 ESRD QIP reporting measures. 

We also requested comment regarding 

whether facilities should receive points 

for partially reporting data and whether 

such reporting need be for consecutive 

months. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Several commenters 

requested that we award points for 

partial or non-consecutive reporting of 

data. Other commenters recommended 

that we modify our scoring of the NHSN 

Dialysis Event, Anemia Management, 

and Mineral Metabolism reporting 

measures to allow facilities to gain 

points for non-consecutive reporting on 

a point scale of 0–10. Commenters 

suggested that two should be subtracted 

from the number of months for which 

the dialysis facility successfully meets 

the reporting requirements (rounding 

negative scores to zero), meaning that a 

facility would have to report two 

months of data before receiving points 

on the measure. Commenters argued 

that this approach will encourage 

facilities to consistently report even if 

consecutive reporting is not possible. 

One commenter argued that facilities 

should be required to report for all 

months in order to receive any points on 

this measure; alternatively, this 

commenter urged us to require facilities 

to report consecutive months of data. 

Response: We thank commenters for 

these suggestions. The NHSN 

participation requirements state that 

facilities must report at least 6 months 

of data during a calendar year to the 


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dialysis event module to maintain active 

status in the NHSN. We believe it is 

important to align the scoring 

requirements for the NHSN dialysis 

event reporting measure for the ESRD 

QIP with the NHSN requirements, 

which are intended to improve the 

quality of the data submitted to the 

NHSN. Furthermore, we believe the 

severity of bloodstream infections and 

other vascular access-related infections 

among dialysis patients warrants more 

extensive monitoring in order to prevent 

future events. We will, therefore, require 

a minimum of 6 months of NHSN 

Dialysis Event reporting before 

awarding facilities points. We believe 

that facilities should receive credit for 

reporting non-consecutive months for 

this measure; we agree with commenters 

that this approach will encourage 

reporting because, even if a facility 

misses a month or many months, it can 

still receive points on the measure. 

Additionally, NHSN requirements allow 

non-consecutive reporting, but strongly 

encourage regular monthly reporting. 

We also agree with the commenters who 

stated that facilities should be awarded 

points on an incremental scale to 

incentivize reporting as much as 

possible. Therefore, we will begin 

awarding points for 6 months of 

reporting, and will not require 

consecutive monthly reporting during 

the performance period. Additionally, 

we will award incremental points for 

reporting more than 6 months of data. 

We will award points to facilities as 

follows: 

(i) 0 points for reporting less than 6 

months of data; 

(ii) 5 points for reporting 6 months of 

data; and 

(iii) 10 points for reporting 12 months 

of data. 

(iv) If the facility reports more than 6 

but less than 12 months of data, we will 

award incremental points using the 

following formula: 

We will round the result of this formula 

(with half rounded up) to generate a 

measure score from 5–10 points; as 

noted, facilities will earn points for 

reporting non-consecutive months. 

As we discuss below, because of the 

time it takes to train and enroll in the 

NHSN Dialysis Event module, we do not 

believe that it is feasible for all facilities 

receiving a CCN in the performance 

period to report at least 6 months of 

data. We will not apply the 6 month 

minimum requirement on these newly 

opened facilities, as we believe this 

requirement would place significant 

undue burden on these facilities to 

report data during their initial year of 

operation starting up their care delivery 

and administration. Therefore, the 

NHSN Dialysis Event reporting measure 

will not apply to any facility receiving 

a CCN on or after January 1, 2013. 

For the Mineral Metabolism and 

Anemia Management reporting 

measures, we believe that it is beneficial 

to encourage less than 6 months of 

reporting so that we can receive data 

from as many facilities as possible and 

use this data to develop a robust clinical 

measure in these areas. We believe that 

the Anemia Management and Mineral 

Metabolism reporting measures should 

also allow facilities to receive credit for 

reporting non-consecutive months 

because we believe that this approach 

will encourage reporting even if a 

facility fails to report for a month or 

more. We agree with commenters that a 

facility should be required to report at 

least two months before it is awarded 

points. Two months of reporting 

translates to reporting at a rate roughly 

equal to our achievement threshold for 

clinical measures—15 percent. We have 

determined that this threshold is an 

appropriate marker for where a facility 

should start earning achievement points 

on the clinical measures, and we believe 

it should also apply to these reporting 

measures. Additionally, as we discuss 

below, we will apply the scoring 

methodology for the Anemia 

Management and Mineral Metabolism 

reporting measures to facilities that 

receive a CCN during the first 6 months 

of the performance period. Taking all of 

these elements into consideration, we 

are finalizing a scoring methodology 

that will allow facilities to score points 

on the Mineral Metabolism and Anemia 

Management reporting measures 

provided that they receive a CCN before 

July 1, 2013. In order to score above a 

zero on these measures, a facility must 

report at least three months of data. 

Therefore, we finalize that facilities 

receiving a CCN before July 1, 2013 will 

score 0–10 points on the Anemia 

Management and Mineral Metabolism 

reporting measures using the following 

formula: 

We will round the result of this formula 

(with half rounded up) to generate a 

measure score from 0–10, and we will 

allow facilities to earn points using the 

same formula for reporting nonconsecutive months. 

Additionally, we finalize the ICH 

CAHPS measure scoring as proposed. 

10. Weighting the PY 2015 ESRD QIP 

Measures and Calculation of the PY 

2015 ESRD QIP Total Performance Score 

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

provides that the methodology for 

assessing facility total performance shall 

include a process to weight the 

performance scores with respect to 

individual measures to reflect priorities 

for quality improvement such as 

weighting the scores to ensure that 

facilities have strong incentives to meet 

or exceed anemia management and 

dialysis adequacy performance 

standards, as determined appropriate by 

the Secretary. In determining how to 


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appropriately weight the PY 2015 ESRD 

QIP measures for purposes of 

calculating Total Performance Scores, 

we considered two criteria. Specifically, 

we considered the number of measures 

we had proposed to include in the PY 

2015 ESRD QIP as well as the National 

Quality Strategy priorities. 

a. Weighting Individual Measures To 

Compute Measure Topic Scores for the 

Kt/V Dialysis Adequacy Measure Topic 

and the Vascular Access Type Measure 

Topic 

Because the Kt/V Dialysis Adequacy 

measure topic and the Vascular Access 

Type measure topic are comprised of 

multiple measures, it is necessary for us 

to discuss how we will derive an overall 

score for each measure topic. For these 

measure topics, we proposed that each 

measure be scored separately for each 

facility using the achievement and 

improvement methodology discussed 

above. After calculating the individual 

measure scores within a measure topic, 

we proposed to calculate a measure 

topic score using the following steps: (1) 

Dividing the number of patients in the 

denominator of each measure by the 

sum of the denominators for all of the 

applicable measures in the measure 

topic; (2) multiplying that figure by the 

facility’s score on the measure; (3) 

summing the results achieved for each 

measure; and (4) rounding this sum 

(with half rounded up). We proposed 

that, if a facility does not have enough 

patients to receive a score on one of the 

measures in the measure topic (this 

proposal is discussed below), that 

measure would not be included in the 

measure topic score for that facility. 

Only one measure within the measure 

topic need have enough cases to be 

scored in order for the measure topic to 

be scored and included in the 

calculation of the Total Performance 

Score. We stated that we believe it is 

important to proportionately weight the 

measures within a measure topic 

because we seek to give equal 

importance to each patient. Finally, we 

proposed that the measure topic score 

would be equal to one clinical measure 

in the calculation of the Total 

Performance Score. 

For additional explanation of our 

proposals to calculate measure topic 

scores, we provided the following 

examples: 

Example 1: Facility X serves hemodialysis 

(HD), peritoneal dialysis (PD), and pediatric 

patients. For HD patients, Facility X’s Kt/V 

measure rate is 50/60. For PD patients, 

Facility’s X’s Kt/V measure rate is 15/20. For 

pediatric patients, Facility X’s Kt/V measure 

rate is 10/20. There are 100 patients included 

in the measure topic (60+20+20). Assume 

that the facility’s measure rates lead to the 

following measure scores: HD—7; PD—8; 

pediatric—5. To compute the Kt/V Dialysis 

Adequacy measure topic score for Facility X, 

we would calculate the following: (7*60/ 

100)+(8*20/100)+(5*20/100) = 6.8, which we 

would round to 7. The Kt/V Dialysis 

Adequacy measure topic score would then be 

treated as one clinical measure when 

calculating the Total Performance Score. 

Example 2: Facility Y serves HD patients 

and PD patients. For HD patients, Facility Y’s 

Kt/V measure rate is 50/60; assume that this 

rate leads to a score of 6. For PD patients, 

Facility Y’s Kt/V measure rate is 4⁄7. Facility 

Y has no Kt/V measure rate for pediatric 

patients because it does not serve this 

population. Assume that the minimum case 

number for scoring a measure is 11. Because 

there are only seven cases in Facility Y’s 

denominator, Facility Y would not receive a 

PD Kt/V measure score. Furthermore, Facility 

Y did not treat any pediatric patients, so it 

would not receive a pediatric Kt/V measure 

score. Therefore, the Kt/V Dialysis Adequacy 

measure topic score for Facility Y would be 

6. The Kt/V Dialysis Adequacy would then 

be treated as one clinical measure when 

calculating the Total Performance Score. 

We requested comment on the 

proposed method of weighting 

individual measure scores to derive a 

measure topic score. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Some commenters 

supported our proposals for weighting 

measure topics. Some commenters, 

however, raised concerns that, given the 

small number of pediatric patients 

relative to adult patients, combining the 

adequacy measures might result in a 

score that does not accurately reflect the 

quality of care provided to pediatric 

patients treated in adult dialysis 

facilities. Other commenters suggested 

that the measure topics should be 

weighted consistently across facilities to 

allow meaningful comparisons between 

facilities; these commenters requested 

that we modify the weighting so that 

each measure is weighted based on 

clinical relevance, importance, and the 

number of patients in a ‘‘typical’’ 

facility’s population. 

Response: We disagree with the 

commenters’ statement that combining 

the adequacy measures might not reflect 

the quality of care given to certain 

patients. The weighting scheme ensures 

that emphasis on each measure in the 

Kt/V measure topic is proportionate to 

the number of patients that facility 

treats. If we were to weight the measure 

topics consistently across facilities or 

base the weight on clinical relevance or 

the typical facility, the scoring 

methodology would not equally weight 

the quality of care provided to each, 

individual patient. That is, one patient’s 

results could count for more points than 

another patient’s results, perhaps 

incentivizing better care for only certain 

ESRD populations. It is the goal of the 

ESRD QIP to provide the best care for 

every patient, and we believe the 

proposed weighting for measure topics 

meets this goal. Therefore, we are 

finalizing the methodology of weighting 

measure topics as proposed. 

b. Weighting the Total Performance 

Score 

In the proposed rule we stated our 

belief that weighting the finalized 

clinical measures/measure topics 

equally will incentivize facilities to 

improve and achieve high levels of 

performance across all of the measures, 

resulting in overall improvement in the 

quality of care provided to ESRD 

patients. We also stated our belief that, 

while the reporting measures are 

valuable, the clinical measures value 

actual patient outcomes and therefore 

justify a higher combined weight. We 

did, however, propose to weight the 

clinical measures slightly less for the PY 

2015 ESRD QIP than we did for the PY 

2014 ESRD QIP. For the PY 2015 ESRD 

QIP, we believe it is important to begin 

to more rigorously incentivize reporting, 

specifically since for three of the four 

reporting measures, we now require 

actual data submission. We intend to 

use these data for purposes of 

developing and creating clinical 

measures in the future; thus, complete 

and correct data submission in these 

areas is essential to the program’s 

overall goal of continued and improved 

ESRD quality care. For these reasons, we 

proposed to equally weight the clinical 

measures/measure topics for which a 

facility receives a score equal to 80 

percent of the Total Performance Score; 

we also proposed to equally weight the 

reporting measures for which a facility 

receives a score as 20 percent of the 

Total Performance Score. We requested 

comment on this proposed methodology 

for weighting the clinical and reporting 

measures. 

We have also considered the issue 

with awarding a Total Performance 

Score to facilities that do not report data 

on the proposed minimum number of 

cases with respect to one or more of the 

finalized measures/measure topics. As 

we stated in the CY 2012 ESRD PPS 

final rule, we believe it is important to 

include as many facilities as possible in 

the ESRD QIP. We did, however, revisit 

our policy of including any facility that 

receives a score on one measure, 

whether that measure is a clinical or 

reporting measure, and we proposed a 

different approach for PY 2015. We 

stated our belief that it is preferable to 


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require a facility to have at least one 

clinical and one reporting measure to 

receive a Total Performance Score. By 

requiring this minimum, we ensure that 

a facility is not included in the program 

unless it meets the minimum case 

requirement for at least one clinical 

measure/measure topic. In the case of a 

facility that has sufficient data (11 cases, 

as discussed below) from the 

performance period, but lacks sufficient 

data (11 cases, as discussed below) to 

calculate the improvement threshold, 

we proposed to only calculate its 

achievement score, because it would not 

be possible to calculate its improvement 

score. We requested comment on our 

proposals to require a facility to qualify 

for a score on at least one reporting and 

one clinical measure in order to receive 

a Total Performance Score. 

Finally, we proposed that all Total 

Performance Scores be rounded to the 

nearest integer, with half being rounded 

up, and we requested comment on this 

proposal. For further examples 

regarding the proposed measure and 

Total Performance Score calculations, 

we refer readers to the figures below. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Many commenters 

supported our proposed scoring 

methodology. Commenters specifically 

supported our proposal to require a 

facility to have a score for both a clinical 

and a reporting measure to receive a 

Total Performance Score. One 

commenter stated that, because of the 

importance of preventing HAIs, we 

should weight the reporting measures at 

50 percent of the Total Performance 

Score. Some commenters stated their 

belief that we should maintain the 90/ 

10 Total Performance Score weighting 

because clinical outcomes are more 

important than simply tracking and 

relaying information. 

Response: We believe, at this time, 

that it is appropriate to weight all of the 

clinical measures topics equally and all 

of the reporting measures equally in 

order to equally incentivize quality in 

all of these areas of care. We do, 

however, agree with the commenter that 

noted that because of the importance of 

reporting measures, such the NHSN 

Dialysis Event measure which tracks 

HAIs, we should give greater weight to 

the reporting measures in calculating 

the Total Performance Score. As stated 

above, we are not finalizing the 

Hypercalcemia clinical measure due to 

our lack of consistent baseline data. 

Instead, we will collect calcium data 

through the Mineral Metabolism 

reporting measure until we have 

baseline data that is robust enough to 

support a clinical measure’s adoption. 

Because of our need to collect data from 

not only LDOs, as we did in the 

CROWNWeb pilot, but all types of 

dialysis facilities, our decision to not 

finalize the Hypercalcemia measure, 

and the importance of collecting HAI 

data through the NHSN Dialysis Event 

reporting measure, we believe it is 

appropriate to weight the reporting 

measures more than we had proposed. 

We continue to believe, however, that 

clinical outcomes should constitute the 

majority of the Total Performance Score. 

Therefore, we finalize that, for the PY 

2015 ESRD QIP, each clinical measure/ 

measure topic will be equally weighted 

to comprise 75 percent of the Total 

Performance Score, and the reporting 

measures will be equally weighted to 

comprise 25 percent of the Total 

Performance Score. 

c. Examples of the PY 2015 ESRD QIP 

Scoring Methodology 

Below, we provide examples to 

illustrate the scoring methodology for 

the PY 2015 ESRD QIP. Figures 1–3 

illustrate the scoring for a clinical 

measure. Figure 1 shows Facility A’s 

performance on an example clinical 

measure. Note that for this example 

clinical measure, the facility is 

attempting to achieve a high rate (that 

is, the higher the measure rate, the 

higher the measure score). The example 

benchmark (which is the 90th percentile 

of performance nationally in CY 2011) 

calculated for this measure is 74 

percent, and the example achievement 

threshold (which is the 15th percentile 

of performance nationally in CY 2011) 

is 46 percent. Facility A’s performance 

rate of 86 percent during the 

performance period meets or exceeds 

the benchmark of 76 percent, so Facility 

A would earn 10 points (the maximum) 

for achievement for this measure. 

(Because, in this example, Facility A has 

earned the maximum number of points 

possible for this measure, its 

improvement score is irrelevant.) 

Figure 2 shows the scoring for another 

facility, Facility B. As illustrated below, 

the facility’s performance on the 

example clinical measure improved 

from 26 percent in CY 2012 to 54 

percent during the performance period. 

The achievement threshold is 46 

percent, the performance standard is 58 

percent, and the benchmark is 74 

percent. 


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Because the facility’s performance 

during the performance period is within 

both the achievement range and the 

improvement range, we must calculate 

both the improvement and achievement 

score to find the example clinical 

measure score. To calculate the 

achievement score, we would employ 

the formula discussed above. 

The result of this formula for this 

example is [9 * ((54 ¥ 46)/(74 ¥ 46))] 

+ .5, which equals 3.07 and we round 

to 3. 

Likewise, to calculate the 

improvement score, we employ the 

improvement formula discussed above. 

The result of this formula for this 

example is [10 * ((54 ¥ 26)/(74 ¥ 26))] 

¥ .5, which equals 5.33 and we round 

to 5. Therefore, for this example clinical 

measure, Facility B’s achievement score 

is 3, and its improvement score is 5. We 

award Facility B the higher of the two 

scores. Thus, Facility B’s score on this 

example measure is 5. 

In Figure 3 below, Facility C’s 

performance on the example clinical 

measure drops from 53 percent in CY 

2012 to 40 percent in CY 2013, a decline 

of 13 percent. 


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8For clarification purposes, as in previous years, 

a ‘‘case’’ refers to a patient that is included in the 

measure. 

Because Facility C’s performance during 

the performance period falls below the 

achievement threshold of 46 percent, it 

receives 0 points for achievement. 

Facility C also receives 0 points for 

improvement because its performance 

during the performance period was 

lower than its improvement threshold 

(its performance during CY 2012). 

Therefore, in this example, Facility C 

would receive 0 points for the example 

clinical measure. 

The method illustrated above would 

be applied to each clinical measure in 

order to obtain a score for each measure. 

Scores for reporting measures are 

calculated based upon their individual 

criteria, as proposed. 

After calculating the scores for each 

measure, we calculate the Total 

Performance Score. As an example, 

applying the weighting criteria to a 

facility that receives a score on all 

finalized measures, we would calculate 

the facility’s Total Performance Score 

using the following formula: 

Total Performance Score = [(.25 * 

Hemoglobin Greater Than 12g/dL 

Measure) + (.25 * Kt/V Dialysis 

Adequacy Measure Topic) + (.25 * 

Vascular Access Type Measure Topic) 

+ (..0625 * NHSN Dialysis Event 

Reporting Measure) + (.0625 * ICH 

CAHPS Survey Reporting Measure) + 

(.0625 * Mineral Metabolism 

Reporting Measure) + (.0625 * 

Anemia Management Reporting 

Measure)] * 10. 

The Total Performance Score would be 

rounded to the nearest integer (and 

any individual measure values ending 

in .5 would be rounded to the next 

higher integer). 

However, if, for example, a facility 

did not receive a score on the Vascular 

Access Type measure topic, the 

facility’s Total Performance Score 

would be calculated as follows: 

Total Performance Score = [(.375 * 

Hemoglobin Greater Than 12g/dL 

Measure) + (.375 * Kt/V Dialysis 

Adequacy Measure Topic) + (.0625 * 

NHSN Dialysis Event Reporting 

Measure) + (.0625 * ICH CAHPS 

Survey Reporting Measure) + (.0625 * 

Mineral Metabolism Reporting 

Measure) + (.0625 * Anemia 

Management Reporting Measure)] * 

10 

Again, the Total Performance Score 

would be rounded to the nearest 

integer (and any individual measure 

values ending in .5 would be rounded 

to the next higher integer). 

Finally, if, for example, a facility 

qualified for only two of the reporting 

measures, the facility’s Total 

Performance Score would be calculated 

as follows: 

Total Performance Score = [(.25 * 

Hemoglobin Greater Than 12g/dL 

Measure) + (.25 * Kt/V Dialysis 

Adequacy Measure Topic) + (.25 * 

Vascular Access Type Measure Topic) 

+ (.125 * Mineral Metabolism 

Reporting Measure) + (.125 * Anemia 

Management Reporting Measure)] * 

10. 

Again, the Total Performance Score 

would be rounded to the nearest integer 

(and any individual measure values 

ending in .5 would be rounded to the 

next higher integer). 

11. Minimum Data for Scoring Measures 

for the PY 2015 ESRD QIP 

We proposed to only score facilities 

on clinical measures for which they 

have a minimum number of cases 

during the performance period. We 

assessed how reliable each clinical 

measure is using the currently available 

data. Specifically, we studied the degree 

the measures assess the actual 

differences in performance among 

facilities as opposed to the variation 

within a facility. Thus, in order for a 

facility to be scored on any clinical 

measure, we proposed that the facility 

must report a minimum number of cases 

qualifying for that measure over the 

course of the 12-month performance 

period. This proposed minimum seeks 

to ensure that facilities are being 

evaluated based on the care they 

provide. 

a. Minimum Data for Scoring Clinical 

Measures for the PY 2015 ESRD QIP 

Dialysis facilities tend to have a small, 

relatively stable patient census, with 

each facility reporting on an average of 

50–60 cases per measure. In previous 

rules, commenters have asked that we 

consider the effect of case size on 

measure reliability in the context of the 

ESRD QIP. We recognize that as a 

general principle, reliability improves 

with increasing case size; that is, the 

reliability of a measure or score 

describes numerically to what extent 

that measure or score assesses the actual 

differences in performance among 

facilities as opposed to the random 

variation within facilities. Furthermore, 

we wish to be responsive to public 

comment and to ensure that dialysis 

facilities with extremely small numbers 

of patients are not penalized by the 

ESRD QIP due to random variation in 

their patient samples. Thus, we 

developed and proposed a new 

methodology to make favorable 

adjustments to the clinical measure 

rates of facilities with very small 

numbers of patients. We also proposed 

a case minimum 8 for clinical measures 

to protect patient privacy, which we 

believe could be compromised if the 


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publicly reported data for a facility is 

based on a small patient population. 

Given the ESRD QIP’s potential to 

encourage quality improvement, our 

goal is to ensure the full participation of 

as many facilities as possible in the 

program. However, we must ensure that 

all measure rates capture a large enough 

number of patients so that the privacy 

of each patient is protected. A case 

minimum allows us to achieve these 

policy objectives of measurement 

reliability and patient privacy. 

For the first 3 payment years of the 

ESRD QIP, we set the minimum number 

of cases to be scored on a clinical 

measure at 11. Eleven cases has 

historically been the case minimum for 

displaying measures on DFC. We have 

determined that in the context of DFC, 

11 cases will meet the requirement that 

individual patients are not identifiable 

in the aggregate measure rate. Given that 

we believe that 11 cases is sufficient to 

address privacy concerns and that our 

policy objective is to maximize the 

number of facilities that participate in 

the ESRD QIP, we proposed to set a 

proposed case minimum threshold of 11 

cases. Under this proposal, facilities 

must report at least 11 qualifying cases 

over the course of the 12-month 

performance period to be scored on a 

given clinical measure. We sought 

public comment on this proposal. 

We indicated in the CY 2012 ESRD 

PPS final rule that we would continue 

to assess the reliability of our measures 

in future payment years of the program 

(76 FR 70259). To further explore this 

issue in response to comments, we 

evaluated the reliability of measure rates 

and the Total Performance Score for 

facilities of various sizes using the PY 

2014 program clinical measures. 

Specifically, we performed a simulation 

of the PY 2014 QIP to calculate the 

Inter-Unit Reliability (IUR) stratified by 

facility size. The IUR is a statistic 

commonly adopted for assessing the 

reliability of measures or scores, and is 

the ratio of the between-facility variance 

to the sum of the between-facility 

variance and the within-facility 

variance. 

We found the reliability of the Total 

Performance Score to be acceptable for 

all strata (IUR>0.6). However, we 

recognize that facilities with very small 

numbers of patients are more likely to 

have a lower IUR. In a facility with a 

low IUR, the case mix might potentially 

shift its measure rate higher or lower 

than the rate the same facility would 

report if it were treating an ‘‘average’’ 

ESRD population. In the context of the 

ESRD QIP, a favorable skew would not 

have a negative effect on facility 

payment, but an unfavorable skew 

potentially could result in the facility 

receiving a payment reduction. We 

cannot identify which specific facilities 

will have a low IUR until after the 

performance period has concluded. 

However, in performing the 

stratification analysis, we found that a 

favorable adjustment to the two strata 

with the lowest number of cases would 

reduce the risk of penalizing facilities in 

those strata for random within-facility 

variation. The average number of cases 

contributing to the Total Performance 

Score in the second stratum is 25. 

Accordingly, we developed and 

proposed below a favorable adjustment 

to the measure rates for facilities with at 

least the minimum case threshold of 11 

and fewer than the adjustment threshold 

of 26 cases. This methodology would 

give facilities ‘‘the benefit of the doubt’’ 

and ensure that any error in measure 

rates due to a small number of cases will 

not adversely affect payment. 

Specifically, we proposed that if a 

facility reports at least 26 cases during 

the 12-month performance period on a 

measure, it would be scored based on its 

raw performance rate on the measure. If 

the facility reports between 11 and 25 

cases during the 12-month performance 

period, it would be scored based on its 

raw performance rate plus a favorable 

reliability adjustment to account for a 

possible unfavorable skew in the 

measure rate due to small sample size. 

We proposed the following 

methodology to adjust the measure rate 

used to score facilities with 11–25 cases 

for a given measure. The adjustment 

factors in facility size and the standard 

error of the measure, which can be 

estimated using an analysis of variance 

(ANOVA). This analysis allows us to 

estimate how much better the measure 

rate could have been if that facility were 

treating an ‘‘average’’ population of 

patients and make a favorable 

adjustment to the facility’s score in that 

amount. For example, as a facility treats 

more patients, the reliability of the 

measure rate improves, and the 

difference between the facility’s 

measure rate and the measure rate we 

statistically would expect to see if the 

facility were treating an ‘‘average’’ panel 

of patients decreases. Thus, the 

magnitude of the adjustment factor 

increases as the number of cases 

decreases from 25 to 11. 

Because the adjustment factor takes 

into account a facility’s performance 

(standard error of the measure) and the 

number of cases for the measure, it is 

computed separately for each measure. 

The specific methodology we proposed 

follows: 

• ANOVA provides an estimate sw of 

the square root of within facility 

variance, given by the within subject 

mean square. 

• Then for the ith facility, the standard 

error of the average measure (denoted by 

xi is given by 

where ni is the number of patients in the 

ith facility. Now denote C as the 

minimum case number. We proposed 

the following adjustment for the original 

score xi by introducing a weight 

depending on facility size. 

where C is the lower bound of cases for 

facilities that will not receive any 

adjustment. 

• For measures where large values of 

xi are good (that is, for the PY 2015 

ESRD QIP, the fistula measure and the 

Kt/V Dialysis Adequacy measure topic): 

o The new score is: ti = xi + wi * 

SE(xi). (If ti > 100%, we set ti = 100%). 

• In cases where lower values of xi

are better (that is, for the PY 2015 ESRD 

QIP, the Hemoglobin Greater Than 12g/ 

dL and catheter measures): 

o The new score is: ti = xi ¥ wi * 

SE(xi). (If ti < 0%, we set ti = 0%). 

We stated our belief that this 

approach gives facilities an allowance to 

account for the uncertainty in the 

estimate xi by accounting for the size of 

the patient population in both weights 

and standard errors. As explained 

above, this allowance decreases when 

the case size increases (from 11 to 26 or 

more)—the larger the case size, the 

smaller the allowance. For example, 

when C=26, this implies that for 

measures with 26 cases and above, no 

allowance is made. We sought public 

comment on this methodology and the 

proposed adjustment threshold. While 

one model is presented above, we 

invited comment on alternative 

approaches that are consistent with our 

intent to include as many facilities as 

possible in the ESRD QIP and at the 

same time address concerns from 

stakeholders regarding the reliability of 


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measures where there are small 

numbers of cases. We stated our belief 

that this adjustment is appropriate for 

the ESRD QIP considering the particular 

measure set and scoring methodology 

for PY 2015. As the program grows and 

evolves, we noted that we will continue 

to assess reliability based on the 

measures and scoring methodology for 

that payment year. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Many commenters 

supported our proposal to use an 

adjustment for measure rates, especially 

because aging patients and patients with 

comorbidities can negatively affect a 

small facility’s score. Commenters also 

supported our proposal to use the 

adjuster for measures with 11–25 cases. 

Other commenters did not support the 

proposed adjustment because it is 

overly complicated, could mislead 

patients, and could make low-volume 

facilities appear better than high-volume 

facilities when they are not, in fact; 

these commenters suggested that we 

raise the case minimum to at least 25 

cases instead of employing the proposed 

adjustment methodology. Some 

commenters expressly stated that the 

proposed case minimum is not 

sufficient; other commenters argued that 

the proposed case minimum should be 

lowered because the proposal could 

preclude participation from many lowvolume facilities, specifically pediatric 

facilities. 

Response: Were we to set the case 

minimum at 26 rather than 11, we 

estimate that an additional 520, or an 

additional 10 percent of, facilities 

would be excluded from the program. 

Although lowering the case minimum 

would include even more facilities, we 

do not believe it is appropriate to do so 

because of not only reliability but also 

privacy concerns. As we stated in the 

proposed rule (77 FR 40984), we believe 

the adjustment balances the competing 

concerns of reliability, privacy, and 

inclusion. 

Although it can be difficult to 

understand the adjustment 

methodology, we do not believe that 

this concern alone should prevent us 

from finalizing it as proposed. The 

adjustment will result in no harm to any 

facility; although a facility may not be 

able to predict its Total Performance 

Score if some of its measures are subject 

to the adjustment, the facility will know 

that the adjuster will not negatively 

affect its score. It could continue to 

predict its minimum score and use this 

score as a baseline for assessing whether 

or not it will receive a payment 

reduction. Additionally, we believe that 

the argument that the adjuster could 

allow smaller facilities to seem better 

than they are is of little concern. 

Although the adjuster will affect the 

measure score, it will not affect the 

measure rate. The rates that are 

displayed to the public will be shown 

without an adjustment. Thus, a 

beneficiary could continue to 

meaningfully compare facilities, 

regardless of the number of patients 

these facilities serve. 

Comment: Some commenters 

requested that, if we adopted the 

proposed adjustment, we publish tables 

with the values of sw to make the ESRD 

QIP as transparent and predictable as 

possible. 

Response: The sw values represent the 

within facility variation. It is specific to 

each facility and, because it will be 

based on 2013 data, it cannot be derived 

until the end of the performance period. 

Therefore, we are not able to publish the 

sw values at this time. 

Comment: Some commenters 

encouraged us to continue to conduct 

analyses to determine the appropriate 

reliability of measures and the 

minimum case number for future years 

of the program. Some commenters 

suggested that, if we are concerned with 

reliability and minimum case numbers, 

we employ longer performance periods 

spanning multiple years. Commenters 

also encouraged us to align the ESRD 

QIP minimum case number with other 

VBP programs. 

Response: We will continue to study 

the reliability of measures and the Total 

Performance Score. We have and will 

continue to consider using longer 

performance periods on a measure-bymeasure basis. Although we strive to 

align the VBP programs as much as 

possible, each program has unique 

measures which may necessitate 

different minimum case numbers. We 

will continue to look for harmonization 

as much as is appropriate. 

For the reasons stated above, we 

finalize the case minimum and 

adjustment for clinical measures as 

proposed. 

b. Minimum Data Requirements for 

Reporting Measures by New Facilities 

For purposes of the PY 2014 ESRD 

QIP, we stated that a facility that 

receives a CCN on or after July 1, 2012 

has the option to choose whether or not 

it is scored on each reporting measure 

(76 FR 70275). We considered using the 

same approach for PY 2015 as we did 

in PY 2014 (that is, allowing new 

facilities to choose whether or not they 

will be scored on each reporting 

measure). Under that approach, if a new 

facility reports enough information to 

receive 10 points on a reporting 

measure, the facility is scored on that 

measure. If a new facility scores zero or 

5 points on a reporting measure, it is not 

scored on that measure. As the program 

evolves, we believe it is important to 

continuously push improvement in all 

facilities—both old and new. 

Additionally, we wish to incentivize 

new facilities to put reporting 

mechanisms in place as soon as 

possible. For these reasons, we 

proposed to modify the reporting 

measure minimum data requirement 

from that of PY 2014. 

For PY 2015, we proposed that any 

facility receiving a CCN before July 1, 

2013 be scored on the reporting 

measures. However, since a facility 

receiving a CCN after January 1, 2013 

would not be able to report a full 12 

months of data, we stated our belief that 

it is not appropriate to require it to do 

so in order to receive a full 10 points on 

the reporting measures. Instead, we 

proposed to score these facilities 

proportionately for the time for which 

they have a CCN during the 

performance period. To earn 10 points 

on the ICH CAHPS reporting measure, 

we proposed to require that a facility 

receiving a CCN between January 1, 

2013 and June 30, 2013 attest that it 

successfully administered the survey 

during the time for which it had a CCN 

during the performance period. For 

purposes of the Anemia Management, 

NHSN Dialysis Event, and Mineral 

Metabolism reporting measures, we 

proposed that if a facility receives a 

CCN on or after January 1, 2013, but 

before July 1, 2013, it would receive 10 

points for reporting for all months for 

which it has a CCN and 5 points for 

consecutively reporting half of the 

months for which it has a CCN during 

the performance period. If a facility has 

a CCN for an odd number of months, we 

proposed to round down to calculate the 

number of months for which it must 

report to receive 5 points. Finally, we 

proposed to begin counting the number 

of months for which a facility is open 

on the first day of the month after the 

facility receives a CCN. For example, 

assume a facility receives a CCN on 

March 15, 2013. In order for this facility 

to receive 10 points on the applicable 

reporting measure, we proposed that it 

must report data from April 1, 2013– 

December 31, 2013 (or 9 months of 

data). In order for it to receive 5 points, 

we proposed that it must report half of 

the months for which it is open, 

consecutively. For the example facility 

to receive 5 points, it would need to 

report 4.5 months of data. Since we 

proposed to round down, this facility 


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would be required to report 4 months of 

data to receive 5 points. 

We realized that facilities receiving a 

CCN on or after July 1, 2013, may have 

difficulty meeting the requirements of 

the reporting measures, such as 

enrolling and training for the NHSN 

Dialysis Event reporting measure or 

hiring a third-party to administer the 

ICH CAHPS survey, because of the short 

period of time left in the performance 

period. We also stated our belief that it 

is appropriate to reduce payment for a 

1-year period based on less than 6 

months of performance. Therefore, we 

proposed to exclude facilities receiving 

a CCN on or after July 1, 2013 from the 

requirements of the reporting measures. 

Because we finalized, as discussed 

above, that a facility will not receive a 

Total Performance Score unless it 

receives a score on at least one clinical 

and one reporting measure, finalizing 

this proposal would result in facilities 

not being eligible for a payment 

reduction if they receive a CCN on or 

after July 1, 2013. We requested 

comment regarding these proposals. We 

also elicited comments regarding 

whether there would be a more 

appropriate way to score these new 

facilities on reporting measures so that 

they may be eligible for inclusion in the 

ESRD QIP. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Commenters supported our 

proposals regarding the reporting 

measures’ minimum data requirements 

for new facilities; specifically, 

commenters supported our proposal to 

exempt facilities receiving a CCN after 

June 30, 2013 from the reporting 

measures. Some commenters suggested 

that a facility that receives a CCN 

between January 2013 and June 2013 

should be required to begin reporting on 

the first day of the third month after the 

facility receives a CCN to allow the 

facility to deploy its IT system and 

enroll in CROWNWeb and NHSN. 

Response: Consistent with our change 

to allow facilities to score 0–10 

incremental points on the Anemia 

Management and Mineral Metabolism 

reporting measures, we will finalize 

changes to our proposed scoring 

methodology for these measures for 

facilities receiving a CCN between 

January 1, 2013 and June 30, 2013. 

Facilities receiving a CCN between 

January 1, 2013 and June 30, 2013, will 

be able to score points in proportion to 

their overall rate of monthly reporting 

on the Anemia Management and 

Mineral Metabolism reporting measures. 

As we noted above, we believe it is 

important to require a minimum 

threshold for facilities to earn points on 

this measure. Thus, we finalize that a 

facility receiving a CCN after January 1, 

2013 but before June 30, 2013 can score 

points on the Mineral Metabolism and 

Anemia Management reporting 

measures using the following formula: 

We will round the result of this formula 

(with half rounded up) to achieve a 

measure score from 0–10. 

For purposes of the Anemia 

Management and Mineral Metabolism 

reporting measures, we do not agree 

with commenters that facilities should 

be required to report the first day of the 

third month after they receive their 

CCN. A facility with a CCN may submit 

claims to Medicare. If a facility is 

submitting claims, it should be 

reporting hemoglobin and ESA levels. It 

should also be reporting in 

CROWNWeb. Therefore, we do not 

believe it is necessary to allow facilities 

more time on these measures, and we 

finalize that facilities must begin 

reporting for these measures on the first 

day of the month after they receive their 

CCN. 

As we have previously noted, we 

believe that a facility needs a period of 

time after it receives its CCN to ensure 

that its systems are in place to report to 

the NHSN system. As we explained 

above, we are requiring facilities to 

report 6 non-consecutive months of data 

to receive points on the NHSN Dialysis 

Event measure. Because of the time 

required to enroll and train in the NHSN 

system, we do not believe it is equitable 

to require facilities receiving a CCN 

during the performance period to 

comply with this measure. Therefore, 

we are finalizing that a facility that 

receives a CCN during the performance 

period will be not be scored on the 

NHSN Dialysis Event reporting measure. 

For the ICH CAHPS measure, we 

believe that facilities receiving a CCN 

before July 1, 2013 should be able to 

hire a third-party administrator in time 

to administer the ICH CAHPS survey. 

Although it may take some time for 

facilities to put this administrator in 

place, it can begin doing so before it 

receives a CCN. Therefore, we finalize 

our proposals that, to earn 10 points on 

the ICH CAHPS reporting measure, a 

facility receiving a CCN between 

January 1, 2013 and June 30, 2013 must 

attest that it successfully administered 

the survey during the time for which it 

had a CCN during the performance 

period. 

We also finalize that facilities 

receiving a CCN after June 30, 2013 will 

be exempt from the Mineral 

Metabolism, Anemia Management, and 

ICH CAHPS reporting measures. For the 

NHSN Dialysis Event reporting measure, 

facilities will be exempt if they receive 

a CCN on or after January 1, 2013. 

12. Payment Reductions for the PY 2015 

ESRD QIP 

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

requires the Secretary to ensure that the 

application of the scoring methodology 

results in an appropriate distribution of 

payment reductions across facilities 

such that facilities achieving the lowest 

Total Performance Scores receive the 

largest payment reductions. For PY 

2014, we adopted an approach under 

which a facility did not have to meet or 

exceed the performance standards with 

respect to each of the finalized clinical 

measures to avoid receiving a payment 

reduction under the ESRD QIP. Rather, 

even if a facility failed to meet or exceed 

the performance standards with respect 

to one or more of these measures, the 

facility could avoid a payment 

reduction if it achieved a minimum 

Total Performance Score that is equal to 

or greater than the minimum Total 

Performance Score it would receive if it 

had met the performance standards for 

each of the clinical measures or, in the 

case of the Vascular Access Type 

Measure, for the two subcomponent 

measures. 

For PY 2014, in calculating this 

minimum Total Performance Score, we 

excluded the reporting measures 


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because we believed this approach best 

underscored the importance of the 

clinical measures. For PY 2015, we 

proposed to retain the same approach as 

in PY 2014. We discuss the 

methodology for deriving the 

performance standards for the measure 

topics, above. We requested comments 

on these proposals. 

Alternately, in order to better 

incentivize compliance with reporting 

measures, we also considered raising 

the minimum Total Performance Score 

to include 50 percent of the total points 

a facility could have received had it met 

all of the reporting requirements for 

each measure. In other words, because 

a facility could receive up to 40 points 

in PY 2015 for meeting all of the 

reporting measure requirements, we 

considered raising the minimum Total 

Performance Score by 20 points (onehalf of 40). This approach would ensure 

that facilities receiving a CCN before 

August 1, 2013 could still achieve the 

minimum Total Performance Score by 

meeting, on average, the performance 

standards for the clinical measures and 

achieving as many points on the 

reporting measures as is possible. We 

requested comment regarding whether 

the reporting measures should be scored 

at greater than 0 when calculating the 

minimum Total Performance Score. 

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

requires that facilities achieving the 

lowest Total Performance Scores receive 

the largest payment reductions. For PY 

2014, we adopted an approach we 

intend to continue for PY 2015. We 

believe that this consistency will allow 

the program to be more understandable 

to both facilities and the general public. 

Accordingly, we proposed that the 

payment reduction scale be the same as 

the PY 2014 program. Therefore, for 

each 10 points a facility falls below the 

minimum Total Performance Score, it 

would receive an additional 0.5 percent 

payment reduction on its ESRD 

payments for PY 2015, with a maximum 

reduction of 2.0 percent. As we stated 

in the CY 2012 ESRD PPS final rule (76 

FR 70281), we believe that such a 

sliding scale will incentivize facilities to 

meet the performance standards and 

continue to improve their performance 

because even if a facility fails to achieve 

the minimum Total Performance Score, 

the facility will still be incentivized to 

strive for, and attain, better performance 

rates in order to reduce the amount of 

its payment reduction. We requested 

comments on the proposed payment 

reduction scale. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Commenters agreed with 

our proposal to use the PY 2014 

payment reductions scale for the PY 

2015 ESRD QIP. Some commenters, 

however, supported placing more 

emphasis on the reporting measures in 

calculating the minimum Total 

Performance Score since these are the 

measures over which facilities have the 

most control. Some commenters 

suggested that we base payment 

reductions on actual impact rather than 

projections of impact, setting tiers of 

reductions by percentage of facilities we 

wish to be in each tier. Another 

commenter urged us to create a more 

individualized approach to payment 

reductions because high quality care is 

markedly different from patient to 

patient. 

Response: At this time, we do not 

believe it is in the best interest of the 

program to base payment reductions on 

actual impact and the percentage of 

facilities to which we wish to provide 

payment reductions. Regardless of the 

impact, we believe that facilities that do 

not meet the performance standards for 

each of the clinical measures should 

face a payment reduction. Were we to 

base reductions on percentages, the 

result could be that some high 

performing facilities receive a payment 

reduction. Our current payment 

reduction scale allows every facility to 

avoid a payment reduction provided 

that they meet the minimum Total 

Performance Score. 

We agree that it is important to 

provide individualized care to patients. 

We believe that the program, 

incentivizes facilities to furnish 

individualized care within a certain 

range of established, clinical acceptable 

guidelines. 

Finally we agree with the commenters 

that requested we place more emphasis 

on the reporting measures when 

calculating the minimum Total 

Performance Score. We specifically 

believe that this approach is appropriate 

now that we have weighted the 

reporting measure to comprise 25 

percent of the Total Performance Score. 

Were we to continue to score the 

reporting measures at zero when 

calculating the minimum Total 

Performance Score, by increasing the 

weight of the reporting measures, we 

would be decreasing the minimum Total 

Performance Score. This result is 

contrary to our belief stated in this final 

rule that the reporting measures should 

be afforded more importance. Therefore, 

we will finalize the alternative approach 

we requested comment on in the 

proposed rule to include the reporting 

measures in the minimum Total 

Performance Score at 50 percent of the 

total points a facility could have 

received had it met all of the reporting 

requirements. As noted above, it is 

possible to gain a total of 40 points from 

the reporting measures; thus, we will 

include half, or 20 of these points, in 

our calculation of the minimum Total 

Performance Score. We believe this 

approach is consistent with our 

methodology for the clinical measures 

since we calculate the clinical measure 

component of the minimum Total 

Performance Score as the score a facility 

would have received if it had reached 

the 50th percentile for all clinical 

measures. 

Comment: One commenter suggested 

that the 2 percent payment reduction be 

revisited since such a small percentage 

will not be a worthwhile incentive as 

new measures are added. Several 

commenters expressed concern that the 

ESRD QIP works as a penalty system 

and suggested that the ESRD QIP 

provide incentives as well as penalties, 

and on balance, be budget-neutral. One 

commenter suggested that the payment 

reductions be returned to the penalized 

facilities for use only to improve care in 

the areas where they failed to meet 

quality standards. 

Response: Section 1881(h) of the Act 

does not provide us with the authority 

to issue bonus payments to facilities 

based on their performance under the 

ESRD QIP, to make reductions of more 

than 2.0 percent, or to redistribute the 

payment reductions to the originally 

penalized facilities. 

For the reasons stated above, we 

finalize our proposals for calculating 

payment reductions except that we will 

include reporting measures in 

calculating the minimum Total 

Performance Score. The reporting 

measure component of the minimum 

Total Performance Score will equal the 

score a facility would have received if 

it is awarded half of the maximum 

points it could have received on the 

reporting measures (that is, 5 points on 

each measure). Based on this approach, 

the minimum Total Performance Score 

is 60 points. Facilities failing to meet 

this minimum will receive payment 

reductions in the amounts indicated in 

Table 7 below. 

TABLE 7—FINALIZED PAYMENT

REDUCTION SCALE FOR PY 2015 

Total performance score Reduction (%) 

100–60 ................................ 0 

59–50 .................................. 0 .5 

49–40 .................................. 1 .0 

39–30 .................................. 1 .5 

29–0 .................................... 2 .0 


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13. Data Validation 

One of the critical elements of the 

ESRD QIP’s success is ensuring that the 

data submitted to calculate measure 

scores and Total Performance Scores is 

accurate. To that end, we have procured 

the services of a data validation 

contractor who will be tasked with 

validating a national sample of facilities’ 

records as they report data under the 

ESRD QIP. Beginning in CY 2013, we 

proposed to begin a pilot data validation 

program for the ESRD QIP. Because data 

validation for the ESRD QIP is new to 

both facilities as well as CMS, we 

believe that the first year of validation 

should result in no payment reductions 

to facilities. Accordingly, we proposed 

that, beginning in CY 2013, we would 

randomly sample the records of 

approximately 750 facilities. We 

anticipate that a CMS-designated 

contractor would request approximately 

10 records from each of these facilities. 

We proposed that the facility must 

comply with this request for records 

within 60-days of receiving notice. The 

contractor would review these records 

to ensure accuracy and reliability of the 

data reported by the facility for 

purposes of the ESRD QIP. 

As noted above, we proposed that, in 

the first year of this program, no facility 

will receive a payment reduction 

resulting from the data validation 

process. In future years of the program, 

we noted our intent to evolve our pilot 

program into a full, data validation 

effort. We are also discussing a data 

validation measure whereby facilities 

would be scored based on the accuracy 

of their records. Finally, we are 

contemplating increasing a facility’s 

payment reduction by one tier (for 

example, from 0.5 percent to 1.0 

percent) if its data are incorrect beyond 

a certain threshold. In future years, we 

stated our intention to propose more 

detailed procedures regarding our data 

validation process that may result in 

penalties. We requested comment on 

our data validation proposals for PY 

2015 and the methods we are 

considering for PY 2016. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Many commenters 

supported our proposal to have a data 

validation pilot program that would 

result in no payment reductions. Some 

commenters suggested that we continue 

the pilot until we can evaluate the data 

from the program, and some 

commenters suggested that we should 

share the results of the pilot with the 

dialysis community before the official 

program is launched. One commenter 

requested that, before the pilot program 

begins, we define the errors being 

sought and publish these for public 

comment. Another commenter stated 

that, before data validation efforts are 

initiated, CMS should provide clear 

specifications, data definitions, and 

reporting requirements because it would 

be inappropriate to penalize facilities 

when clarification questions or 

reporting issues have not been resolved. 

Commenters also recommended that 

CMS include the initial data validation 

in the routine Comprehensive Error Rate 

Testing (CERT) request for RACs 

(Recovery Audit Contractors), but 

cautioned against paying auditors on a 

contingency fee. 

Response: We thank commenters for 

their support of the pilot data validation 

program. At this time, we are still 

finalizing the processes and procedures 

for the pilot. We will provide this 

information before the pilot program 

begins on a publicly available Web site. 

We will consider the commenters’ 

suggestions as we continue this process. 

Additionally, as discussed in the 

sections of this rule outlining the 

measures, we believe that the 

specifications, data definitions, and 

reporting requirements are clear and 

transparent. If it becomes apparent that 

there is some significant confusion as to 

any of these elements, we will clarify 

these them using the most appropriate 

means. 

Comment: One commenter stated that 

it does not believe it is appropriate for 

CMS to develop a data validation 

measure for the ESRD QIP. This 

commenter argued that CMS must first 

explain the scope of accuracy and errors 

(for example, does it include missing 

values, transcriptional errors) that CMS 

requires. Other commenters requested 

that, before payment is tied to 

validation, CMS should publish for 

comment the relationship of errors to 

payment reductions (with some 

accorded more weight than others 

depending on their scope and type) and 

allow the dialysis community to review 

the results of the pilot. 

Response: We thank commenters for 

these suggestions. We believe that 

ensuring data accuracy of reported data 

is an important component to ensure 

accurate performance scores and 

corresponding payments. We continue 

to consider whether and how we will tie 

payment to any data validation issues. 

We will publish any future proposals in 

rulemaking for public comment. 

Comment: Some commenters 

expressed concern with the burden data 

validation may place on facilities. One 

commenter is concerned that producing 

records within 60 days is too monetarily 

burdensome and suggests a 120 day 

period. Another commenter requested 

that we limit the number of document 

requests based on provider size and 

resources and reimburse facilities for 

data requests. One commenter suggested 

that the requested data sample be a 

percentage of patients rather than a 

fixed number so that small facilities are 

not disproportionally affected. One 

commenter asked that the requested 

records be as current as possible so that 

they can be easily accessed by facilities 

that many have data storage protocols. 

Another commenter specifically noted 

its support for HAI data validation, but 

stated its concern that we 

underestimated the burden on facilities; 

this commenter requested that we 

provide more detail on the validation 

process, specifically the facilities’ 

responsibilities, and encouraged us to 

partner with NHSN and state and public 

health partners in developing a 

standardized process for the validation 

of HAI data. 

Response: We do not believe that our 

proposals place an undue burden on 

facilities. We proposed to request only 

ten records, and we will provide the 

facility 60 days to produce these 

records. We do not believe that 

collecting such a small amount of 

documentation in such a great deal of 

time should pose problems for facilities. 

As we explain later in this rule, we 

estimate that it will take each facility 

only 2.5 hours to comply with the 

requests for these records and will cost 

approximately $83.08 per facility. We 

do not believe that 2.5 hours in the span 

of 2 months (or 2.5 minutes per day) is 

too little time to comply with these 

requests nor do we believe it warrants 

an additional 60 days for compliance. 

Further, we do not agree that we should 

request a percentage of documents from 

facilities rather than a fixed number. If 

a facility is large, asking for even one 

percent of its records could prove to be 

a large burden. Alternatively, requesting 

that a small facility provide even 10 

percent of its records would not provide 

our data contractor with enough 

information to assess the validity of the 

data. By requesting 10 records from each 

facility, we can ensure a similar burden 

(2.5 hours and approximately $83.08) 

for each facility and an analysis of its 

validity based on the same volume of 

information. 

As noted above, at this time, we are 

still finalizing the processes and 

procedures for the pilot. We will 

provide further information on a 

publicly available Web site. As we 

finalize these procedures, we intend to 

engage various stakeholders to 

encourage the development of a 


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standardized process for the validation 

of data, including data from the CDC for 

HAIs. 

Comment: One commenter requested 

that we specify a data validation appeals 

process. 

Response: We will consider proposing 

a data validation appeals process in 

future rulemaking. Because the 

proposed program is a pilot and will not 

have any impact on payment, we do not 

believe an appeals process is necessary 

at this time. 

Comment: One commenter believes 

that the various technological resources 

facilities have should be taken into 

account when evaluating data validity. 

This commenter encouraged us to 

evaluate manual/electronic medical 

records (EMR) data entry in 

CROWNWeb. 

Response: We will consider 

commenter’s suggestion when we 

evaluate the data in the pilot program. 

We will specifically consider if there are 

variations in the accuracy of data 

because of the mode of data entry. 

Comment: One commenter 

encouraged us not to implement a 

payment reduction until all facilities 

have been asked to submit medical 

records for purposes of data validation 

at least one time. Another commenter 

stated that each facility should have the 

opportunity to identify data 

transmission/download errors without 

the risk of payment penalty. 

Response: We thank commenters for 

the suggestions and will consider them 

as our pilot program advances. 

For the reasons stated above, we 

finalize our pilot data validation 

program as proposed, and we will 

specify the processes and procedures of 

this pilot on http:// 

www.dialysisreports.org. 

14. Scoring Facilities Whose Ownership 

Has Changed 

During our first year of 

implementation of the ESRD QIP, PY 

2012, facilities requested guidance 

regarding how a change in ownership 

affects any applicable ESRD QIP 

payment reduction. We proposed that, 

for all future years of the ESRD QIP, the 

application of an ESRD QIP payment 

reduction would depend on whether the 

facility retains its CCN after the 

ownership transfer. If the facility’s CCN 

remains the same after the facility is 

transferred, for purposes of the ESRD 

QIP, we would consider the facility to 

be the same facility (despite the change 

in ownership) and we would apply any 

ESRD QIP payment reduction for the 

transferor to the transferee. Likewise, as 

long as the facility retains the same 

CCN, we would calculate the measure 

scores using the data submitted during 

the applicable period regardless of 

whether the ownership changed during 

one of these periods. If, however, a 

facility receives a new CCN as a result 

of a change in ownership, we would 

treat the facility as a new facility for 

purposes of the ESRD QIP as of the date 

it received the new CCN. We stated our 

belief that these proposals are the most 

operationally efficient and will allow 

facilities the most certainty when they 

change ownership. We proposed to 

apply these rules beginning with the PY 

2014 ESRD QIP, and we requested 

public comment on these proposals. 

The comments that we received and 

our responses to these comments are set 

forth below. 

Comment: Many commenters strongly 

supported our proposals for scoring 

transferred facilities. One commenter 

expressed concern that the proposals 

will change the marketplace in ways 

that are not yet known. 

Response: We thank commenters for 

their support. We realize that this 

proposal may impact how dialysis 

facilities are acquired in the future. 

However, we believe that creating rules 

around how we will treat transferred 

facilities for purposes of the ESRD QIP 

will create a marketplace that is more 

predictable. Therefore, we finalize these 

rules for transferred facilities as 

proposed. 

15. Public Reporting Requirements 

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

requires the Secretary to establish 

procedures for making information 

regarding facilities’ performance under 

the ESRD QIP available to the public, 

including information on the Total 

Performance Score (as well as 

appropriate comparisons of facilities to 

the national average with respect to 

such scores) and performance scores for 

individual measures achieved by each 

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

further requires that a facility have an 

opportunity to review the information to 

be made public with respect to that 

facility prior to such information’s 

publication. In addition, section 

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

Secretary to provide each facility with a 

certificate containing its Total 

Performance Score to post in patient 

areas within the facility. Finally, section 

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

Secretary to post a list of facilities and 

performance-score data on the CMS 

Web site. 

In the PY 2012 ESRD QIP final rule, 

we adopted uniform requirements based 

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

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

procedures for facilities to review the 

information to be made public and the 

procedures for informing the public 

through facility-posted certificates for 

the first 3 payment years of the ESRD 

QIP (76 FR 636 through 639). We 

proposed that these requirements 

generally apply to PY 2015 and 

subsequent payment years. However, we 

proposed to make some modifications, 

as outlined below, to these requirements 

and that these modifications become 

effective upon the effective date of this 

final rule. Thus, these requirements, if 

finalized, would apply in PY 2014 and 

for subsequent payment years. All other 

previously finalized requirements 

would remain the same. 

First, for the first year of the program, 

PY 2012, we did not explicitly state that 

we would be publishing a list of facility 

performance on or after December 1 of 

the year before the payment 

consequence year. We did, however, 

make this list available for the pubic via 

the CMS Web site. For the PY 2013 

ESRD QIP and subsequent payment 

years, and in accordance with section 

1881(h)(6)(D) of the Act, we proposed to 

publish such aggregate list on the CMS 

Web site at www.cms.gov and any other 

Web site controlled by CMS. This list 

will include information on the facility, 

specifically: 

(i) Name and address; 

(ii) Measure rates (which may include 

numerators and denominators) and 

scores; 

(iii) And Total Performance Scores. 

This list will also indicate those 

facilities that do not have enough data 

to calculate one or more measure rates 

and/or a Total Performance Score. We 

believe it is important to publish such 

a list because it allows beneficiaries, the 

public, and facilities access to this 

information without having to 

individually download a certificate for 

each facility, and, because of such 

access, we believe it will ultimately 

improve quality. The data will be more 

accessible, Medicare beneficiaries and 

their families will have the information 

more easily to make choices about their 

care, and facilities can more readily 

compare their performance to other 

facilities or across facilities. Therefore, 

beginning in January 2013, we proposed 

to publish a list of facility information 

described above for each payment year 

after facilities have the ability to review 

their scores. 

Second, for PY 2012, we required 

facilities to prominently post certificates 

within 5 days of us making these 

certificates available for download from 

www.dialysisreports.org in accordance 

with section 1881(h)(6)(C) of the Act (76 

FR 637). We proposed to modify the 


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previously finalized requirements for 

posting certificates in two ways. We no 

longer believe it is necessary for 

facilities to post these certificates within 

5 days of their availability. The 

certificates are provided in late 

December, and it was our experience in 

the PY 2012 program that many 

individuals responsible for the 

certificates were away on holiday 

during this period of time. Therefore, 

we proposed to change this requirement 

so that, beginning with the PY 2014 

program, facilities will be required to 

post their certificates on or before the 

first business day after January 1 of each 

payment year. Certificates are typically 

available for download on or around 

December 15, and we believe that this 

two week amount of time is long enough 

to allow facilities to post them. 

Therefore, beginning PY 2014, we 

proposed that facilities be required to 

post their Performance Score 

Certificates (PSCs) on or before the first 

business day after January 1 of each 

payment year in a prominent place for 

the duration of that payment year and 

otherwise comply with the requirements 

listed in the PY 2012 final rule (76 FR 

637). 

Third, for the PY 2012 ESRD QIP, we 

required facilities to post one copy of 

the certificate in their facility (76 FR 

637). Beginning in PY 2014, we 

proposed to require facilities to post two 

copies of this certificate, one copy in 

English and one copy in Spanish. Both 

of these certificates (which are posted as 

a single file) will be provided by CMS, 

both must be posted by the first 

business day after January 1 of the 

payment year, and both must be posted 

for the entirety of such year in a 

prominent location. We proposed to 

require the certificate to be posted in 

both English and Spanish to make the 

certificate more understandable to 

native Spanish speakers. Thus, to best 

serve a greater number of ESRD patients, 

we proposed to finalize the requirement 

that facilities must post both an English 

and a Spanish certificate prominently in 

their facility. The only additional 

burden for facilities in adding this 

Spanish certificate is its printing and 

posting. 

The comments we received on these 

proposals and our responses are set 

forth below. 

Comment: Commenters supported our 

proposal to allow facilities until the first 

business day after January 1 to post 

certificates. Most commenters agreed 

with our proposal to require facilities to 

post both English and Spanish versions 

of the PSC beginning in PY 2014, stating 

that the additional burden is very small; 

one commenter argued that Spanish 

versions of the PSC are not necessary in 

all locations and recommended that 

individual facility administrators 

determine whether posting a PSC in 

Spanish is necessary or beneficial based 

upon the population that the facility 

serves. Another commenter suggested 

not only requiring a Spanish PSC but 

also developing Spanish-language 

materials explaining the PSCs. 

Response: We agree with commenters 

that the burden of posting a Spanish as 

well as an English PSC is very little and 

far outweighs the benefits it could 

convey upon beneficiaries. We do not 

agree that it is appropriate for facility 

administrators to determine whether 

posting the Spanish PSC is necessary. A 

facility that does not furnish services to 

native Spanish speaking patients in 1 

year could begin to do so during the 

next year. As the ESRD QIP evolves, we 

seek to make the program as transparent 

as possible for all beneficiaries. 

Comment: Some commenters believe 

that the ESRD QIP should be clearer, 

and we should develop and make public 

guidance documents for patients and 

clinics. These commenters also 

suggested that we hold open door 

forums specifically for patients so that 

they do not interpret the quality of care 

information incorrectly. 

Response: As we noted above, we 

seek to make the program as transparent 

as possible, specifically to beneficiaries. 

We intend to continue to assess the 

modes and efficacy of our 

communications to beneficiaries. We 

will take these comments into account 

as we do so. 

Comment: Some commenters 

requested that we make available on our 

Web site individual measure scores 

(including the numerator and 

denominator) and the Total Performance 

Scores; commenters stated that these 

scores should be organized by facility 

and state to facilitate choice in care. One 

commenter requested that this 

information be published in both 

English and Spanish. One commenter 

encouraged us to create a ‘‘one-stopshop’’ for quality information on the 

internet. 

Response: Since the PY 2012 program, 

we have made aggregate information on 

measure scores and Total Performance 

Scores available on http://www.cms.gov/ 

Medicare/End-Stage-Renal-Disease/ 

ESRDQualityImproveInit/index.html. 

This information includes numerators 

and denominators for each clinical 

measure, the scores for each measure, 

and Total Performance Scores for every 

facility. The information is organized in 

alphabetical order by state and facility. 

We will consider publishing this 

information in Spanish in future years. 

Additionally, we seek to align the ESRD 

QIP with CMS’ other VBP program; we 

continue to assess how information 

across programs should be presented, 

and we will considering creating a ‘‘onestop-shop’’ for information related to 

CMS’ programs. At present, a great deal 

of information on these programs can be 

found here: http://www.cms.gov/ 

Medicare/Quality-Initiatives-PatientAssessment-Instruments/ 

QualityInitiativesGenInfo/index.html. 

Comment: One commenter believes 

that the NHSN measure should be 

included in DFC because it is key to 

patient safety. 

Response: We thank comments and 

will consider the appropriateness for 

inclusion of this measure on DFC in 

future Web site releases. 

Comment: One commenter requested 

that we confirm that there is consistency 

in measures reported in DFR, DFC, PSR, 

and for ESRD QIP purposes. 

Response: We thank the commenter 

for its inquiry regarding the consistency 

of measures reported through DFR, DFC, 

the Performance Score Reports (PSR), 

and for ESRD QIP purposes. There are 

some differences in the measure 

descriptions between DFR, DFC, and 

QIP because each serves its own 

purposes; the measure rates for the 

ESRD QIP that are posted on DFR, DFC, 

and in the PSR are the same. For 

example, for DFR/DFC, the 

denominators for the Kt/V measures 

include out of range values, whereas the 

ESRD QIP Kt/V measure denominators 

do not. We seek to align reporting 

mechanisms as much as possible, but, in 

some cases, we believe that it is 

appropriate to present this information 

differently. 

Comment: One commenter 

recommended that we timely monitor 

quality data and intervene if trends 

indicate a decrease in the quality of 

care. 

Response: We are committed to 

monitoring and evaluating the impacts 

of the ESRD QIP. 

Comment: One commenter urged us 

to prioritize the development and 

implementation of a single system to 

which facilities would report their data 

in order to simplify reporting and 

minimize unnecessary burdens on 

providers, particularly staff members 

otherwise providing direct care to 

patients. 

Response: We continue to evaluate 

our reporting systems; we seek to 

minimize provider burden as much as 

possible, and we will continue to 

evaluate ways in which we can do so as 

the program moves forward. 


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IV. Limitation on Payments to All 

Providers, Suppliers and Other Entities 

Entitled to Bad Debt 

A. Background 

In accordance with section 1861(v)(1) 

of the Act and current regulations at 42 

CFR 413.89, Medicare pays some or all 

of the uncollectible deductible and 

coinsurance amounts to those entities 

eligible to receive reimbursement for 

bad debt. To determine if bad debt 

amounts are allowable, the requirements 

at § 413.89 must be met. Chapter 3 of the 

Provider Reimbursement Manual (PRM) 

(CMS Pub. 15, Part I) provides 

additional guidance on the standards 

governing bad debt reimbursement. 

Prior to the passage of the Middle 

Class Tax Extension and Job Creation 

Act of 2012 (Pub. L. 112–96), under 

section 1861(v)(1)(T) of the Act and 

§ 413.89(h)(1) of our regulations, 

Medicare payments for allowable bad 

debt amounts for hospitals were 

reduced by 30 percent for cost reporting 

periods beginning on or after October 1, 

2001. Likewise, under section 

1861(v)(1)(V) of the Act and 

§ 413.89(h)(2) of our regulations, 

Medicare payments for allowable bad 

debt amounts for patients in skilled 

nursing facilities (SNFs) that were not 

dual eligible individuals beginning with 

cost reporting periods beginning on or 

after October 1, 2005, were reduced by 

30 percent. Section 413.89(h)(2) defines 

a dual eligible individual for bad debt 

purposes as an individual that is 

entitled to benefits under Part A of 

Medicare and is determined eligible by 

the State for Medical Assistance under 

Title XIX of the Act as described in 42 

CFR 423.772 paragraph (2) under the 

definition of a ‘‘full-benefit dual eligible 

individual.’’ 

For all other providers, suppliers, and 

entities eligible to receive bad debt 

payment, including critical access 

hospitals (CAHs), rural health clinics 

(RHCs), Federally qualified health 

centers (FQHCs), community mental 

health centers (CMHCs), end stage renal 

diease (ESRD) facilities, swing bed 

hospitals, as defined at 42 CFR 

413.114(b), and patients that are dual 

eligible individuals in SNFs, Medicare 

paid 100 percent of allowable bad debt 

amounts. Additionally, for health 

maintenance organizations (HMOs) 

reimbursed on a cost basis and 

competitive medical plans (CMPs) 

defined under section 1876 of the Act, 

and for health care prepayment plans 

(HCPPs) defined under section 

1833(a)(1)(A) of the Act, Medicare pays 

a portion of bad debt amounts under 42 

CFR 417.536(f) of our regulations. 

Although Medicare previously paid 

ESRD facilities 100 percent of allowable 

bad debt amounts, these payments were 

capped at the facility’s reasonable cost 

in accordance with § 413.178(a). In the 

proposed rule, we proposed to maintain 

the cap on bad debt reimbursement to 

an ESRD facility up to the facility’s 

unrecovered costs. We also proposed to 

apply the bad debt reduction 

percentages mandated by section 3201 

of the Middle Class Tax Extension and 

Job Creation Act of 2012 (Pub. L. No. 

112–96), prior to applying the cap up to 

the ESRD facility’s unrecovered costs. 

B. Section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012 

(Pub. L. 112–96) 

Sections 3201(a) and (b) of the Middle 

Class Tax Extension and Job Creation 

Act of 2012 (Pub. L. 112–96) amended 

section 1861(v)(1)(T) and section 

1861(v)(1)(V) of the Act, respectively, by 

further reducing the percentage of 

allowable bad debt attributable to the 

deductibles and coinsurance amounts 

payable to hospitals (section 

1861(v)(1)(T)) and SNFs (section 

1861(v)(1)(V)). Section 3201(b) of Public 

Law 112–96 also revised the SNF bad 

debt reductions to include both dual 

eligible beneficiaries and non-dual 

eligible beneficiaries under section 

1861(v)(1)(V) of the Act, and to apply 

such reductions to swing bed hospitals 

for cost reporting periods beginning 

during fiscal year 2013 and subsequent 

fiscal years. 

Finally, section 3201(c) of The Middle 

Class Tax Extension and Job Creation 

Act of 2012 added a new subparagraph 

1861(v)(1)(W) to the Act, which applied 

a reduction in bad debt payments to 

‘‘providers’’ not addressed under 

subparagraphs 1861(v)(1)(T) or 

1861(v)(1)(V) of the Act. For the purpose 

of subparagraph 1861(v)(1)(W) of the 

Act, section 3201(c) Public Law 112–96 

defined ‘‘providers’’ as those providers 

not previously described in subsections 

3201(a) or (b), suppliers, or any other 

type of entity that receives payment for 

bad debts under the authority of section 

1861(v)(1)(A) of the Act. These 

providers include, but are not limited 

to, CAHs, RHCs, FQHCs, CMHCs, HMOs 

reimbursed on a cost basis, CMPs, 

HCPPs and ESRD facilities. 

C. Summary of Provisions of This Final 

Rule 

1. Self-Implementing Provisions of 

Section 3201 Public Law 112–96 

The provisions of subsections 3201(a), 

(b), and (c) of The Middle Class Tax 

Extension and Job Creation Act of 2012 

permit no discretion on the part of the 

Secretary and thus, are self 

implementing, with the exception of the 

proposal to maintain the cap on bad deb 

reimbursement for ESRD facilities, as 

discussed below. 

Comment: We received comments 

from commenters suggesting that the 

bad debt reduction percentages be 

implemented in single digit percent 

reductions instead of the double digit 

percent reductions, as mandated by 

section 3201 of the Middle Class Tax 

Extension and Job Creation Act of 2012. 

Response: While we appreciate the 

concerns of the provider community 

regarding bad debt payments to 

providers eligible to receive bad debt, 

the percent reductions of bad debt 

payments are statutorily mandated by 

section 3201 of the Middle Class Tax 

Extension and Job Creation Act of 2012 

and do not provide for discretion. 

Therefore, we are codifying these 

provisions, as summarized below, in our 

regulations. 

• Payment of allowable bad debt to 

hospitals for cost reporting periods 

beginning during fiscal year 2013 and 

subsequent fiscal years will be reduced 

by 35 percent. 

• Payment of allowable bad debt to 

SNFs and swing bed hospitals for cost 

reporting periods beginning during 

fiscal year 2013 or a subsequent fiscal 

year will be reduced by 35 percent for 

coinsurance amounts for services 

furnished to a beneficiary who is not a 

dual eligible individual. 

• Payment of allowable bad debt to 

SNFs and swing bed hospitals for 

coinsurance for services furnished to a 

beneficiary who is a dual eligible 

individual will be: 

• For cost reporting periods 

beginning during fiscal year 2013, 

reduced by 12 percent; 

• For cost reporting periods 

beginning during fiscal year 2014, 

reduced by 24 percent and; 

• For cost reporting periods 

beginning during fiscal year 2015, 

reduced by 35 percent. 

• Payment of allowable bad debt to 

all other providers, suppliers and any 

other entity that receives payment for 

bad debts under the authority of section 

1861(v)(1)(A) of the Act will be: 

• For cost reporting periods 

beginning during fiscal year 2013, 

reduced by 12 percent; 

• For cost reporting periods 

beginning during fiscal year 2014, 

reduced by 24 percent; 

• And for cost reporting periods 

beginning during fiscal year 2015 and 

subsequent fiscal years, by 35 percent. 

A summary of the changes in 

Medicare bad debt payment percentages 

required by section 3201 of The Middle 

Class Tax Extension and Job Creation 


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Act of 2012 is reflected in Table 8 

below: 

TABLE 8—SUMMARY OF MEDICARE BAD DEBT REIMBURSEMENT BY PROVIDER TYPES FOR COST REPORTING PERIODS

THAT BEGIN DURING FY 2013, 2014, 2015 AND SUBSEQUENT YEARS

Provider type 

Allowable bad 

debt amount 

during FY 2012 

(percent) 

Allowable bad 

debt amount 

during FY 2013 

(percent) 

Allowable bad 

debt amount 

during FY 2014 

(percent) 

Allowable bad 

debt amount 

during FY 2015 & 

subsequent FYs 

(percent) 

Hospitals .................................................................................. 70 65 65 65 

SNFs: Non-Full Dual Eligibles ................................................. 70 65 65 65 

Swing Bed Hospitals: Non-Full Dual Eligibles ......................... 100 65 65 65 

SNFs: Full Dual Eligibles ......................................................... 100 88 76 65 

Hospital Swing Beds: Full Dual Eligibles ................................ 100 88 76 65 

CAHs ........................................................................................ 100 88 76 65 

ESRD Facilities ........................................................................ 100 88 76 65 

CMHCs .................................................................................... 100 88 76 65 

FQHCs ..................................................................................... 100 88 76 65 

RHCs ....................................................................................... 100 88 76 65 

Cost Based HMOs ................................................................... 100 88 76 65 

Health Care Pre-Payment Plans ............................................. 100 88 76 65 

Competitive Medical Health Plans ........................................... 100 88 76 65 

2. ESRD Bad Debt Cap and Remove and 

Reserve § 413.178 

In the proposed rule, we proposed to 

maintain the cap on bad debt 

reimbursement up to an ESRD facility’s 

unrecovered costs. Bad debt payments 

are made under section 1861(v)(1)(A) of 

the Act to prevent non-Medicare 

patients from subsidizing Medicare 

patients and vice-versa, also known as 

the anti-cross subsidization principle. 

The cap at an ESRD facility’s 

unrecovered costs for bad debt 

reimbursement was originally 

implemented to assure that the 

combination of the composite rate 

payment and the bad debt payment did 

not exceed the ESRD facility’s total 

allowable costs of providing services to 

Medicare beneficiaries, as well as to 

avoid violating the anti-cross 

subsidization principle. Thus, by 

applying the cap, an ESRD facility 

would not be paid for bad debt amounts 

that exceeded its unrecovered costs 

under the composite rate payment 

system implemented in 1983. 

Comment: We received comments 

from commenters suggesting the 

maintenance of the cap on bad debt 

reimbursement to ESRD facilities up to 

the facilities’ unrecovered costs was 

inconsistent with the bad debt 

reimbursement policies for all other 

types of providers eligible to receive bad 

debt reimbursement and was also 

inconsistent with Federal court rulings. 

Response: After careful consideration 

of the policy implications of removing 

the cap on bad debt reimbursement at 

an ESRD facility’s unrecovered costs, we 

have decided to eliminate the cap. The 

elimination of the cap on bad debt 

reimbursement to ESRD facilities will 

allow ESRD facilities to claim bad debts 

at an amount exceeding unrecovered 

costs incurred under a prospective 

payment system. In addition, removal of 

the cap on bad debt reimbursement to 

ESRD facilities complies with the order 

of the D.C. Circuit Court in Kidney 

Center of Hollywood, et al. v. Shalala, 

133 F.3d 78 (D.C. Circuit 1998), and will 

allow us to apply our bad debt policies 

consistently across all the types of 

providers eligible to receive bad debt 

payments. Therefore, we believe the 

removal of the bad debt reimbursement 

cap at an ESRD facility’s unrecovered 

cost, is an equitable and reasonable 

policy choice with respect to bad debt 

reimbursement to ESRD facilities. 

We are eliminating the cap for ESRD 

facilities for cost reporting periods 

beginning on or after January 1, 2013, 

the effective date of this final rule. With 

this change, ESRD facilities will be 

reimbursed for bad debt reduced as 

outlined in the proposed changes to 

§ 413.89(h)(3), described above. 

However, because the new bad debt 

reductions for ESRD facilities become 

effective October 1, 2012, and the 

removal of the cap on bad debt 

reimbursement to ESRD facilities will 

not be effective until January 1, 2013, 

for cost reporting periods beginning 

between October 1, 2012 and December 

31, 2012, the cap on bad debt 

reimbursement to ESRD facilities will be 

calculated with both the required bad 

debt reductions and the cap on bad debt 

reimbursement to ESRD facilities. For 

illustrative purposes only, the following 

examples present the interaction of the 

application of the cap on ESRD bad debt 

payments until January 1, 2013 and the 

ESRD bad debt reduction effective 

October 1, 2012: 

Example (A), for cost reporting periods 

beginning before October 1, 2012, only the 

cap applies as follows: 

1. Unrecovered costs = $100.00 

2. Aggregate Gross bad debt = $110.00 

3. Bad debt amount of $110.00 is capped 

at the unrecovered costs of $100.00, 

therefore, the facility receives $100.00. 

Example (B), for cost reporting periods 

beginning between October 1, 2012 and 

December 31, 2012, the 12 percent reduction 

applies up to the facilities’ unrecovered costs 

as follows: 

1. Unrecovered costs = $100.00 

2. Aggregate Gross bad debt = $110.00 

3. Bad debt amount of $110.00 is reduced 

by 12 percent (bad debt reduction in FY 

2013) which equals $96.80. Since the 

reduction is less than the cap, the facility 

receives $96.80. 

Example (C), for cost reporting periods 

beginning on or after January 1, 2013 and 

before October 1, 2013, only the 12 percent 

reduction applies: 

1. Unrecovered costs = $100.00 

2. Aggregate Gross bad debt = $110.00 

3. The $110.00 bad debt amount is reduced 

by 12 percent (bad debt reduction in FY 

2013). The facility receives $96.80 with no 

cap applied. 

We are moving current regulations 

text at § 413.178(a) to proposed 

§ 413.89(h)(3). The revised regulation 

text will remove the bad debt cap for 

ESRD facilities, and include the bad 

debt reduction percentages applicable to 

ESRD facilities in accordance with 

1861(v)(1)(W). 

We are removing current paragraphs 

(b), (c), and (d)(1) of § 413.178 since 

these provisions already are set out at 

§ 413.89, Chapter 3 of the PRM Part I, 


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and in the Medicare cost report 

instructions in the PRM Part II. 

In addition, we are moving the bad 

debt exception provision applicable to 

ESRD facilities discussed at 

§ 413.178(d)(2) to proposed 

§ 413.89(i)(2). For consistency, we are 

also moving the current general bad 

debt exception set out at § 413.89(i) to 

new paragraph § 413.89(i)(1). 

We are removing and reserving 

§ 413.178. 

3. Technical Corrections 

We are making a technical correction 

to 42 CFR 417.536(f)(1) to refer to 42 

CFR 413.89 as the appropriate cross 

reference to Medicare bad debt 

reimbursement policy, to revise the 

existing language describing bad debt to 

conform to § 413.89(a), and to remove 

requirements that already are set out at 

§ 413.89. 

D. Changes to Medicare Bad Debt Policy 

In this rule, we are conforming 

existing regulations text found at 

§ 413.89(h) to the self-implementing 

provisions of section 3201 of Public Law 

112–96. Previously, bad debt 

reimbursement to an ESRD facility was 

capped up to the facility’s reasonable 

costs under § 413.178(a). In this final 

rule, we are moving the current 

provision at § 413.178(a) to 

§ 413.89(h)(3), and adding ESRD 

facilities to the list of facilities to which 

§ 413.89 ‘‘Bad debts, charity, and 

courtesy allowances,’’ applies. We are 

also eliminating duplicate provisions in 

§ 413.178 and reserving § 413.178 for 

future use. In addition, we are making 

a technical correction to § 417.536(f)(1) 

to clarify Medicare bad debt 

reimbursement policy. 

1. Changes to 42 CFR 413.89(h) 

Under each paragraph of our existing 

regulations at § 413.89(h), we describe 

the limits on bad debt payment to be 

reductions to the amount of bad debt 

otherwise treated as allowable costs. 

Under § 413.89(a), bad debts are 

deductions from revenue and are not to 

be included in allowable cost. 

Therefore, we are clarifying that the 

limits on bad debt payments are 

reductions to amount of allowable bad 

debt. 

We are revising § 413.89(h)(1)(iv) to 

set forth the percentage reduction in 

reimbursable bad debt payments to 

hospitals for cost reporting periods 

beginning during fiscal years 2001 

through 2012. 

We are adding a new § 413.89(h)(1)(v), 

which will set forth the percentage 

reduction in reimbursable bad debt 

payments required by section 

1861(v)(1)(T)(v) of the Act to hospitals 

for cost reporting periods beginning 

during fiscal year 2013 and subsequent 

fiscal years. 

We are revising § 413.89(h)(2) to add 

paragraphs (h)(2)(i) and (h)(2)(ii). 

Paragraph (h)(2)(i) will set forth the 

percentage reduction in reimbursable 

bad debt payments required by section 

1861(v)(1)(V)(ii) of the Act for SNFs and 

swing bed hospitals for cost reporting 

periods beginning during fiscal years 

2006 through 2012 for a patient that was 

not a dual eligible individual. Paragraph 

(h)(2)(ii) will set forth the reduction in 

reimbursable bad debt payments for 

SNFs and swing bed hospitals, for cost 

reporting periods beginning during 

fiscal year 2013 and subsequent fiscal 

years, for a patient that was a dual 

eligible individual. 

We are revising § 413.89(h)(3) to set 

forth the percentage reduction in 

allowable bad debt payments required 

by section 1861(v)(1)(W) of the Act for 

ESRD facilities for cost reporting 

periods beginning during fiscal year 

2013, fiscal year 2014 and subsequent 

fiscal years. We are also revising 

§ 413.89(h)(3) to set forth the 

applicability of the cap on bad debt 

reimbursement to ESRD facilities for 

cost reporting periods beginning 

between October 1, 2012 and December 

31, 2012. 

We are adding a new § 413.89(h)(4) to 

set forth the percentage reduction in 

reimbursable bad debt payments for all 

other entities required by section 

1861(v)(1)(W) of the Act not described 

in § 413.89(h)(1), (h)(2), or (h)(3) that are 

eligible to receive reimbursement of bad 

debt for cost reporting periods 

beginning during fiscal year 2013, fiscal 

year 2014, and subsequent fiscal years. 

2. Rationale for Removing 42 CFR 

413.178 

Previously, § 413.178(a) stated that 

CMS will reimburse each ESRD facility 

its allowable Medicare bad debts, as 

defined in § 413.89(b), up to the 

facility’s costs, as determined under 

Medicare principles, in a single lump 

sum payment at the end of the facility’s 

cost reporting period. This cap on bad 

debt reimbursements will be eliminated 

and the new reductions in bad debt 

reimbursements will be applied, as 

discussed above. 

We are revising § 413.89(h)(3) to 

implement the ESRD facilities’ bad debt 

reduction effective October 1, 2012 in 

accordance with section 1861(v)(1)(W) 

of the Act. 

We are also removing and reserving 

§ 413.178, since the revised provisions 

already are set out at § 413.89, in 

Chapter 3 of the PRM Part I, and in the 

Medicare cost report instructions in the 

PRM Part II. We are moving the current 

general bad debt exception at § 413.89(i) 

to new paragraph § 413.89(i)(1) in order 

to move the ESRD facilities’ bad debt 

exception provision previously 

discussed at § 413.178(d)(2) to new 

paragraph § 413.89(i)(2). 

3. Technical Corrections to 42 CFR 

417.536(f)(1) 

In this final rule, we are revising the 

regulations text at 417.536(f)(1) to 

correct the cross-reference to the 

Medicare bad debt reimbursement 

regulation, so that § 417.536(f)(1) will 

reference 42 CFR 413.89 instead of the 

outdated reference to § 413.80. In 

addition, we are revising the language at 

42 CFR 417.536(f)(1) to conform to the 

description of bad debt in § 413.89(a) 

and we are removing § 417.536(f)(1)(i) 

and (ii) since these provisions already 

are set out at § 413.89, in Chapter 3 of 

the PRM Part I, and in the Medicare cost 

report instructions in the PRM Part II. 

V. Collection of Information 

Requirements 

A. Legislative Requirement for 

Solicitation of Comments 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

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. 

B. Requirements in Regulation Text 

We did not propose and therefore are 

not finalizing any changes to regulatory 

text for the ESRD PPS in CY 2013. 

C. Additional Information Collection 

Requirements 

This final rule does not impose any 

new information collection 

requirements in the regulation text, as 

specified above. However, this final rule 

does make reference to several 

associated information collections that 


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9This hourly wage is absent any fringe benefits. 

are not discussed in the regulation text 

contained in this document. The 

following is a discussion of these 

information collections. We are 

soliciting public comment on each of 

these issues. 

1. ESRD QIP 

a. Display of Certificates for the PY 2015 

ESRD QIP 

Section III.D.15 of this final rule 

discusses a disclosure requirement for 

the PY 2014 and PY 2015 ESRD QIP. As 

stated earlier in this final rule, section 

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

Secretary to provide certificates to 

dialysis care providers and facilities 

with their Total Performance Scores 

under the ESRD QIP. This section also 

requires each facility that receives an 

ESRD QIP certificate to display it 

prominently at the facility. 

To comply with this requirement, we 

proposed to issue one English and one 

Spanish ESRD QIP certificate beginning 

in PY 2014 to facilities via a generally 

accessible electronic file format. We had 

previously finalized other display 

requirements for the program, including 

that each facility prominently display 

the applicable ESRD QIP certificate in 

the patient area, take the necessary 

measures to ensure the security of the 

certificate in the patient areas, and 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 facilities to print 

the applicable ESRD QIP certificates, 

display the certificates prominently in 

patient areas, ensure the safety of the 

certificates, and respond to patient 

inquiries in reference to the certificates. 

We do not anticipate that posting the 

Spanish certificate will add more time 

or burden to the Collection of 

Information requirements outlined in 

the CY 2011 ESRD PPS final rule (76 FR 

70298 through 70299) for the PY 2014 

ESRD QIP. Therefore, this analysis only 

applies to the burden associated with 

the PY 2015 and beyond requirements. 

We estimate that approximately 5,726 

facilities will receive ESRD QIP 

certificates in PY 2015 and will be 

required to display them. We also 

estimate that it will take each facility 10 

minutes per year to print, prominently 

display, and secure the ESRD QIP 

certificates, for a total estimated annual 

burden of 954 hours (10/60 hours 

*5,726 facilities). According to the 

Bureau of Labor Statistics, the mean 

hourly wage of a registered nurse is 

$33.23.9 Since we anticipate nurses (or 

administrative staff) will post these 

certificates, we estimate that the 

aggregate cost of this requirement will 

be $31,701 ($33.23/hour × 954 hours). 

We estimate that approximately onethird of ESRD patients, or 100,000 

patients, will ask a question about the 

ESRD QIP certificate. We further 

estimate that it will take each facility 

approximately 5 minutes to answer each 

patient’s question about the applicable 

ESRD QIP certificate, or 1.52 hours per 

facility each year. The total estimated 

annual burden associated with this 

requirement is 8,704 hours (1.52 hours/ 

facility × 5,726 facilities). The total 

estimated annual burden for both 

displaying the ESRD QIP certificates 

and answering patients’ questions about 

the certificates is 9,658 hours (8,704 

hours + 954 hours). While the total 

estimated annual burden associated 

with both of these requirements as 

discussed is 9,658 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. We estimate that 

the total cost for all ESRD facilities to 

comply with the collection of 

information requirements associated 

with the certificates each year would be 

less than $320,935 ($33.23/hour × 9,658 

hours). 

b. NHSN Dialysis Event Reporting 

Requirement for the PY 2015 ESRD QIP 

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

this finalrule, we finalized a measure 

requiring facilities to reporting dialysis 

events to the NHSN for he PY 2015 

ESRD QIP. Specifically, we will require 

facilities to submit 12 months of dialysis 

event data to the NHSN to receive 10 

points on the measure. The burden 

associated with this requirement for 

existing facilities is the time and effort 

necessary for facilities to submit 12 

months of data in order to receive the 

maximum number of points. According 

to our most recent data, 5,525 facilities 

treat adult in-center hemodialysis and/ 

or pediatric in-center hemodialysis 

patients and are, then, eligible to receive 

a score on this measure; therefore, we 

estimate that approximately 5,525 

facilities will submit the required data. 

Based on data previously collected, we 

further estimate that the average number 

of dialysis events is 0.008 per patient 

per month and that each facility has 

approximately 75 patients. Accordingly, 

we estimate the number of dialysis 

events in a 12-month period for all 

facilities to be 397,800 (0.09 events/ 

patient/month × 75 patiens/facility × 

5,525 facilities × 12 mohths) for the PY 

201 ESRD QIP performance period. We 

estimae it will require 10 minutes to 

collect and submit data on these events, 

and the estimated burden for submiting 

12 mohths of data will be 66,300 hours 

(397,800 dialysis events × 10/60 

minute). If the dialysis events were 

distributed evenly across all 5,525 

facilities, the reporting would result in 

an additional 12 hour (66, 300 hours/ 

5,525 facilities), burden for each facility 

at a cost of $399 ($33.23/hour × 12 

hours) per facility. Again, we estimate 

the mean hourly wage of a registered 

nurse is $33.23, and we anticipate 

nurses (for administrative staff) will be 

responsible for this reporting. In total, 

we believe that the cost for all ESRD 

facilities to comply with the reporting 

requirements associated with NHSN 

Dialysis Event reporting measure will be 

approximately $2.2 million ($399 × 

5,525 facilities= $2,204,475) per year. 

c. ICH CAHPS Survey Attestation 

Requirement for the PY 2015 ESRD QIP 

As stated above in section III.D.1.c of 

this final rule, we finalized a measure 

that assesses facility usage of the ICH 

CAHPS survey as a reporting measure 

for the PY 2015 ESRD QIP. The burden 

associated with this requirement is the 

time and effort necessary for facilities to 

administer the ICH CAHPS survey 

through a third party and submit an 

attestation to CMS that they successfully 

administered the survey. 

We estimate that approximately 5,523 

facilities treat adult, in-center 

hemodialysis patients and are, therefore, 

eligible to receive a score on this 

measure. We estimate that all 5,523 

facilities will administer the ICH 

CAHPS survey through a third-party 

and submit an attestation to that effect. 

We estimate that it will take each 

facility’s third-party administrator 16 

hours per year to be trained on the 

survey features. We further estimate that 

it will take each facility approximately 

5 minutes to submit the attestation each 

year. The estimated total annual burden 

on facilities is 88,829 hours ((16 hours 

× 5,523 facilities) + ((5/60 minutes) × 

5,523 facilities) which is equal to 

$2,952,818 (88,829 hours × $33.23), or 

$534 per facility ($2,952, 818/5,523). 

Again, we estimate the mean hourly 

wage of a registered nurse is $33.23, and 

we anticipate nurses (or administrative 

staff) will be responsible for this 

reporting. We estimate that it would 

take each patient 30 minutes to 

complete the survey (to account for 

variability in education levels) and that 

approximately 75 surveys per year 


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10Last year, we stated that we believed that 200 

surveys would be administered per facility per year 

(76 FR 70299). Upon further review, however, we 

note that the ICH CAHPS specifications require a 

sample of 200 surveys only for those facilities with 

a large patient population. Faculties with fewer 

than 200 patients are required to survey all patients, 

aiming for a 40 percent response rate. (http:// 

www.cahps.ahrq.gov/∼/media/Files/ 

SurveyDocuments/ICH/Admin_Survey/ 

53_fielding_the_ich_survey.pdf). Since we estimate 

that each facility serves approximately 75 patients, 

we believe that the average facility, at most, would 

survey 75 patients per year. 

would be taken per facility.10

Interviewers from each facility would 

spend a total of approximately 37.5 

hours per year with patients completing 

these surveys (30/60 minutes * 75 

minutes) or $1,247 (37.5 hours × $33.23) 

for an estimated annual burden of 

207,113 hours (37.5 hours * 5,523 

facilities) which is equal to $6.9 million 

(207,113 hours × 33.23/hour). We 

estimate that time burden for ESRD 

facilities to comply with the collection 

of information requirements associated 

with administering the ICH CAHPS 

survey each year would be 

approximately $1,781 ($534 + $1,247) 

for each facility, or $9.9 million ($1,781 

× 5,523 facilities =$9,836,463) across all 

ESRD facilities. 

d. Data Validation Requirements 

Section III.D.13 of this final rule 

outlines the data validation processes 

we are finalizing. We will randomly 

sample records from 750 facilities; each 

sampled facility would be required to 

produce approximately 10 records. The 

burden associated with this validation 

requirement is the time and effort 

necessary to submit validation data to a 

CMS contractor. Because we anticipate 

that the sampled facilities will be 

reimbursed by our validation contractor 

for the costs associated with copying 

and mailing the requested records, we 

only estimate the burden of retrieving 

and submitting the necessary records. 

We estimate that it will take each 

facility approximately 2.5 hours to 

comply with these requirements. If 750 

facilities are tasked with providing the 

required documentation, the estimated 

annual burden across all facilities will 

be 1,875 hours (750 facilities × 2.5 

hours) at a total of $62,307 (1,875 hours 

× $33.23/hour) or $83.08 ($62,307/750) 

per facility in the sample. Again, we 

estimate the mean hourly wage of a 

registered nurse is $33.23, and we 

anticipate nurses (or administrative 

staff) will be responsible for providing 

this information. 

The comments we received on this 

analysis are set forth below. 

Comment: One commenter believes 

that the underlying premise for the 

CAHPS burden analysis is incorrect. 

This commenter stated that if the 

average facility serves 75 patients, it 

would survey at most 75 patients per 

year. 

Response: We believe that this 

assumption is a good approximation for 

this analysis. We realize that facilities 

may have more than 75 patients or less 

than 75 patients. Across the ESRD 

population, however, we believe 75 

patients per facility is accurate. 

According to the ICH CAHPS 

specifications, if a facility has less than 

200 patients, it must draw a census of 

patients from this facility. Therefore, if 

the average facility has 75 patients, we 

believe it would survey at most 75 

patients. 

Comment: One commenter expressed 

concern that responding to questions 

from patients about the Performance 

Score Certificates (PSCs) could consume 

too many staff hours. 

Response: We recognize that patients 

may have questions about the PSCs. The 

ESRD QIP is designed not only to 

incentivize care, but also to stimulate 

discussion about the quality of dialysis 

care. Therefore, we believe that these 

questions and answers are important in 

promoting the goals of the program and 

improvement in care in that they 

promote patient awareness and 

understanding of the care they are 

receiving. Additionally, we believe that 

these questions will be answered during 

the course of usual patient care. We will 

continue to monitor the burden these 

questions may place upon facilities. 

To obtain copies of the supporting 

statement and any related forms for the 

paperwork collections referenced above, 

access CMS’ Web site at http:// 

www.cms.gov/PaperworkReductionAct

of1995/PRAL/list.asp#TopOfPage. 

If you comment on these information 

collection and recordkeeping 

requirements, please submit your 

comments to the Office of Information 

and Regulatory Affairs, Office of 

Management and Budget, Attention: 

CMS Desk Officer, [CMS–1352–F]; Fax: 

(202) 395–6974; or Email: 

OIRA_submission@omb.eop.gov. 

2. Reductions to Bad Debt Payments for 

All Medicare Providers 

The statutorily mandated reductions 

of bad debt payments to providers, 

suppliers, and other entities that are 

currently receiving bad debt payments 

will not result in any changes to or any 

additional collection of information 

requirements. The removal of the cap on 

bad debt reimbursement to ESRD 

facilities will result in fewer collection 

of information requirements for ESRD 

facilities. 

VI. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We examined the impacts of this final 

rule as required by Executive Order 

12866 (September 30, 1993, Regulatory 

Planning and Review) and Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011). Executive Orders 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated economically 

significant under section 3(f)(1) of 

Executive Order 12866. Accordingly, 

the rule has been reviewed by the Office 

of Management and Budget. We have 

prepared a Regulatory Impact Analysis 

that to the best of our ability presents 

the costs and benefits of the final rule. 

2. Statement of Need 

This rule finalizes a number of 

routine updates for renal dialysis items 

and services in CY 2013, implements 

the third year of the ESRD PPS 

transition, and makes several policy 

changes and clarifications to the ESRD 

PPS. These include updates and 

changes to the ESRD PPS and composite 

rate base rates, wage index values, wage 

index budget-neutrality adjustment 

factors, outlier payment policy, and 

transition budget-neutrality adjustment. 

Failure to publish this final rule would 

result in ESRD facilities not receiving 

appropriate payments in CY 2013. 

This final rule also implements the 

QIP for PY 2015 and beyond by 

establishing measures, a scoring system, 

and payment reductions to incentivize 

improvements in dialysis care as 

directed by section 1881(h) of the Act. 

Failure to establish QIP program 

parameters in this rule would prevent 

continuation of the QIP beyond PY 

2014. 

This final rule also implements the 

reduction percentages of bad debt 

reimbursement required by section 3201 

of The Middle Class Tax Extension and 

Job Creation Act of 2012. This final rule 

also removes the cap on bad debt 

reimbursement to an ESRD facility up to 

the facility’s unrecovered costs. Section 

3201(c) of The Middle Class Tax 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations 67523 

Extension and Job Creation Act of 2012 

adds a new subparagraph— 

1861(v)(1)(W) to the Act and applies a 

reduction in bad debt payments to 

‘‘providers’’ not addressed under 

subparagraphs 1861(v)(1)(T) or 

1861(v)(1)(V) of the Act. For the purpose 

of subparagraph 1861(v)(1)(W) of the 

Act, section 3201(c) of The Middle Class 

Tax Extension and Job Creation Act of 

2012 defined ‘‘providers’’ as a supplier 

or any other type of entity that receives 

payment for bad debts under the 

authority of section 1861(v)(1)(A) of the 

Act. These providers include, but are 

not limited to, CAHs, RHCs, FQHCs, 

CMHCs, HMOs reimbursed on a cost 

basis, CMPs, HCPPs and ESRD facilities. 

3. Overall Impact 

We estimate that the final revisions to 

the ESRD PPS will result in an increase 

of approximately $250 million in 

payments, from Medicare, to ESRD 

facilities in CY 2013, which includes 

the amount associated with the increase 

in the ESRDB market basket reduced by 

the productivity adjustment, updates to 

outlier amounts, and the effect of 

changing the blended payments from 50 

percent under the composite rate 

payment and 50 percent under the 

ESRD PPS to 25 percent under the 

composite rate payment and 75 percent 

under the ESRD PPS. 

We estimate that the requirements 

related to the ESRD QIP for PY 2015 

will cost approximately $12.4 million 

and the predicted payment reductions 

will equal about $12.1 million to result 

in a total impact from the proposed 

ESRD QIP requirements of $24.6 

million. 

In section IV of this final rule, we 

discuss the provisions required by 

section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012, 

which apply percentage reductions in 

bad debt reimbursement to all providers 

eligible to receive bad debt 

reimbursement; these provisions are 

specifically prescribed by statute and 

thus, are self-implementing. Table 9 in 

section IV.C.1 of the CY 2013 proposed 

rule (77 FR 40988) depicts a comparison 

of the bad debt payment percentages 

prior to and after FY 2013. We estimate 

these self implementing provisions of 

section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012 

will result in savings to the Medicare 

program of $10.92 billion over the 

period from 2012 through 2022. 

Fiscal year 

Medicare program 

savings from 

reductions in bad 

debt 

2013 ............................. 240 million. 

2014 ............................. 600 million. 

2015 ............................. 900 million. 

2016 ............................. 1.06 billion. 

2017 ............................. 1.14 billion. 

2018 ............................. 1.21 billion. 

2019 ............................. 1.30 billion. 

2020 ............................. 1.39 billion. 

2021 ............................. 1.49 billion. 

2022 ............................. 1.59 billion. 

Aggregate FY Total 

Savings.

10.92 billion. 

Additionally, in section IV of this 

final rule, we discuss the removal of the 

cap on bad debt reimbursement to ESRD 

facilities. We estimate the removal of 

this cap will result in a cost to the 

Medicare program in the amount of 

$170 million from 2013 through 2022. 

Fiscal year 

Medicare program 

cost resulting from 

cap removal 

2013 ............................. 10 million. 

2014 ............................. 20 million. 

2015 ............................. 10 million. 

2016 ............................. 10 million. 

2017 ............................. 20 million. 

2018 ............................. 20 million. 

2019 ............................. 20 million. 

2020 ............................. 20 million. 

2021 ............................. 20 million. 

2022 ............................. 20 million. 

Aggregate FY Total 

Cost.

170 million. 

B. Detailed Economic Analysis 

1. CY 2013 End-Stage Renal Disease 

(ESRD) Prospective Payment System 

(PPS) 

a. Effects on ESRD Facilities 

To understand the impact of the 

changes affecting payments to different 

categories of ESRD facilities, it is 

necessary to compare estimated 

payments (that is, payments made under 

the 100 percent ESRD PPS and those 

under the ESRD PPS blended payment 

during the transition) in CY 2012 to 

estimated payments in CY 2013. To 

estimate the impact among various 

classes of ESRD facilities, it is 

imperative that the estimates of 

payments in CY 2012 and CY 2013 

contain similar inputs. Therefore, we 

simulated payments only for those 

ESRD facilities for which we are able to 

calculate both current payments and 

new payments. 

For this final rule, we used the June 

2012 update of CY 2011 National Claims 

History file as a basis for Medicare 

dialysis treatments and payments under 

the ESRD PPS. We updated the 2011 

claims to 2012 and 2013 using various 

updates. The updates to the ESRD PPS 

base rate and the base composite rate 

portion of the blended rate during the 

transition are described in section II.C of 

this final rule. In addition, in order to 

prepare an impact analysis, since some 

ESRD facilities opted to be paid the 

blended payment amount during the 

transition, we made various 

assumptions about price growth for the 

formerly separately billable drugs and 

laboratory tests with regard to the 

composite portion of the ESRD PPS 

blended payment during the transition. 

These rates of price growth are briefly 

outlined below, and are described in 

more detail in the CY 2011 ESRD PPS 

final rule (75 FR 49078 through 49080). 

We used the CY 2011 amounts for the 

CYs 2012 and 2013 amounts for 

Supplies and Other Services, since this 

category primarily includes the $0.50 

administration fee for separately billable 

Part B drugs and this fee continues to be 

an appropriate amount. Because some 

ESRD facilities will receive blended 

payments during the transition and 

receive payment for ESRD drugs and 

biologicals based on their average sales 

price plus 6 percent (ASP+6), we 

estimated price growth for these drugs 

and biologicals based on ASP+6 

percent. We updated the last available 

quarter of actual ASP data for the top 

twelve drugs (the fourth quarter of 2012) 

thru 2013 by using the quarterly growth 

in the Producer Price Index (PPI) for 

Drugs, consistent with the method for 

addressing price growth in the ESRDB 

market basket. This resulted in increases 

of 3.0 percent, 0.2 percent, 1.4 percent 

and 1.0 percent, respectively, for the 

first quarter of 2013 thru the fourth 

quarter of 2013. Since the top twelve 

drugs account for over 99 percent of 

total former separately billable Part B 

drug payments, we used a weighted 

average growth of the top twelve drugs 

for the remainder. Table 8 below shows 

the updates used for the drugs. 

We updated payments for laboratory 

tests paid under the laboratory fee 

schedule to 2012 and 2013 using the 

statutorily required update of the CPI– 

U increase with any legislative 

adjustments. For this final rule, the 

growth from 2011 to 2012 is 0.7 percent 

and the growth from 2011 to 2013 is 

¥1.1 percent. 


tkelley on DSK3SPTVN1PROD with RULES2
67524 Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations 

TABLE 9—PRICE INCREASES FROM 2011 TO 2012 AND 2011 TO 2013 OF FORMER SEPARATELY BILLABLE PART B 

DRUGS

Separately billable drugs 

Total growth 2011 to 

2012 

(percent) 

Total growth 2011 to 

2013 

(percent) 

EPO ................................................................................................................................................. ¥0.3 5.0 

Paricalcitol ........................................................................................................................................ ¥31.6 ¥36.5 

Sodium_ferric_glut ........................................................................................................................... ¥24.8 ¥33.3 

Iron_sucrose .................................................................................................................................... ¥14.7 ¥14.2 

Levocarnitine .................................................................................................................................... 12.2 ¥2.3 

Doxercalciferol ................................................................................................................................. ¥68.3 ¥68.5 

Calcitriol ........................................................................................................................................... 64.6 15.7 

Vancomycin ..................................................................................................................................... ¥12.4 ¥15.4 

Alteplase .......................................................................................................................................... 15.5 24.4 

Aranesp ............................................................................................................................................ 6.5 12.3 

Daptomycin ...................................................................................................................................... 11.5 19.0 

Ferumoxytol ..................................................................................................................................... ¥7.8 ¥4.3 

Weight for others ............................................................................................................................. ¥8.1 ¥4.6 

Table 10 below shows the impact of 

the estimated CY 2013 ESRD payments 

compared to estimated payments to 

ESRD facilities in CY 2012. 

TABLE 10—IMPACT OF CHANGES IN PAYMENTS TO ESRD FACILITIES FOR THE CY 2013 ESRD FINAL RULE

[Percent change in total payments to ESRD facilities (both program and beneficiaries)] 

A B C D E 

Number of 

facilities 

Number of 

treatments 

(in millions) 

Effect of 2013 

changes in 

outlier policy 3

(percent) 

Effect of 2013 

changes in 

wage indexes 

(percent) 

Effect of total 

2013 

changes 4

(percent) 

Facility type 

All Facilities .......................................................................... 5,726 41.4 0.4 0.0 3.0 

Type 

Freestanding ................................................................. 5,176 38.0 0.5 0.0 2.9 

Hospital based .............................................................. 550 3.4 0.3 0.1 3.6 

Ownership Type 

Large dialysis organization ........................................... 3,719 27.3 0.5 0.0 2.9 

Regional chain .............................................................. 926 7.1 0.3 0.1 3.0 

Independent .................................................................. 636 4.4 0.2 0.0 3.0 

Hospital based 1 ............................................................ 434 2.6 0.3 0.2 3.6 

Unknown .............................................................................. 11 0.0 0.3 1.5 4.4 

Geographic Location 

Rural ............................................................................. 1,267 6.8 0.5 ¥0.2 2.9 

Urban ............................................................................ 4,459 34.6 0.4 0.0 3.0 

Census Region 

East North Central ........................................................ 941 6.3 0.5 0.1 3.1 

East South Central ....................................................... 472 3.1 0.6 ¥0.5 2.5 

Middle Atlantic .............................................................. 641 5.1 0.4 0.0 3.1 

Mountain ....................................................................... 335 1.9 0.3 ¥0.3 2.6 

New England ................................................................ 171 1.4 0.5 0.5 3.5 

Pacific ........................................................................... 667 5.6 0.2 0.6 3.4 

Puerto Rico and Virgin Islands ..................................... 41 0.3 0.2 ¥2.4 0.6 

South Atlantic ................................................................ 1,259 9.5 0.6 ¥0.2 2.8 

West North Central ....................................................... 416 2.2 0.4 0.1 3.2 

West South Central ...................................................... 783 6.0 0.5 ¥0.2 2.8 

Facility Size 

Less than 4,000 treatments 2 ........................................ 1,105 2.5 0.4 0.0 3.0 

4,000 to 9,999 treatments ............................................ 2,225 11.6 0.5 0.0 3.0 

10,000 or more treatments ........................................... 2,370 27.2 0.4 0.0 3.0 

Unknown ....................................................................... 26 0.0 0.2 0.1 3.2 

Percentage of Pediatric Patients 

Less than 2% ................................................................ 5,616 41.0 0.5 0.0 3.0 

Between 2% and 19% .................................................. 44 0.4 0.3 ¥0.1 3.0 

Between 20% and 49% ................................................ 8 0.0 0.1 ¥0.1 4.1 

More than 50% ............................................................. 58 0.1 ¥0.2 0.0 2.2 

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

2Of the 1,105 Facilities with less than 4,000 treatments, only 332 qualify for the low-volume adjustment. The low-volume adjustment is mandated by Congress, and is not applied to pediatric patients. The impact to these Low volume Facilities is a 3.3% increase in payments. 3 Includes the effects of the final payment policy on thrombolytics for those facilities that are paid under the blend. 


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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations 67525 

4 Includes the effect of Market Basket minus productivity increase of 2.3% to the ESRD PPS base and the Composite Rate. 

Includes the effect of the change in the drug add-on percentage from 14.3% to 14.0% for those facilities that opted to be paid under the transition. 

Includes the effect of the blend changing from 50/50 to 25/75 for those facilities that choose to be paid under the transition.

Includes the effect of the Transition Budget-Neutrality Factor of 0.1 percent for all facilities. 

Note: Totals do not necessarily equal the sum of rounded parts. 

Column A of the impact table 

indicates the number of ESRD facilities 

for each impact category and column B 

indicates the number of dialysis 

treatments (in millions). The overall 

effect of the final changes to the outlier 

payment policy described in section 

II.C.7 of this final rule is shown in 

column C. For CY 2013, the impact on 

all facilities as a result of the changes to 

the outlier payment policy would be a 

0.4 percent increase in estimated 

payments. The estimated impact of the 

changes to outlier payment policy 

ranges from a 0.2 percent decrease to a 

0.6 percent increase. Most ESRD 

facilities are anticipated to experience a 

positive effect in their estimated CY 

2013 payments as a result of the final 

outlier policy changes. 

Column D shows the effect of the 

wage index on ESRD facilities and 

reflects the CY 2013 wage index values 

for the composite rate portion of the 

blended payment during the transition 

and the ESRD PPS payments. Facilities 

located in the census region of Puerto 

Rico and the Virgin Islands would 

receive a 2.4 percent decrease in 

estimated payments in CY 2013. Since 

most of the facilities in this category are 

located in Puerto Rico, the decrease is 

primarily due to the reduction in the 

wage index floor, (which only affects 

facilities in Puerto Rico in CY 2013). 

The other categories of types of facilities 

in the impact table show changes in 

estimated payments ranging from a 0.5 

percent decrease to a 1.5 percent 

increase due to the update of the wage 

index. 

Column E reflects the overall impact 

(that is, the effect of the final outlier 

policy changes, the effect of the final 

wage index, the effect of the ESRDB 

market basket increase minus 

productivity adjustment, the effect of 

the change in the blended payment 

percentage from 50 percent of payments 

based on the composite rate system and 

50 percent based on the ESRD PPS in 

2012, to 25/75, respectively, for 2013, 

for those facilities that opted to be paid 

under the transition, and the effect of 

the 0.1 percent transition budgetneutrality adjustment increase). We 

expect that overall, ESRD facilities will 

experience a 3.0 percent increase in 

estimated payments in 2013. ESRD 

facilities in Puerto Rico and the Virgin 

Islands are expected to receive a 0.6 

percent increase in their estimated 

payments in CY 2013. This smaller 

increase is primarily due to the negative 

impact of the wage index. The other 

categories of types of facilities in the 

impact table show positive impacts 

ranging from an increase of 2.2 percent 

to 4.4 percent in their 2013 estimated 

payments. 

b. Effects on Other Providers 

Under the ESRD PPS, ESRD facilities 

are paid directly for the renal dialysis 

bundle and other provider types such as 

laboratories, DME suppliers, and 

pharmacies, may no longer bill 

Medicare directly for renal dialysis 

services. Rather, effective January 1, 

2011, such other providers can only 

furnish renal dialysis services under 

arrangements with ESRD facilities and 

must seek payment from ESRD facilities 

rather than Medicare. Under the ESRD 

PPS, Medicare pays ESRD facilities one 

payment for renal dialysis services, 

which may have been separately paid to 

suppliers by Medicare prior to the 

implementation of the ESRD PPS. 

Therefore, in CY 2013, the third year of 

the ESRD PPS, we estimate that the final 

ESRD PPS will have zero impact on 

these other providers. 

c. Effects on the Medicare Program 

We estimate that Medicare spending 

(total Medicare program payments) for 

ESRD facilities in 2013 will be 

approximately $8.4 billion. This 

estimate is based on various price 

update factors discussed in section VI.B 

in this final rule and takes into account 

a projected increase in fee-for-service 

Medicare dialysis beneficiary 

enrollment of 4.0 percent in CY 2013. 

d. Effects on Medicare Beneficiaries 

Under the ESRD PPS, beneficiaries are 

responsible for paying 20 percent of the 

ESRD PPS payment amount or blended 

payment amount for patients treated in 

facilities going through the ESRD PPS 

transition. As a result of the projected 

3.0 percent overall increase in the ESRD 

PPS payment amounts in CY 2013, we 

estimate that there will be an increase 

in beneficiary co-insurance payments of 

3.0 percent in CY 2013, which translates 

to approximately $60 million. 

e. Alternatives Considered 

We considered eliminating the AY 

modifier use by ESRD facilities in CY 

2013, which could address program 

integrity concerns but could also require 

Medicare beneficiaries to incur 

additional injections, medical visits and 

co-insurance liabilities and accordingly, 

we did not pursue this alternative. 

Rather, we decided to monitor the use 

of the AY modifier and consider the 

elimination of the AY modifier in future 

rulemaking if we determine that it is 

being used inappropriately. 

2. ESRD QIP 

a. Effects of the PY 2015 ESRD QIP 

The ESRD QIP provisions are 

intended to prevent possible reductions 

in the quality of ESRD dialysis facility 

services provided to beneficiaries as a 

result of payment changes under the 

ESRD PPS by implementing an ESRD 

QIP that reduces ESRD payments by up 

to 2 percent for dialysis 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 finalizing to determine a 

facility’s Total Performance Score is 

described in section III.D.9 and III.D.10 

of this final rule. Any reductions in 

ESRD payments would begin on January 

1, 2015 for services furnished on or after 

January 1, 2015. 

As a result, based on the ESRD QIP 

outlined in this final rule, we estimate 

that, of the total number of dialysis 

facilities (including those not receiving 

an ESRD QIP Total Performance Score), 

approximately 20 percent or 1,093 of the 

facilities would likely receive a payment 

reduction for PY 2015. Facilities that do 

not receive a TPS are not eligible for a 

payment reduction. 

The ESRD QIP impact assessment 

assumes an initial count of 5,726 

dialysis facilities paid through the ESRD 

PPS. Table 11 shows the overall 

estimated distribution of payment 

reductions resulting from the PY 2015 

ESRD QIP. 


tkelley on DSK3SPTVN1PROD with RULES2
67526 Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations 

TABLE 11—ESTIMATED DISTRIBUTION

OF PY 2015 ESRD QIP PAYMENT

REDUCTIONS

Payment 

reduction 

(percent) 

Number of 

facilities 

Percent of 

facilities 

0.0 ................. 4308 79.8 

0.5 ................. 599 11.1 

1.0 ................. 309 5.7 

1.5 ................. 97 1.8 

TABLE 11—ESTIMATED DISTRIBUTION

OF PY 2015 ESRD QIP PAYMENT

REDUCTIONS—Continued 

Payment 

reduction 

(percent) 

Number of 

facilities 

Percent of 

facilities 

2.0 ................. 88 1.6 

* Note: this table excludes 325 facilities that 

did not receive a score because they did not 

have enough data to receive a Total Performance Score. 

To estimate whether or not a facility 

would receive a payment reduction 

under the proposed approach, we 

scored each facility on achievement and 

improvement for each of the proposed 

clinical measures using the most recent 

data available for each measure shown 

in Table 12. 

TABLE 12—DATA USED TO ESTIMATE PY 2015 ESRD QIP PAYMENT REDUCTIONS

Measure 

Period of time used to 

calculate achievement 

thresholds, performance 

standards, benchmarks, 

and 

improvement thresholds 

Performance period 

Hemoglobin Greater Than 12 g/dL ................................................................................ Jan 2010–Dec 2010 ........... Jan 2011–Dec 2011. 

Vascular Access Type 

% Fistula ................................................................................................................. Oct 2010–Apr 2011 ............ May 2011–Dec 2011. 

% Catheter .............................................................................................................. Oct 2010–Apr 2011 ............ May 2011–Dec 2011. 

Kt/V 

Adult HD ................................................................................................................. Jul 2010–Mar 2011 ............ Apr 2011–Dec 2011. 

Adult PD ................................................................................................................. Jul 2010–Mar 2011 ............ Apr 2011–Dec 2011. 

Pediatric HD ........................................................................................................... Jul 2010–Mar 2011 ............ Apr 2011–Dec 2011. 

We used claims data for these 

calculations. Clinical measures with less 

than 11 cases for a facility were not 

included in that facility’s Total 

Performance Score. Clinical measures 

with 11–25 cases for a facility received 

an adjustment as outlined in section 

III.C.11.a of this final rule. Each 

facility’s Total Performance Score was 

compared to the estimated minimum 

Total Performance Score and the 

payment reduction table found in 

section III.D.12 of this final rule. 

Facilities were required to have a score 

on at least one clinical measure to 

receive a Total Performance Score. For 

these simulations, reporting measures 

were not included due to lack of data 

availability. Therefore, the simulated 

facility Total Performance Scores were 

calculated using only the clinical 

measure scores. 

To estimate the total payment 

reductions in PY 2015 for each facility 

resulting from this final rule, we 

multiplied the total Medicare payments 

to the facility during the 1-year period 

between January 2011 and December 

2011 by the facility’s estimated payment 

reduction percentage expected under 

the ESRD QIP, yielding a total payment 

reduction amount for each facility: 

(Total ESRD payment in January 2011 

and December 2011 times the estimated 

payment reduction percentage). For PY 

2015 the total payment reduction for all 

of the 1,093 facilities expected to 

receive a reduction is approximately 

$12 million ($12,087,940). Further, we 

estimate that the total costs associated 

with the collection of information 

requirements for PY 2015 described in 

section V.C. of this final rule would be 

approximately $12.4 million for all 

ESRD facilities. As a result, we estimate 

that ESRD facilities will experience an 

aggregate impact of $24.5 million 

($12,087,940 + 12,424,180 = 

$24,512,120) as a result of the PY 2015 

ESRD QIP. 

Table 13 below shows the estimated 

impact of the finalized ESRD QIP 

payment reductions to all ESRD 

facilities for PY 2015. The table details 

the distribution of ESRD facilities by 

facility size (both among facilities 

considered to be small entities and by 

number of treatments per facility), 

geography (both urban/rural and by 

region), and by facility type (hospital 

based/freestanding facilities). Given that 

the time periods used for these 

calculations will differ from those we 

will use for the PY 2015 ESRD QIP, the 

actual impact of the PY 2015 ESRD QIP 

may vary significantly from the values 

provided here. 

TABLE 13—IMPACT OF ESRD QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR CY 2015 

Number of 

facilities 

Number of 

Medicare 

treatments 

2009 

(in millions) 

Number of 

facilities with 

QIP score 

Number of 

facilities 

expected to 

receive a 

payment 

reduction 

Payment 

reduction 

(percent 

change in 

total ESRD 

payments) 

All Facilities .......................................................................... 5,726 41.4 5,401 1,093 ¥0.17 

Facility Type: 

Freestanding ................................................................. 5,176 38.0 4,989 931 ¥0.15 

Hospital-based .............................................................. 550 3.4 412 162 ¥0.41 

Ownership Type: 

Large Dialysis ............................................................... 3,719 27.3 3,612 662 ¥0.14 

Regional Chain ............................................................. 926 7.1 882 151 ¥0.14 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations 67527 

TABLE 13—IMPACT OF ESRD QIP PAYMENT REDUCTIONS TO ESRD FACILITIES FOR CY 2015—Continued 

Number of 

facilities 

Number of 

Medicare 

treatments 

2009 

(in millions) 

Number of 

facilities with 

QIP score 

Number of 

facilities 

expected to 

receive a 

payment 

reduction 

Payment 

reduction 

(percent 

change in 

total ESRD 

payments) 

Independent .................................................................. 636 4.4 584 150 ¥0.22 

Hospital-based (non-chain) ........................................... 434 2.6 318 128 ¥0.43 

Unknown ....................................................................... 11 0.0 5 2 ¥0.30 

Facility Size: 

Large Entities ................................................................ 4,645 34.4 4,494 813 ¥0.14 

Small Entities 1 .............................................................. 1,070 7.0 902 278 ¥0.30 

Unknown ....................................................................... 11 0.0 5 2 ¥0.30 

Urban/Rural Status: 

1) Rural ......................................................................... 1,267 6.8 1,188 263 ¥0.18 

2) Urban ........................................................................ 4,459 34.6 4,213 830 ¥0.16 

Census Region: 

Northeast ...................................................................... 810 6.5 752 166 ¥0.20 

Midwest ......................................................................... 1,352 8.5 1,238 310 ¥0.21 

South ............................................................................. 2,510 18.7 2,420 445 ¥0.15 

West .............................................................................. 1,001 7.5 952 154 ¥0.13 

U.S. Territories 2 ........................................................... 53 0.3 39 18 ¥0.37 

Census Division: 

East North Central ........................................................ 941 6.3 856 227 ¥0.23 

East South Central ....................................................... 472 3.1 451 77 ¥0.15 

Middle Atlantic .............................................................. 641 5.1 593 143 ¥0.22 

Mountain ....................................................................... 335 1.9 321 64 ¥0.15 

New England ................................................................ 171 1.4 159 23 ¥0.13 

Pacific ........................................................................... 667 5.6 631 90 ¥0.11 

South Atlantic ................................................................ 1,259 9.5 1,217 236 ¥0.16 

West North Central ....................................................... 416 2.2 382 83 ¥0.17 

West South Central ...................................................... 783 6.0 752 132 ¥0.13 

U.S. Territories 2 ........................................................... 41 0.3 39 18 ¥0.37 

Facility Size (# of total treatments): 

Less than 4,000 treatments .......................................... 1,105 2.5 864 214 ¥0.27 

4,000–9,999 treatments ................................................ 2,225 11.6 2,190 420 ¥0.15 

Over 10,000 treatments ................................................ 2,370 27.2 2,345 459 ¥0.14 

Unknown ....................................................................... 26 0.0 2 0 ¥0.00 

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

2 Includes Puerto Rico and Virgin Islands. 

The comments we received on this 

analysis are set forth below. 

Comment: Several commenters 

requested that we provide, for both PY 

2014 and PY 2015, the data, 

assumptions, and methodology used to 

calculate the rate of improvement, 

performance standards, achievement 

thresholds, and benchmarks for all 

measures to allow stakeholders to have 

the opportunity to assess the impact on 

facilities so that the community may 

provide meaningful comment. 

Commenters also argued that we have 

underestimated the PY 2014 average 

payment reduction (i.e., by 36 percent), 

and requested that we provide the 

model, data, and assumption we used 

for these estimates. 

Response: As we noted above, the PY 

2014 final rule was finalized on 

November 1, 2011 (76 FR 70228). We 

direct commenters to this rule for our 

analysis of the PY 2014 ESRD QIP. The 

methodology and assumptions that we 

used to calculate the estimated rate of 

improvement, performance standards, 

achievement thresholds, and standards 

are set forth in this section. 

b. Alternatives Considered for the PY 

2015 ESRD QIP In developing the PY 

2015 ESRD QIP, we selected measures 

that we believe are important indicators 

of patient outcomes and quality of care 

as discussed in sections III.C, and III.D 

of this final rule. Poor management of 

anemia and inadequate dialysis, for 

example, can lead to otherwiseavoidable hospitalizations, decreased 

quality of life, and death. Infections are 

also a leading cause of hospitalization 

and death among hemodialysis patients, 

but there are proven infection control 

methods that have been shown effective 

in reducing morbidity and mortality. We 

also considered proposing to adopt the 

Standardized Hospitalization Ratio 

Admissions (SHR) measure and the 

Standardized Mortality Ratio (SMR) 

measures as part of the PY 2015 ESRD 

QIP. While we decided not to propose 

to adopt the SHR and SMR measures for 

the PY 2015 ESRD QIP, we will publicly 

report these measure rates/ratios via 

DFC to encourage facilities to improve 

their care. We believe the measures 

selected for the ESRD QIP will allow us 

to continue focusing on improving the 

quality of care that Medicare 

beneficiaries receive from ESRD dialysis 

facilities. 

In developing the scoring 

methodology for the PY 2015 ESRD QIP, 

we considered a number of alternatives 

including various improvement ranges, 

achievement thresholds, and 

benchmarks. We also considered 

whether some of the new measures 

should be scored based only on 

achievement. We also discussed scoring 

some of the clinical measures using a 

binary methodology (that is, facilities 

receive either zero or 10 points for 

missing or achieving a standard, 

respectively). We ultimately decided to 

mirror the PY 2014 ESRD QIP scoring 

methodology as closely as possible. We 

aim to design a scoring methodology 

that is straightforward and transparent 

to facilities, patients, and other 

stakeholders, and we believe that one of 


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the ways to obtain this transparency is 

to be as consistent as possible from yearto-year of the program. We believe that 

this consistency will allow us to better 

assess the impacts of the ESRD QIP 

upon facilities and beneficiaries. 

Finally, we believe that all scoring 

methodologies for Medicare VBP 

programs should be aligned as 

appropriate given their specific 

statutory requirements, and the scoring 

methodology for the ESRD QIP is 

similar to the Hospital Inpatient VBP 

Program. 

When deciding upon how to best 

score the Vascular Access Type and Kt/ 

V Dialysis Adequacy measure topics, we 

considered combining all of the 

measures within the measure topic into 

one composite measure (that is, having 

one, combined numerator and one, 

combined denominator for all of the 

measures within the topic) rather than 

individually scoring each measure and 

weighting it appropriately in the 

measure topic. We believe that it is 

important to mirror the NQF 

specifications for each measure as much 

as possible; we also heeded the 

suggestion of the Measures Application 

Partnership to further test composite 

measures before implementing them. 

Therefore, we decided to score measure 

topics where each measure within the 

measure topic is scored individually 

and then weighted appropriately. 

We considered requiring facilities to 

report data for 100 percent of their 

patients for the Mineral Metabolism and 

Anemia Management reporting 

measures in order to ensure complete, 

accurate data collection. We ultimately 

decided that, because there are some 

situations where a facility cannot 

control whether a patient’s blood is 

drawn (for example, hospitalization), we 

should adopt a reporting threshold of 

less than 100 percent. 

We also considered multiple baseline 

periods for purposes of scoring facilities 

on achievement and improvement. We 

considered periods of the same time and 

duration, periods occurring at different 

times, and periods with various 

durations. We ultimately decided that a 

baseline period of 12-months for both 

the achievement and improvement 

scores is best because it is consistent 

with the PY 2014 program. 

Additionally, a 12-month baseline 

period prevents issues related to 

seasonality. We finalized achievement 

and improvement baseline periods 

occurring over different periods of time 

because we believe that this approach 

mitigates data lag as much as possible 

and also allows us to score all of the 

measures on both achievement and 

improvement. Finally, we finalized an 

achievement baseline period spanning a 

calendar year (CY 2011) because this 

approach allows us to publish the 

numerical values for the performance 

standards before the beginning of the 

performance period. 

In deciding upon the minimum 

number of cases required for a facility 

to be scored on a measure, we reviewed 

and discussed many options. We 

considered keeping the program the 

same as PY 2014 by excluding measures 

with less than 11 cases and applying no 

adjustment. We also discussed 

including an adjustment for measures 

with 11–25 cases. Finally, we discussed 

an adjustment applicable to measures 

with 26–50 cases. We believe that we 

should set the case minimum at 11 and 

adopt an adjustment for measures with 

11–25 cases. 

Finally, in deciding upon the 

calculation of the minimum Total 

Performance Score, we considered 

scoring the reporting measures at zero, 

consistent with PY 2014. We decided, 

however, to finalize a minimum Total 

Performance Score that includes half of 

the maximum score a facility could 

receive on these measures. We believe 

that this methodology appropriately 

places emphasis on complete reporting 

from all facilities. 

We did not receive any comments 

related to this analysis of the 

alternatives that we considered for the 

PY 2015 ESRD QIP. 

3. Reductions to Bad Debt Payments for 

All Medicare Providers 

Section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012 

that requires reductions in bad debt 

reimbursement to all providers, supplies 

and other entities eligible to receive bad 

debt reimbursement will have a 

significant impact on the operations of 

all affected entities. However, these 

provisions are specifically prescribed by 

statute and thus, are self-implementing. 

It is estimated that these provisions will 

result in savings in CY 2013 of $330 

million. Removal of the cap on bad debt 

reimbursement to ESRD facilities up to 

a facility’s unrecovered cost will have 

an impact on ESRD facilities by 

increasing their bad debt reimbursement 

amounts. It is estimated that the 

removal of this cap will result in $10 

million in increased payments to ESRD 

facilities for CY 2013. Therefore, it is 

estimated that the combined overall 

savings in the CY 2013 would be $320 

million. 

C. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/ 

circulars_a004_a-4), in Table 14 below, 

we have prepared an accounting 

statement showing the classification of 

the transfers and costs associated with 

the various provisions of this final rule. 

TABLE 14—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS

ESRD PPS for CY 2013 

Category Transfers 

Annualized Monetized Transfers .............................................................. $250 million. 

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

Increased Beneficiary Co-insurance Payments ....................................... $60 million. 

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

ESRD QIP for PY 2015 

Annualized Monetized Transfers .............................................................. ¥$12.1 million.* 

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

Category Costs 

Annualized Monetized ESRD Provider Costs .......................................... 12.4 million.** 


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TABLE 14—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS AND COSTS/SAVINGS—Continued 

Savings from Congressionally Mandated Reductions of Bad Debt Payments in CY 2013 

Category Transfers 

Annualized Monetized Bad Debt Payments ............................................. $¥320 million. 

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

* It is the reduced payment to the ESRD facilities, which fall below the quality standards as stated in section III.D.12 of this proposed rule. 

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

VII. Regulatory Flexibility Act Analysis 

The Regulatory Flexibility Act 

(September 19, 1980, Pub. L. 96–354) 

(RFA) requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. 

Approximately 19 percent of ESRD 

dialysis facilities are considered small 

entities according to the Small Business 

Administration’s (SBA) size standards, 

which classifies small businesses as 

those dialysis facilities having total 

revenues of less than $34.5 million in 

any 1 year. Individuals and States are 

not included in the definitions of a 

small entity. For more information on 

SBA’s size standards, see the Small 

Business Administration’s Web site at 

http://www.sba.gov/sites/default/files/ 

files/Size_Standards_Table.pdf (Kidney 

Dialysis Centers are listed as 621492 

with a size standard of $34.5 million). 

The claims data used to estimate 

payments to ESRD facilities in this RFA 

analysis and RIA do not identify which 

dialysis facilities are part of a large 

dialysis organization (LDO), regional 

chain, or other type of ownership 

because each individual dialysis facility 

has its own provider number and bills 

Medicare using this number. Therefore, 

in previous RFA analyses and RIAs 

presented in proposed and final rules 

that updated the basic case-mix adjusted 

composite payment system, we 

considered each ESRD facility to be a 

small entity for purposes of the RFA 

analysis. However, we conducted a 

special analysis for this final rule that 

enabled us to identify the ESRD 

facilities that are part of an LDO or 

regional chain and therefore, were able 

to identify individual ESRD facilities 

that will be considered small entities. 

We do not believe ESRD facilities are 

operated by small government entities 

such as counties or towns with 

populations of 50,000 or less, and 

therefore, they are not enumerated or 

included in this estimated RFA analysis. 

Individuals and States are not included 

in the definition of a small entity. 

For purposes of the RFA, we estimate 

that approximately 19 percent of ESRD 

facilities are small entities as that term 

is used in the RFA (which includes 

small businesses, nonprofit 

organizations, and small governmental 

jurisdictions). This amount is based on 

the number of ESRD facilities shown in 

the ownership category in Table 9. 

Using the definitions in this ownership 

category, we consider the 636 facilities 

that are independent and the 434 

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

facilities that are owned and operated 

by LDOs and regional chains would 

have total revenues of more than $34.5 

million in any year when the total 

revenues for all locations are combined 

for each business (individual LDO or 

regional chain), and are not, therefore, 

included as small entities. 

For the ESRD PPS updates in this 

rule, a hospital-based ESRD facility (as 

defined by ownership type) is estimated 

to receive a 3.6 percent increase in 

payments for CY 2013. An independent 

facility (as defined by ownership type) 

is estimated to receive a 3.0 percent 

increase in payments for 2013. 

Based on the ESRD QIP payment 

reduction impacts to ESRD facilities for 

PY 2015, we estimate that of the 1,093 

ESRD facilities expected to receive a 

payment reduction, 278 ESRD small 

entity facilities will experience a 

payment reduction (ranging from 0.5 

percent up to 2.0 of total payments). We 

anticipate the payment reductions to 

average approximately $11,059 per 

facility among the 1,093 facilities 

receiving a payment reduction, with an 

average of $12,866 per small entity 

facilities receiving a payment reduction. 

The projected impacts for these small 

entities are estimates based on current 

data. The actual impacts may differ. 

Using our projections of facility 

performance, we then estimated the 

impact of anticipated payment 

reductions on ESRD small entities, by 

comparing the total payment reductions 

for the 278 small entities expected to 

receive a payment reduction, with the 

aggregate ESRD payments to all small 

entities. We estimate that there are a 

total of 1,070 small entity facilities. For 

this entire group of 1,070 ESRD small 

entity facilities, a decrease of 0.30% 

percent in aggregate ESRD payments is 

observed. 

The comment we received on this 

analysis is set forth below. 

Comment: One commenter expressed 

concern that we have not provided 

additional funding for the ESRD QIP 

COI requirements to alleviate the 

aggregate associated cost; commenter is 

specifically concerned of the impact on 

small facilities. 

Response: We recognize that a facility 

may have additional costs resulting 

from the ESRD QIP. We believe that 

these costs, however, are necessary in 

improving care and do not outweigh the 

utility of the program. We will continue 

to monitor these costs, paying specific 

attention to their effect upon small 

facilities. 

Therefore, the Secretary has 

determined that this final 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. Any such regulatory impact 

analysis must conform to the provisions 

of section 604 of the RFA. For purposes 

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

a small rural hospital as a hospital that 

is located outside of a metropolitan 

statistical area and has fewer than 100 

beds. We do not believe this final rule 

will have a significant impact on 

operations of a substantial number of 

small rural hospitals because most 

dialysis facilities are freestanding. 

While there are 180 rural hospital-based 

dialysis facilities, we do not know how 

many of them are based at hospitals 

with fewer than 100 beds. However, 

overall, the 180 rural hospital-based 

dialysis facilities will experience an 

estimated 3.5 percent increase in 

payments. As a result, this final rule is 

estimated to not have a significant 

impact on small rural hospitals. 

Therefore, the Secretary has determined 

that this final rule will not have a 

significant economic impact on a 

substantial number of small entities. 


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Section 3201 of The Middle Class Tax 

Extension and Job Creation Act of 2012 

that requires reductions in bad debt 

reimbursement to all providers, supplies 

and other entities eligible to receive bad 

debt reimbursement will have a 

significant impact on the operations of 

a substantial number of small entities 

and small rural hospitals. However, 

these provisions are specifically 

prescribed by the Congress and thus, are 

self-implementing. Additionally, we do 

not believe that the removal of the cap 

on bad debt reimbursements to ESRD 

facilities up to their unrecovered costs 

will have a significant impact on the 

operations of a substantial number of 

small entities and small rural hospitals. 

Thus, we are not providing a Regulatory 

Flexibility Act Analysis to codify the 

statutorily mandated reductions in bad 

debt payments, nor for the removal of 

the cap on bad debt reimbursement as 

it pertains to ESRD facilities. 

VIII. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

(Pub. L. 104–4) also requires that 

agencies assess anticipated costs and 

benefits before issuing any rule whose 

mandates require spending in any 1 year 

$100 million in 1995 dollars, updated 

annually for inflation. In 2012, that 

threshold is approximately $139 

million. This final rule does not include 

any mandates that will impose spending 

costs on State, local, or Tribal 

governments in the aggregate, or by the 

private sector, of $139 million. 

IX. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a final rule that 

imposes substantial direct requirement 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. We have 

reviewed this final rule under the 

threshold criteria of Executive Order 

13132, Federalism, and have 

determined that it will not have 

substantial direct effects on the rights, 

roles, and responsibilities of States, 

local or Tribal governments. 

X. Files Available to the Public via the 

Internet 

This section lists the Addenda 

referred to in the preamble of this final 

rule. Beginning in CY 2012, the 

Addenda for the annual ESRD PPS 

proposed and final rulemakings will no 

longer appear in the Federal Register. 

Instead, the Addenda will be available 

only through the Internet. We will 

continue to post the Addenda through 

the Internet. 

Readers who experience any problems 

accessing the Addenda that are posted 

on the CMS Web site at http:// 

www.cms.gov/ESRDPayment/PAY/ 

list.asp, should contact Michelle Cruse 

at (410) 786–7540. 

List of Subjects 

42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 417 

Administrative practice and 

procedure, Grant programs—health, 

Health care, Health insurance, Health 

maintenance organizations (HMO), Loan 

programs—health, Medicare, Reporting 

and recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as follows: 

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END–STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

■ 1. The authority citation for part 413 

is revised to read as follows: 

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

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

1881, 1883 and 1886 of the Social Security 

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

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

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

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

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

Stat. 156). 

Subpart F—Specific Categories of 

Costs 

■ 2. Section 413.89 is amended by 

revising paragraphs (h)(1) introductory 

text, (h)(1)(iv), (h)(2), (h)(3), and (i), and 

by adding paragraphs (h)(1)(v) and (h)(4) 

to read as follows: 

§ 413.89 Bad debts, charity, and courtesy 

allowances. 

* * * * * 

(h) * * * 

(1) Hospitals. In determining 

reasonable costs for hospitals, the 

amount of allowable bad debt (as 

defined in paragraph (e) of this section) 

is reduced: 

* * * * * 

(iv) For cost reporting periods 

beginning during fiscal years 2001 

through 2012, by 30 percent. 

(v) For cost reporting periods 

beginning during a subsequent fiscal 

year, by 35 percent. 

(2) Skilled nursing facilities and swing 

bed hospitals. For the purposes of this 

paragraph (h)(2), a dual eligible 

individual is defined as an individual 

that is entitled to benefits under Part A 

of Medicare and is determined eligible 

by the State for medical assistance 

under Title XIX of the Act as described 

under paragraph (2) of the definition of 

a ‘‘full-benefit dual eligible individual’’ 

at § 423.772 of this chapter. In 

determining reasonable costs for a 

skilled nursing facility and for posthospital SNF care furnished in a swing 

bed hospital, as defined in § 413.114(b), 

the amount of allowable bad debt (as 

defined in paragraph (e) of this section) 

is reduced: 

(i) For non-dual eligible individuals— 

(A) For cost reporting periods beginning 

during fiscal years 2006 through 2012, 

by 30 percent, for a patient in a skilled 

nursing facility. 

(B) For cost reporting periods 

beginning during a subsequent fiscal 

year, by 35 percent, for a patient in a 

skilled nursing facility or receiving posthospital SNF care in a swing bed 

hospital. 

(ii) For dual eligible individuals—(A) 

For cost reporting periods beginning 

during fiscal year 2013, by 12 percent, 

for a patient in a skilled nursing facility 

or a patient receiving post-hospital SNF 

care in a swing bed hospital. 

(B) For cost reporting periods 

beginning during fiscal year 2014, by 24 

percent, for a patient in a skilled 

nursing facility or a patient receiving 

post-hospital SNF care in a swing bed 

hospital. 

(C) For cost reporting periods 

beginning during a subsequent fiscal 

year, by 35 percent, for a patient in a 

skilled nursing facility or a patient 

receiving post-hospital SNF care in a 

swing bed hospital. 

(3) End-stage renal dialysis facilities. 

In determining reasonable costs for an 

end-stage renal dialysis facility, the 

amount of allowable bad debt (as 

defined in paragraph (e) of this section) 

is: 

(i) For cost reporting periods 

beginning before October 1, 2012, 

reimbursed up to the facility’s costs. 

(ii) For cost reporting periods 

beginning on or after October 1, 2012 

and before January 1, 2013, reduced by 

12 percent with the resulting amount 

reimbursed up to the facility’s costs. 

(iii) For cost reporting periods 

beginning on or after January 1, 2013 

and before October 1, 2013, reduced by 

12 percent. 


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Federal Register / Vol. 77, No. 218 / Friday, November 9, 2012 / Rules and Regulations 67531 

(iv) For cost reporting periods 

beginning during fiscal year 2014, 

reduced by 24 percent. 

(v) For cost reporting periods 

beginning during a subsequent fiscal 

year, reduced by 35 percent. 

(4) All other providers. In determining 

reasonable costs for all other providers, 

suppliers and other entities not 

described elsewhere in paragraph (h) of 

this section that are eligible to receive 

reimbursement for bad debts under this 

section, the amount of allowable bad 

debts (as defined in paragraph (e) of this 

section) is reduced: 

(i) For cost reporting periods 

beginning during fiscal year 2013, by 12 

percent. 

(ii) For cost reporting periods 

beginning during fiscal year 2014, by 24 

percent. 

(iii) For cost reporting periods 

beginning during a subsequent fiscal 

year, by 35 percent. 

(i) Exceptions applicable to bad debt 

reimbursement. (1) Bad debts arising 

from covered services paid under a 

reasonable charge-based methodology or 

a fee schedule are not reimbursable 

under the program. 

(2) For end-stage renal dialysis 

services furnished on or after January 1, 

2011 and paid for under the end-stage 

renal dialysis prospective payment 

system described in § 413.215, bad debts 

arising from covered items or services 

that, prior to January 1, 2011 were paid 

under a reasonable charge-based 

methodology or a fee schedule, 

including but not limited to drugs, 

laboratory tests, and supplies are not 

reimbursable under the program. 

§ 413.178 [Removed and Reserved] 

■ 3. Section 413.178 is removed and 

reserved. 

PART 417—HEALTH MAINTENANCE 

ORGANIZATIONS, COMPETITIVE 

MEDICAL PLANS, AND HEALTH CARE 

PREPAYMENT PLANS 

■ 4. The authority citation for part 417 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh), secs. 1301, 1306, and 1310 of the 

Public Health Service Act (42 U.S.C. 300e, 

300e–5, and 300e–9), and 31 U.S.C. 9701. 

Subpart O—Medicare Payment: Cost 

Basis 

■ 5. Section 417.536 is amended by 

revising paragraph (f)(1) to read as 

follows: 

§ 417.536 Cost payment principles. 

* * * * * 

(f) * * * 

(1) Bad debts attributable to Medicare 

deductible and coinsurance amounts are 

allowable only if the requirements of 

§ 413.89 of this chapter are met, subject 

to the limitations described under 

§ 413.89(h) and the exceptions for 

services described under § 413.89(i). 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: October 26, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–26903 Filed 11–2–12; 4:15 pm] 

BILLING CODE 4120–01–P 


tkelley on DSK3SPTVN1PROD with RULES2